EXHIBIT 10.6

EXECUTION COPY

U.S. $250,000,000

FIVE-YEAR REVOLVING CREDIT AGREEMENT

Among

RAYONIER INC.,

RAYONIER TRS HOLDINGS INC.,

and

RAYONIER FOREST RESOURCES, L.P.,

as Borrowers

and

The Several Lenders from Time to Time Parties Hereto,

The Issuing Banks from Time to Time Parties Hereto,

CREDIT SUISSE,

as Administrative Agent,

CREDIT SUISSE SECURITIES (USA) LLC,

as Sole Bookrunner,

CREDIT SUISSE SECURITIES (USA) LLC and BANK OF AMERICA, N.A.,

as Co-Syndication Agents

JPMORGAN CHASE BANK, SUN TRUST BANK

and THE BANK OF NEW YORK,

as Co-Documentation Agents

and

CREDIT SUISSE SECURITIES (USA) LLC,

BANC OF AMERICA SECURITIES LLC

as Joint Lead Arrangers

Dated as of August 4, 2006

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TABLE OF CONTENTS

 

     Page

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

   1

SECTION 1.01. Certain Defined Terms

   1

SECTION 1.02. Computation of Time Periods

   28

SECTION 1.03. Accounting Terms

   28

ARTICLE II AMOUNTS AND TERMS OF THE REVOLVING CREDIT ADVANCES

   28

SECTION 2.01. The Revolving Credit Advances

   28

SECTION 2.02. Making the Revolving Credit Advances

   29

SECTION 2.03. Letters of Credit

   30

SECTION 2.04. Fees

   35

SECTION 2.05. Termination or Reduction of the Commitments

   36

SECTION 2.06. Repayment of Revolving Credit Advances

   36

SECTION 2.07. Interest on Revolving Credit Advances

   36

SECTION 2.09. Inability to Determine Interest Rate

   38

SECTION 2.10. Conversion of Revolving Credit Advances

   38

SECTION 2.11. Prepayments of Revolving Credit Advances

   39

SECTION 2.12. Increased Costs

   39

SECTION 2.13. Illegality

   40

SECTION 2.14. Payments

   40

SECTION 2.15. Taxes

   41

SECTION 2.16. Sharing of Payments, Etc

   44

SECTION 2.17. Evidence of Debt

   45

SECTION 2.18. Use of Proceeds

   45

SECTION 2.19. Increase in the Aggregate Commitments

   45

ARTICLE III CONDITIONS PRECEDENT

   47

SECTION 3.01. Conditions Precedent to Closing Date

   47

SECTION 3.02. Conditions Precedent to Each Loan Event

   49

SECTION 3.03. Conditions Precedent to Additional Borrower Effective Date

   50

SECTION 3.04. Conditions Precedent to Additional Subsidiary Guarantor

   51

ARTICLE IV REPRESENTATIONS AND WARRANTIES

   52

SECTION 4.01. Representations and Warranties of the Borrower

   52

ARTICLE V COVENANTS OF THE BORROWERS

   55

SECTION 5.01. Affirmative Covenants

   55

SECTION 5.02. Additional Rayonier’s Affirmative Covenants

   61

SECTION 5.03. Negative Covenants

   61

SECTION 5.04. Additional RFR’s Negative Covenants

   64

SECTION 5.05. Financial Covenants

   68

 

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ARTICLE VI EVENTS OF DEFAULT

   68

SECTION 6.01. Events of Default

   68

ARTICLE VII THE ADMINISTRATIVE AGENT

   72

SECTION 7.01. Authorization and Action

   72

SECTION 7.02. Administrative Agent’s Reliance, Etc

   72

SECTION 7.03. CS and Affiliates

   72

SECTION 7.04. Lender Credit Decision

   73

SECTION 7.05. Indemnification

   73

SECTION 7.06. Successor Administrative Agent

   74

SECTION 7.07. Other Administrative Agents

   74

ARTICLE VIII MISCELLANEOUS

   74

SECTION 8.01. Amendments, Etc

   74

SECTION 8.02. Notices, Etc

   75

SECTION 8.03. No Waiver; Remedies

   75

SECTION 8.04. Costs and Expenses

   75

SECTION 8.05. Right of Set-off

   77

SECTION 8.06. Binding Effect

   77

SECTION 8.07. Assignments and Participations

   78

SECTION 8.08. Confidentiality

   82

SECTION 8.09. Governing Law

   82

SECTION 8.10. Execution in Counterparts

   82

SECTION 8.11. Jurisdiction, Etc

   82

SECTION 8.12. Waiver of Jury Trial

   83

 

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Schedules

 

Schedule I

   -     

Commitment Amounts and Applicable Lending Offices

Schedule 4.01(g)

   -     

Disclosed Litigation

Schedule 4.01(l)

   -     

Environmental Matters

Schedule 4.01(o)

   -     

Post Retirement Benefit Obligations

Schedule 5.03(b)

   -     

Existing Liens

Schedule 5.04(b)

   -     

Existing Investments

Schedule 5.04(e)

   -     

Existing Subsidiary Payment Restrictions

Exhibits

 

Exhibit A

   -      Form of Revolving Credit Promissory Note

Exhibit B

   -     

Form of Notice of Revolving Credit Borrowing

Exhibit C-1

   -     

Form of Guarantee Agreement

Exhibit C-2

   -     

Form of RFR Subsidiary Guarantee Agreement

Exhibit C-3

   -     

Form of TRS Subsidiary Guarantee Agreement

Exhibit C-4

   -     

Form of Subsidiary Guarantee Agreement

Exhibit D-1

   -     

Form of Opinion of Rayonier’s Vice President and General Counsel

Exhibit D-2

   -     

Form of Opinion of Counsel for the Borrowers

Exhibit D-3

   -     

Form of Opinion of Special New York Counsel for the Borrowers

Exhibit E

   -     

Form of Closing Certificate

Exhibit F

   -     

Form of Assignment and Acceptance

Exhibit G

   -     

Form of Additional Borrower Designation

Exhibit H

   -     

Form of Additional Subsidiary Guarantor Designation

 

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FIVE-YEAR REVOLVING CREDIT AGREEMENT, dated as of August 4, 2006 (as
supplemented, modified and amended from time to time, the “Agreement”), among
RAYONIER INC., a North Carolina corporation (“Rayonier”), RAYONIER TRS HOLDINGS
INC., a Delaware corporation (“TRS”), RAYONIER FOREST RESOURCES, L.P., a
Delaware limited partnership (“RFR”) and any Additional Borrower (each of
Rayonier, TRS, RFR and any Additional Borrower being referred to herein
individually as a “Borrower” and collectively as the “Borrowers”), the several
banks, financial institutions and other institutional lenders from time to time
party hereto (the “Lenders”), the issuing banks from time to time party hereto
(the “Issuing Banks”), CREDIT SUISSE, acting through one or more of its branches
(“Credit Suisse” or “CS”)), as Administrative Agent (in such capacity, the
“Administrative Agent”), CREDIT SUISSE SECURITIES (USA) LLC (“Credit Suisse
Securities”), as Sole Bookrunner, CREDIT SUISSE SECURITIES (USA) LLC and BANK OF
AMERICA, N.A., as Co-Syndication Agents, JPMORGAN CHASE BANK, SUN TRUST BANK and
THE BANK OF NEW YORK, as Co-Documentation Agents, and CREDIT SUISSE SECURITIES
and BANC OF AMERICA SECURITIES LLC, as Joint Lead Arrangers.

PRELIMINARY STATEMENTS

1. The Borrowers have requested that the Lenders extend credit to the Borrowers
in an aggregate principal amount of up to $250,000,000 in the form of revolving
credit advances and letters of credit.

2. In consideration of the premises and the mutual covenants herein contained
and for other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.01. CERTAIN DEFINED TERMS . As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):

“Acquired Debt” means, with respect to any specified Person (a) Debt of any
other Person existing at the time such other Person merged with or into or
became a Subsidiary of such specified Person, including Debt incurred in
connection with, or in contemplation of, such other Person merging with or into
or becoming a Subsidiary of such specified Person and (b) Debt encumbering any
asset acquired by such specified Person.

“Additional Borrower” means a domestic Subsidiary of Rayonier designated by
Rayonier as a borrower hereunder (such designation to be in the form of Exhibit
G hereto), and as to which the Additional Borrower Effective Date shall have
occurred, provided that:

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(a) such Subsidiary shall be a direct Subsidiary of Rayonier, the accounts and
financial reports of which shall be consolidated with Rayonier in accordance
with GAAP;

(b) only one such designation may be made by Rayonier hereunder; and

(c) as of the Additional Borrower Effective Date, (i) Rayonier shall have
transferred to such Additional Borrower all assets and properties of Rayonier,
including, without limitation, all capital stock and other equity interests in
all direct Subsidiaries of Rayonier, (ii) such Additional Borrower shall have
assumed all liabilities and obligations of Rayonier, and (iii) for all purposes
of this Agreement, (A) all Revolving Credit Advances owing by Rayonier and then
outstanding shall be deemed to be Revolving Credit Advances made to and owing by
such Additional Borrower, and (B) all Letters of Credit issued for the account
of Rayonier and then outstanding shall be deemed to be Letters of Credit issued
for the account of such Additional Borrower and such Additional Borrower shall
have full liability in respect thereof to the same extent as though such Letters
of Credit had been issued for the account of such Additional Borrower hereunder.

“Additional Borrower Assumption Agreement” has the meaning specified in
Section 3.03(a).

“Additional Borrower Effective Date” means, with respect to any Additional
Borrower, the date on which all conditions set forth in Section 3.03 shall have
been satisfied or waived by the Required Lenders.

“Additional Subsidiary Guarantor” means a domestic Subsidiary of Rayonier that
is not a Subsidiary of TRS or RFR and that is designated by Rayonier as a
Subsidiary Guarantor hereunder (such designation to be in the form of Exhibit H
hereto), provided that (a) such Subsidiary shall be a direct or indirect
Subsidiary of Rayonier (or, after any Additional Borrower Effective Date, the
Additional Borrower) the accounts and financial reports of which shall be
consolidated with Rayonier in accordance with GAAP, (b) each Subsidiary of
Rayonier (or, after any Additional Borrower Effective Date, the Additional
Borrower) that directly or indirectly holds any interest in the Capital Stock of
such Subsidiary shall also be an Additional Subsidiary Guarantor, and (c) the
conditions set forth in Section 3.04 with respect to such Subsidiary shall have
been satisfied or waived by the Required Lenders.

“Additional Subsidiary Guarantor Guarantee Agreement” means a guarantee
agreement among one or more Additional Subsidiary Guarantors and CS, as
Administrative Agent, pursuant to which each such Additional Subsidiary
Guarantor guarantees all obligations of Rayonier, TRS, RFR and any Additional
Borrower under this Agreement, such agreement to be substantially in the form of
Exhibit C-4 hereto.

“Adjusted Asset Sales Amount” means $100,000,000 as increased by 10% of the
purchase price of Asset Acquisitions (other than like-kind exchanges) subsequent
to the Closing Date.

 

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“Administrative Agent’s Account” means the account of the Administrative Agent
maintained by the Administrative Agent at The Bank of New York, ABA
No. 02100018, Account No. 8900492627, Attn: Agency Cayman, Reference: Rayonier
or such other account as the Administrative Agent may designate from time to
time by notice to Rayonier and the Lenders.

“Affiliate” means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person. For purposes of this
definition, the term “control” (including the terms “controlling”, “controlled
by” and “under common control with”) of a Person means the possession, direct or
indirect, of the power to vote 5% or more of the Voting Stock of such Person or
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or otherwise.

“Alternate Base Rate” shall mean, on any particular date, a rate of interest per
annum equal to the higher of

(a) the rate of interest per annum announced from time to time by CS as its
prime rate in effect at its principal office in New York City (which rate is not
necessarily intended to be the lowest rate of interest charged by CS in
connection with extensions of credit); and

(b) the Federal Funds Rate for such date plus 0.50%.

If for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable to
ascertain the Federal Funds Rate, for any reason, including the inability or
failure of the Administrative Agent to obtain sufficient quotations in
accordance with the terms hereof, the Alternate Base Rate shall be determined
with out regard to clause (b) above until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change
in the prime rate or the Federal Funds Rate shall be effective as of the
effective day of such change in the prime rate or the Federal Funds Rate,
respectively.

“Alternate Base Rate Advance” means a Revolving Credit Advance that bears
interest as provided in Section 2.07(a)(i).

“Applicable Lending Office” means, with respect to each Lender, such Lender’s
Domestic Lending Office in the case of an Alternate Base Rate Advance and such
Lender’s Eurodollar Lending Office in the case of a Eurodollar Rate Advance.

“Applicable Margin” means (a) for Alternate Base Rate Advances, 0% per annum and
(b) for Eurodollar Rate Advances, as of any date, a percentage per annum
determined by reference to the Corporate Credit Rating in effect on such date as
set forth below:

 

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Corporate Credit Rating
S&P/Moody’s

  

Applicable Margin for
Eurodollar Rate Advances

Level 1

BBB+ or Baa1 or above

   0.320%

Level 2

Lower than Level 1 but at least BBB or Baa2

   0.400%

Level 3

Lower than Level 2 but at least BBB- and Baa3

   0.475%

Level 4

Lower than Level 3 (or Levels 1, 2 and 3 otherwise not applicable) but at least
BBB- or Baa3

   0.600%

Level 5

Lower than Level 4 but at least BB+ and Ba1

   0.675%

Level 6

Lower than Level 5 (or Levels 1-5 otherwise not applicable)

   1.025%

“Asset Acquisition” means (a) an Investment by RFR or any Restricted Subsidiary
in any other Person pursuant to which such Person shall become a Restricted
Subsidiary or shall be merged with or into RFR or any Restricted Subsidiary,
(b) the acquisition by RFR or any Restricted Subsidiary of the assets of any
Person (other than a Restricted Subsidiary) which constitute all or
substantially all of the assets of such Person, (c) the acquisition by RFR or
any Restricted Subsidiary of merchantable Timber or Timberlands outside the
ordinary course of business, or (d) the acquisition by RFR or any Restricted
Subsidiary of any division or line of business of any Person (other than a
Restricted Subsidiary).

“Asset Sale” means “Asset Sale” as such term is defined in the Installment Note
Agreement as in existence as of the date hereof.

“Assignment and Acceptance” means an assignment and acceptance entered into by a
Lender and an Eligible Assignee, and accepted by the Administrative Agent, in
the form of Exhibit F hereto (or such other form as may be acceptable to the
Administrative Agent).

“Assuming Lender” has the meaning specified in Section 2.19(d).

“Assumption Agreement” has the meaning specified in Section 2.19(d)(ii).

“Attributable Debt” means, with respect to any Sale and Leaseback Transaction
not involving a Capital Lease, as of any date of determination, the total
obligation (discounted to present value at the rate of interest implicit in the
lease included in such transaction) of the lessee for rental payments (other
than amounts required to be paid on

 

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account of property taxes, maintenance, repairs, insurance, assessments,
utilities, operating and labor costs and other items which do not constitute
payments for property rights) during the remaining portion of the term
(including extensions which are at the sole option of the lessor) of the lease
included in such transaction (in the case of any lease which is terminable by
the lessee upon a payment of a penalty, such rental obligation shall also
include the amount of such penalty, but no rent shall be considered as required
to be paid under such lease subsequent to the first date upon which it may be so
terminated).

“Available Cash” means, with respect to any Fiscal Quarter,

(a) the sum of (i) all cash and cash equivalents of the Partnership Group on
hand at the end of such Fiscal Quarter, and (ii) all additional cash and cash
equivalents of the Partnership Group on hand on the date of determination of
Available Cash with respect to such Fiscal Quarter resulting from the Working
Capital Borrowings made subsequent to the end of such Fiscal Quarter, less

(b) the amount of any cash reserves that is necessary or appropriate in the
reasonable discretion of the Managing General Partner to (i) provide for the
proper conduct of the business of the Partnership Group (including reserves for
future capital expenditures and for anticipated future credit needs of the
Partnership Group) subsequent to such Fiscal Quarter, or (ii) comply with
applicable law or any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which any Group Member is a party
or by which it is bound or its assets are subject.

For purposes of the definition of “Available Cash”, the following terms shall
have the following meanings:

“Group Member” means a member of the Partnership Group.

“Partnership Group” means RFR and all its Subsidiaries, treated as a single
Consolidated entity.

“Working Capital Borrowings” means borrowings by the Partnership Group under any
Working Capital Facility giving rise to Debt incurred for working capital
purposes and for the purpose of making distributions to RFR and its
Subsidiaries.

“Business Day” means a day of the year on which banks are not required or
authorized by law to close in New York City and, if the applicable Business Day
relates to any Eurodollar Rate Advances, on which dealings are carried on in the
London interbank market.

“Capital Lease” means, as applied to any Person, any lease of any property
(whether real, personal or mixed) by such Person (as lessee or guarantor or
other surety) which would, in accordance with GAAP, be required to be classified
and accounted for as a capital lease on a balance sheet of such Person.

 

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“Capital Stock” means, with respect to any Person, any and all shares, units
representing interests, participations, rights in or other equivalents (however
designated) of such Person’s capital stock, including (x) with respect to
partnerships, partnership interests (whether general or limited) and any other
interest or participation that confers upon a Person the right to receive a
share of the profits and losses of, or distributions of assets of, such
partnership, (y) with respect to limited liability companies, member interests,
and (z) with respect to any Person, any rights (other than debt securities
convertible into capital stock), warrants or options exchangeable for or
convertible into such capital stock.

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.

“CERCLIS” has the meaning specified in Section 4.01(m).

“Closing Date” means the date on which the conditions precedent set forth in
Section 3.01 shall be satisfied or waived by the Required Lenders.

“Commitment” means, with respect to any Lender at any time (a) the amount set
forth opposite such Lender’s name as its “Commitment Amount” on Schedule I
hereto, or (b) if such Lender has entered into any Assignment and Acceptance,
the amount set forth for such Lender in the Register maintained by the
Administrative Agent pursuant to Section 8.07(d), as such amount may be reduced
pursuant to Section 2.05.

“Commitment Date” has the meaning specified in Section 2.19(b).

“Commitment Increase” has the meaning specified in Section 2.19(a).

“Commitment Percentage” means, as to any Lender at any time, the percentage
which such Lender’s Commitment then constitutes of the aggregate Commitments
(or, at any time after the Closing Date, the percentage which the aggregate
principal amount of such Lender’s Revolving Credit Advances and its
proportionate interest in LC Exposure then outstanding constitutes of the
aggregate principal amount of the Revolving Credit Advances and LC Exposure then
outstanding).

“Confidential Information” means (a) any financial information that relates
specifically to the assets, results of operations or financial condition of any
Loan Party or its Subsidiaries, or (b) any other information that any Borrower
furnishes to the Administrative Agent or any Lender or Issuing Bank in a writing
designated as confidential, but “Confidential Information” does not include any
such information under clause (a) or (b) that is or becomes generally available
to the public or that is or becomes available to the Administrative Agent or
such Lender or Issuing Bank from a source other than any Borrower, that to the
knowledge of the Administrative Agent or such Lender or Issuing Bank, as the
case may be, is not acting in violation of a confidentiality agreement with any
Borrower.

 

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“Consolidated” refers to the consolidation of accounts in accordance with GAAP.

“Consolidated Assets” means on any date of determination, all amounts that are
or should, in accordance with GAAP be included under assets on a Consolidated
balance sheet of any Person and its Subsidiaries determined in accordance with
GAAP as at such date.

“Consolidated Cash Flow Available for Fixed Charges” means, with respect to RFR
and its Restricted Subsidiaries for any period, the sum of, without duplication,
the amounts for such period, taken as a single accounting period, of (a) RFR
Consolidated Net Income, (b) Consolidated Non-Cash Charges, (c) Consolidated
Interest Expenses, and (d) Consolidated Income Tax Expense.

“Consolidated Fixed Charges” means, with respect to RFR and its Restricted
Subsidiaries for any period, the sum of, without duplication, (a) the amount for
such period of Consolidated Interest Expense and (b) the product of (i) the
aggregate amount of dividends and other distributions paid or accrued during
such period in respect of Preferred Stock and Redeemable Capital Stock of
Restricted Subsidiaries on a Consolidated basis and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the then
applicable current combined federal, state and local statutory tax rate,
expressed as a percentage.

“Consolidated Income Tax Expense” means, with respect to any period, all
provisions for federal, state, local and foreign income taxes of RFR and its
Restricted Subsidiaries for such period as determined on a Consolidated basis in
accordance with GAAP.

“Consolidated Interest Expense” means, with respect to RFR and its Restricted
Subsidiaries for any period, without duplication, the sum of (a) the interest
expense (not including any amounts paid or accrued in respect of any Preferred
Stock or Redeemable Capital Stock) of RFR and its Restricted Subsidiaries for
such period as determined on a Consolidated basis in accordance with GAAP,
including, without limitation, (i) any amortization of debt discount, (ii) the
net cost under Interest Rate Agreements, (iii) the interest portion of any
deferred payment obligation, (iv) all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers’ acceptance
financings that constitute Debt, and (v) all accrued interest and (b) the
interest component of Capital Leases paid, accrued or scheduled to be paid or
accrued by RFR and its Restricted Subsidiaries during such period as determined
on a Consolidated basis in accordance with GAAP.

“Consolidated Net Income” means, with respect to any specified Person for any
period, Consolidated net income (or loss) of such Person and its Subsidiaries
for such period determined on a Consolidated basis in accordance with GAAP;
provided that there shall be excluded (a) the income (or deficit) of any other
Person accrued prior to the date

 

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it becomes a Subsidiary of such specified Person or is merged into or
Consolidated with such specified Person or any of its Subsidiaries and (b) the
undistributed earnings of any Subsidiary of such specified Person 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 or requirement of law applicable to such Subsidiary.

“Consolidated Non-Cash Charges” means, with respect to RFR and its Restricted
Subsidiaries for any period, the aggregate depreciation, depletion, amortization
and any other non-cash charges (including, without limitation, the non-cash cost
basis of land sold), in each case reducing RFR Consolidated Net Income for such
period, determined on a Consolidated basis in accordance with GAAP.

“Consolidated Tangible Net Worth” means, with respect to any Person as of any
date of determination, the excess of total assets over total liabilities, total
assets and total liabilities each to be determined in accordance with GAAP,
excluding, however, from the determination of total assets, (a) goodwill,
experimental or organizational expenses, research and development expenses,
franchises, trademarks, service marks, trade names, copyrights, patents, patent
applications, licenses and rights in any thereof, and other similar intangibles,
(b) all unamortized debt discount and expense, (c) treasury stock and Capital
Stock, obligations or other securities of, or capital contributions to, or
investments in, any Subsidiary, and (d) any items not included in clauses
(a) through (c) above which are treated as intangibles in conformity with GAAP,
in each case, determined on a Consolidated basis and in accordance with GAAP.

“Control” means (a) the possession of the power to direct or cause the direction
of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise and (b) such other control, if
any, required under GAAP for the consolidation of financial statements between
the Person having such control and such other Person.

“Convert”, “Conversion” and “Converted” each refers to a conversion of Revolving
Credit Advances of one Type into Revolving Credit Advances of the other Type
pursuant to Section 2.09 or 2.10.

“Corporate Credit Rating” means, as of any date, the rating that has been most
recently announced by either S&P or Moody’s, as the case may be, as the
“corporate rating” or “corporate family rating” of Rayonier. For purposes of the
foregoing, (i) if neither S&P nor Moody’s shall have in effect a Corporate
Credit Rating, the Applicable Margin and the Facility Fee will be set in
accordance with Level 6 under the definitions of such terms; (ii) if any rating
established by S&P or Moody’s shall be changed, such change shall be effective
as of the date on which such change is first announced publicly by the rating
agency making such change; and (iii) if S&P or Moody’s shall change the basis on
which ratings are established, each reference to the Corporate Credit Rating
announced by S&P or Moody’s, as the case may be, shall refer to the then
equivalent rating by S&P or Moody’s, as the case may be.

 

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“Debt” of any Person means, 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 trade payables incurred in
the ordinary course of such Person’s business and that are not overdue for a
period that is not consistent with the ordinary course of business of such
Person), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all obligations of such Person
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 obligations of
such Person as lessee under leases that have been or should be, in accordance
with GAAP, recorded as capital leases, (f) all obligations, contingent or
otherwise, of such Person in respect of acceptance, letter of credit or similar
facilities (other than obligations under (i) Trade Letters of Credit,
(ii) performance bonds or letters of credit issued in connection with the
purchase of inventory, including prepaid timber stumpage, by Rayonier or any of
its Subsidiaries in the ordinary course of business, (iii) performance bonds or
letters of credit to secure obligations under workers’ compensation laws or
similar legislation, (iv) performance bonds or letters of credit issued for the
account of Rayonier or any of its Subsidiaries to secure obligations under
self-insurance programs to the extent permitted by the terms of this Agreement
and in an aggregate maximum available amount with respect to all such
performance bonds and letters of credit not to exceed at any one time
$20,000,000 and (v) performance bonds or letters of credit issued for the
account of Rayonier or any of its Subsidiaries not otherwise excluded from this
definition in an aggregate maximum available amount with respect to all such
performance bonds and letters of credit not to exceed at any one time
$2,000,000, provided that in each case such performance bond or letter of credit
(including, without limitation, any Trade Letters of Credit but excluding
performance bonds or letters of credit described in clause (f)(v) above) does
not secure Debt), (g) all Guarantees issued by such Person and (h) all Debt
referred to in clauses (a) through (g) above secured by (or for which the holder
of such Debt 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, even though such Person has not assumed or become
liable for the payment of such Debt. The Debt of any Person shall include the
Debt of any partnership in which such Person is a general partner, but shall not
include obligations under a financial assurance statement that a Person is
required to provide under Environmental Law in support of the closure and
post-closure obligations of one or more of its Subsidiaries.

“Default” means any Event of Default or any event that would constitute an Event
of Default but for the requirement that notice be given or time elapse or both.

“Default Interest” has the meaning specified in Section 2.07(b).

“Disclosed Litigation” has the meaning specified in Section 4.01(g).

“Domestic Lending Office” means, with respect to any Lender, the office of such
Lender specified as its “Domestic Lending Office” opposite its name on Schedule
I hereto or in the Assignment and Acceptance pursuant to which it became a
Lender, or such other office of such Lender as such Lender may from time to time
specify to Rayonier and the Administrative Agent.

 

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“EBITDA” means, for any Person during any period, earnings (income) from
continuing operations before the cumulative effect of accounting changes and any
provision for dispositions, income taxes, interest expense and depreciation,
depletion and amortization and the non-cash cost of timberland and real estate
sales, provided that, for purposes of calculating compliance with Section 5.05,
the EBITDA attributable to any Person or business unit acquired by Rayonier or
any of its Subsidiaries during any period of four full Fiscal Quarters shall be
included on a pro forma basis for such period of four full Fiscal Quarters
(assuming the consummation of each such acquisition occurred on the first day of
such period of four full Fiscal Quarters).

“Eligible Assignee” means (a) any Lender; (b) an Affiliate of a Lender; (c) a
commercial bank organized under the laws of the United States, or any State
thereof, and having total assets in excess of $10,000,000,000; (d) a commercial
bank organized under the laws of any other country that is a member of the
Organization for Economic Cooperation and Development or has concluded special
lending arrangements with the International Monetary Fund associated with its
General Arrangements to Borrow or of the Cayman Islands, or a political
subdivision of any such country, and having total assets in excess of
$10,000,000,000, so long as such bank is acting through a branch or agency
located in the country in which it is organized or another country that is
described in this clause (d); (e) the central bank of any country that is a
member of the Organization for Economic Cooperation and Development; and (f) any
other Person approved by the Administrative Agent; provided, however, that
(x) each Eligible Assignee shall maintain a branch or representative office or
similar presence in the United States and (y) no Borrower nor an Affiliate of
any Borrower shall qualify as an Eligible Assignee.

“Environmental Action” means any (a) administrative, regulatory or judicial
action, suit, written demand, demand letter, written claim, notice of
noncompliance or violation, notice of liability or potential liability,
investigation, proceeding, consent order or consent agreement relating in any
way to any Environmental Law, Environmental Permit or Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or the
environment including, without limitation, (i) by any governmental or regulatory
authority for enforcement, cleanup, removal, response, remedial or other actions
or damages and (ii) by any governmental or regulatory authority for damages,
contribution, indemnification, cost recovery, compensatory or injunctive relief;
and (b) any administrative, regulatory or judicial action, suit or proceeding
brought by any third party properly before a forum of competent jurisdiction
relating in any way to any Environmental Law, Environmental Permit or Hazardous
Materials or arising from alleged injury or threat of injury to health, safety
or the environment.

“Environmental Law” means any federal, state, local or foreign statute, law,
ordinance, rule, regulation, code, order, judgment or decree or any judicial or
agency interpretation, policy or guidance binding on Rayonier or any Subsidiary
of Rayonier relating to pollution or protection of the environment, health,
safety or natural resources, including, without limitation, those relating to
the use, handling, transportation, treatment, storage, disposal, release or
discharge of Hazardous Materials all as amended or hereafter amended.

 

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“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time, and the regulations promulgated and rulings issued
thereunder.

“ERISA Affiliate” means any Person that for purposes of Title IV of ERISA is a
member of any Borrower’s controlled group, or under common control with any
Borrower, within the meaning of Section 414 of the Internal Revenue Code.

“ERISA Event” means (a) (i) the occurrence of a reportable event, within the
meaning of Section 4043 of ERISA, with respect to any Plan unless the 30-day
notice requirement with respect to such event has been waived by the PBGC, or
(ii) the requirements of subsection (1) of Section 4043(b) of ERISA (without
regard to subsection (2) of such Section) are met with respect to a contributing
sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
is reasonably expected to occur with respect to such Plan within the following
30 days; (b) the application for a minimum funding waiver with respect to a
Plan; (c) the provision by the administrator of any Plan of a notice of intent
to terminate such Plan pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred to in Section 4041(e) of
ERISA); (d) the cessation of operations at a facility of any Borrower or any of
its ERISA Affiliates in the circumstances described in Section 4062(e) of ERISA;
(e) the withdrawal by any Borrower or any of its ERISA Affiliates from a
Multiple Employer Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA; (f) the conditions for the
imposition of a lien under Section 302(f) of ERISA or Section 412 (n) of the
Internal Revenue Code shall have been met with respect to any Plan; (g) the
adoption of an amendment to a Plan requiring the provision of security to such
Plan pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of
proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition described in Section 4042 of ERISA that
could constitute grounds for the termination of, or the appointment of a trustee
to administer, a Plan.

“Eurodollar Base Rate” means, with respect to any Eurodollar Rate Advance for
any Interest Period, the rate per annum determined by the Administrative Agent
at approximately 11:00 a.m. (London time) on the date which is two (2) Business
Days prior to the beginning of such Interest Period by reference to the British
Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set
forth by the Bloomberg Information Service or any successor thereto or any other
service selected by the Administrative Agent which has been nominated by the
British Bankers’ Association as an authorized information vendor for the purpose
of displaying such rates) for a period equal to such Interest Period; provided
that, to the extent that an interest rate is not

 

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ascertainable pursuant to the foregoing provisions of this definition, the
“Eurodollar Base Rate” shall be the interest rate per annum determined by the
Administrative Agent to be the average of the rates per annum at which deposits
in Dollars are offered for such Interest Period to major banks in the London
interbank market in London, England by the Administrative Agent at approximately
11:00 a.m. (London time) on the date which is two (2) Business Days prior to the
beginning of such Interest Period.

“Eurodollar Lending Office” means, with respect to any Lender, the office of
such Lender specified as its “Eurodollar Lending Office” opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time to
time specify to Rayonier and the Administrative Agent.

“Eurodollar Rate” means with respect to each day during each Interest Period
pertaining to a Eurodollar Rate Advance, a rate per annum determined for such
day in accordance with the following formula:

 

Eurodollar Base Rate

 

 

1.00 – Eurodollar Reserve Requirements

“Eurodollar Rate Advance” means a Revolving Credit Advance that bears interest
as provided in Section 2.07(a)(ii).

“Eurodollar Reserve Requirements” means, for any day as applied to a Eurodollar
Rate Advance, the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board of Governors of the Federal Reserve System and any
other banking authority, domestic or foreign, to which the Administrative Agent
or any Lender (including any branch, Affiliate, or other fronting office making
or holding a Revolving Credit Advance) is subject for Eurocurrency Liabilities
(as defined in Regulation D of such Board). Such reserve percentages shall
include those imposed pursuant to such Regulation D. Eurodollar Rate Advances
shall be deemed to constitute Eurocurrency Liabilities and to be subject to such
reserve requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D. Eurocurrency Reserve Requirements shall be adjusted automatically
on and as of the effective date of any change in any reserve percentage.

“Events of Default” has the meaning specified in Section 6.01.

“Excess Harvest” means a harvest of Timber (including timber deed, bulk,
pay-as-cut and stumpage sales), to the extent in excess in the aggregate of the
following limitations: (a) 140% of the Planned Volume during any fiscal year of
RFR, (b) 135% of the Planned Volume during any period of two consecutive fiscal
years of RFR, (c) 130% of the Planned Volume during any period of three
consecutive fiscal years of RFR, (d) 125% of the Planned Volume during any
period of four consecutive fiscal years of RFR, and (e) 120% of the Planned
Volume during any period of five consecutive fiscal years of

 

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RFR. In the event that RFR or any of its Restricted Subsidiaries sells Timber
pursuant to a timber deed, bulk, pay-as-cut or stumpage contract, the Timber
shall be deemed harvested in equal monthly amounts over the life of the
contract, regardless of when the purchaser actually severs the Timber.

“Excess Harvest Offer” has the meaning specified in Section 5.04(d).

“Excess Harvest Proceeds” has the meaning specified in Section 5.04(d).

“Existing Credit Agreement” means the Three-Year Credit Agreement dated as of
November 24, 2003 by and among Rayonier, TRS and RFR as borrowers, lenders from
time to time parties thereto and CS, as administrative agent.

“Facility Fee” means, as of any date, a percentage per annum determined by
reference to the Corporate Credit Rating in effect on such date as set forth
below:

 

Corporate Credit Rating
S&P/Moody’s

  

Facility Fee

Level 1

BBB+ or Baa1 or above

   0.080%

Level 2

Lower than Level 1 but at least BBB or Baa2

   0.100%

Level 3

Lower than Level 2 but at least BBB- and Baa3

   0.125%

Level 4

Lower than Level 3 (or Levels 1, 2 and 3 otherwise not applicable) but at least
BBB- or Baa3

   0.150%

Level 5

Lower than Level 4 but at least BB+ and Ba1

   0.200%

Level 6

Lower than Level 5 (or Levels 1-5 otherwise not applicable)

   0.225%

“Fair Market Value” means, at any time and with respect to any property, the
sale value of such property that would be realized in an arm’s-length sale at
such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).

“Federal Funds Rate” means for any particular date, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with members of the Federal
Reserve

 

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System arranged by Federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next succeeding such day;
provided that (a) if such day is not a Business Day, the Federal Funds Rate for
such day shall be such rate on such transactions on the next preceding Business
Day as so published on the next succeeding Business Day, and (b) if no such rate
is so published on such next succeeding Business Day, the Federal Funds Rate for
such day shall be the average rate charged to the Administrative Agent (in its
individual capacity) on such day on such transactions as determined by the
Administrative Agent.

“Fiscal Quarter” means each consecutive three calendar month period ending
March 31, June 30, September 30 or December 31 of any fiscal year.

“Funds From Operations,” for any period, means Consolidated Net Income of
Rayonier for such period, excluding, without duplication, (i) gains (or losses)
from debt restructuring, sales of depreciable property not in the ordinary
course of business or extraordinary items and (ii) gains (or losses) on
investments in marketable securities, and plus, without duplication,
(i) depletion, depreciation and amortization (excluding amortization of
financing costs) of Consolidated Assets of Rayonier and its Subsidiaries and
(ii) non-cash costs of timberland sales (to the extent not constituting
previously depreciated operating property), in each case for such period.

“GAAP” has the meaning specified in Section 1.03.

“Governmental Authority” means any national government (United States or
foreign), any state or other political subdivision thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government and any agency, authority,
instrumentality, or regulatory body of any thereof.

“Guarantee” by any Person, means any obligation, contingent or otherwise, of
such Person guaranteeing directly or indirectly in any manner the Debt of any
other Person, or in effect guaranteeing directly or indirectly the Debt of any
other Person through an agreement (i) to pay or purchase such Debt or to advance
or supply funds for the payment or purchase of such Debt, (ii) to purchase, sell
or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such Debt or
to assure the holder of such Debt against loss, (iii) to supply funds to or in
any other manner invest in the debtor (including any agreement to pay for
property or services irrespective of whether such property is received or such
services are rendered) or (iv) otherwise to assure a creditor against loss.

“Guarantee Agreement” means a guarantee agreement among Rayonier, TRS and any
Additional Borrower, as guarantors, and CS, as Administrative Agent, pursuant to
which (a) Rayonier guarantees all obligations of TRS, RFR and any Additional
Borrower under this Agreement and any other Loan Document, (b) TRS guarantees
all obligations of Rayonier, RFR and any Additional Borrower under this
Agreement and any other Loan Document, and (c) any Additional Borrower
guarantees all obligations of TRS, RFR and Rayonier under this Agreement and any
other Loan Document, such agreement to be substantially in the form of Exhibit
C-1 hereto.

 

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“Hazardous Materials” means petroleum and petroleum products, byproducts or
breakdown products, radioactive materials, asbestos-containing materials,
polychlorinated biphenyls and radon gas and any other chemicals, materials or
substances designated, classified or regulated as being “hazardous” or “toxic”
or words of similar import, under any applicable Environmental Law.

“Increase Date” as the meaning specified in Section 2.19(a).

“Increasing Lender” has the meaning specified in Section 2.19(b).

“Indemnified Costs” has the meaning specified in Section 7.05.

“Indemnified Party” has the meaning specified in Section 8.04(b).

“Installment Notes” means (a) $112,500,000 aggregate principal amount of RFR’s
Series A Senior Notes due December 31, 2007, (b) $147,500,000 aggregate
principal amount of RFR’s Series B Senior Notes due December 31, 2009,
(c) $112,500,000 aggregate principal amount of RFR’s Series C Senior Notes due
December 31, 2011, and (d) $112,500,000 aggregate principal amount of RFR’s
Series D Senior Notes due December 31, 2014, all issued pursuant to the
Installment Note Agreement.

“Installment Note Agreement” means the Note Purchase Agreement dated as of
October 25, 1999, between RFR and Timber Capital Holdings LLC, as amended from
time to time.

“Insufficiency” means, with respect to any Plan, the amount, if any, of its
unfunded benefit liabilities, as defined in Section 4001(a)(18) of ERISA.

“Interest Period” means, for each Eurodollar Rate Advance comprising part of the
same Revolving Credit Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Alternate Base Rate
Advance into such Eurodollar Rate Advance and ending on the last day of the
period selected by a Borrower pursuant to the provisions below and, thereafter,
each subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by such
Borrower pursuant to the provisions below, provided, however, that if the
applicable Borrower shall fail to select the duration of such subsequent period
pursuant to the provisions below, such Eurodollar Rate Advance shall be
automatically converted to an Alternate Base Rate Advance on the last day of
such then expiring Interest Period. The duration of each Interest Period shall
be one, two, three or six months, as the Borrower may, upon notice received by
the Administrative Agent not later than 12:00 Noon (New York City time) on the
third Business Day prior to the first day of such Interest Period, select;
provided, however, that:

(i) a Borrower may not select any Interest Period that ends after the
Termination Date;

 

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(ii) Interest Periods commencing on the same date for Eurodollar Rate Advances
comprising part of the same Revolving Credit Borrowing shall be of the same
duration;

(iii) whenever the last day of any Interest Period would otherwise occur on a
day other than a Business Day, the last day of such Interest Period shall be
extended to occur on the next succeeding Business Day, provided, however, that,
if such extension would cause the last day of such Interest Period to occur in
the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day; and

(iv) whenever the first day of any Interest Period occurs on a day of an initial
calendar month for which there is no numerically corresponding day in the
calendar month that succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such Interest Period
shall end on the last Business Day of such succeeding calendar month.

“Interest Rate Agreement” means any interest rate swap agreement, interest rate
cap agreement, interest rate collar agreement or other similar agreement or
arrangement designated to protect RFR or any Restricted Subsidiary from
fluctuations in interest rates.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended from
time to time.

“Investment” means as applied to any Person, any direct or indirect purchase or
other acquisition by such Person of stock or other securities of any other
Person, or any direct or indirect loan, advance or capital contribution by such
Person to any other Person, and any other item which would be classified as an
“investment” on a balance sheet of such Person prepared in accordance with GAAP,
including, without limitation, any direct or indirect contribution by such
Person of property or assets to a joint venture, partnership or other business
entity in which such Person retains an interest (it being understood that a
direct or indirect purchase or other acquisition by such Person of assets of any
other Person (other than stock or other securities) shall not constitute an
Investment). The amount involved in Investments made during any period shall be
the aggregate cost to RFR and its Restricted Subsidiaries of all such
Investments made during such period, determined in accordance with GAAP, but
without regard to unrealized increases or decreases in value, or write-ups,
write-downs or write-offs, of such Investments and without regard to the
existence of any undistributed earnings or accrued interest with respect thereto
accrued after the respective dates on which such Investments were made, less any
net return of capital realized during such period upon the sale, repayment or
other liquidation of such Investments (determined in accordance with GAAP, but
without regard to any amounts received during such period as earnings (in the
form of dividends not constituting a return of capital, interest or otherwise)
on such Investments or as loans from any Person in whom such Investments have
been made). Notwithstanding the foregoing, if RFR shall at any time designate
any Restricted Subsidiary as an Unrestricted Subsidiary, the amount of the
Investment in such newly designated Unrestricted Subsidiary arising at such time
by reason of such designation

 

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shall be the portion of the Fair Market Value of the net assets of such
Subsidiary allocable to RFR’s equity interest in such Subsidiary at the time
that such Subsidiary is designated an Unrestricted Subsidiary.

“Issuing Bank” means each Lender selected by Rayonier which agrees to act
(pursuant to a written agreement among (and in form and substance acceptable to)
such Lender, Rayonier and the Administrative Agent) as an Issuing Bank, in its
capacity as issuer of Letters of Credit hereunder and which by execution of an
agreement referred to above shall become a party hereto, and each of their
successors in such capacity as provided in Section 2.03(h). For purposes of any
Letter of Credit referred to in the second sentence of the definition of “Letter
of Credit” and existing on the Closing Date, the term “Issuing Bank” shall mean
the issuer of such Letters of Credit.

“LC Commitment” of an Issuing Bank means, as of any date, the amount mutually
agreed between such Issuing Bank and Rayonier, not to exceed $50,000,000.

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter
of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of
all outstanding Letters of Credit at such time plus (b) the aggregate amount of
all LC Disbursements that have not yet been reimbursed by or on behalf of the
applicable Borrower at such time. The LC Exposure of any Lender at any time
shall be its Commitment Percentage of the total LC Exposure at such time.

“Lenders” means the Lenders party hereto and each Person that shall become a
party hereto pursuant to Section 8.07.

“Letters of Credit” means the letters of credit issued pursuant to
Section 2.03(a). For all purposes of this Agreement, any and all “Letters of
Credit” (as defined in the Existing Credit Agreement) outstanding on the Closing
Date shall be deemed to be Letters of Credit issued hereunder on the Closing
Date.

“Lien” means any lien, security interest or other charge or encumbrance of any
kind, or any other type of preferential arrangement, including, without
limitation, the lien or retained security title of a conditional vendor and any
easement, right of way or other encumbrance on title to real property.

“Loan Documents” means collectively, this Agreement, the Guarantee Agreement,
the RFR Subsidiary Guarantee Agreement, the TRS Subsidiary Guarantee Agreement,
any Additional Borrower Assumption Agreement, any Additional Subsidiary
Guarantor Guarantee Agreement, the Notes (if any) and each other agreement,
instrument or certificate (other than an Assignment and Acceptance, pursuant to
which the assignor therein sells and/or assigns an interest under this
Agreement) issued, executed and delivered to the Administrative Agent, any
Issuing Bank, or the Lenders hereunder or thereunder or pursuant hereto or
thereto (in each case as the same may be amended, restated, supplemented,
extended, renewed or replaced from time to time), and “Loan Document” means any
one of them.

 

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“Loan Event” has the meaning specified in Section 3.02.

“Loan Parties” means, collectively, (i) each Borrower (whether in its capacity
as a borrower hereunder or as a guarantor under the Guarantee Agreement or
otherwise), and (ii) each Subsidiary Guarantor.

“Managing General Partner” means the managing general partner of RFR, which on
the date hereof is Rayonier Timberlands Management, LLC, and any successor
thereto.

“Material Adverse Change” means any material adverse change in the business,
condition (financial or otherwise), operations, performance or properties of
Rayonier and its Subsidiaries taken as a whole.

“Material Adverse Effect” means a material adverse effect on (a) the business,
condition (financial or otherwise), operations, performance or properties of
Rayonier and its Subsidiaries taken as a whole, (b) the rights and remedies of
the Administrative Agent or any Lender or Issuing Bank under this Agreement, any
Note or any other Loan Document or (c) the ability of any Borrower to perform
its obligations under this Agreement, any Note or any other Loan Document.

“Moody’s” means Moody’s Investors Service, Inc.

“Multiemployer Plan” means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which any Borrower or any of its ERISA
Affiliates is making or accruing an obligation to make contributions, or has
within any of the preceding five plan years made or accrued an obligation to
make contributions.

“Multiple Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Borrower or any ERISA Affiliate and at least one Person other than such Borrower
and its ERISA Affiliates or (b) was so maintained and in respect of which any
Borrower or any of its ERISA Affiliates could have liability under Section 4064
or 4069 of ERISA in the event such plan has been or were to be terminated.

“Net Proceeds” means, with respect to any Excess Harvest, the proceeds thereof
in the form of cash or cash equivalents, including payments in respect of
deferred payment obligations when received in the form of cash or cash
equivalents (except to the extent that such deferred payment obligations are
financed or sold with recourse to RFR or any Restricted Subsidiary), net of
(a) brokerage commissions and other fees and expenses (including, without
limitation, fees and expenses of legal counsel and accountants and fees,
expenses, discounts or commissions of underwriters, placement agents and
investment bankers) related to such Excess Harvest, (b) provisions for all taxes
payable as a result of such Excess Harvest, (c) amounts required to be paid to
any

 

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Person (other than RFR or any Restricted Subsidiary) owning a beneficial
interest in the assets subject to such Excess Harvest, (d) appropriate amounts
to be provided by RFR or any Restricted Subsidiary, as the case may be, as a
reserve required in accordance with GAAP against liabilities associated with
such Excess Harvest and retained by RFR or any Restricted Subsidiary, as the
case may be, after such Excess Harvest, including, without limitation, pension
and other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Excess Harvest, and (e) amounts required to be applied to
the repayment of Debt secured by a Lien on the asset or assets sold in such
Excess Harvest.

“Note” means a revolving credit promissory note of the applicable Borrower
payable to the order of any Lender, delivered pursuant to a request made under
Section 2.17, in substantially the form of Exhibit A hereto, evidencing the
aggregate indebtedness of such Borrower to such Lender resulting from the
Revolving Credit Advances made by such Lender.

“Notice of Revolving Credit Borrowing” has the meaning specified in
Section 2.02(a).

“NPL” has the meaning specified in Section 4.01(m).

“Other Taxes” has the meaning specified in Section 2.15(b).

“Payment Restrictions” has the meaning specified in Section 5.04(e).

“PBGC” means the Pension Benefit Guaranty Corporation (or any successor).

“Permitted Liens” means such of the following as to which no enforcement,
collection, execution, levy or foreclosure proceeding shall have been commenced:
(a) Liens for taxes, assessments and governmental charges or levies to the
extent not required to be paid under Section 5.01(b) hereof; (b) Liens imposed
by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s
Liens and other similar Liens arising in the ordinary course of business
securing obligations that are not overdue for a reasonable period and which,
individually or when aggregated with all other Permitted Liens outstanding on
any date, do not materially affect the use of the property to which they relate;
(c) pledges or deposits to secure obligations under workers’ compensation laws
or similar legislation or to secure public or statutory obligations; and
(d) easements, rights of way, encumbrances and minor defects or irregularities
in title to real property not interfering in any material respect with the
ordinary conduct of the business of any Borrower or any of its Subsidiaries.

“Person” means an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.

“Plan” means a Single Employer Plan or a Multiple Employer Plan.

 

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“Planned Volume” means 6,700,000 tons for the calendar year 2000 and shall
increase 2% per year thereafter. In the event of the acquisition of merchantable
Timber or Timberlands (other than in like-kind exchange of Timber or Timberlands
for other Timber or Timberlands and other than Timber or Timberlands acquired
with the Net Proceeds of an Excess Harvest) constituting an Asset Acquisition,
Planned Volume will be increased for 10 years by 10% of the volume of
merchantable Timber so acquired; provided that if such Asset Acquisition is made
under a cutting contract with a term of less than 10 years, Planned Volume will
be increased for each year during the term of the cutting contract by a number
of tons equal to the number of tons so acquired multiplied by the quotient of
100% divided by the numbers of years in the cutting contract. In the event of a
disposition of merchantable Timber or Timberlands constituting an Asset Sale,
Planned Volume will be reduced by 10% of the volume of merchantable Timber sold
in such Asset Sale. In the event of an Excess Harvest, Planned Volume will be
reduced by 10% of the amount of the Excess Harvest. For the purpose of this
definition, all volumes of Timber harvested that are denominated in board feet
shall be converted to tons on the basis of 7.2 tons per thousand board feet.

“Preferred Stock”, as applied to the Capital Stock of any Person, means Capital
Stock of any class or classes (however designated), which is preferred as to the
payment of distributions, dividends, or upon and voluntary or involuntary
liquidation or dissolution of such Person, over shares or units of Capital Stock
of any other class of such Person.

“Qualified Transferee” means (a) as to any sale, lease, transfer or other
disposition by TRS, (i) Rayonier, (ii) any Additional Borrower, (iii) any
Subsidiary of TRS or (iv) any Additional Subsidiary Guarantor, (b) as to any
sale, lease, transfer or other disposition by RFR, (i) Rayonier, (ii) any
Additional Borrower, (iii) any Subsidiary of RFR, (iv) TRS, (v) any Subsidiary
of TRS, or (vi) any Additional Subsidiary Guarantor, (c) as to any sale, lease,
transfer or other disposition by any Subsidiary of TRS, (i) Rayonier, (ii) any
Additional Borrower, (iii) TRS, (iv) any other Subsidiary of TRS, or (v) any
Additional Subsidiary Guarantor, (d) as to any sale, lease, transfer or other
disposition by any Subsidiary of RFR, (i) Rayonier, (ii) any Additional
Borrower, (iii) RFR, (iv) any other Subsidiary of RFR, (v) TRS, (vi) any
Subsidiary of TRS or (vii) any Additional Subsidiary Guarantor, and (e) as to
any sale, lease, transfer or other disposition by any other Subsidiary of
Rayonier not covered by any of the foregoing clauses (a) through (d),
(i) Rayonier, (ii) any Additional Borrower, (iii) TRS, (iv) any Subsidiary of
TRS, or (v) any Additional Subsidiary Guarantor.

“Redeemable Capital Stock” means any shares of any class or series of Capital
Stock, that, either by the terms thereof, by the terms of any security into
which it is convertible or exchangeable or by contract or otherwise, is or upon
the happening of an event or passage of time would be, (i) required to be
redeemed prior to the Termination Date, (ii) redeemable at the option of the
holder thereof at any time prior to the Termination Date, or (iii) convertible
into or exchangeable for debt securities at any time prior to the Termination
Date.

“Register” has the meaning specified in Section 8.07(d).

 

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“REIT” means a real estate investment trust.

“Required Lenders” means at any time Lenders owed at least a majority in
interest of the then aggregate unpaid principal amount of the Revolving Credit
Advances and LC Exposure owing to Lenders, or, if no such principal amount is
then outstanding, Lenders having at least a majority in interest of the
Commitments.

“Restricted Subsidiary” means any Subsidiary of RFR which, as of the date of
determination, is not an Unrestricted Subsidiary.

“Revolving Credit Advance” means an advance by a Lender to any Borrower as part
of a Revolving Credit Borrowing and refers to a Alternate Base Rate Advance or a
Eurodollar Rate Advance (each of which shall be a “Type” of Revolving Credit
Advance).

“Revolving Credit Borrowing” means a borrowing consisting of simultaneous
Revolving Credit Advances of the same Type made by each of the Lenders pursuant
to Section 2.01.

“RFR Consolidated Fixed Charge Coverage Ratio” means, with respect to RFR and
its Restricted Subsidiaries, the ratio of the aggregate amount of Consolidated
Cash Flow Available for Fixed Charges for the most recent four full Fiscal
Quarters for which financial information in respect thereof is available
immediately preceding the date of the transaction (the “Transaction Date”)
giving rise to the need to calculate the RFR Consolidated Fixed Charge Coverage
Ratio (such most recent four full Fiscal Quarter period being referred to herein
as the “Four Quarter Period”) to the aggregate amount of Consolidated Fixed
Charges for the Four Quarter Period. In addition to and without limitation of
the foregoing, for purposes of this definition, “Consolidated Cash Flow
Available for Fixed Charges” and “Consolidated Fixed Charges” shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to, without duplication (a) the incurrence or repayment of any Debt
of RFR or any of its Restricted Subsidiaries (and, in the case of any
incurrence, the application of the net proceeds thereof) during the period
commencing on the first day of the Four Quarter Period to and including the
Transaction Date (the “Reference Period”), including, without limitation, the
incurrence of the Debt giving rise to the need to make such calculation (and the
application of the net proceeds thereof), as if such incurrence (and
application) occurred on the first day of the Reference Period (including any
actual interest payments made with respect to Debt under the Working Capital
Facility), and (b) any Asset Sales or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of RFR or one of its Restricted Subsidiaries (including
any Person who becomes a Restricted Subsidiary as a result of the Asset
Acquisition) incurring, assuming or otherwise being liable for Acquired Debt)
occurring during the Reference Period, as if such Asset Sale or Asset
Acquisition occurred on the first day of the Reference Period; provided,
however, that (i) Consolidated Fixed Charges shall be reduced by amounts
attributable to businesses or assets that are so disposed of or discontinued
only to the extent that the obligations giving rise to such Consolidated Fixed
Charges would no longer be obligations contributing to the Consolidated Fixed
Charges

 

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subsequent to the date of determination of the Consolidated Fixed Charge
Coverage Ratio and (ii) Consolidated Cash Flow Available for Fixed Charges
generated by an acquired business or asset shall be determined (x) in the case
of an Asset Acquisition of Timber or Timberlands by RFR or a Restricted
Subsidiary during such period, by using the projected net cash flow of the
Timber or Timberlands so acquired, based on the harvest plan prepared in the
ordinary course of business and in good faith by the Managing General Partner,
for the first 12 full months of operations of the acquired Timber or Timberlands
following the date of the Asset Acquisition; provided that such harvest plan
shall not assume the harvesting or sale of more than 10% (or, in the case of an
acquisition under a cutting contract with a term of less than 10 years, such
higher percentage as shall be equal to the quotient of 100% divided by the term
of such cutting contract (expressed in years)) of the total merchantable Timber
so acquired in the first 12 full months following the date of the Asset
Acquisition; and provided further, in determining projected cash flow from
acquired Timber or Timberlands, prices shall be assumed to equal the average
prices realized by RFR for comparable Timber sold during such prior period, and
(y) in the case of all other Asset Acquisitions during such period, by using the
actual gross profit (revenues minus cost of goods sold) of such acquired
business or asset during the Four Quarter Period minus the pro forma expenses
that would have been incurred by RFR and its Restricted Subsidiaries in the
operation of such acquired business or asset during such period computed on the
basis of personnel expenses for employees retained or to be retained by RFR and
its Restricted Subsidiaries in the operation of the acquired business or asset
and non-personnel costs and expenses incurred by RFR and its Restricted
Subsidiaries in the operation of RFR’s business at similarly situated
facilities. If the applicable Reference Period for any calculation of the RFR
Consolidated Fixed Charge Coverage Ratio shall include a portion prior to the
Closing Date, then such RFR Consolidated Fixed Charge Coverage Ratio shall be
calculated based upon the Consolidated Cash Flow Available for Fixed Charges and
the Consolidated Fixed Charges of RFR on a pro forma basis for such portion of
the Reference Period prior to the Closing Date, giving effect to the
transactions occurring on the Closing Date, and the Consolidated Cash Flow
Available for Fixed Charges and the Consolidated Fixed Charges for the remaining
portion of the Reference Period on and after the Closing Date, giving pro forma
effect, as described in the two foregoing sentences, to all applicable
transactions occurring on the Closing Date or otherwise. Furthermore, in
calculating “Consolidated Fixed Charges” for purposes of determining the “RFR
Consolidated Fixed Charge Coverage Ratio” (i) interest on outstanding Debt
(other than Debt referred to in clause (ii) below) determined on a fluctuating
basis as of the last day of the Four Quarter Period and which will continue to
be so determined thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Debt in effect on such date;
(ii) only actual interest payments associated with Debt incurred in accordance
with clause (d) of the definition of RFR Permitted Debt and all RFR Permitted
Refinancing Debt in respect thereof, during the Four Quarter Period shall be
included in such calculation; and (iii) if interest of any Debt actually
incurred on such date may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a eurocurrency interbank offered rate,
or other rates, then the interest rate in effect on the last day of the Four
Quarter Period will be deemed to have been in effect during such period.

 

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“RFR Consolidated Net Income” means the net income of RFR and its Restricted
Subsidiaries, as determined on a consolidated basis in accordance with GAAP and
as adjusted to exclude (a) net after-tax extraordinary gains or losses, and
(b) net after-tax gains or losses attributable to Asset Sales to the extent that
Net Proceeds therefrom result in the aggregate Net Proceeds received by RFR or
any Restricted Subsidiary from all Asset Sales since the Closing Date exceeding
the Adjusted Asset Sales Amount, (c) the net income or loss of any Person which
is not a Restricted Subsidiary and which is accounted for by the equity method
of accounting, provided that RFR Consolidated Net Income shall include the
amount of dividends or distributions actually paid to RFR or any Restricted
Subsidiary, (d) the net income or loss prior to the date of acquisition of any
Person combined with RFR or any Restricted Subsidiary in a pooling of interest,
(e) the net income of any Restricted Subsidiary to the extent that dividends or
distributions of such net income are not at the date of determination permitted
by the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule, or other regulation and (f) the cumulative effect of any
changes in accounting principles.

“RFR Permitted Debt” means “Permitted Debt” as such term is defined in the
Installment Note Agreement as in existence as of the date hereof.

“RFR Permitted Investments” means, at any time, all of the following:

(a) Investments made or owned by RFR or any Restricted Subsidiary in (i) any
evidence of Debt with a maturity of 365 days or less issued by or directly,
fully and unconditionally guaranteed or insured by the United States of America
or any agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support thereof);
(ii) deposits, certificates of deposit or acceptances with a maturity of 365
days or less of any institution that is a member of the Federal Reserve System
having combined capital and surplus and undivided profits of not less than
$500,000,000; (iii) commercial paper with a maturity of 365 days or less issued
by a corporation (other than an Affiliate of RFR) incorporated or organized
under the laws of the United States or any state thereof or the District of
Columbia and rated at least A-1 by S&P or P-1 by Moody’s; (iv) repurchase
agreements and reverse repurchase agreements relating to marketable direct
obligations issued by or directly, fully and unconditionally guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof), in each case maturing within 365 days from the date
of acquisition; (v) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and having as at such date the highest rating obtainable
from either S&P or Moody’s; or (vi) money market mutual or similar funds that
invest in obligations referred to in clauses (i) through (v) of this definition,
in each case having assets in excess of $100,000,000;

(b) the acquisition by RFR or any Restricted Subsidiary of Capital Stock or
other ownership interests, whether in a single transaction or in a series of
related transactions, of a Person engaged in substantially the same business as
RFR such that upon the completion of such transaction or series of transactions,
such Person becomes a Restricted Subsidiary;

 

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(c) the making or ownership by RFR or any Restricted Subsidiary of Investments
(in addition to Investments permitted by subdivisions (a), (b), (d), (e),
(f) and (g)) in any Person which is engaged in substantially the same business
as RFR, provided that the aggregate amount of all such Investments made by RFR
and its Restricted Subsidiaries following the Closing Date and outstanding
pursuant to this subdivision (c) shall not at any date of determination exceed
10% of Consolidated total assets of RFR and its Restricted Subsidiaries (the
“Investment Limit”), provided that, in addition to Investments that would be
permitted under the Investment Limit, during any fiscal year RFR and its
Restricted Subsidiaries may invest up to $100,000,000 (the “Annual Limit”)
pursuant to the provisions of this subdivision (c), but the unused amount of the
Annual Limit shall not be carried over to any future years;

(d) the making or ownership by RFR or any Restricted Subsidiary of Investments
(i) arising out of loans and advances to employees incurred in the ordinary
course of business, (ii) arising out of extensions of trade credit or advances
to third parties in the ordinary course of business and (iii) acquired by reason
of the exercise of customary creditors rights upon default or pursuant to the
bankruptcy, insolvency or reorganization of a debtor;

(e) the creation or incurrence of liability by RFR or any Restricted Subsidiary
with respect to any Guarantee constituting an obligation, warranty or indemnity,
not guaranteeing Debt of any Person, which is undertaken or made in the ordinary
course of business;

(f) the creation or incurrence of liability by RFR or any Restricted Subsidiary
with respect to any Interest Rate Agreements;

(g) the guarantees by RFR Subsidiary Guarantors of all obligations of RFR
hereunder and the guarantees by applicable RFR’s Subsidiaries of the Installment
Notes (and, in each case, any assumption of the obligations guaranteed thereby),
and the making by RFR or any Restricted Subsidiary of Investments in RFR or
another Restricted Subsidiary; and

(h) investments existing on the date hereof and set forth on Schedule 5.04(b).

“RFR Permitted Refinancing Debt” means “Permitted Refinancing Debt” as such term
is defined in the Installment Note Agreement as in existence as of the date
hereof.

“RFR Restricted Payments” has the meaning specified in Section 5.04(b).

“RFR Subsidiary Guarantee Agreement” means a guarantee agreement among certain
Subsidiaries of RFR as guarantors and CS, as administrative agent, pursuant to

 

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which each such Subsidiary guarantees all obligations of RFR under this
Agreement, such agreement to be substantially in the form of Exhibit C-2 hereto.

“RFR Subsidiary Guarantor” means each Subsidiary of RFR which is then a party to
the RFR Subsidiary Guarantee Agreement as a guarantor.

“Sale and Leaseback Transaction” of any Person (a “Transferor”) means any
arrangement (other than between RFR and a Restricted Subsidiary or between
Restricted Subsidiaries) whereby (a) property (the “Subject Property”) has been
or is to be disposed of by such Transferor to any other Person with the
intention on the part of such Transferor of taking back a lease of such Subject
Property pursuant to which the rental payments are calculated to amortize the
purchase price of such Subject Property substantially over the useful life of
such Subject Property, and (b) such Subject Property is in fact so leased by
such Transferor or an Affiliate of such Transferor.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Security” has the meaning set forth in section 2(a)(1) of the Securities Act.

“Senior Debt” means Debt of RFR or any of its Restricted Subsidiaries which is
not Subordinated Debt.

“Single Employer Plan” means a single employer plan, as defined in
Section 4001(a)(15) of ERISA, that (a) is maintained for employees of any
Borrower or any of its ERISA Affiliates and no Person other than such Borrower
and its ERISA Affiliates or (b) was so maintained and in respect of which any
Borrower or any of its ERISA Affiliates could have liability under Section 4069
of ERISA in the event such plan has been or were to be terminated.

“S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

“Stated Maturity” means when used with respect to any Debt, the date or dates
specified in the instrument governing such Debt as the fixed date or dates on
which each then remaining installment, sinking fund, serial maturity or other
required payments of principal, including payment at final maturity, in respect
of such Debt, or any installment of interest thereon, is due and payable.

“Subordinated Debt” means Debt of RFR and any RFR Subsidiary Guarantor which is
expressly subordinated in right of payment to its obligations hereunder and
under the RFR Subsidiary Guarantee Agreement.

“Subsidiary” (a) of RFR means (i) a corporation a majority of whose Voting Stock
(or, in the case of a partnership, a majority of the partners’ Capital Stock,
considering all partners’ Capital Stock as a single class) is at the time,
directly or indirectly, owned by RFR, by one or more Subsidiaries of RFR or by
RFR and one or

 

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more Subsidiaries thereof, and (ii) any other Person, including, without
limitation, a joint venture, in which RFR, one or more Subsidiaries thereof or
RFR and one or more Subsidiaries thereof, directly or indirectly, at the date of
determination thereof, has at least majority ownership interest entitled to vote
in the election of directors, managers, general partners or trustees thereof (or
other Person performing similar functions) or, if such Persons are not elected,
to vote on any matter that is submitted to the vote of all Persons holding
ownership interests in such entity, and (iii) a corporation or any other Person
substantially all the equity interest in which (whether or not a voting
interest) is at the time, directly or indirectly, owned by RFR, by one or more
Subsidiaries of RFR or by RFR and one or more Subsidiaries thereof (for purposes
of this definition, any directors qualifying shares or investments by foreign
nationals mandated by applicable law shall be disregarded in determining the
ownership of a Subsidiary), and (b) of any Person (other than RFR) means any
corporation, partnership, joint venture, limited liability company, trust or
estate of which (or in which) more than 50% of (i) the issued and outstanding
Capital Stock having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether, at the time, Capital
Stock of any other class or classes of such corporation shall or might have
voting power upon the occurrence of any contingency), (ii) the interest in the
capital or profits of such partnership, joint venture or limited liability
company or (iii) the beneficial interest in such trust or estate is at the time
directly or indirectly owned or controlled by such Person, by such Person and
one or more of its other Subsidiaries or by one or more of such Person’s other
Subsidiaries. For the avoidance of doubt, from and after any Additional Borrower
Effective Date, any Additional Borrower and its Subsidiaries shall be deemed to
be Subsidiaries of Rayonier for all purposes of this Agreement and the other
Loan Documents.

“Subsidiary Guarantee Agreement” means the RFR Subsidiary Guarantee Agreement,
the TRS Subsidiary Guarantee Agreement and any Additional Subsidiary Guarantor
Guarantee Agreement.

“Subsidiary Guarantors” means, collectively, the TRS Subsidiary Guarantors, the
RFR Subsidiary Guarantors and each Additional Subsidiary Guarantor.

“Taxes” has the meaning specified in Section 2.15(a).

“Termination Date” means the earlier of (a) August 4, 2011 and (b) the date of
termination in whole of the Commitments pursuant to Section 2.05 or 6.01.

“Timber” means all crops and all trees, timber, whether severed or unsevered and
including standing and down timber, stumps and cut timber, logs, wood chips and
other forest products, whether now located on or hereafter planted or growing in
or on the Timberlands or otherwise or now or hereafter removed from the
Timberlands or otherwise for sale or other disposition.

“Timberlands” means, at any date of determination, all real property owned by or
leased to RFR that is suitable for Timber production.

 

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“Trade Letter of Credit” means any letter of credit that is issued for the
benefit of a supplier of inventory or provider of a service related to for the
conduct of the business of any Borrower or any of its Subsidiaries (other than
any financial services) to such Borrower or any of its Subsidiaries to effect
payment for such inventory or service.

“TRS Subsidiary Guarantee Agreement” means a guarantee agreement among certain
subsidiaries of TRS as guarantors and CS, as administrative agent, pursuant to
which each such Subsidiary guarantees all obligations of Rayonier, TRS, RFR and
any Additional Borrower under this Agreement and the Guarantee Agreement, such
agreement to be substantially in the form of Exhibit C-3 hereto.

“TRS Subsidiary Guarantor” means each Subsidiary of TRS which is then a party to
the TRS Subsidiary Guarantee Agreement as a guarantor.

“Unrestricted Subsidiary” means any Subsidiary of RFR (including any Restricted
Subsidiary) that is designated as such by the Managing General Partner, provided
that no portion of the Debt or any other obligation (contingent or otherwise) of
such Subsidiary (a) is guaranteed by RFR or any Restricted Subsidiary, (b) is
recourse to or obligates RFR or any Restricted Subsidiary in any way or
(c) subjects any property or assets of RFR or any Restricted Subsidiary,
directly or indirectly, contingently or otherwise, to the satisfaction thereof.
Notwithstanding the foregoing, RFR or a Restricted Subsidiary may Guarantee or
agree to provide funds for the payment or maintenance of, or otherwise become
liable with respect to Debt of an Unrestricted Subsidiary, but only to the
extent that RFR or a Restricted Subsidiary would be permitted to (a) make an
Investment in an amount equal to the Debt represented by such Guarantee or
agreement in such Unrestricted Subsidiary pursuant to subdivision (c) of the
definition of RFR Permitted Investments and (b) incur the Debt represented by
such Guarantee or agreement pursuant to Section 5.04(a). The Managing General
Partner may designate an Unrestricted Subsidiary to be a Restricted Subsidiary,
provided that immediately after giving effect to such designation (a) there
exists no Default or Event of Default, and (b) if such Unrestricted Subsidiary
has, as of the date of such designation, outstanding Debt (other than RFR
Permitted Debt), RFR could incur at least $1.00 of Debt (other than RFR
Permitted Debt). Notwithstanding the foregoing, no Subsidiary may be designated
an Unrestricted Subsidiary if such Subsidiary, directly or indirectly, holds
Capital Stock of a Restricted Subsidiary.

“Voting Stock” means (a) with respect to RFR, (i) Securities of any class or
classes, the holders of which are ordinarily, in the absence of contingencies,
entitled to elect a majority of the directors (or Persons performing similar
functions) or (ii) in the case of a partnership, limited liability company or
joint venture, interest in the profits or capital thereof entitling the holders
of such interests to approve major business actions, and (b) with respect to any
Person (other than RFR), Capital Stock issued by a corporation, or equivalent
interests in any other Person, the holders of which are ordinarily, in the
absence of contingencies, entitled to vote for the election of directors (or
persons performing similar functions) of such Person, even though the right so
to vote has been suspended by the happening of such a contingency.

 

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“Wholly-Owned Restricted Subsidiary” means any Subsidiary of RFR of which at
least 99% of the outstanding Capital Stock is owned by RFR or by one or more
Wholly-Owned Restricted Subsidiaries of RFR or by RFR and one or more
Wholly-Owned Restricted Subsidiaries of RFR. For purposes of this definition,
any directors qualifying shares or investments by foreign nationals mandated by
applicable law shall be disregarded in determining the ownership of a
Subsidiary.

“Withdrawal Liability” has the meaning specified in Part 1 of Subtitle E of
Title IV of ERISA.

“Working Capital Facility” means any working capital facility or facilities of
RFR (other than the working capital facility provided hereunder), including a
commercial paper facility.

SECTION 1.02. Computation of Time Periods. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
“from” means “from and including” and the words “to” and “until” each means “to
but excluding”.

SECTION 1.03. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with United States generally accepted
accounting principles as in effect from time to time (“GAAP”).

ARTICLE II

AMOUNTS AND TERMS OF THE REVOLVING CREDIT ADVANCES

SECTION 2.01. The Revolving Credit Advances. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make Revolving Credit
Advances to any Borrower from time to time on any Business Day during the period
from the Closing Date until the Termination Date up to the full amount of such
Lender’s Commitment hereunder; provided that (i) the aggregate amount of such
Revolving Credit Advances made by such Lender at any time outstanding for all
Borrowers plus such Lender’s then outstanding LC Exposure shall not exceed such
Lender’s Commitment and (ii) the sum of the aggregate outstanding principal
amount of the Revolving Credit Advances made by all Lenders plus the total LC
Exposure shall not exceed at any time the aggregate amount of the Commitments of
the Lenders. Each Revolving Credit Borrowing shall be in an aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall
consist of Revolving Credit Advances of the same Type made on the same day by
the Lenders ratably according to their respective Commitments. The Borrowers may
borrow under this Section 2.01 subject to limitation set forth in this
Section 2.01, prepay pursuant to Section 2.11 and reborrow under this
Section 2.01. Anything contained herein to the contrary notwithstanding, from
and after any Additional Borrower Effective Date, Rayonier shall not be entitled
to borrow any amounts hereunder and no Revolving Credit Advances shall be made
to Rayonier, provided that the term “Borrower” shall otherwise continue to
include Rayonier for purposes of the provisions of this Agreement and the other
Loan Documents.

 

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SECTION 2.02. Making the Revolving Credit Advances. (a) Each Revolving Credit
Borrowing shall be made on notice, given not later than (x) 12:00 Noon (New York
City time) on the third Business Day prior to the date of the proposed Revolving
Credit Borrowing in the case of a Revolving Credit Borrowing to be comprised of
Eurodollar Rate Advances or (y) 12:00 Noon (New York City time) on the Business
Day of the proposed Revolving Credit Borrowing in the case of a Revolving Credit
Borrowing to be comprised of Alternate Base Rate Advances, by the applicable
Borrower to the Administrative Agent, which shall give to each Lender prompt
notice thereof. Each such notice of a Revolving Credit Borrowing (a “Notice of
Revolving Credit Borrowing”) shall be by telephone, confirmed immediately in
writing, or telecopier or telex in substantially the form of Exhibit B hereto,
specifying therein the requested (i) date of such Revolving Credit Borrowing,
(ii) Type of Revolving Credit Advances comprising such Revolving Credit
Borrowing, (iii) aggregate amount of such Revolving Credit Borrowing,
(iv) remittance instructions and (v) in the case of a Revolving Credit Borrowing
consisting of Eurodollar Rate Advances, initial Interest Period for each such
Revolving Credit Advance. If no election as to Type of Revolving Credit Advances
comprising such Revolving Credit Borrowing is specified in any such Notice of
Revolving Credit Borrowing, then such Revolving Credit Advances shall be
Alternate Base Rate Advances. If no Interest Period with respect to Eurodollar
Rate Advances is specified in any such Notice of Revolving Credit Borrowing,
then the applicable Borrower shall be deemed to have selected an Interest Period
of one month duration. Each Lender shall on the date of such Revolving Credit
Borrowing, before 12:00 Noon (New York City time), in the case of a Revolving
Credit Borrowing to be comprised of Eurodollar Rate Advances, and before 2:00
P.M. (New York City time), in the case of a Revolving Credit Borrowing to be
comprised of Alternate Base Rate Advances, make available for the account of its
Applicable Lending Office to the Administrative Agent at the Administrative
Agent’s Account, in same day funds, such Lender’s ratable portion of such
Revolving Credit Borrowing. After the Administrative Agent’s receipt of such
funds and upon fulfillment of the applicable conditions set forth in
Section 3.02, the Administrative Agent will make such funds available to the
applicable Borrower in the manner specified by the applicable Borrower in the
Notice of Revolving Credit Borrowing.

(b) Anything in subsection (a) above to the contrary notwithstanding, (i) no
Borrower may select Eurodollar Rate Advances for any Revolving Credit Borrowing
if the obligation of the Lenders to make Eurodollar Rate Advances shall then be
suspended pursuant to Section 2.09 or 2.13 and (ii) the Eurodollar Rate Advances
may not be outstanding as part of more than eight separate Revolving Credit
Borrowings.

(c) Each Notice of Revolving Credit Borrowing shall be irrevocable and binding
on the applicable Borrower. In the case of any Revolving Credit Borrowing that
the related Notice of Revolving Credit Borrowing specifies is to be comprised of
Eurodollar Rate Advances, the applicable Borrower shall indemnify each Lender
against any loss, cost or expense incurred by such Lender as a result of any
failure to fulfill on or before the date specified in such Notice of Revolving
Credit Borrowing for such Revolving Credit Borrowing the applicable conditions
set forth in Section 3.02, including, without limitation, any loss, cost or
expense incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund the Revolving Credit Advance to be
made by such Lender as part of such Revolving Credit Borrowing when such
Revolving Credit Advance, as a result of such failure, is not made on such date.

 

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(d) Unless the Administrative Agent shall have received notice from a Lender
prior to the date of any Revolving Credit Borrowing (in the case of a Revolving
Credit Borrowing to be comprised of Eurodollar Rate Advances) and not later than
1:00 P.M. (New York City time) on the Business Day of the proposed Revolving
Credit Borrowing (in the case of a Revolving Credit Borrowing to be comprised of
Alternate Base Rate Advances) that such Lender will not make available to the
Administrative Agent such Lender’s ratable portion of such Revolving Credit
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Revolving
Credit Borrowing in accordance with subsection (a) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make available to
the applicable Borrower on such date a corresponding amount. If and to the
extent that such Lender shall not have so made such ratable portion available to
the Administrative Agent, such Lender and the applicable Borrower severally
agree to repay to the Administrative Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made available to the applicable Borrower until the date such
amount is repaid to the Administrative Agent, at (i) in the case of the
applicable Borrower, the interest rate applicable at such time to Revolving
Credit Advances comprising such Revolving Credit Borrowing and (ii) in the case
of such Lender, the Federal Funds Rate for the first three days and Alternate
Base Rate thereafter. If such Lender shall repay to the Administrative Agent
such corresponding amount, such amount so repaid shall constitute such Lender’s
Revolving Credit Advance as part of such Revolving Credit Borrowing for purposes
of this Agreement.

(e) The failure of any Lender to make the Revolving Credit Advance to be made by
it as part of any Revolving Credit Borrowing shall not relieve any other Lender
of its obligation, if any, hereunder to make its Revolving Credit Advance on the
date of such Revolving Credit Borrowing, but no Lender shall be responsible for
the failure of any other Lender to make the Revolving Credit Advance to be made
by such other Lender on the date of any Revolving Credit Borrowing.

SECTION 2.03. Letters of Credit. Subject to the terms and conditions set forth
herein, each Borrower may request the issuance of, and each Issuing Bank agrees
to issue, one or more Letters of Credit for its own account, in a form and
substance reasonably acceptable to the Administrative Agent and the applicable
Issuing Bank, at any time and from time to time during the period from the
Closing Date until the thirtieth (30th) day prior to the Termination Date on a
revolving basis. In the event of any inconsistency between the terms and
conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the applicable Borrower
to, or entered into by the applicable Borrower with, the applicable Issuing Bank
relating to any Letter of Credit, the terms and conditions of this Agreement
shall control. At the request of the applicable Borrower, any Letter of Credit
may be issued (i) designating a Subsidiary of such Borrower as a nominal account
party in respect of such Letter of Credit, but no such designation shall in any
manner limit or impair, or relieve such Borrower of, the obligations of such
Borrower hereunder and in respect of such Letter of Credit, it being understood
and agreed that, as among the several parties to this Agreement, such

 

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Borrower shall at all times have all of the rights and be subject to all of the
obligations, duties and responsibilities of an account party in respect thereof
or (ii) for the joint and several account of such Borrower and another Borrower.
Anything contained herein to the contrary notwithstanding, from and after any
Additional Borrower Effective Date, no additional Letters of Credit shall be
issued for the account of Rayonier.

(a) Notice of Issuance; Amendment; Renewal; Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the applicable Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the applicable Issuing Bank) to
the applicable Issuing Bank and the Administrative Agent on the third Business
Day (or such other period of time acceptable to the applicable Issuing Bank)
prior to requested date of issuance, amendment, renewal or extension a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, the date of issuance, amendment,
renewal or extension, the date on which such Letter of Credit is to expire
(which shall comply with subsection (b) of this Section 2.03), the amount of
such Letter of Credit, the name and address of the beneficiary thereof and such
other information as shall be necessary to prepare, amend, renew or extend such
Letter of Credit. If requested by the applicable Issuing Bank, such Borrower
also shall submit a letter of credit application on such Issuing Bank’s standard
form in connection with any request for a Letter of Credit. A Letter of Credit
shall be issued, amended, renewed or extended only if (and upon issuance,
amendment, renewal or extension of each Letter of Credit, the applicable
Borrower shall be deemed to represent and warrant that), after giving effect to
such issuance, amendment, renewal or extension (i) the total LC Exposure shall
not exceed $50,000,000, and (ii) the sum of the aggregate outstanding principal
amount of the Revolving Credit Advances made by all Lenders plus the total LC
Exposure shall not exceed at any time the aggregate amount of the Commitments of
the Lenders.

(b) Expiration Date. Each Letter of Credit shall expire at or prior to the close
of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Termination Date; provided that any Letter of
Credit may provide for the renewal thereof for additional periods not to exceed
one year (which in no event extend beyond the date referred to in clause
(ii) above). Notwithstanding the foregoing, the Issuing Bank, in its sole
discretion, may issue one or more Letters of Credit, each with an expiration
date extending beyond the Termination Date (each a “Designated Letter of Credit”
and, collectively, the “Designated Letters of Credit”); provided that on or
before the Termination Date, to the extent that any Designated Letter of Credit
remains outstanding, the applicable Borrower shall Cash Collateralize the
aggregate then undrawn and unexpired amount of all Designated Letters of Credit
outstanding at such time. For purposes hereof, “Cash Collateralize” means to
pledge and deposit with or deliver to the Administrative Agent, until the cause
for such cash collateral no longer exists, for the benefits of the Issuing Bank
and the Lenders, as collateral for the outstanding Designated Letters of Credit,
cash or deposit accounts balances in an amount equal to the aggregate then
undrawn and unexpired amount of all Designated Letters of Credit outstanding at
such time pursuant to documentation in form and substance reasonable
satisfactory to the

 

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Administrative Agent and the Issuing Bank. In the event that the applicable
Borrower fails to Cash Collateralize the outstanding Designated Letters of
Credit by the Termination Date, each such outstanding Designated Letter of
Credit shall automatically be deemed drawn in full and such Borrower shall be
deemed to have requested a Revolving Credit Advance to be funded by the Lenders
on the Termination Date to reimburse such drawing (with the proceeds of such
Revolving Credit Advance being used to Cash Collateralize outstanding Designated
Letters of Credit as set forth above) in accordance with Section 2.03(d). The
funding by a Lender of its pro rata share of such Revolving Credit Advance to
Cash Collateralize the outstanding Designated Letters of Credit on the
Termination Date shall be deemed payment by such Lender in respect of its
participation in each such Designated Letter of Credit.

(c) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action
on the part of any Issuing Bank or the Lenders, each Issuing Bank issuing one or
more Letters of Credit hereby grants to each Lender, and each Lender hereby
acquires from such Issuing Bank, a participation in each such Letter of Credit
equal to such Lender’s Commitment Percentage of the aggregate amount available
to be drawn under such Letter of Credit. In consideration and in furtherance of
the foregoing, each Lender hereby absolutely and unconditionally agrees to pay
to the Administrative Agent, for the account of the applicable Issuing Bank,
such Lender’s Commitment Percentage of each LC Disbursement made by such Issuing
Bank and not reimbursed on or before the date due as provided in subsection
(d) of this Section 2.03, or of any reimbursement payment required to be
refunded to the applicable Borrower for any reason. Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this subsection
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a Default
or reduction or termination of the Commitments, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.

(d) Reimbursement. If the applicable Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the applicable Borrower shall reimburse such
LC Disbursement by paying to such Issuing Bank an amount equal to such LC
Disbursement not later than 2:00 p.m., New York City time, on the date that such
LC Disbursement is made, if such Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by such Borrower prior to such time on such date,
then not later than 2:00 p.m., New York City time, on (i) the Business Day that
such Borrower receives such notice, if such notice is received prior to 10:00
a.m., New York City time, on the day of receipt or (ii) the Business Day
immediately following the day that such Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
such Borrower may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.02 that such payment be financed with a
Revolving Credit Advance in an equivalent amount and, to the extent so financed,
such Borrower’s obligation to make such payment shall be discharged and replaced
by the resulting Revolving Credit Advance. If such Borrower fails to make such
payment when due, the applicable Issuing Bank shall notify the Administrative
Agent and the Administrative Agent shall notify each Lender of the applicable LC
Disbursement, the

 

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payment then due from such Borrower in respect thereof and such Lender’s
Commitment Percentage thereof. Promptly following receipt of such notice, each
Lender shall pay to the Administrative Agent its Commitment Percentage of the
payment then due from such Borrower, in the same manner as provided in
Section 2.02 with respect to Revolving Credit Advances made by such Lender (and
Section 2.02 shall apply, mutatis mutandis, to the payment obligations of the
Lenders), and the Administrative Agent shall promptly pay to the applicable
Issuing Bank the amounts so received by it from the Lenders; provided that such
Borrower shall remain obligated to pay interest on such LC Disbursement until
the applicable Issuing Bank is reimbursed for such LC Disbursement in accordance
with subsection (g) of this Section 2.03. Promptly following receipt by the
Administrative Agent of any payment from such Borrower pursuant to this
subsection, the Administrative Agent shall distribute such payment to the
applicable Issuing Bank or, to the extent that Lenders have made payments
pursuant to this subsection to reimburse such Issuing Bank, then to such Lenders
and such Issuing Bank as their interests may appear. Any payment made by a
Lender pursuant to this subsection to reimburse the applicable Issuing Bank for
any LC Disbursement (including the funding of Revolving Credit Advances as
contemplated above) shall constitute a Revolving Credit Advance and the
applicable Borrower shall be deemed to have reimbursed the applicable Issuing
Bank as of date of such payment and the Lenders shall be deemed to have
extended, and such Borrower shall be deemed to have accepted, a Revolving Credit
Advance in the aggregate principal amount of such payment without any further
action on the part of any party, provided that if any such payment is not deemed
to be the funding of a Revolving Credit Advance for any reason, such payment
shall constitute the funding of such Lender’s participation in the applicable LC
Disbursement.

(e) Obligations Absolute. Each applicable Borrower’s obligation to reimburse LC
Disbursements as provided in subsection (d) of this Section 2.03 shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of:

(i) any lack of validity or enforceability of any Letter of Credit or this
Agreement, or any term or provision therein;

(ii) any amendment or waiver of or any consent to departure from all or any of
the provisions of any Letter of Credit or this Agreement;

(iii) the existence of any claim, setoff, defense or other right that any
Borrower, any other party guaranteeing, or otherwise obligated with, any
Borrower, any Subsidiary or other Affiliate thereof or any other Person, other
than payment in full of all amounts due and payable, may at any time have
against the beneficiary under any Letter of Credit, the applicable Issuing Bank,
the Administrative Agent or any Lender or any other Person, whether in
connection with this Agreement or any other related or unrelated agreement or
transaction;

(iv) any draft or other document presented under a Letter of Credit proving to
be forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect;

 

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(v) payment by the applicable Issuing Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the terms of
such Letter of Credit; and

(vi) any other act or omission to act or delay of any kind of the applicable
Issuing Bank, the Lenders, the Administrative Agent or any other Person or any
other event or circumstance whatsoever, whether or not similar to any of the
foregoing, that might, but for the provisions of this Section 2.03, constitute a
legal or equitable discharge of such Borrower’s obligations hereunder, other
than payment in full of all amounts due and payable.

Neither the Administrative Agent, the Lenders nor the applicable Issuing Bank
nor any of their Affiliates, directors, officers, employees and agents, shall
have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit or any payment or failure to make
any payment thereunder, including any of the circumstances specified in
clauses (i) through (vi) above, as well as any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document
required to make a drawing thereunder), any error in interpretation of technical
terms or any consequence arising from causes beyond the control of the
applicable Issuing Bank; provided that the foregoing shall not be construed to
excuse such Issuing Bank from liability to such Borrower to the extent of any
direct damages (as opposed to consequential damages, claims in respect of which
are hereby waived by the Borrowers to the extent permitted by applicable law)
suffered by such Borrower that are caused by such Issuing Bank’s failure to
exercise the agreed standard of care (as set forth below) in determining whether
drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that each Issuing Bank shall
have exercised the agreed standard of care in the absence of gross negligence or
willful misconduct on the part of such Issuing Bank. Without limiting the
generality of the foregoing, it is understood that any Issuing Bank may accept
documents that appear on their face to be in substantial compliance with the
terms of a Letter of Credit, without responsibility for further investigation,
regardless of any notice or information to the contrary, and may make payment
upon presentation of documents that appear on their face to be in substantial
compliance with the terms of such Letter of Credit; provided that each Issuing
Bank shall have the right, in its sole discretion, to decline to accept such
documents and to make such payment if such documents are not in strict
compliance with the terms of such Letter of Credit.

(f) Disbursement Procedures. The applicable Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. Such Issuing Bank shall promptly
notify the Administrative Agent and such Borrower for whose account such Letter
of Credit was issued by telephone (confirmed by telecopy) of such demand for
payment and whether such Issuing Bank has made or will make an LC Disbursement
thereunder; provided that any failure to give or delay in giving such notice
shall not relieve such Borrower of its obligation to reimburse such Issuing Bank
and the Lenders with respect to any such LC Disbursement.

(g) Interim Interest. If the applicable Issuing Bank shall make any LC
Disbursement, unless the applicable Borrower shall reimburse (including with the
proceeds of

 

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Revolving Credit Advances as provided in subsection (d) of this Section 2.03) or
shall be deemed to have reimbursed such LC Disbursement in full on the date such
LC Disbursement is made, the unpaid amount thereof shall bear interest, for each
day from and including the date such LC Disbursement is made to but excluding
the date that such Borrower reimbursed such LC Disbursement at the rate per
annum specified in Section 2.07(a)(i), provided that, if such Borrower fails to
reimburse (including with the proceeds of Revolving Credit Advances as provided
in subsection (d) of this Section 2.03) such LC Disbursement when due pursuant
to subsection (d) of this Section 2.03, then Section 2.07(b)(ii) shall apply.
Interest accrued pursuant to this subsection shall be for the account of the
applicable Issuing Bank, except that interest accrued on and after the date of
payment by any Lender pursuant to subsection (d) of this Section 2.03 to
reimburse such Issuing Bank shall be for the account of such Lender to the
extent of such payment.

(h) Replacement of an Issuing Bank. All or a portion of the LC Commitment of any
Issuing Bank may be replaced at any time by written agreement among the
Borrowers, a new Issuing Bank and the Administrative Agent (with notice to such
replaced Issuing Bank); provided, however, that the Administrative Agent shall
review any such proposed agreement for form only and not with respect to the
identity of any successor Issuing Bank or the identity of the Issuing Bank to be
replaced. The Administrative Agent shall notify the Lenders of any such
replacement of the LC Commitment of an Issuing Bank. At the time any such
replacement shall become effective, the Borrowers shall pay all unpaid fees
accrued for the account of the replaced Issuing Bank pursuant to Section 2.04(c)
and shall return to such Issuing Bank any Letter of Credit issued by such
Issuing Bank (to the extent the aggregate undrawn face amount of its then
outstanding Letters of Credit would exceed its revised LC Commitment). From and
after the effective date of any such replacement, (i) the successor Issuing Bank
shall have all the rights and obligations of an Issuing Bank under this
Agreement with respect to its LC Commitment (and its Letters of Credit to be
issued by it on such effective date or thereafter) and (ii) references herein to
the term “Issuing Bank” shall be deemed to refer to such successor or to any
previous Issuing Bank, or to such successor and all previous Issuing Banks, as
the context shall require. After the replacement of an Issuing Bank hereunder,
the replaced Issuing Bank shall remain a party hereto and shall continue to have
all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall
not be required to issue additional Letters of Credit in excess of its remaining
LC Commitment (if any).

SECTION 2.04. Fees. (a) Facility Fee. The Borrowers agree, jointly and
severally, to pay to the Administrative Agent for the ratable account of each
Lender a Facility Fee on the aggregate amount of such Lender’s Commitment (or,
if terminated, its Revolving Credit Advances and LC Exposure) from the date
hereof until the Termination Date at a rate per annum in effect from time to
time as set forth in the definition of “Facility Fee” in Section 1.01, payable
in arrears quarterly on the last Business Day of each March, June, September and
December, commencing on September 29, 2006, and on the Termination Date. All
Facility Fees shall be computed on the basis of a year of 360 days and shall be
payable for the actual number of days elapsed (including the first day but
excluding the last day).

 

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(b) Administrative Agent’s Fees. The Borrowers agree, jointly and severally, to
pay to the Administrative Agent for its own account such fees as may from time
to time be agreed between Rayonier and the Administrative Agent.

(c) Participation and Fronting Fees. The applicable Borrower agrees to pay
(i) to the Administrative Agent for the account of each Lender a participation
fee with respect to its participations in Letters of Credit issued for the
account of such Borrower, which shall accrue at a rate per annum equal to the
Applicable Margin applicable to interest on Eurodollar Rate Advances on such
Lender’s Commitment Percentage of the average daily aggregate face amount of
Letters of Credit outstanding hereunder for the account of such Borrower during
the period from and including the Closing Date to but excluding the date on
which such Lender ceases to have any LC Exposure and (ii) to each Issuing Bank a
fronting fee, which shall accrue at the rate of 0.10% per annum on the average
daily aggregate face amount of the outstanding Letters of Credit of such Issuing
Bank issued for the account of such Borrower, as well as such Issuing Bank’s
standard fees with respect to the issuance, amendment, renewal or extension of
any such Letter of Credit or processing of drawings thereunder. Participation
fees and fronting fees shall be payable in arrears quarterly on the last
Business Day of March, June, September and December of each year, commencing on
the first such date to occur after the Closing Date; provided that all such fees
shall be payable on the Termination Date and any such fees accruing after the
Termination Date shall be payable on demand. Any other fees payable to any
Issuing Bank pursuant to this subsection shall be payable promptly after demand.
All participation fees and fronting fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

(d) All fees payable hereunder shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for the benefit of the parties
entitled thereto. Fees paid shall not be refundable under any circumstances.

SECTION 2.05. Termination or Reduction of The Commitments. Rayonier shall have
the right, upon at least three Business Days’ notice to the Administrative
Agent, to terminate in whole or permanently reduce ratably in part the unused
portions of the respective Commitments of the Lenders, provided that each
partial reduction shall be in the aggregate amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof.

SECTION 2.06. Repayment of Revolving Credit Advances. The applicable Borrower
shall repay to the Administrative Agent for the ratable account of the Lenders
on the Termination Date the aggregate principal amount of the Revolving Credit
Advances then outstanding.

SECTION 2.07. Interest on Revolving Credit Advances. (a) Scheduled Interest. The
applicable Borrower shall pay interest on the unpaid principal amount of each
Revolving Credit Advance owing to each Lender from the date of such Revolving
Credit Advance until such principal amount shall be paid in full, at the
following rates per annum:

(i) Alternate Base Rate Advances. During such periods as such Revolving Credit
Advance is an Alternate Base Rate Advance, a rate per annum equal at all times
to

 

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the sum of (y) the Alternate Base Rate in effect from time to time plus (z) the
Applicable Margin in effect from time to time, payable in arrears quarterly on
the last Business Day of each March, June, September and December during such
periods.

(ii) Eurodollar Rate Advances. During such periods as such Revolving Credit
Advance is a Eurodollar Rate Advance, a rate per annum equal at all times during
each Interest Period for such Revolving Credit Advance to the sum of (y) the
Eurodollar Rate for such Interest Period for such Revolving Credit Advance plus
(z) the Applicable Margin in effect from time to time, payable in arrears on the
last day of such Interest Period and, if such Interest Period has a duration of
more than three months, on each day that occurs during such Interest Period
every three months from the first day of such Interest Period and on the date
such Eurodollar Rate Advance shall be Converted or paid in full.

(b) Default Interest. At any time during which any Borrower shall fail (i) to
pay any principal of any Revolving Credit Advance, any interest on any Revolving
Credit Advance or make any other payment in connection with this Agreement or
any other Loan Document when the same becomes due and payable or (ii) to perform
or observe any term, covenant or agreement contained in Section 5.05, the
Administrative Agent may, and upon the request of the Required Lenders shall,
require the Borrowers to pay interest (“Default Interest”) on (i) the unpaid
principal amount of each Revolving Credit Advance owing to each Lender by such
Borrower, payable in arrears on the dates referred to in clause (a)(i) or
(a)(ii) above, at a rate per annum equal at all times to 2% per annum above the
rate per annum required to be paid on such Revolving Credit Advance pursuant to
clause (a)(i) or (a)(ii) above and (ii) to the fullest extent permitted by law,
the amount of any interest, fee or other amount payable hereunder that is not
paid when due, from the date such amount shall be due until such amount shall be
paid in full, payable in arrears on the date such amount shall be paid in full
and on demand, at a rate per annum equal at all times to 2% per annum above the
rate per annum required to be paid on Alternate Base Rate Advances pursuant to
clause (a)(i) above, provided, however, that following acceleration of the
Revolving Credit Advances pursuant to Section 6.01, Default Interest shall
accrue and be payable hereunder whether or not previously required by the
Administrative Agent.

SECTION 2.08. Computation of Interest. (a) The Alternate Base Rate interest
(when calculated based upon the prime rate) shall be calculated on the basis of
a 365/366 day year and all other interest shall be calculated on the basis of a
360-day year for the actual days elapsed. The Administrative Agent shall as soon
as practicable notify Rayonier and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a Revolving Credit Advance
resulting from a change in the Alternate Base Rate or the Eurodollar 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 Rayonier and the 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
Borrowers and the Lenders in the absence of manifest error.

 

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SECTION 2.09. Inability to Determine Interest Rate. If prior to the first day of
any Interest Period:

(a) the Administrative Agent shall have reasonably determined (which
determination shall be conclusive and binding upon the Borrowers) 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
Lenders 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 certified by such Lenders) of making or maintaining its affected Revolving
Credit Advances during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to
Rayonier and the Lenders as soon as practicable thereafter (which notice shall
include supporting calculations in reasonable detail). If such notice is given,
(i) any Eurodollar Rate Advance requested to be made on the first day of such
Interest Period shall be made as Alternate Base Rate Advances, (ii) any
Revolving Credit Advances that were to have been Converted on the first day of
such Interest Period to Eurodollar Rate Advances shall be continued as Alternate
Base Rate Advances and (iii) any outstanding Eurodollar Rate Advances shall be
Converted, on the first day of such Interest Period, to Alternate Base Rate
Advances. Until such notice has been withdrawn by the Administrative Agent, no
further Eurodollar Rate Advances shall be made or continued as such, nor shall
any Borrower have the right to Convert Alternate Base Rate Advances to
Eurodollar Rate Advances.

SECTION 2.10. Conversion of Revolving Credit Advances. (a) Optional Conversion.
Any Borrower may on any Business Day, upon notice given to the Administrative
Agent not later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Conversion and subject to the provisions of
Sections 2.09 and 2.13, Convert all Revolving Credit Advances of one Type owed
by such Borrower and comprising the same Borrowing into Revolving Credit
Advances of the other Type; provided, however, that any Conversion of Eurodollar
Rate Advances into Alternate Base Rate Advances shall be made only on the last
day of an Interest Period for such Eurodollar Rate Advances, any Conversion of
Alternate Base Rate Advances into Eurodollar Rate Advances shall be in an amount
not less than the minimum amount specified for Revolving Credit Borrowings in
Section 2.01 and no Conversion of any Revolving Credit Advances shall result in
more separate Revolving Credit Borrowings than permitted under Section 2.02(b).
Each such notice of a Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Revolving Credit Advances to
be Converted, and (iii) if such Conversion is into Eurodollar Rate Advances, the
duration of the initial Interest Period for each such Advance. Each notice of
Conversion shall be irrevocable and binding on such Borrower.

(b) Mandatory Conversion. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Revolving Credit
Borrowing shall be reduced, by payment or prepayment or otherwise, to less than
$5,000,000, such Advances shall automatically Convert into Alternate Base Rate
Advances, and (ii) upon the occurrence and during the continuance of any Event
of Default, (x) each Eurodollar Rate

 

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Advance will automatically, on the last day of the then existing Interest Period
therefor, Convert into a Alternate Base Rate Advance and (y) the obligation of
the Lenders to make, or to Convert Advances into, Eurodollar Rate Advances shall
be suspended.

SECTION 2.11. Prepayments of Revolving Credit Advances. Any Borrower may, upon
notice to the Administrative Agent no later than 11:00 A.M. (New York City time)
on the Business Day of the proposed date of the prepayment in the case of
Alternate Base Rate Advances and on the third Business Day prior to the proposed
date of the prepayment in the case of Eurodollar Rate Advances, in each case
stating the proposed date and aggregate principal amount of the prepayment, and
if such notice is given such Borrower shall, prepay the outstanding principal
amount of the Revolving Credit Advances owing by such Borrower comprising part
of the same Revolving Credit Borrowing in whole or ratably in part, together
with accrued interest to the date of such prepayment on the principal amount
prepaid; provided, however, that (x) each partial prepayment shall be in an
aggregate principal amount not less than $5,000,000 or an integral multiple of
$1,000,000 in excess thereof and (y) in the event of any such prepayment of a
Eurodollar Rate Advance, such Borrower shall be obligated to reimburse the
Lenders in respect thereof pursuant to Section 8.04(c).

SECTION 2.12. Increased Costs. (a) If, due to either (i) the introduction of or
any change in or in the interpretation of any law or regulation after the date
hereof or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law)
issued after the date hereof, there shall be any increase in the cost to any
Lender of agreeing to make or making, funding or maintaining Eurodollar Rate
Advances or to participate or participating in Letters of Credit or any Issuing
Bank of agreeing to issue Letters of Credit (excluding for purposes of this
Section 2.12 any such increased costs resulting from (i) Taxes or Other Taxes
(as to which Section 2.15 shall govern) and (ii) changes in the basis of
taxation of overall net income or overall gross income by the United States or
by the foreign jurisdiction or state under the laws of which such Lender is
organized or has its Applicable Lending Office or any political subdivision
thereof), then the Borrowers agree, jointly and severally, to pay from time to
time, upon demand by such Lender or Issuing Bank (with a copy of such demand to
the Administrative Agent), to the Administrative Agent for the account of such
Lender or Issuing Bank (as applicable) additional amounts sufficient to
compensate such Lender or Issuing Bank for such increased cost; provided,
however, that any Lender claiming additional amounts under this Section 2.12
shall use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions) to designate a different Applicable Lending Office if
such change would avoid the need for, or reduce the amount of, such increased
cost that may thereafter accrue and would not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to such Lender. A certificate as to
the amount of such increased cost, submitted to Rayonier and the Administrative
Agent by such Lender, shall be conclusive and binding for all purposes, absent
manifest error.

(b) If any Lender or Issuing Bank determines that compliance with any law or
regulation or any guideline or request from any central bank or other
Governmental Authority enacted or made after the date hereof (whether or not
having the force of law) affects or would affect the amount of capital required
or expected to be maintained by such Lender or Issuing Bank or any corporation
controlling such Lender or Issuing Bank and that

 

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the amount of such capital is increased by or based upon the existence of such
Lender’s commitment to lend hereunder or Issuing Bank’s commitment to issue
Letters of Credit hereunder and other commitments of this type, then, upon
demand by such Lender or Issuing Bank (with a copy of such demand to the
Administrative Agent), the Borrowers agree, jointly and severally, to pay to the
Administrative Agent for the account of such Lender or Issuing Bank (as
applicable), from time to time as specified by such Lender or Issuing Bank,
additional amounts sufficient to compensate such Lender or Issuing Bank or such
corporation (as applicable) in the light of such circumstances, to the extent
that such Lender or Issuing Bank reasonably determines such increase in capital
to be allocable to the existence of such Lender’s commitment to lend hereunder
or Issuing Bank’s commitment to issue Letters of Credit hereunder. A certificate
as to such amounts submitted to Rayonier and the Administrative Agent by such
Lender or Issuing Bank shall be conclusive and binding for all purposes, absent
manifest error.

(c) Failure or delay on the part of any Lender or Issuing Bank to demand
compensation pursuant to this Section 2.12 shall not constitute a waiver of such
Lender’s or Issuing Bank’s right to demand such compensation; provided that no
Borrower shall be required to compensate a Lender or an Issuing Bank pursuant to
this Section 2.12 for any increased costs or reductions incurred more than four
months prior to the date that such Lender or Issuing Bank notifies Rayonier of
the change giving rise to such increased costs or reductions and of such
Lender’s or Issuing Bank’s intention to claim compensation therefor;
provided further that, if the change giving rise to such increased costs or
reductions is retroactive, then the four-month period referred to above shall
include the period of retroactive effect thereof.

SECTION 2.13. Illegality. Notwithstanding any other provision of this Agreement,
if any Lender shall notify the Administrative Agent that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other Governmental Authority asserts that it is
unlawful, for any Lender or its Eurodollar Lending Office to perform its
obligations hereunder to make Eurodollar Rate Advances or to fund or maintain
Eurodollar Rate Advances hereunder, (i) the obligation of the Lenders to make,
or to Convert Revolving Credit Advances into, Eurodollar Rate Advances shall be
suspended until the Administrative Agent shall notify Rayonier and the Lenders
that the circumstances causing such suspension no longer exist and (ii) each
Borrower shall forthwith prepay in full all Eurodollar Rate Advances of such
Borrower then outstanding, together with interest accrued thereon, unless such
Borrower, within five Business Days of notice from the Administrative Agent,
Converts all Eurodollar Rate Advances of such Borrower then outstanding into
Alternate Base Rate Advances in accordance with Section 2.10.

SECTION 2.14. Payments. (a) The Borrowers shall make each payment hereunder,
irrespective of any right of counterclaim or set-off, not later than 12:00 Noon
(New York City time) on the day when due in U.S. dollars to the Administrative
Agent at the Administrative Agent’s Account in same day funds. The
Administrative Agent will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest or Facility Fees or
participation fees or fronting fees ratably (other than amounts payable pursuant
to Section 2.12, 2.15 or 8.04(c)) to the Lenders for the account of their
respective Applicable

 

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Lending Offices or the applicable Issuing Bank, and like funds relating to the
payment of any other amount payable to any Lender or Issuing Bank to such Lender
for the account of its Applicable Lending Office or the applicable Issuing Bank,
in each case to be applied in accordance with the terms of this Agreement. Upon
its acceptance of an Assignment and Acceptance and recording of the information
contained therein in the Register pursuant to Section 8.07(c), from and after
the effective date specified in such Assignment and Acceptance, the
Administrative Agent shall make all payments hereunder and under the Notes in
respect of the interest assigned thereby to the Lender assignor and the Lender
assignee thereunder on a pro rata basis subject to all appropriate adjustments
in such payments for periods prior to such effective date.

(b) Except as otherwise provided herein, whenever any payment hereunder or under
the Notes shall be stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall in such case be included in the computation of payment of interest or
Facility Fee, as the case may be; provided, however, that, if such extension
would cause payment of interest on or principal of Eurodollar Rate Advances to
be made in the next following calendar month, such payment shall be made on the
next preceding Business Day.

(c) Unless the Administrative Agent shall have received notice from the
applicable Borrower prior to the date on which any payment is due to the Lenders
or the Issuing Banks hereunder that such Borrower will not make such payment in
full, the Administrative Agent may assume that such Borrower has made such
payment in full to the Administrative Agent on such date and the Administrative
Agent may, in reliance upon such assumption, cause to be distributed to each
Lender or the applicable Issuing Bank (as applicable) on such due date an amount
equal to the amount then due such Lender or Issuing Bank. If and to the extent
such Borrower shall not have so made such payment in full to the Administrative
Agent, each Lender or the applicable Issuing Bank shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender
or Issuing Bank together with interest thereon, for each day from the date such
amount is distributed to such Lender or Issuing Bank until the date such Lender
or Issuing Bank repays such amount to the Administrative Agent, at the Federal
Funds Rate.

SECTION 2.15. Taxes. (a) Any and all payments by each Borrower to or for the
account of any Lender, Issuing Bank or the Administrative Agent hereunder, under
the Notes, any other Loan Document or any other documents to be delivered
hereunder shall be made, in accordance with Section 2.14 or the applicable
provisions of such other documents, free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of each Lender, Issuing Bank and the Administrative Agent, taxes imposed on its
overall net income and minimum taxes, alternative minimum taxes, doing business
taxes, franchise taxes and value added taxes imposed on it in lieu of net income
taxes, by the jurisdiction under the laws of which such Lender, Issuing Bank or
the Administrative Agent (as the case may be) is organized (federal or state) or
doing business or any political subdivision thereof and, in the case of each
Lender, taxes imposed on its overall net income and minimum taxes, alternative
minimum taxes, doing business taxes, franchise taxes and value added taxes
imposed on it in lieu of net income taxes,

 

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by the jurisdiction of such Lender’s Applicable Lending Office (federal or
state) (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities in respect of payments hereunder or under the Notes
being hereinafter referred to as “Taxes”). If any Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note or any other documents to be delivered hereunder to any Lender, Issuing
Bank or the Administrative Agent, (i) the sum payable shall be increased as may
be necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.15) such Lender,
Issuing Bank or the Administrative Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made,
(ii) the applicable Borrower shall make such deductions and (iii) such Borrower
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.

(b) In addition, each Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder, under the Notes, any other
Loan Document or any other documents to be delivered hereunder or from the
execution, delivery or registration of, performing under, or otherwise with
respect to, this Agreement, the Notes, any other Loan Document or any other
documents to be delivered hereunder imposed by the jurisdiction under the laws
of which such Borrower is organized or operates or any political subdivision
thereof, or by the jurisdiction in which such Borrower’s principal office is
located or from which any payments hereunder are made (hereinafter referred to
as “Other Taxes”).

(c) The applicable Borrower will indemnify each Lender, each Issuing Bank and
the Administrative Agent for and hold it harmless against the full amount of
Taxes or Other Taxes (including, without limitation, taxes of any kind imposed
or asserted by any jurisdiction on amounts payable under this Section 2.15)
imposed on or paid by such Lender, Issuing Bank or the Administrative Agent (as
the case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. This indemnification shall be made
within 30 days from the date such Lender, Issuing Bank or the Administrative
Agent (as the case may be) makes written demand therefor; provided, however,
that in no event shall any such indemnification be due earlier than five
Business Days after such Lender, Issuing Bank or the Administrative Agent (as
the case may be) has paid such Taxes or Other Taxes; provided, further, that any
such demand shall be accompanied by copies of all written correspondence to and
from the applicable taxing authority relating to such payment and a copy of the
calculation of such Taxes or Other Taxes.

(d) Within 30 days after the date of any payment of Taxes, each Borrower will
furnish to the Administrative Agent, at its address referred to in Section 8.02,
the original or a certified copy of a receipt evidencing such payment to the
extent such a receipt is issued therefor, or other written proof of payment
thereof that is reasonably satisfactory to the Administrative Agent. In the case
of any payment hereunder, under the Notes, any other Loan Document or any other
documents to be delivered hereunder by or on behalf of any Borrower through an
account or branch outside the United States or by or on behalf of any Borrower
by a payor that is not a United States person, if the applicable Borrower
determines that no Taxes are payable in respect thereof, such Borrower shall
furnish, or shall cause such payor to

 

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furnish, to the Administrative Agent, at such address, an opinion of counsel
reasonably acceptable to the Administrative Agent stating that such payment is
exempt from Taxes. For purposes of this subsection (d) and subsection (e), the
terms “United States” and “United States person” shall have the meanings
specified in Section 7701 of the Internal Revenue Code.

(e) Each Lender organized under the laws of a jurisdiction outside the United
States, on or prior to the date of its execution and delivery of this Agreement
in the case of each Lender party to this Agreement as of the date hereof or on
the date of the Assignment and Acceptance pursuant to which it becomes a Lender
in the case of each other Lender, and from time to time thereafter as reasonably
requested in writing by Rayonier (but only so long as such Lender remains
lawfully able to do so), shall provide each of the Administrative Agent and
Rayonier with two original Internal Revenue Service forms W-8BEN or W-8ECI, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that such Lender is exempt from or entitled to a reduced
rate of United States withholding tax on payments pursuant to this Agreement or
the Notes. If the form provided by a Lender at the time such Lender first
becomes a party to this Agreement indicates a United States interest withholding
tax rate in excess of zero, withholding tax at such rate shall be considered
excluded from Taxes unless and until such Lender provides the appropriate forms
certifying that a lesser rate applies, whereupon withholding tax at such lesser
rate only shall be considered excluded from Taxes for periods governed by such
form; provided, however, that, if at the date of the Assignment and Acceptance
pursuant to which a Lender assignee becomes a party to this Agreement, the
Lender assignor was entitled to payments under subsection (a) in respect of
United States withholding tax with respect to interest paid at such date, then,
to such extent, the term “Taxes” shall include (in addition to withholding taxes
that may be imposed in the future or other amounts otherwise includable in
Taxes) United States withholding tax, if any, applicable with respect to the
Lender assignee on such date. If any form or document referred to in this
subsection (e) requires the disclosure of information, other than information
necessary to compute the tax payable and information required on the date hereof
by Internal Revenue Service form W-8BEN or W-8ECI, that the Lender reasonably
considers to be confidential, the Lender shall give notice thereof to the
Borrowers and shall not be obligated to include in such form or document such
confidential information.

(f) For any period with respect to which a Lender has failed to provide Rayonier
with the appropriate form, certificate or other document described in
Section 2.15(e) (other than if such failure is due to a change in law, or in the
interpretation or application thereof, occurring subsequent to the date on which
a form, certificate or other document originally was required to be provided, or
if such form, certificate or other document otherwise is not required under
subsection (e) above), such Lender shall not be entitled to indemnification
under Section 2.15(a) or (c) with respect to Taxes imposed by the United States
by reason of such failure; provided, however, that should a Lender become
subject to Taxes because of its failure to deliver a form, certificate or other
document required hereunder, each Borrower shall take such steps as such Lender
shall reasonably request to assist the Lender to recover such Taxes (and such
Lender shall reimburse such Borrower for reasonable out-of-pocket costs and
expenses of such Borrower in connection therewith).

 

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(g) Any Lender claiming any additional amounts payable pursuant to this
Section 2.15 shall use reasonable efforts (consistent with its internal policy
and legal and regulatory restrictions) to change the jurisdiction of its
Eurodollar Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender, provided that, should any Borrower be required
to pay any amounts under Section 2.15(a) or (c), and such Borrower delivers to
each Lender that received such amounts an opinion of counsel that payments to
the Lender or the Administrative Agent were not in fact subject to Taxes, each
Lender shall use reasonable efforts to cooperate with such Borrower, including,
but not limited to filing and pursuing a claim of refund in its own name
(provided that such Borrower agrees in writing to indemnify and reimburse such
Lender for its actual out-of-pocket expenses in connection with such claim for
refund), in obtaining a refund of Taxes, and if such Lender receives a refund of
Taxes shall promptly pay such Taxes over to such Borrower together with any
interest received by, or credited against the tax liability of, such Lender to
the extent such interest is attributable to such refund of Taxes.

(h) If any Lender or Issuing Bank determines, in its sole discretion, that it
has actually realized, by reason of a refund, deduction or credit of any Taxes
paid or reimbursed by any Borrower pursuant to subsection (a) or (c) above in
respect of payments hereunder or the Notes, a current monetary benefit that it
would otherwise not have obtained, and that would result in the total payments
under this Section 2.15 exceeding the amount needed to make such Lender whole,
such Lender or Issuing Bank shall pay to such Borrower, with reasonable
promptness following the date on which it actually realized such benefit, an
amount equal to the lesser of the amount of such benefit or the amount of such
excess, in each case net of all out-of-pocket expenses in securing such refund,
deduction or credit, provided, in the event that any portion of such refund,
deduction or credit is subsequently disallowed, such Borrower shall hold such
Lender or Issuing Bank harmless (on an after-tax basis) from such disallowance.

SECTION 2.16. Sharing of Payments, Etc. If any Lender shall obtain any payment
(whether voluntary, involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Revolving Credit Advances owing to it (other
than pursuant to Section 2.12, 2.15 or 8.04(c)) in excess of its ratable share
of payments on account of the Revolving Credit Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other Lenders such
participations in the Revolving Credit Advances owing to them as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such recovery together with an amount
equal to such Lender’s ratable share (according to the proportion of (i) the
amount of such Lender’s required repayment to (ii) the total amount so recovered
from the purchasing Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so recovered. Each Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.16 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such participation as fully as if such Lender were the direct creditor of
such Borrower in the amount of such participation.

 

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SECTION 2.17. Evidence of Debt. (a) Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of
each Borrower to such Lender resulting from each Revolving Credit Advance owing
to such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder in respect
of Revolving Credit Advances. Each Borrower agrees that upon notice by any
Lender to any Borrower (with a copy of such notice to the Administrative Agent)
to the effect that a Note is required or appropriate in order for such Lender to
evidence (whether for purposes of pledge, enforcement or otherwise) the
Revolving Credit Advances owing to, or to be made by, such Lender, such Borrower
shall promptly execute and deliver to such Lender a Note payable to the order of
such Lender in a principal amount up to the Commitment of such Lender.

(b) The Register maintained by the Administrative Agent pursuant to
Section 8.07(d) shall include a control account, and a subsidiary account for
each Lender, in which accounts (taken together) shall be recorded (i) the date
and amount of each Revolving Credit Borrowing made hereunder, the applicable
Borrower thereof, the Type of Advances comprising such Revolving Credit
Borrowing and, if appropriate, the Interest Period applicable thereto, (ii) the
terms of each Assignment and Acceptance delivered to and accepted by it,
(iii) the amount of any principal or interest due and payable or to become due
and payable from each Borrower to each Lender hereunder and (iv) the amount of
any sum received by the Administrative Agent from each Borrower hereunder and
each Lender’s share thereof.

(c) Entries made in good faith by the Administrative Agent in the Register
pursuant to subsection (b) above, and by each Lender in its account or accounts
pursuant to subsection (a) above, shall be prima facie evidence of the amount of
principal and interest due and payable or to become due and payable from each
Borrower to, in the case of the Register, each Lender and, in the case of such
account or accounts, such Lender, under this Agreement, absent manifest error;
provided, however, that the failure of the Administrative Agent or such Lender
to make an entry, or any finding that an entry is incorrect, in the Register or
such account or accounts shall not limit or otherwise affect the obligations of
any Borrower under this Agreement.

SECTION 2.18. Use of Proceeds. The proceeds of the Revolving Credit Advances
shall be available (and each Borrower agrees that it shall use such proceeds)
solely first, to refinance Debt outstanding under the Existing Credit Agreement
and to pay fees and expenses incurred in connection with the transactions
contemplated by this Agreement, and, thereafter, for other general corporate
purposes of the Borrowers and its Subsidiaries (including, without limitation,
acquisitions, repayment of Debt and repurchase of Capital Stock). The Letters of
Credit are to be used for the general corporate purposes of the Borrowers.

SECTION 2.19. Increase in the Aggregate Commitments. (a) Rayonier may, at any
time prior to the Termination Date, by notice to the Administrative Agent,
request that the aggregate amount of the Commitments be increased on one or more
occasions by an amount in

 

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each case of not less than $25 million and by an amount not more than
$100,000,000 in the aggregate for all such increases (each a “Commitment
Increase”) to be effective as of a date that is at least 90 days prior to the
scheduled Termination Date then in effect (the “Increase Date”) as specified in
the related notice to the Administrative Agent; provided, however, no Default or
Event of Default shall have occurred and be continuing as of the date of such
request or as of the Increase Date, or shall occur as a result thereof.

(b) The Administrative Agent shall promptly notify the Lenders of a request by
Rayonier for a Commitment Increase, which notice shall include (i) the proposed
amount of such requested Commitment Increase, (ii) the proposed Increase Date
and (iii) the date by which Lenders wishing to participate in the Commitment
Increase must commit to an increase in the amount of their respective
Commitments (the “Commitment Date”). Each Lender that is willing to participate
in such requested Commitment Increase (each an “Increasing Lender”) shall give
written notice to the Administrative Agent on or prior to the Commitment Date of
the amount by which it is willing to increase its Commitment. No Lender shall be
obligated or entitled to participate in any Commitment Increase.

(c) Promptly following each Commitment Date, the Administrative Agent shall
notify Rayonier as to the amount, if any, by which each Lender is willing to
participate in the requested Commitment Increase, and Rayonier shall promptly
notify the Administrative Agent in writing, which shall in turn notify the
Lenders, of the amount of the Commitment Increase that is allocated to each such
Lender. In addition to the existing Lenders, Rayonier may extend offers to one
or more Eligible Assignees to participate in any portion of the requested
Commitment Increase; provided, however, that the Commitment of each such
Eligible Assignee shall be in an amount of $5,000,000 or an integral multiple of
$1,000,000 in excess thereof, and provided further that any such Eligible
Assignee shall be approved by the Administrative Agent and each Issuing Bank.

(d) On the Increase Date, each Eligible Assignee that accepts an offer to
participate in a requested Commitment Increase in accordance with
Section 2.19(c) (each such Eligible Assignee, an “Assuming Lender”) shall become
a Lender party to this Agreement as of such Increase Date and the Commitment of
each Increasing Lender for such requested Commitment Increase shall be increased
by the amount allocated to such Lender pursuant to Section 2.19(c)) as of such
Increase Date; provided, however, that the Administrative Agent shall have
received on or before such Increase Date the following, each dated such date:

(i) (A) certified copies of resolutions of the Board of Directors of the
Borrowers approving the Commitment Increase and the corresponding modifications
to this Agreement and (B) an opinion of counsel for the Borrowers in form and
substance reasonably satisfactory to the Administrative Agent;

(ii) an assumption agreement from each Assuming Lender, if any, in form and
substance satisfactory to the Assuming Lender, the Borrowers and the
Administrative Agent (each an “Assumption Agreement”), duly executed by such
Assuming Lender, the Administrative Agent and the Borrowers; and

 

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(iii) confirmation from each Increasing Lender of the increase in the amount of
its Commitment in a writing satisfactory to Rayonier and the Administrative
Agent.

(e) On each Increase Date, upon fulfillment of the conditions set forth in
Section 2.19(d), the Administrative Agent shall notify the Lenders (including,
without limitation, each Assuming Lender) and Rayonier, on or before 1:00 P.M.
(New York City time), by telecopier, of the occurrence of the Commitment
Increase to be effected on such Increase Date and shall record in the Register
the relevant information with respect to each Increasing Lender and each
Assuming Lender on such date.

ARTICLE III

CONDITIONS PRECEDENT

SECTION 3.01. Conditions Precedent to Closing Date. This Agreement shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 8.01):

(a) Documents. The Administrative Agent shall have received each of the
following documents, each of which shall be satisfactory to the Administrative
Agent (and to the extent specified below, to each Lender) in form and substance:

(i) Executed Counterparts. From each party hereto either (A) multiple
counterparts of this Agreement, signed on behalf of such party or (B) written
evidence satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page to this Agreement) that such party has
signed a counterpart of this Agreement;

(ii) Corporate Documents. (A) Such documents and certificates as the
Administrative Agent or its counsel may reasonably request, certified as of the
Closing Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of each Borrower and Subsidiary Guarantor or, in the case of
RFR, by the Secretary or an Assistant Secretary of the Managing General Partner,
relating to (1) the organization, existence and good standing of such Borrower
or Subsidiary Guarantor, as the case may be, and, in the case of RFR, the
existence of any amendments to the Installment Note Agreement, (2) the
authorization of the execution, delivery and performance by such Borrower or
Subsidiary Guarantor, as the case may be, of the applicable Loan Documents and
of the borrowings hereunder by each Borrower, and (3) certificates as to the
incumbency and signature of each individual signing this Agreement and/or any
other Loan Document or other agreement or document contemplated hereby on behalf
of the applicable Borrower or Subsidiary Guarantor; and (B) in the case of RFR,
a certificate of another officer of the Managing General Partner as to the
incumbency and specimen signature of the Secretary or an Assistant Secretary
executing the certificate pursuant to clause (A) above;

 

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(iii) Financial Statements. Copies of (A) the audited Consolidated balance
sheets of Rayonier and its Subsidiaries as of December 31, 2005 and the related
Consolidated statements of income and cash flows for the period ending as of
such date, and (B) the unaudited Consolidated balance sheets of Rayonier and its
Subsidiaries as of March 31, 2006, and the related Consolidated statements of
income and cash flows for the period ending as of such date;

(iv) Guarantee. The Administrative Agent shall have received the Guarantee
Agreement substantially in the form of Exhibit C-1 hereto and executed by duly
authorized officers of Rayonier and TRS respectively;

(v) Subsidiary Guarantees. The Administrative Agent shall have received the TRS
Subsidiary Guarantee Agreement substantially in the form of Exhibit C-3 hereto,
in each case executed by duly authorized officers of the parties thereto; and

(vi) Other Documents. Such other documents as the Administrative Agent or any
Lender (acting through the Administrative Agent) may reasonably request.

(b) Existing Credit Agreement. The Administrative Agent shall have received
documentation satisfactory to the Administrative Agent evidencing that the
Existing Credit Agreement shall have been terminated and all respective amounts
outstanding thereunder shall have been repaid in full;

(c) Representations and Warranties. Each of the representations and warranties
made by each Borrower in or pursuant to the Loan Documents (except to the extent
applicable to an earlier date) shall be true and correct in all material
respects on and as of such date as if made on and as of such date;

(d) No Default. No Default or Event of Default shall have occurred and be
continuing on such date;

(e) Legal Opinions. The Administrative Agent shall have received, with a
counterpart for each Lender, the executed legal opinions of (i) Rayonier’s Vice
President and General Counsel, substantially in the form of Exhibit D-1 hereto,
(ii) Womble Carlyle Sandridge & Rice, PLLC, special counsel for the Borrowers
and the Subsidiary Guarantors, substantially in the form of Exhibit D-2 hereto
and (iii) Vinson & Elkins L.L.P., special New York counsel for the Borrowers and
the Subsidiary Guarantors, substantially in the form of Exhibit D-3 hereto and,
in each such case, as to such other matters as any Lender through the
Administrative Agent may reasonably request;

(f) Closing Certificate. The Administrative Agent shall have received, with a
counterpart for each Lender, a closing certificate of each Borrower
substantially in the form of Exhibit E hereto, dated as of the Closing Date and
satisfactory in form and substance to the Administrative Agent;

(g) “Know Your Customer” Information. At least five Business Days prior to the
Closing Date, the Administrative Agent shall have received documentation and
other

 

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information required by bank regulatory authorities under applicable “know your
customer” and Anti-Money Laundering rules and regulations, including, without
limitation, the USA PATRIOT Act. Such documentation shall include, without
limitation, evidence satisfactory to the Administrative Agent of (y) the listing
of Capital Stock of Rayonier on New York Stock Exchange and (z) Rayonier’s
ownership of all of the outstanding Capital Stock of TRS, RFR and any Subsidiary
Guarantors hereunder;

(h) Closing Fees and Expenses. The Administrative Agent shall have received the
fees to be received on the Closing Date separately agreed to between the
Administrative Agent and Rayonier and shall have received reimbursement of all
reasonable costs and expenses (including reasonable fees and expenses of counsel
to the Administrative Agent);

(i) Outside Closing Date. The Closing Date shall have occurred and each of the
conditions precedent set forth in this Section 3.01 shall have been satisfied on
or prior to August 31, 2006; and

(j) Additional Matters. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement, the other Loan Documents shall be reasonably
satisfactory in form and substance to the Administrative Agent, and the
Administrative Agent shall have received such other documents, instruments and
legal opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.

SECTION 3.02. Conditions Precedent to Each Loan Event. The agreement of each
Lender to make any Revolving Credit Advance, including the initial Revolving
Credit Advance, on the occasion of each Revolving Credit Borrowing and the
agreement of the Issuing Bank to issue, amend, renew or extend (and of each
Lender to participate in) any Letter of Credit (the making of any such Revolving
Credit Advance or the issuance, amendment, renewal or extension of (and the
participation in) any such Letter of Credit, a “Loan Event”) is subject to the
satisfaction of the following conditions precedent:

(a) Closing Date. The Closing Date shall have occurred;

(b) Notice of Revolving Credit Borrowing. In the case of Revolving Credit
Advances made pursuant to Section 2.01, the Administrative Agent shall have
received a Notice of Revolving Credit Borrowing in compliance with the terms
hereof;

(c) Representations and Warranties. Each of the representations and warranties
made by each Borrower in or pursuant to the Loan Documents (except for the
representations and warranties specified in Section 4.01(e), (f) and (g)(i))
shall be true and correct in all material respects on and as of such date as if
made on and as of such date (both before and after giving effect to such Loan
Event);

(d) No Default. No Default or Event of Default shall have occurred and be
continuing on such date or after giving effect to such Loan Event requested to
be made on such date; and

 

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(e) Additional Matters. The Administrative Agent shall have received such other
approvals, opinions or documents as any Lender through the Administrative Agent
may reasonable request.

Each Loan Event shall constitute a representation and warranty by each Borrower
as of the date of such Loan Event that the statements in any document delivered
by such Borrower in connection with such Loan Event are true and correct and
that the conditions contained in this Section 3.02 have been satisfied.

SECTION 3.03. Conditions Precedent to Additional Borrower Effective Date.
Notwithstanding the provisions of Section 3.02, the occurrence of the Additional
Borrower Effective Date for any Additional Borrower, and the initial Loan Event
with respect to any such Additional Borrower, shall be subject to the
satisfaction of the following conditions precedent:

(a) Corporate Documents. The Administrative Agent shall have received, in form
and substance satisfactory to the Administrative Agent, (i) an assumption
agreement duly executed by such Additional Borrower (“Additional Borrower
Assumption Agreement”), pursuant to which such Additional Borrower agrees to be
bound by the terms hereof as an Additional Borrower and by the terms of the
Guarantee Agreement as a guarantor thereunder, (ii) a consent and confirmation
from each Loan Party with respect to such Additional Borrower and the
obligations of such Loan Party under the Loan Documents after the effectiveness
of the Additional Borrower Assumption Agreement, (iii) copies of the articles of
incorporation (or the equivalent thereof) of such Additional Borrower, together
with all amendments thereto, and a certificate of good standing (or the
equivalent thereof), each certified by the appropriate governmental officer in
its jurisdiction of organization, as well as any other information required by
the USA PATRIOT ACT, as determined by the Administrative Agent, (iv) copies,
certified by the secretary or assistant secretary (or equivalent thereof) of the
Additional Borrower, of its by-laws (or the equivalent thereof) and of its board
of directors’ (or the equivalent thereof) resolutions and resolutions or actions
of any other body authorizing the execution of the Additional Borrower
Assumption Agreement and the other Loan Documents to which such Additional
Borrower is a party, and (v) such other documents and certificates as the
Administrative Agent or its counsel may reasonably request, each of which shall
be certified as of the date of initial Loan Event with respect to such
Additional Borrower as complete and correct copies thereof by the Secretary or
an Assistant Secretary of such Additional Borrower relating to (A) the
organization, existence and good standing of such Additional Borrower, (B) the
authorization of the execution, delivery and performance by such Additional
Borrower of each Loan Document to which it is to become a party, and
(C) certificates as to the incumbency and signature of each individual signing
any Loan Document on behalf of such Additional Borrower;

(b) No Event of Default. No Event of Default shall have occurred and be
continuing as of the Additional Borrower Effective Date; and

(c) Legal Opinions. The Administrative Agent shall have received, with a
counterpart for each Lender, the executed legal opinions, each of which shall be
satisfactory to the Administrative Agent, of (i) Rayonier’s Vice President and
General Counsel, (ii) Womble Carlyle Sandridge & Rice, PLLC, as special counsel
for the Additional Borrower and (iii)

 

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special New York counsel for the Additional Borrower acceptable to the
Administrative Agent, as to due authorization, execution and enforceability of
the Additional Borrower Assumption Agreement and as to such other matters as any
Lender through the Administrative Agent may reasonably request.

SECTION 3.04. Conditions Precedent to Additional Subsidiary Guarantor. The
effectiveness of the designation of any Subsidiary of Rayonier as an Additional
Subsidiary Guarantor shall be subject to the satisfaction of the following
conditions precedent:

(a) Corporate Documents. The Administrative Agent shall have received the
Additional Subsidiary Guarantor Guarantee Agreement substantially in the form of
Exhibit C-4 hereto and executed by a duly authorized officer of such Additional
Subsidiary Guarantor, and each of the following, in form and substance
satisfactory to the Administrative Agent, (i) copies of the articles of
incorporation (or the equivalent thereof) of such Additional Subsidiary
Guarantor, together with all amendments thereto, and a certificate of good
standing (or the equivalent thereof), each certified by the appropriate
governmental officer in its jurisdiction of organization, as well as any other
information required by the USA PATRIOT ACT, as determined by the Administrative
Agent, (ii) copies, certified by the secretary or assistant secretary (or
equivalent thereof) of the Additional Subsidiary Guarantor, of its by-laws (or
the equivalent thereof) and of its board of directors’ (or the equivalent
thereof) resolutions and resolutions or actions of any other body authorizing
the execution of the Additional Subsidiary Guarantor Guarantee Agreement, and
(iii) such other documents and certificates as the Administrative Agent or its
counsel may reasonably request, each of which shall be certified as of the date
of the effective date of such designation as complete and correct copies thereof
by the Secretary or an Assistant Secretary of such Additional Subsidiary
Guarantor relating to (A) the organization, existence and good standing of such
Additional Subsidiary Guarantor, (B) the authorization of the execution,
delivery and performance by such Additional Subsidiary Guarantor or the
Additional Subsidiary Guarantor Guarantee Agreement, and (C) certificates as to
the incumbency and signature of each individual signing Additional Subsidiary
Guarantor Guarantee Agreement on behalf of such Additional Subsidiary Guarantor;

(b) Representations and Warranties. The representations and warranties contained
in the Additional Subsidiary Guarantor Guarantee Agreement shall be true and
correct in all material respects as to such Additional Subsidiary Guarantor and
its Subsidiaries on and as of such date as if made on and as of such date;

(c) No Event of Default. No Event of Default shall have occurred and be
continuing as of such date; and

(d) Legal Opinions. The Administrative Agent shall have received, with a
counterpart for each Lender, the executed legal opinions, each of which shall be
satisfactory to the Administrative Agent, of (i) Rayonier’s Vice President and
General Counsel, (ii) Womble Carlyle Sandridge & Rice, PLLC, as special counsel
for the Additional Subsidiary Guarantor and (iii) special New York counsel for
the Additional Subsidiary Guarantor acceptable to the Administrative Agent, as
to due authorization, execution and enforceability of the Additional Subsidiary
Guarantor Guarantee Agreement and as to such other matters as any Lender through
the Administrative Agent may reasonably request.

 

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower. Each Borrower
represents and warrants as follows:

(a) Organization. Each Loan Party (i) is duly organized or formed, validly
existing and in good standing under the laws of the jurisdiction of its
organization or formation, (ii) has all requisite 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 except to
the extent that the failure to have such power and authority and the legal right
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect, and (iii) is duly qualified to conduct business, and is in good
standing, under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such qualification
except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.

(b) Power and Authority. The execution, delivery and performance by each Loan
Party of this Agreement, the Notes and the other Loan Documents to be delivered
by it are within such Loan Party’s requisite powers, have been duly authorized
by all requisite action, including member or partnership action and do not
contravene (i) such Loan Party’s charter or by-laws or (ii) law or any material
contractual restriction binding on or affecting such Loan Party or, to the
actual knowledge of a responsible officer of such Loan Party, any other
contractual restriction binding on or affecting such Loan Party.

(c) Governmental Approvals. No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority, regulatory body or any
other third party is required for the due execution, delivery and performance by
any Loan Party of this Agreement, the Notes or any other Loan Documents.

(d) Enforceability. This Agreement and any other Loan Document have been, and
each of the Notes and other Loan Documents to be delivered by any Loan Party
when delivered hereunder will have been, duly executed and delivered by the
applicable Loan Party. This Agreement and any other Loan Document are, and each
of the Notes when delivered hereunder will be, the legal, valid and binding
obligation of the applicable Loan Party enforceable against such Loan Party in
accordance with their respective terms; provided that the enforceability hereof
and thereof is subject in each case to general principles of equity and to
bankruptcy, insolvency and similar laws affecting the enforcement of creditors’
rights generally.

(e) Financial Statements. The Consolidated balance sheet of Rayonier and its
Subsidiaries as at December 31, 2005, and the related Consolidated statements of
income and cash flows of Rayonier and its Subsidiaries for the fiscal year then
ended, accompanied by

 

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an opinion of Deloitte & Touche LLP, independent public accountants, and the
unaudited Consolidated balance sheet of Rayonier and its Subsidiaries as at
March 31, 2006, and the related unaudited Consolidated statements of income and
cash flows of Rayonier and its Subsidiaries for the three months then ended,
duly certified by the senior vice president of finance of Rayonier, copies of
which have been furnished to each Lender, fairly present, subject, in the case
of said balance sheet as at March 31, 2006, and said statements of income and
cash flows for the three months then ended, to year-end audit adjustments, the
Consolidated financial condition of Rayonier and its Subsidiaries as at such
dates and the Consolidated results of the operations of Rayonier and its
Subsidiaries for the periods ended on such dates, all in accordance with GAAP
consistently applied.

(f) No Material Adverse Change. Since December 31, 2005, there has been no
Material Adverse Change.

(g) Litigation. There is no pending or, to the knowledge of the applicable
Borrower, threatened action or proceeding, including, without limitation, any
Environmental Action, affecting such Borrower or any of its Subsidiaries before
any court, governmental agency or arbitrator that (i) could be reasonably likely
to have a Material Adverse Effect (other than as set forth in Schedule 4.01(g)
(the “Disclosed Litigation”)), and since the date of Schedule 4.01(g) was
prepared there has been no material adverse change in the status, or financial
effect on such Borrower or any of its Subsidiaries, of the Disclosed Litigation
from that described in Schedule 4.01(g) or (ii) purports to affect the legality,
validity or enforceability of this Agreement, any Note or the other Loan
Documents.

(h) No Violation; Compliance with Laws. No Loan Party or Subsidiary of any Loan
Party is in violation of any law, rule or regulation (including any zoning,
building, Environmental Laws, ordinance, code or approval or any building
permit) or any restrictions of record or agreements affecting such material
properties or assets, or is in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where any such
violation or default could reasonably be expected to result in a Material
Adverse Effect.

(i) Accuracy of Information. No written information, report, financial
statement, exhibit or schedule furnished by or on behalf of any Borrower or any
of its Subsidiaries to the Administrative Agent or any Lender in connection with
the negotiation of this Agreement or any other Loan Document or included herein
or delivered pursuant hereto contained or contains any material misstatement of
fact or omitted or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were or
are made, not misleading.

(j) Regulation U. No Loan Party or any Subsidiary of any Loan Party is engaged
in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System).

(k) Taxes. Each Borrower and each of its Subsidiaries has timely filed or caused
to be filed all federal and, to the extent the failure to timely file such
return could

 

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reasonably be expected to result in a Material Adverse Effect, other tax returns
which are required to be filed and has paid or caused to be paid all taxes
(including interest and penalties) 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 any tax, fee or other charge the failure to
pay which could not reasonably be expected to have a Material Adverse Effect or
the amount or validity of which is 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 applicable Borrower or such
Subsidiary, as the case may be); and no tax Lien has been filed, and, to the
knowledge of each Borrower, no claim is being asserted, with respect to any such
tax, fee or other charge, other than any such Lien or claim which could not
reasonably be expected to have a Material Adverse Effect.

(l) Environmental Matters. (i) Except as set forth in Schedule 4.01(l), the
operations and properties of each Borrower and each of its Subsidiaries comply
in all material respects with all Environmental Laws, all material and necessary
Environmental Permits have been obtained and are in effect for the operations
and properties of such Borrower and each of its Subsidiaries, and such Borrower
and each of its Subsidiaries are in compliance in all material respects with all
such Environmental Permits.

(ii) Except as set forth in Rayonier’s Form 10-K for 2005 and in Schedule
4.01(l), to the knowledge of the applicable Borrower, there are no circumstances
that are reasonably likely to form the basis of an Environmental Action against
such Borrower or any of its Subsidiaries that could be reasonably likely to have
a Material Adverse Effect.

(m) CERCLA. Except as set forth in Schedule 4.01(l), none of the properties
currently or formerly owned or operated by any Borrower or any of its
Subsidiaries is listed or, to the knowledge of any Borrower, proposed for
listing on the National Priorities List under CERCLA (the “NPL”) or on the
Comprehensive Environmental Response, Compensation and Liability Information
System maintained by the U.S. Environmental Protection Agency (“CERCLIS”) or any
analogous state list if such listing or proposed listing could reasonably be
likely to have a Material Adverse Effect.

(n) Transportation of Hazardous Materials. Except as set forth in Schedule
4.01(l), to the knowledge of any Borrower, neither any Borrower nor any of its
Subsidiaries has transported or arranged for the transportation of any Hazardous
Materials to any location that is listed or proposed for listing on the NPL or
on the CERCLIS, which could reasonably be likely to lead to claims against any
Borrower or such Subsidiary for any remedial work, damage to natural resources
or personal injury that have, or could reasonably be likely to have, a Material
Adverse Effect.

(o) ERISA. (i) No ERISA Event has occurred or is reasonably expected to occur
with respect to any Plan, (ii) Neither any Borrower nor any of its ERISA
Affiliates has incurred or is reasonably expected to incur any Withdrawal
Liability to any Multiemployer Plan. (iii) Neither any Borrower nor any of its
ERISA Affiliates has been notified by the sponsor of a Multiemployer Plan that
such Multiemployer Plan is in reorganization or has

 

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been terminated, within the meaning of Title IV of ERISA, and no such
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated, within the meaning of Title IV of ERISA. (iv) Except as set forth in
Schedule 4.01(o), as of the date indicated on Schedule 4.01(o) neither any
Borrower nor any of its Subsidiaries have material liability with respect to
“accumulated post-retirement benefit obligations” within the meaning of
Statement of Financial Accounting Standards No. 106 and (v) Schedule B
(Actuarial Information) to the most recent annual report (Form 5500 Series) for
each Plan, copies of which have been filed with the Internal Revenue Service
and, if requested, furnished to the Administrative Agent pursuant to
Section 5.01(k)(ix) hereof, is complete and accurate in all material respects
and fairly presents the funding status of such Plan, and since the date of such
Schedule B there has been no material adverse change in such funding status.

(p) Holding Company; Investment Company Act. None of the Borrowers nor any of
their respective Subsidiaries is an “investment company” or a company
“controlled” by an “investment company”, within the meaning of the Investment
Company Act of 1940, as amended.

(q) NYSE Listing; REIT Status. The common stock of Rayonier is listed on the New
York Stock Exchange, there is no proceeding pending to delist such common stock,
and Rayonier is in good standing on such exchange. Rayonier is qualified as a
REIT under Section 856 of the Internal Revenue Code and is in material
compliance with all other provisions of the Internal Revenue Code applicable to
Rayonier as a REIT.

ARTICLE V

COVENANTS OF THE BORROWERS

SECTION 5.01. Affirmative Covenants. Each Borrower hereby agrees that for so
long as any of the Commitments remains in effect, any Revolving Credit Advance
remains outstanding and unpaid, any Letter of Credit remains outstanding, or any
obligation of any Borrower is owing to any Lender, any Issuing Bank or the
Administrative Agent hereunder or under any other Loan Document (other than
contingent obligations which pursuant to Section 8.04(d) shall survive payment
in full of all amounts referred to in Section 8.04(d)), each Borrower shall:

(a) Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to
comply in all material respects, with all applicable laws, rules, regulations
and orders, such compliance to include, without limitation, compliance with
(i) ERISA and (ii) Environmental Laws to the extent set forth in
Section 5.01(d).

(b) Payment of Taxes, Etc. Pay and discharge, and cause each of its Subsidiaries
to pay and discharge, before the same shall become delinquent, (i) all federal
and other material taxes, assessments and governmental charges or levies imposed
upon it or upon its property and (ii) all lawful claims that, if unpaid, might
by law become a Lien upon its property; provided, however, that no Borrower nor
any of its Subsidiaries shall be required to pay or discharge any such tax,
assessment, charge or claim that is being contested in good

 

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faith by appropriate proceedings and with respect to which reserves in
conformity with GAAP are being maintained on the books of the applicable
Borrower or such Subsidiary.

(c) Payment of Obligations. Pay, discharge or otherwise satisfy, and cause each
of its Subsidiaries to 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, or in the case of any trade payable before such
trade payable becomes Debt, except where the amount or validity thereof is
currently being contested in good faith and by appropriate proceedings and as to
which appropriate reserves, if any, to the extent required in accordance with
GAAP, are being maintained.

(d) Compliance with Environmental Laws. (i) Comply and cause each of its
Subsidiaries to comply, in all material respects, with all Environmental Laws
and Environmental Permits that are material to the conduct of the business of
the applicable Borrower or any of its Subsidiaries or necessary for their
operations and properties, and (ii) obtain and renew, and cause each of its
Subsidiaries to obtain and renew, all Environmental Permits that are material to
the conduct of the business of the applicable Borrower or any of its
Subsidiaries or necessary for their operations and properties; except, with
respect to (i) and (ii) above, to the extent that any such Environmental Law or
the terms of any Environmental Permit are being contested in good faith and by
proper proceedings and as to which appropriate reserves, if any, to the extent
required in accordance with GAAP, are being maintained.

(e) Maintenance of Insurance. Maintain, and cause each of its Subsidiaries to
maintain, insurance (including self-insurance, in amounts consistent with
industry practice and custom) with responsible insurance companies or
associations in such amounts and covering such risks as is usually carried by
companies engaged in similar businesses and owning similar properties in the
same general areas in which the applicable Borrower or such Subsidiary operates.

(f) Preservation of Corporate Existence, Etc. Preserve and maintain, and cause
each of its Subsidiaries to preserve and maintain, its corporate existence,
rights (charter and statutory) and franchises; provided, however, that any
Borrower and its Subsidiaries may consummate any merger or consolidation
permitted under Section 5.03(c) and provided further that no Borrower nor any of
its Subsidiaries shall be required to preserve any right or franchise or the
corporate existence of any Subsidiary of such Borrower (other than, in the case
of Rayonier, TRS, RFR and any Additional Borrower) if the Board of Directors of
such Borrower or such Subsidiary shall determine that the preservation thereof
is no longer desirable in the conduct of the business of such Borrower or such
Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Rayonier and its Subsidiaries taken as a whole or the
Lenders.

(g) Visitation Rights. At any reasonable time and from time to time, upon
reasonable prior notice, permit, and shall cause each of its Subsidiaries to
permit, the Administrative Agent or, subject to the proviso hereto, any of the
Lenders or Issuing Bank or any agents or representatives thereof to examine and
make copies of and abstracts from the records and books of account of, and visit
the properties of any Borrower and any of its

 

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Subsidiaries, as shall be reasonably requested, and to discuss the affairs,
finances and accounts of any Borrower and any of its Subsidiaries with any of
their officers and with their independent certified public accountants, provided
that, unless (x) an Event of Default has occurred and is continuing or (y) the
Corporate Credit Rating assigned by S&P is lower than BBB- and the Corporate
Credit Rating assigned by Moody’s is lower than Baa3, none of the Borrowers
shall be required to comply with this subsection (g) with respect to any of the
Lenders, Issuing Bank or any agents or representatives thereof (other than the
Administrative Agent).

(h) Keeping of Books. Keep, and cause each of its Subsidiaries to keep, proper
books of record and account, in which appropriate entries that are correct in
all material respects shall be made, of all financial transactions and the
assets and business of each Borrower and each such Subsidiary so as to permit
preparation of their Consolidated financial statements in accordance with GAAP.

(i) Maintenance of Properties, Etc. Maintain and preserve, and cause each of its
Subsidiaries to maintain and preserve, all of its properties that are necessary
or, in the reasonable judgment of the applicable Borrower or such Subsidiary,
useful in the conduct of its business in good working order and condition,
ordinary wear and tear excepted.

(j) Transactions with Affiliates. Conduct, and cause each of its Subsidiaries to
conduct, all transactions otherwise permitted under this Agreement with any of
their Affiliates on terms that are fair and reasonable and no less favorable to
the applicable Borrower or such Subsidiary than it would obtain in a comparable
arm’s-length transaction with a Person not an Affiliate other than:

(i) transactions among any Borrower and any of its wholly owned Subsidiaries;
and

(ii) transactions among wholly owned Subsidiaries of any Borrower.

(k) Reporting Requirements. Furnish to the Lenders:

(i) as soon as available and in any event within 10 days after the date
quarterly financial statements would be required to be filed by an “Accelerated
Filer” as defined in Rule 12b-2 under the Exchange Act (without giving effect to
any extension) in a periodic report with the SEC (and in any event within 50
days after the end of each of the first three Fiscal Quarters in each fiscal
year of Rayonier), unaudited Consolidated balance sheets of Rayonier and its
Subsidiaries as of the end of such quarter and Consolidated statements of income
and cash flows of Rayonier and its Subsidiaries for the period commencing at the
end of the previous fiscal year and ending with the end of such quarter, duly
certified (subject to year-end audit adjustments) by the senior vice president
of finance of Rayonier as having been prepared in accordance with GAAP;

(ii) as soon as available and in any event within 10 days after the date annual
financial statements would be required to be filed by an “Accelerated Filer” as
defined in Rule 12b-2 under the Exchange Act (without giving effect to any
extension) in

 

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a periodic report with the SEC (and in any event within 90 days after the end of
each fiscal year of Rayonier), a copy of the annual audit report for such year
for Rayonier and its Subsidiaries, containing Consolidated balance sheets of
Rayonier and its Subsidiaries as of the end of such fiscal year and Consolidated
statements of income and cash flows of Rayonier and its Subsidiaries for such
fiscal year, in each case accompanied by an opinion reasonably acceptable to the
Required Lenders by a nationally recognized firm of independent public
accountants;

(iii) together with the financial statements required to be delivered in
accordance with clauses (i) and (ii) above, (A) a certificate of the senior vice
president of finance of Rayonier stating that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement as to
the nature thereof and the action that the applicable Borrower has taken and
proposes to take with respect thereto and (B) a schedule in form and substance
satisfactory to the Administrative Agent of the computations used by Rayonier in
determining compliance with the covenants contained in Section 5.05;

(iv) promptly after any Borrower becomes aware of and in any event within five
Business Days after becoming aware of each Default, continuing on the date of
such statement, a statement of the senior vice president of finance of Rayonier
setting forth details of such Default and the action that Rayonier has taken and
proposes to take with respect thereto;

(v) promptly after the sending or filing thereof, copies of all reports that any
Borrower sends to any of its public securityholders, and copies of all reports
and registration statements that any Borrower or any of its Subsidiaries files
with the SEC or any national securities exchange;

(vi) promptly after any Borrower becomes aware of the commencement thereof,
notice of all actions and proceedings before any court, governmental agency or
arbitrator affecting such Borrower or any of its Subsidiaries of the type
described in the first sentence of Section 4.01(g);

(vii) promptly and in any event within 10 days after Rayonier or any of its
ERISA Affiliates knows that any ERISA Event has occurred, a statement of the
senior vice president of finance of Rayonier describing such ERISA Event and the
action, if any, that Rayonier or such ERISA Affiliate has taken and proposes to
take with respect thereto;

(viii) promptly and in any event within three Business Days after receipt
thereof by Rayonier or any of its ERISA Affiliates, copies of each notice from
the PBGC stating its intention to terminate any Plan or to have a trustee
appointed to administer any such Plan;

(ix) upon the request of the Administrative Agent after the filing thereof with
the Internal Revenue Service, copies of each Schedule B (Actuarial Information)
to the annual report (Form 5500 Series) with respect to each Plan;

 

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(x) promptly and in any event within five Business Days after receipt thereof by
Rayonier or any of its ERISA Affiliates from the sponsor of a Multiemployer
Plan, copies of each notice concerning (x) the imposition of Withdrawal
Liability by any such Multiemployer Plan, (y) the reorganization or termination,
within the meaning of Title IV of ERISA, of any such Multiemployer Plan or
(z) the amount of liability incurred, or that may be incurred, by Rayonier or
any of its ERISA Affiliates in connection with any event described in clause
(x) or (y);

(xi) as soon as practical and in any event promptly after the receipt thereof by
any Borrower, copies of all written claims, complaints, notices or inquiries
relating to compliance by such Borrower or any of its Subsidiaries with any
Environmental Law or Environmental Permit that could reasonably be likely to
have a Material Adverse Effect or could reasonably be likely to (x) form the
basis of an Environmental Action against such Borrower or any of its
Subsidiaries or such property that could reasonably be likely to have a Material
Adverse Effect or (y) cause any such property to be subject to any restrictions
on ownership, occupancy, use or transferability under any Environmental Law that
could reasonably be likely to have a Material Adverse Effect;

(xii) promptly such other information and data with documentation and other
information required by bank regulatory authorities under applicable “know your
customer” and Anti-Money Laundering rules and regulations (including, without
limitation, the USA PATRIOT Act), including, without limitation, evidence
satisfactory to the Administrative Agent of (x) the listing of Capital Stock of
Rayonier on New York Stock Exchange and (y) Rayonier’s ownership of all of the
outstanding Capital Stock of TRS and RFR, as from time to time may be reasonably
requested by the Administrative Agent; and

(xiii) such other information respecting the condition or operations, financial
or otherwise, of any Borrower or any of its Subsidiaries as any Lender or
Issuing Bank through the Administrative Agent may from time to time reasonably
request.

Information required to be delivered pursuant to this Section 5.01(k) shall be
deemed to have been delivered to the Lenders when it has been delivered to the
Administrative Agent.

Notwithstanding any of the foregoing, at any time when Rayonier is subject to
the reporting requirements of Section 13(a)(2) of the Securities Exchange Act of
1934, Rayonier shall be deemed to have complied with the requirements of clauses
(i), (ii), (v) and (vi) above, if Rayonier shall include such information in
timely filings made with the SEC by Rayonier.

(l) Subsidiary Guarantees. (i) Cause at all times domestic Subsidiaries of RFR
to be party to the RFR Subsidiary Guarantee Agreement such that as of the
Closing Date and as of the 60th day after the end of each Fiscal Quarter
thereafter (and at any time as a condition precedent to (and after giving effect
to) any merger, consolidation, liquidation or other disposition of assets
permitted by Section 5.03(c)(ii) or 5.03(d)), (x) the aggregate assets of RFR
and RFR Subsidiary Guarantors are not less than 90% of the Consolidated Assets
of

 

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RFR and its domestic Subsidiaries and (y) the aggregate gross revenues of RFR
and the RFR Subsidiary Guarantors (calculated as of the last day of RFR’s and
such Guarantors’ most recently ended Fiscal Quarter for the four consecutive
Fiscal Quarters ending with such Fiscal Quarter) do not constitute less than 90%
of the aggregate gross revenues of RFR and its domestic Subsidiaries (calculated
as of the last day of RFR’s and its Subsidiaries’ most recently ended Fiscal
Quarter for the four consecutive Fiscal Quarters ending with such Fiscal
Quarter); provided that in the event that any Subsidiary of RFR guarantees any
other Debt of RFR, such Subsidiary shall promptly execute and deliver a
supplement to the RFR Subsidiary Guarantee Agreement as a supplemental
guarantor.

(ii) Cause at all times domestic Subsidiaries of TRS to be party to the TRS
Subsidiary Guarantee Agreement such that as of the Closing Date and as of the
60th day after the end of each Fiscal Quarter thereafter (and at any time as a
condition precedent to (and after giving effect to) any merger, consolidation,
liquidation or other disposition of assets permitted by Section 5.03(c)(i) or
5.03(d)), (x) the aggregate assets of TRS and TRS Subsidiary Guarantors are not
less than 90% of the Consolidated Assets of TRS and its domestic Subsidiaries
and (y) the aggregate gross revenues of TRS and the TRS Subsidiary Guarantors
(calculated as of the last day of TRS’s and such Guarantors’ most recently ended
Fiscal Quarter for the four consecutive Fiscal Quarters ending with such Fiscal
Quarter) do not constitute less than 90% of the aggregate gross revenues of TRS
and its domestic Subsidiaries (calculated as of the last day of TRS’s and its
Subsidiaries’ most recently ended Fiscal Quarter for the four consecutive Fiscal
Quarters ending with such Fiscal Quarter); provided that in the event that any
Subsidiary of TRS guarantees any other Debt of TRS, such Subsidiary shall
promptly execute and deliver a supplement to the TRS Subsidiary Guarantee
Agreement as a supplemental guarantor.

(iii) In maintaining such guarantees, the guarantees executed by any Subsidiary
Guarantors shall promptly be executed and delivered to the Administrative Agent
for the benefit of each of the Lenders and Issuing Banks and shall be
substantially identical to the guarantees previously executed by each of the
other Subsidiary Guarantors, together with such supporting documentation,
including corporate resolutions and opinions of counsel with respect to such
additional guarantee, as may be reasonably required by the Administrative Agent.

(iv) In the event of a sale or other disposition of all or substantially all of
the assets of any Subsidiary Guarantor, by way of merger, consolidation or
otherwise, or a sale or other disposition of all of the Capital Stock of any
Subsidiary Guarantor, then such Subsidiary Guarantor (in the event of a sale or
disposition, by way of merger, consolidation or otherwise, of all of the Capital
Stock of such Subsidiary Guarantor) or the Person acquiring the property (in the
event of a sale or other disposition of all or substantially all of the assets
of such Subsidiary Guarantor) will be released and relieved of any obligations
under its respective Guarantee, provided that (y) such Subsidiary Guarantor or
other Person, as the case may be, is concurrently released and relieved of any
obligations it may have with respect to all other guarantees of Debt of such
Borrower and (z) after such release Rayonier remains in compliance with
Section 5.01(l)(i) and (ii).

 

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SECTION 5.02. Additional Rayonier’s Affirmative Covenants. In addition to the
affirmative covenants set forth in Section 5.01, Rayonier hereby agrees that for
so long as any of the Commitments remains in effect, any Revolving Credit
Advance remains outstanding and unpaid, any Letter of Credit remains
outstanding, or any obligation of any Borrower is owing to any Lender, any
Issuing Bank or the Administrative Agent hereunder or under any other Loan
Document (other than contingent obligations which pursuant to Section 8.04(d)
shall survive payment in full of all amounts referred to in Section 8.04(d)),
Rayonier shall:

(a) Corporate Credit Ratings. Maintain at all times a Corporate Credit Rating by
Moody’s and S&P.

(b) Maintenance of NYSE Listing. Maintain at all times the listing of its common
shares of beneficial interest on New York Stock Exchange and not take any action
that results in a proceeding to delist such common shares.

(c) Maintenance of REIT Status. Maintain material compliance with Section 856
and any other applicable provisions of the Internal Revenue Code necessary to
maintain its REIT status.

(d) Additional Borrower. From and after any Additional Borrower Effective Date
with respect to an Additional Borrower, maintain Control over such Additional
Borrower and take such other action as may be required so that all accounts and
financial reports of Rayonier and such Additional Borrower and, to the extent
otherwise required by GAAP, their respective Subsidiaries are consolidated in
accordance with GAAP.

SECTION 5.03. Negative Covenants. Rayonier hereby agrees that for so long as the
Commitments remain in effect, any Revolving Credit Advance remains outstanding
and unpaid, any Letter of Credit remains outstanding, or any obligation of any
Borrower is owing to any Lender, any Issuing Bank or the Administrative Agent
hereunder or under any other Loan Document (other than contingent obligations
which pursuant to Section 8.04(d) shall survive payment in full of all amounts
referred to in Section 8.04(d)), Rayonier shall not:

(a) Dividends. Declare or pay, or permit any of its Subsidiaries to declare or
pay, any dividends or make any other distribution on Capital Stock of Rayonier
or any of its Subsidiaries (other than dividends or distributions payable solely
in Capital Stock of Rayonier or, in the case of dividends paid to Rayonier or
any of its Subsidiaries, Capital Stock of such Subsidiary) or purchase, redeem,
defease or otherwise acquire or retire for value, or permit any of its
Subsidiaries to purchase, redeem, defease or otherwise acquire or retire for
value any of the Capital Stock of Rayonier or any of its Subsidiaries at any
time outstanding except as provided in this Section 5.03(a). So long as no
Default or Event of Default has occurred and is then continuing, Rayonier and
its Subsidiaries shall be permitted to redeem, repurchase or otherwise acquire
or retire any of their respective Capital Stock and declare and pay dividends on
their respective Capital Stock from time to time in amounts determined by
Rayonier or such Subsidiaries; provided, however, that subject to the terms of
the next sentence, in no event shall Rayonier (or, after any Additional Borrower
Effective Date, the Additional Borrower) declare or pay dividends on its Capital
Stock if dividends (other than dividends or distributions payable solely in
Capital Stock of Rayonier (or, after the Additional

 

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Borrower Effective Date, the Additional Borrower)) paid in, or with respect to,
any period of four Fiscal Quarters, in the aggregate, would exceed the sum of
(1) 90% of Funds From Operations for such period plus (2) the aggregate amount
of dividends permitted pursuant to the foregoing clause (1) in the preceding
period of four Fiscal Quarters in excess of the aggregate amount dividends
actually paid during such period. Notwithstanding the foregoing, unless at the
time of such distribution any Event of Default has occurred and is then
continuing under Section 6.01(a), Rayonier (and, if applicable any Additional
Borrower) shall be permitted to declare and pay whatever amount of cash
dividends is necessary for Rayonier to maintain its tax status as a REIT.

(b) Liens, Etc. Create or suffer to exist, or permit any of its Subsidiaries to
create or suffer to exist, any Lien on or with respect to any of its properties,
whether now owned or hereafter acquired, or assign, or permit any of its
Subsidiaries to assign, any right to receive income, other than:

(i) Permitted Liens,

(ii) purchase money Liens upon or in any property acquired or held by Rayonier
or any Subsidiary in the ordinary course of business to secure the purchase
price of such property or to secure Debt incurred solely for the purpose of
financing the acquisition of such property, or Liens existing on such property
at the time of its acquisition (other than any such Lien created in
contemplation of such acquisition) or extensions, renewals or replacements of
any of the foregoing for the same or a lesser amount; provided, however, that no
such Lien shall extend to or cover any property other than the property being
acquired, and no such extension, renewal or replacement shall extend to or cover
any property not theretofore subject to the Lien being extended, renewed or
replaced,

(iii) Liens on property of a Person existing at the time such Person is merged
into or consolidated with Rayonier or any of its Subsidiaries or becomes a
Subsidiary of Rayonier; provided that such Liens were not created in
contemplation of such merger, consolidation or acquisition and do not extend to
any assets other than those of the Person so merged into or consolidated with
Rayonier or such Subsidiary or acquired by Rayonier or such Subsidiary,

(iv) the Liens described on Schedule 5.03(b),

(v) the replacement, extension or renewal of any Lien permitted by clauses (ii),
(iii) and (iv) above upon or in the same property theretofore subject thereto or
the replacement, extension or renewal (without increase in the amount or change
in any direct or contingent obligor) of the Debt secured thereby, and

(vi) other Liens securing Debt; provided that the principal amount of Debt
secured pursuant to this clause (vi) shall not in the aggregate at any time
outstanding exceed 15% of the Consolidated Tangible Net Worth of Rayonier and
its Subsidiaries.

 

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(c) Mergers, Etc. Merge or consolidate with or into, or convey, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to, any Person, or permit any of its Subsidiaries to do so,
except that (i) subject to Section 5.01(l), (A) any wholly owned Subsidiary of
TRS may merge or consolidate with or into, or dispose of all or substantially
all of its assets to, any other wholly owned Subsidiary of TRS or (B) any wholly
owned Subsidiary of TRS may merge into or dispose of all or substantially all of
its assets to TRS (with TRS being the surviving entity), (ii) subject to
Section 5.01(l), (A) any wholly owned Subsidiary of RFR may merge or consolidate
with or into, or dispose of all or substantially all of its assets to, any other
wholly owned Subsidiary of RFR or (B) any wholly owned Subsidiary of RFR may
merge into or dispose of all or substantially all of its assets to RFR (with RFR
being the surviving entity), (iii) Rayonier (prior to any Additional Borrower
Effective Date) or any Additional Borrower (after any Additional Borrower
Effective Date) may merge with any other Person (including TRS and RFR),
provided in each case that no Default shall have occurred and be continuing at
the time of such proposed transaction or would result therefrom and, in the case
of any merger to which Rayonier or such Additional Borrower is a party,
(w) Rayonier or such Additional Borrower, as the case may be, is the surviving
corporation, (x) after giving effect to the consummation of such merger,
Rayonier shall be in compliance with the covenants set forth in Section 5.05
(calculated on a pro forma basis, as of the date of the consummation of such
merger), (y) the RFR Subsidiary Guarantee Agreement (in the event of merger with
RFR) or the TRS Subsidiary Guarantee Agreement (in the event of merger with TRS)
shall remain in full force and the respective Subsidiary Guarantors shall
continue to guarantee obligations of Rayonier hereunder and under other Loan
Documents, and (z) Rayonier and its Subsidiaries shall be in the same line of
business as conducted by them immediately prior to such merger, and
(iv) Rayonier may transfer all of its assets and properties to an Additional
Borrower on the Additional Borrower Effective Date.

(d) Transfers of Assets Among Loan Parties. Sell, lease, transfer or otherwise
dispose of, or permit any if its Subsidiaries to sell, lease, transfer or
otherwise dispose of, any assets to any Borrower or any Subsidiary of any
Borrower, except (i) as permitted by Section 5.03(c), (ii) any such sale, lease,
transfer or other disposition that is made in the ordinary course of its
business, (iii) except in the case of Rayonier and any Additional Borrower, any
such sale, lease, transfer or other disposition that is made to a Qualified
Transferee of such Person, (iv) sales, leases, transfers or other dispositions
by Rayonier and its Subsidiaries to The Rayonier Foundation in an aggregate
amount for all such Persons not to exceed $5,000,000 in any calendar year, and
(v) sales, leases, transfers or other dispositions by Rayonier and its
Subsidiaries to Subsidiaries that are not Subsidiary Guarantors in an aggregate
amount for all such Persons not to exceed $10,000,000 in any calendar year
(which amount shall be in addition to any amount covered by clause (iv)).

(e) Change in Nature of Business. Make, or permit any of its Subsidiaries to
make, any material change in the nature of the business of Rayonier and its
Subsidiaries taken as a whole as carried on at the date hereof.

 

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(f) Accounting Changes. Make or permit, or permit any of its Subsidiaries to
make or permit, any change in accounting policies or reporting practices that
would prevent Rayonier from preparing its Consolidated financial statements in
accordance with GAAP.

(g) Additional Borrower. From and after any Additional Borrower Effective Date
with respect to an Additional Borrower, (i) own, hold or acquire any assets,
other than equity interests in such Additional Borrower, (ii) create, incur,
assume or suffer to exist any Debt or other liabilities or obligations, other
than (A) liabilities or obligations existing on the Additional Borrower
Effective Date and assumed by the Additional Borrower, and (B) liabilities or
obligations arising by law that are also liabilities or obligations of such
Additional Borrower, or (iii) engage in any business or activity, other than the
ownership of equity interests in such Additional Borrower and other activities
incidental thereto.

SECTION 5.04. Additional RFR’s Negative Covenants. In addition to (and without
in any way modifying) the covenants set forth in Section 5.03, Rayonier and RFR
hereby agree that for so long as the Commitments remain in effect, any Revolving
Credit Advance remains outstanding and unpaid, any Letter of Credit remains
outstanding, or any obligation of any Borrower is owing to any Lender, any
Issuing Bank or the Administrative Agent hereunder or under any other Loan
Document (other than contingent obligations which pursuant to Section 8.04(d)
shall survive payment in full of all amounts referred to in Section 8.04(d)),
RFR:

(a) Additional Limitation on Debt. Shall not and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or in any manner become directly or indirectly liable,
contingently or otherwise, for the payment of (in each case, to “incur”) any
Debt (including, without limitation, Acquired Debt), unless at the time of such
incurrence, and after giving pro forma effect to the receipt and application of
the proceeds of such Debt, the RFR Consolidated Fixed Charge Coverage Ratio is
greater than 2.50 to 1.00; provided that the foregoing limitation shall not
apply to the RFR Permitted Debt.

(b) Investments and Other Restricted Payments. Shall not and shall not permit
any of its Restricted Subsidiaries to, directly or indirectly (i) declare or pay
any dividend or make any other distribution or payment on or in respect of
Capital Stock of RFR or any of its Restricted Subsidiaries or any payment made
to the direct or indirect holders (in their capacities as such) of Capital Stock
of RFR or any of its Restricted Subsidiaries (other than (A) dividends or
distributions payable solely in Capital Stock of RFR (other than Redeemable
Capital Stock of a Restricted Subsidiary) or in options, warrants or other
rights to purchase Capital Stock of RFR (other than Redeemable Capital Stock of
a Restricted Subsidiary), (B) the declaration or payment of dividends or other
distributions to the extent declared or paid to RFR or any Restricted
Subsidiary, and (C) the declaration or payment of dividends or other
distributions by any Restricted Subsidiary to all holders of Capital Stock of
such Restricted Subsidiary on a pro rata basis (including, in the case of RFR,
to the Managing General Partner)); (ii) purchase, redeem, defease or otherwise
acquire or retire for value any Capital Stock of RFR or any of its Restricted
Subsidiaries (other than any such Capital Stock owned by a Wholly-Owned
Restricted Subsidiary); (iii) make any principal payment on, purchase, defease,
repurchase, redeem or otherwise acquire or retire for value, prior to any
scheduled maturity, scheduled repayment, scheduled sinking fund payment or other
Stated Maturity, any Subordinated Debt (other than any such Debt owned by RFR or
a Wholly-Owned

 

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Restricted Subsidiary), (iv) make any Investment (other than any RFR Permitted
Investment) in any Person, or (v) make any interest payment on the Rayonier
Subordinated Notes (such payments or Investments described in the preceding
clauses (i), (ii), (iii) (iv) and (v), collectively, “RFR Restricted Payments”),
unless, at the time of and after giving effect to proposed Restricted Payment
(y) no Default or Event of Default shall have occurred and be continuing and
(z) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by RFR and its Restricted Subsidiaries during the
Fiscal Quarter during which such Restricted Payment is made, shall not exceed
(1) if the RFR Consolidated Fixed Charge Coverage Ratio shall be greater than
2.00 to 1.00, an amount equal to Available Cash for the immediately preceding
Fiscal Quarter, or (2) if the RFR Consolidated Fixed Charge Coverage Ratio shall
be equal to or less than 2.00 to 1.00, an amount equal to the sum of
(a) $75,000,000 over the life of the Installment Note Agreement, plus (b) to the
extent not theretofore used as the basis for a Restricted Payment pursuant to
clause (ii) or (iii) of the next succeeding paragraph, the aggregate net cash
proceeds of any (i) capital contribution to RFR from any Person (other than a
Restricted Subsidiary) or (ii) issuance and sale of shares of Capital Stock
(other than Redeemable Capital Stock) of RFR to any Person (other than to a
Restricted Subsidiary), in either such case made after the Closing Date and no
later than substantially concurrently with the making of such Restricted
Payment, minus (c) the aggregate amount of all Restricted Payments (including
such Restricted Payment) made pursuant to this clause (2) after the Closing
Date. The amount of any such Restricted Payment, if other than cash, shall be
the Fair Market Value (as determined in good faith by Board of Directors of the
General Managing Partner) on the date of such Restricted Payment of the asset(s)
proposed to be transferred by RFR or such Restricted Subsidiary, as the case may
be, pursuant to such Restricted Payment.

None of the foregoing provisions of this Section 5.04(b) shall prohibit: (i) the
payment of any dividend or distribution within 60 days after the date of its
declaration, if at the date of declaration such payment would be permitted by
the immediately preceding paragraph; (ii) the redemption, repurchase or other
acquisition or retirement of any class of Capital Stock of RFR or any Restricted
Subsidiary in exchange for, or out of the net cash proceeds of, a substantially
concurrent (A) capital contribution to RFR from any Person (other than a
Restricted Subsidiary) or (B) issue and sale of other shares of Capital Stock
(other than Redeemable Capital Stock of a Restricted Subsidiary) of RFR to any
Person (other than to a Restricted Subsidiary); provided, however, that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase or other acquisition or retirement shall be excluded from the
calculation of Available Cash; (iii) any redemption, repurchase or other
acquisition or retirement of the Subordinated Debt by exchange for, or out of
the net cash proceeds of, a substantially concurrent (A) capital contribution to
RFR from any Person (other than a Restricted Subsidiary) or (B) issue and sale
of (y) Capital Stock (other than Redeemable Capital Stock of a Restricted
Subsidiary) of RFR to any Person (other than to a Restricted Subsidiary) or
(z) Debt of RFR issued to any Person (other than a Restricted Subsidiary), so
long as such Debt is RFR Permitted Refinancing Debt; or (iv) any distribution,
or redemptions declared or effected by RFR on or before the Closing Date,
whether or not payable on a later date; provided, however, in each case, that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase or other acquisition or retirement shall be excluded from
the calculation of Available Cash. In computing the amount of Restricted
Payments previously made for purposes of the preceding paragraph, Restricted
Payments made under clause (i) of this paragraph shall be included and
Restricted Payments made under clauses (ii), (iii) and (iv) shall not be so
included.

 

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(c) Limitation on Sale and Leaseback Transactions. Shall not enter, and shall
not permit any of its Restricted Subsidiaries to enter, into any Sale and
Leaseback Transaction with respect to any property of RFR or any of its
Restricted Subsidiaries. Notwithstanding the foregoing, RFR and its Restricted
Subsidiaries may enter into Sale and Leaseback Transactions with respect to
property acquired or constructed after the Closing Date; provided that (i) RFR
or such Restricted Subsidiary would be permitted to incur Debt secured by a Lien
on such property in an amount equal to the Attributable Debt with respect to
such Sale and Leaseback Transaction, or (ii) the lease in such Sale and
Leaseback Transaction is for a term not in excess of the lesser of (A) three
years and (B) 60% of the remaining useful life of such property.

(d) Limitation on Timber Harvesting. In the event that RFR or any of its
Restricted Subsidiaries receive any Net Proceeds from one or more Excess
Harvests, within 270 days after the date of such receipt (or such longer period
as may be required to comply with any agreement in effect on the Closing Date),
RFR, at its option, may apply the amount of such aggregate Net Proceeds (less
the amount of any such Net Proceeds previously applied during such fiscal year
for the purposes set forth in clause (i) and/or (ii) below) to (i) reduce Senior
Debt of RFR secured as permitted under Section 5.03(b) or Senior Debt of a
Restricted Subsidiary (with a permanent reduction of availability in the case of
any borrowings by RFR or any Restricted Subsidiary under the Working Capital
Facility or any other facility (other than the facility provided hereunder) that
permits amounts repaid or prepaid to be reborrowed) or (ii) make, or commit,
pursuant to a binding written contract (provided that such contract is
consummated substantially in accordance with the terms thereof within 30 days
after the end of the 270-day period), to make an investment in assets used or
useful in the business of RFR or such Subsidiary. Pending the final application
of any such Net Proceeds, RFR or any Restricted Subsidiary may temporarily
reduce borrowings under the Working Capital Facility or otherwise invest such
Net Proceeds in any manner that is not prohibited by this Agreement. Any such
Net Proceeds that are not applied or invested as provided in the first sentence
of this Section 5.04(d) will be deemed to constitute “Excess Harvest Proceeds”.
When the aggregate amount of Excess Harvest Proceeds exceeds $100,000,000, RFR
shall make an offer to the holders of the Installment Notes and an offer to all
holders of other Senior Debt containing provisions similar to those set forth in
this Section 5.04(d) (an “Excess Harvest Offer”), to prepay the aggregate
outstanding principal amount of the Installment Notes and such other Senior Debt
that may be prepaid out of the Excess Harvest Proceeds. To the extent that the
aggregate principal amount of the Installment Notes and other Senior Debt
tendered pursuant to an Excess Harvest Offer is less than the Excess Harvest
Proceeds, RFR may use such deficiency for general business purposes. If the
aggregate principal amount of the Installment Notes and other Senior Debt
offered to be prepaid exceeds the amount of Excess Harvest Proceeds offered to
be applied to prepay the same, the offer to prepay the Installment Notes and
such other Senior Debt shall be made on a pro rata basis. Upon completion of
such Excess Harvest Offer, the amount of Excess Harvest Proceeds shall be reset
at zero. It being understood that this Section 5.04(d) does not require RFR to
make an offer to the Lenders when the aggregate amount of Excess Harvest
Proceeds exceeds $100,000,000 and this Section 5.04(d) shall not be deemed to be
a provision similar to Section 10.1 of the Installment Note Agreement.

 

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(e) Limitation on Dividends and Other Payment Restrictions Affecting Restricted
Subsidiaries. Shall not, and shall not permit any of its Restricted Subsidiaries
to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or consensual restriction on the ability of any
Restricted Subsidiary to (i) pay dividends, in cash or otherwise, or make any
other distributions on or in respect of its Capital Stock, (ii) pay any Debt
owed to RFR or any other Restricted Subsidiary, (iii) make loans or advances to,
or any investment in, RFR or any other Restricted Subsidiary, or (iv) transfer
any of its properties or assets to RFR or any other Restricted Subsidiary
(collectively, “Payment Restrictions”), except for such encumbrances or
restrictions existing under or by reason of (A) applicable law, rules or
regulations, or any order or ruling by any Governmental Authority; (B) any
agreement in effect at or entered into on the Closing Date (including, without
limitation, this Agreement, the Installment Note Agreement and other agreements
described in Schedule 5.04(e)); (C) customary non-assignment provisions of any
contract, license or any lease governing a leasehold interest of RFR or any
Restricted Subsidiary; (D) customary restrictions on cash or other deposits
imposed by customers under contracts entered into in the ordinary course of
business; (E) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iv) above on the property so acquired; (F) contracts for the sale of assets,
including, without limitation, customary restrictions with respect to a
Restricted Subsidiary pursuant to an agreement that has been entered into for a
sale of all or substantially all the Capital Stock or assets of such Restricted
Subsidiary, to the extent such sale is permitted by this Agreement; (G) any
agreement or other instrument governing Debt, Preferred Stock or Redeemable
Capital Stock of a Person acquired by RFR or any Restricted Subsidiary (or of a
Restricted Subsidiary of such Person) in existence at the time of such
acquisition (but not created in contemplation thereof), which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the properties, assets or Subsidiaries of the
Person, so acquired; (H) provisions contained in agreements or instruments
relating to Debt or Preferred Stock which prohibit the transfer of all or
substantially all of the assets of the obligor or issuer thereunder unless the
transferee shall assume the obligations of the obligor or issuer under such
agreement or instrument; or (I) encumbrances or restrictions contained in any
agreement or instrument governing RFR Permitted Refinancing Debt; provided that
the encumbrances or restrictions of the type referred to in clause (i), (ii),
(iii) or (iv) above, contained in such agreement governing such RFR Permitted
Refinancing Debt are no more restrictive (taken as a whole) than those contained
in the agreement governing the Debt being refinanced.

(f) Limitations on Transactions with Affiliates. Notwithstanding provisions of
Section 5.03(d), shall not sell, transfer or otherwise dispose, and shall not
permit any of its Subsidiaries to sell, transfer or otherwise dispose, of any of
its Timberlands or Timber to any of their Affiliates (other than RFR and its
wholly owned Subsidiaries) unless such transaction is for the Fair Market Value
thereof.

 

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SECTION 5.05. Financial Covenants. Rayonier hereby agrees that for so long as
any of the Commitments remains in effect, any Revolving Credit Advance remains
outstanding and unpaid, any Letter of Credit remains outstanding, or any
obligation of any Borrower is owing to any Lender, any Issuing Bank or the
Administrative Agent hereunder or under any other Loan Document (other than
contingent obligations which pursuant to Section 8.04(d) shall survive payment
in full of all amounts referred to in Section 8.04(d)), Rayonier shall:

(a) Leverage Ratio. Cause, on the last day of each Fiscal Quarter of Rayonier,
the ratio of (i) Consolidated Debt of Rayonier and its Subsidiaries on such date
of determination to (ii) Consolidated EBITDA of Rayonier and its Subsidiaries
for the four Fiscal Quarters ended on such date not to exceed 4.00 to 1.00.

(b) Interest Coverage Ratio. Cause, on the last day of each Fiscal Quarter of
Rayonier, the ratio of (i) Consolidated EBITDA of Rayonier and its Subsidiaries
for the four Fiscal Quarters ended on such date of determination to
(ii) Consolidated interest expense of Rayonier and its Subsidiaries for the four
Fiscal Quarters ended on such date not to be less than 2.50 to 1.00.

ARTICLE VI

EVENTS OF DEFAULT

SECTION 6.01. Events of Default. If any of the following events (“Events of
Default”) shall occur and be continuing:

(a) Any Borrower shall fail to pay any principal of any Revolving Credit Advance
or LC Disbursement when the same becomes due and payable or any Borrower shall
fail to pay any interest on any Revolving Credit Advance or any fee or make any
other payment due in connection with this Agreement, any Note or any other Loan
Document within five days after the same becomes due and payable; or

(b) Any representation or warranty made or deemed made by or on behalf of any
Loan Party herein or in any other Loan Document or in any notice, report,
certificate, financial statement, instrument, agreement or other writing
delivered or prepared in connection with this Agreement or any other Loan
Document, shall prove to have been incorrect in any material respect when made;
or

(c) (i) Any Borrower shall fail to perform or observe any term, covenant or
agreement contained in Section 5.01(f), (g) or (k), (ii) Rayonier shall fail to
perform or observe any term, covenant or agreement contained in Section 5.02(b),
Section 5.03(a), (b), (c), (d) or (e), or Section 5.05, or (iii) any Loan Party
shall fail to perform or observe any other term, covenant or agreement contained
in this Agreement or any other Loan Document on its part to be performed or
observed if, solely in the case of this clause (iii), such failure shall remain
unremedied for 30 days after written notice thereof shall have been given to
such Loan Party by the Administrative Agent or any Lender; or

 

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(d) (i) Any Borrower or any of its Subsidiaries shall fail to pay any principal
of or premium, interest or other amount payable with respect to any Debt that is
outstanding in a principal amount of at least $10,000,000 in the aggregate (but
excluding Debt outstanding hereunder or under any other Loan Document) of such
Borrower or such Subsidiary (as the case may be), when the same becomes due and
payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such Debt;
or (ii) any event shall occur or condition shall exist (including, without
limitation, any event of the type described in clause (i) above) under any
agreement or instrument relating to any Debt that is outstanding in a principal
amount of at least $25,000,000 in the aggregate (but excluding Debt outstanding
hereunder or under any other Loan Document) of any Borrower or any of its
Subsidiaries (as the case may be) and shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect of such
event or condition is to accelerate the maturity of such Debt, or any such Debt
shall be accelerated, declared to be due and payable, or required to be prepaid
or redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the Stated
Maturity thereof; or

(e) Any Loan Party shall generally not pay its debts as such debts become due,
or shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any proceeding shall
be instituted by or against any Loan Party seeking to adjudicate it a bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts, in each such
case, under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of its
property) shall occur; or any Loan Party shall take any corporate action to
authorize any of the actions set forth above in this subsection (e); or

(f) Any judgment or order for the payment of money in excess of $10,000,000
shall be rendered against any Borrower or any of its Subsidiaries and either
(i) enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or

(g) Any non-monetary judgment or order shall be rendered against any Borrower or
any of its Subsidiaries that could be reasonably expected to have a Material
Adverse Effect, and there shall be any period of 30 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or

 

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(h) (i) Any Person or two or more Persons acting in concert shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 of the SEC under the
Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of
Rayonier (or other securities convertible into such Voting Stock) representing
30% or more of the combined voting power of all Voting Stock of Rayonier; or
(ii) during any period of up to 24 consecutive months, commencing after the date
of this Agreement, individuals who at the beginning of such 24-month period were
directors of Rayonier shall cease for any reason (other than due to death or
disability) to constitute a majority of the Board of Directors of Rayonier
(except to the extent that individuals who at the beginning of such 24-month
period were replaced by individuals (x) elected by 66-2/3% of the remaining
members of the Board of Directors of Rayonier or (y) nominated for election by a
majority of the remaining members of the Board of Directors of Rayonier and
thereafter elected as directors by the shareholders of Rayonier); or (iii) any
Person or two or more Persons acting in concert shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon
consummation, will result in its or their acquisition of, the power to exercise,
directly or indirectly, a controlling influence over the management or policies
of Rayonier; or (iv) Rayonier or an Affiliate of Rayonier shall cease to be the
managing partner of RFR; or (v) from and after any Additional Borrower Effective
Date, Rayonier shall cease to have Control over such Additional Borrower; or
(vi) Rayonier or, from and after any Additional Borrower Effective Date with
respect to any Additional Borrower, such Additional Borrower shall cease to
directly own beneficially all of the outstanding Capital Stock of TRS and RFR;
or

(i) Any ERISA Event shall have occurred and the sum (determined as of the date
of occurrence of such ERISA Event) of the Insufficiency of the Plan with respect
to which such ERISA Event shall have occurred and the Insufficiency of any and
all other Plans with respect to which an ERISA Event shall have occurred and
then exist (or the liability of any Borrower and its ERISA Affiliates related to
any such ERISA Event) exceeds $10,000,000; or

(j) Any Borrower or any of its ERISA Affiliates shall have been notified by the
sponsor of a Multiemployer Plan that it has incurred Withdrawal Liability to
such Multiemployer Plan in an amount that, when aggregated with all other
amounts required to be paid to Multiemployer Plans by such Borrower and its
ERISA Affiliates as Withdrawal Liability (determined as of the date of such
notification), exceeds $10,000,000 or requires payments exceeding $5,000,000 per
annum; or

(k) Any Borrower or any of its ERISA Affiliates shall have been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or is being terminated, within the meaning of Title IV of ERISA,
and as a result of such reorganization or termination the aggregate annual
contributions of such Borrower and its ERISA Affiliates to all Multiemployer
Plans that are then in reorganization or being terminated have been or will be
increased over the amounts contributed to such Multiemployer Plans for the plan
years of such Multiemployer Plans immediately preceding the plan year in which
such reorganization or termination occurs by an amount exceeding $10,000,000; or

 

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(l) The Guarantee Agreement or any Subsidiary Guarantee Agreement shall cease,
for any reason, to be, or shall be asserted in writing by any Loan Party not to
be, in full force and effect, other than pursuant to the terms thereof and
hereof;

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to each Borrower,
declare the obligation of each Lender to make Revolving Credit Advances to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders, by notice to each
Borrower, declare the Revolving Credit Advances, all interest thereon and all
other amounts payable under this Agreement (including all amounts of LC
Exposure, whether or not the beneficiary of the then outstanding Letters of
Credit shall have presented the documents required therein) to be forthwith due
and payable, whereupon the Revolving Credit Advances, all such interest and all
such amounts (including all amounts of LC Exposure, whether or not the
beneficiary of the then outstanding Letters of Credit shall have presented the
documents required therein) shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of which
are hereby expressly waived by each Borrower; provided, however, that in the
event of an actual or deemed entry of an order for relief with respect to any
Borrower under the Federal Bankruptcy Code, (A) the obligation of each Lender to
make Revolving Credit Advances shall automatically be terminated and (B) the
Revolving Credit Advances, all such interest and all such amounts (including all
amounts of LC Exposure, whether or not the beneficiary of the then outstanding
Letters of Credit shall have presented the documents required therein) shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
each Borrower. With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an acceleration
pursuant to this paragraph, the applicable Borrower at such time shall be
required to cash collateralize such Letters of Credit by depositing in a cash
collateral account opened by the Administrative Agent an amount equal to the
aggregate then undrawn and unexpired amount of such Letters of Credit. Amounts
held in such cash collateral account shall be applied by the Administrative
Agent to the payment of drafts drawn under such Letters of Credit, and the
unused portion thereof after all such Letters of Credit shall have expired or
been fully drawn upon, if any, shall be applied to repay other obligations of
the applicable Borrower hereunder and under the other Loan Documents. The
Administrative Agent shall have exclusive dominion and control, including the
exclusive right of withdrawal, over such account. Other than any interest earned
on the investment of such deposits, which investments shall be made at the
option and sole discretion of the Administrative Agent and at the applicable
Borrower’s risk and expense, such deposits shall not bear interest. Interest or
profits, if any, on such investments shall accumulate in such account. After all
such Letters of Credit shall have expired or been fully drawn upon, all
reimbursement obligations shall have been satisfied and all other obligations of
the applicable Borrower hereunder and under the other Loan Documents shall have
been paid in full, the balance, if any, in such cash collateral account shall be
returned to such Borrower (or such other Person as may be lawfully entitled
thereto).

 

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ARTICLE VII

THE ADMINISTRATIVE AGENT

SECTION 7.01. Authorization and Action. Each Lender hereby appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement or the other
Loan Documents as are delegated to the Administrative Agent by the terms hereof
and thereof, together with such powers and discretion as are reasonably
incidental thereto. As to any matters not expressly provided for by this
Agreement (including, without limitation, enforcement of any Loan Document or
collection of any amounts thereunder), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Required Lenders, and such
instructions shall be binding upon all Lenders and all holders of Revolving
Credit Advances; provided, however, that the Administrative Agent shall not be
required to take any action that exposes the Administrative Agent to personal
liability or that is contrary to this Agreement or applicable law. The
Administrative Agent agrees to give to each Lender prompt notice of each notice
given to it by any Borrower pursuant to the terms of this Agreement.

SECTION 7.02. Administrative Agent’s Reliance, Etc. Neither the Administrative
Agent nor any of its directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with this Agreement, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, the
Administrative Agent: (i) may treat the Lender that made any Revolving Credit
Advance and Issuing Bank that issued any Letters of Credit as the holders of the
Debt resulting therefrom until, in the case of any such Lender, the
Administrative Agent receives and accepts an Assignment and Acceptance entered
into by such Lender, as assignor, and an Eligible Assignee, as assignee, as
provided in Section 8.07; (ii) may consult with legal counsel (including counsel
for the Borrowers), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Lender and shall not
be responsible to any Lender for any statements, warranties or representations
(whether written or oral) made in or in connection with this Agreement;
(iv) shall not have any duty to ascertain or to inquire as to the performance,
observance or satisfaction of any of the terms, covenants or conditions of this
Agreement or any other Loan Documents on the part of any Borrower or the
existence at any time of any Default or to inspect the property (including the
books and records) of any Borrower; (v) shall not be responsible to any Lender
or Issuing Bank for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any other Loan Document or
any other instrument or document furnished pursuant hereto and thereto; and
(vi) shall incur no liability under or in respect of this Agreement or any other
Loan Document by acting upon any notice, consent, certificate or other
instrument or writing (which may be by telecopier, telegram or telex) believed
by it to be genuine and signed or sent by the proper party or parties.

SECTION 7.03. CS and Affiliates. With respect to its Commitment, the Revolving
Credit Advances made by it and the Note issued to it, CS shall have the same
rights

 

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and powers under this Agreement as any other Lender and may exercise the same as
though it were not the Administrative Agent; and the term “Lender” or “Lenders”
shall, unless otherwise expressly indicated, include CS in its individual
capacity. CS and its Affiliates may accept deposits from, lend money to, act as
trustee under indentures of, accept investment banking engagements from and
generally engage in any kind of business with, any Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of any
Borrower or any such Subsidiary, all as if CS were not the Administrative Agent
and without any duty to account therefor to the Lenders. The Administrative
Agent shall have no duty to disclose information obtained or received by it or
any of its Affiliates relating to any Borrower or its Subsidiaries to the extent
such information was obtained or received in any capacity other than as
Administrative Agent.

SECTION 7.04. Lender Credit Decision. Each Lender and each Issuing Bank
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or Issuing Bank and based on the
financial statements referred to in Section 4.01 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender and each Issuing Bank also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender or Issuing Bank and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.

SECTION 7.05. INDEMNIFICATION. The Lenders agree to indemnify the Administrative
Agent and each Issuing Bank (to the extent not reimbursed by the Borrowers) and
their respective directors, officers, employees and agents, ratably according to
the respective principal amounts of the Revolving Credit Advances and LC
Exposure then owed to each of them (or if no Revolving Credit Advances or LC
Exposure are at the time outstanding, ratably according to the respective
amounts of their Commitments), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever that may be imposed
on, incurred by, or asserted against the Administrative Agent or such Issuing
Bank in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by the Administrative Agent hereunder
and thereunder (collectively, the “Indemnified Costs”), provided that no Lender
shall be liable for any portion of the Indemnified Costs of an indemnified
person resulting from such indemnified person’s gross negligence or willful
misconduct. Without limitation of the foregoing, each Lender agrees to reimburse
the Administrative Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by the Administrative
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any other Loan Document, to the extent
that the Administrative Agent is not reimbursed for such expenses by the
Borrowers. In the case of any investigation, litigation or proceeding giving
rise to any Indemnified Costs, this Section 7.05 applies whether any such
investigation, litigation or proceeding is brought by the Administrative Agent,
any Lender, any Issuing Bank or a third party.

 

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SECTION 7.06. Successor Administrative Agent. The Administrative Agent may
resign at any time by giving written notice thereof to the Lenders and the
Borrowers and may be removed at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Administrative Agent, with the consent of
Rayonier (which consent shall not be unreasonably withheld or delayed) if no
Event of Default has occurred and is continuing. If no successor Administrative
Agent shall have been so appointed by the Required Lenders, and shall have
accepted such appointment, within 30 days after the retiring Administrative
Agent’s giving of notice of resignation or the Required Lenders’ removal of the
retiring Administrative Agent, then the retiring Administrative Agent may, on
behalf of the Lenders, appoint a successor Administrative Agent, which shall be
a commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Administrative Agent, and the
retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Administrative Agent’s
resignation or removal hereunder as Administrative Agent, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement.

SECTION 7.07. Other Administrative Agents. Each Lender hereby acknowledges that
neither the documentation agent nor any other Lender designated as any “Agent”
on the signature pages hereof has any liability hereunder other than in its
capacity as a Lender.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of this
Agreement, the Notes or any other Loan Document, nor consent to any departure by
any Borrower therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Required Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by each of the Lenders directly affected thereby,
do any of the following: (a) waive any of the conditions specified in
Section 3.01, (b) increase the Commitments of such Lenders or subject such
Lenders to any additional obligations, (c) reduce the principal of, or interest
on, the Revolving Credit Advances or any fees or other amounts payable
hereunder, (d) postpone any date fixed for any payment of principal of
(including, without limitation, final maturity), or interest on, the Revolving
Credit Advances or any fees or other amounts payable hereunder, (e) change the
percentage of the Commitments or of the aggregate unpaid principal amount of the
Revolving Credit Advances that shall be required for the Lenders or any of them
to take any action hereunder, (f) release Rayonier or TRS from its guarantee
obligations under the Guarantee Agreement, (g) release all or substantially all
Loan Parties party to any Subsidiary Guarantee Agreement from their respective
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obligations thereunder (other than in accordance with the terms hereof or
thereof), (h) change the pro rata distribution of payments and proceeds to the
Lenders or (i) amend this Section 8.01; and provided further that no amendment,
waiver or consent shall, unless in writing and signed by the Administrative
Agent in addition to the Lenders required above to take such action, affect the
rights or duties of the Administrative Agent under this Agreement, any Note or
any other Loan Document.

SECTION 8.02. Notices, Etc. All notices and other communications provided for
hereunder shall be in writing (including telecopier or telegraphic
communication) and mailed, telecopied, telegraphed or delivered, if to any
Borrowers, at its address at 50 North Laura Street, Suite 1900, Jacksonville,
Florida 32202, Attention: Treasurer, Telecopy No.: (904) 357-9818, with a copy
to: Corporate Secretary; if to any Lender party to this Agreement as of the date
hereof, at its Domestic Lending Office specified opposite its name on Schedule I
hereto; if to any other Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a Lender; and if to the
Administrative Agent, at its address at Eleven Madison Avenue, New York, New
York 10010-3629, Attention: Thomas Lynch, Telecopy No.: (212) 325-8304, email:
thomas.lynch@credit-suisse.com; or, as to any Borrower or the Administrative
Agent, at such other address as shall be designated by such party in a written
notice to the other parties and, as to each other party, at such other address
as shall be designated by such party in a written notice to each Borrower and
the Administrative Agent. All such notices and communications shall, when
mailed, telecopied or telegraphed, be effective when deposited in the mails,
telecopied or delivered to the telegraph company, respectively, except that
notices and communications to the Administrative Agent pursuant to Article II,
III or VII shall not be effective until received by the Administrative Agent.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement, the Notes or any other Loan Document or of any
Exhibit hereto and thereto to be executed and delivered hereunder and thereunder
shall be effective as delivery of a manually executed counterpart thereof.
Electronic mail and intranet websites may be used only to distribute routine
information such as financial statements and other information as provided in
Section 5.01(k), and to distribute Loan Documents for execution by the parties
thereto, and may not be used for any other purpose, except as agreed to by the
Administrative Agent.

SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender, any
Issuing Bank or the Administrative Agent to exercise, and no delay in
exercising, any right hereunder, under any Note or any other Loan Document or
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The remedies herein provided are cumulative and not exclusive
of any remedies provided by law.

SECTION 8.04. Costs and Expenses. (a) Each Borrower, jointly and severally,
agrees to pay on demand all reasonable out-of-pocket costs and expenses of the
Administrative Agent in connection with the preparation, execution, delivery,
administration, waiver or modification and amendment of this Agreement, the
Notes and the other Loan Documents and any other documents to be delivered
hereunder and thereunder, including, without limitation, (i) all due diligence,
syndication (including, without limitation, printing, distribution and bank
meetings), transportation, computer, duplication, appraisal, consultant, and
audit expenses and

 

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(ii) the reasonable fees, disbursement and other charges of counsel for the
Administrative Agent with respect thereto and with respect to advising the
Administrative Agent as to its rights and responsibilities under this Agreement
or any other Loan Document. Each Borrower, jointly and severally, agrees to
(A) pay all reasonable out-of-pocket expenses incurred by any Issuing Bank in
connection with the issuance, amendment or extension of any Letter of Credit or
any demand for payment thereunder, (B) pay on demand all reasonable costs and
expenses of the Administrative Agent and the Lenders, if any (including, without
limitation, reasonable counsel fees and expenses), in connection with the
enforcement (whether through negotiations, legal proceedings or otherwise) of
this Agreement, the Notes and the other Loan Documents and any other documents
to be delivered hereunder and thereunder, including, without limitation,
reasonable fees and expenses of counsel for the Administrative Agent and each
Lender in connection with the enforcement of rights under this Section 8.04(a),
and (C) indemnify and hold harmless the Administrative Agent, each Lender and
each Issuing Bank from any and all present or future stamp, documentary or
excise taxes or similar charges, any and all recording and filing fees, and any
and all liabilities with respect thereto, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or payment under, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, the Notes, the Letters of Credit, the other Loan
Documents and any such other documents.

(b) Each Borrower, jointly and severally, agrees to indemnify, exonerate and
hold harmless the Administrative Agent, each Lender, each Issuing Bank and each
of their Affiliates and their officers, directors, employees, agents, advisors,
representatives and controlling persons (each, an “Indemnified Party”) from and
against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, fees, disbursements and other charges of
counsel) incurred by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason of (including,
without limitation, in connection with any claim, investigation, litigation or
proceeding or preparation of a defense in connection therewith) (i) the Notes,
this Agreement, any other Loan Document or any other documents related thereto,
any extension of credit hereunder, any of the transactions contemplated herein
or the actual or proposed use of the proceeds of the Revolving Credit Advances
or (ii) the actual or alleged presence of Hazardous Materials on any property
currently or formerly owned or operated by any Borrower or any of its
Subsidiaries or any Environmental Action relating in any way to any Borrower or
any of its Subsidiaries, except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party’s gross
negligence or willful misconduct. In the case of an claim, investigation,
litigation or other proceeding to which the indemnity in this Section 8.04(b)
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by any Borrower, its directors,
equityholders or creditors or an Indemnified Party or any other Person, whether
or not any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated. Each Borrower, jointly and
severally, also agrees not to assert any claim for special, indirect,
consequential or punitive damages against the Administrative Agent, any Lender,
any of their Affiliates, or any of their respective officers, directors,
employees, agents, advisors, representatives and controlling persons, on any
theory of liability, arising out of or otherwise

 

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relating to (i) the Notes, this Agreement, any other Loan Document or any other
documents related thereto, any of the transactions contemplated herein or the
actual or proposed use of the proceeds of the Revolving Credit Advances or
(ii) the actual or alleged presence of Hazardous Materials on an property of any
Borrower or any of its Subsidiaries or any Environmental Action relating in any
way to any Borrower or any of its Subsidiaries.

(c) If any payment of principal of, or Conversion of, any Eurodollar Rate
Advance is made by any Borrower to or for the account of a Lender other than on
the last day of the Interest Period for such Advance, as a result of a payment
or Conversion pursuant to Section 2.10(a), 2.10(b)(i) or (ii), 2.11 or 2.13,
acceleration of the maturity of the Notes pursuant to Section 6.01 or for any
other reason, or by an Eligible Assignee to a Lender other than on the last day
of the Interest Period for such Advance upon an assignment of rights and
obligations under this Agreement pursuant to Section 8.07 as a result of a
demand by any Borrower pursuant to Section 8.07(a) or a replacement of a Lender
pursuant to Section 8.07(i), such Borrower shall, upon demand by such Lender
(with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses that it may
reasonably incur as a result of such payment or Conversion, including, without
limitation, any loss (including loss of anticipated profits), cost or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by any Lender to fund or maintain such Advance.

(d) Without prejudice to the survival of any other agreement of any Borrower
hereunder, the agreements and obligations of each Borrower contained in Sections
2.12, 2.15 and 8.04 shall survive the payment in full of principal, interest and
all other amounts payable hereunder, under the Notes or any other Loan Document.

SECTION 8.05. Right of Set-off. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender or such Affiliate to or for the credit or the account
of any Borrower against any and all of the obligations of such Borrower now or
hereafter existing under this Agreement, the Note held by such Lender or any
other Loan Document, whether or not such Lender shall have made any demand under
this Agreement, such Note or any other such Loan Document and although such
obligations may be unmatured. Each Lender agrees promptly to notify the
applicable Borrower after any such set-off and application, provided that the
failure to give such notice shall not affect the validity of such set-off and
application. The rights of each Lender and its Affiliates under this Section are
in addition to other rights and remedies (including, without limitation, other
rights of set-off) that such Lender and its Affiliates may have.

SECTION 8.06. Binding Effect. This Agreement shall become effective when it
shall have been executed by each Borrower and the Administrative Agent and when
the Administrative Agent shall have been notified by each Lender party to this
Agreement as of the

 

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date hereof that such Lender has executed it and the Closing Date shall have
occurred and thereafter shall be binding upon and inure to the benefit of each
Borrower, the Administrative Agent and each such Lender, Issuing Bank and their
respective successors and assigns, except that no Borrower shall have the right
to assign its rights or obligations hereunder or any interest herein without the
prior written consent of the Lenders.

SECTION 8.07. Assignments and Participations. (a) Each Lender may and, if
demanded by any Borrower (following a demand by such Lender pursuant to
Section 2.12 or 2.15) upon at least five Business Days’ notice to such Lender
and the Administrative Agent, will assign to one or more Persons all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment, the Revolving Credit Advances
owing to it and the Note or Notes held by it); provided, however, that (i) such
Lender shall have obtained the prior written consent of the Administrative
Agent, the Issuing Bank and, other than in the case of an assignment to an
Affiliate of such Lender, another Lender or its Affiliate, or assignments of the
type described in subsection (g) below and unless a Default or an Event of
Default has occurred and is continuing, Rayonier, in each case such consent not
to be unreasonably withheld or delayed, (ii) each such assignment shall be of a
constant, and not a varying, percentage of all rights and obligations under this
Agreement, (iii) except in the case of an assignment to a Person that,
immediately prior to such assignment, was a Lender or an assignment of all of a
Lender’s rights and obligations under this Agreement, the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 and shall
be an integral multiple of $1,000,000 unless Rayonier and the Administrative
Agent otherwise agree, and if the assigning Lender is assigning less than all of
its Commitments after giving effect to such assignment, the amount of the
commitment of the assigning Lender shall be equal to or greater than $5,000,000,
(iv) each such assignment shall be to an Eligible Assignee, (v) each such
assignment made as a result of a demand by the applicable Borrower pursuant to
this Section 8.07(a) shall be arranged by such Borrower after consultation with
the Administrative Agent and shall be either an assignment of all of the rights
and obligations of the assigning Lender under this Agreement or an assignment of
a portion of such rights and obligations made concurrently with another such
assignment or other such assignments that together cover all of the rights and
obligations of the assigning Lender under this Agreement, (vi) no Lender shall
be obligated to make any such assignment as a result of a demand by the
applicable Borrower pursuant to this Section 8.07(a) unless and until such
Lender shall have received one or more payments from either such Borrower or one
or more Eligible Assignees in an aggregate amount at least equal to the
aggregate outstanding principal amount of the Revolving Credit Advances owing to
such Lender, together with accrued interest thereon to the date of payment of
such principal amount, its proportionate interest in LC Exposure and all other
amounts payable to such Lender under this Agreement, (vii) each such assignment
shall include an assignment by such Lender of its proportionate interest in LC
Exposure, and (viii) the parties to each such assignment shall electronically
execute and deliver to the Administrative Agent an Assignment and Acceptance via
an electronic settlement system acceptable to the Administrative Agent (or, if
previously agreed with the Agent, manually) and pay to the Administrative Agent
a processing and recordation fee of $3,500 (such fee payable by the assignor or
assignee, as agreed by the parties, and which fee may be waived or reduced in
the sole discretion of the Administrative Agent), for its acceptance and
recording in the Register.

 

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Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (y) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights (other than its rights under Section 2.12, 2.15 and 8.04
to the extent any claim thereunder relates to an event arising prior to such
assignment) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto).

(b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to (A) any statements,
warranties or representations made in or in connection with this Agreement or
any other Loan Document, (B) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (C) the financial condition of any Borrower, any of its Subsidiaries
or Affiliates or any other Person obligated in respect of any Loan Document or
(D) the performance or observance by any Borrower, any of its Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any
Loan Document; (ii) such assignee (A) represents and warrants that (1) it
satisfies the requirements, if any, specified in this Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest (as
defined in such Assignment and Acceptance) and become a Lender, (2) from and
after the Effective Date (specified in such Assignment and Acceptance), it shall
be bound by the provisions of this Agreement as a Lender thereunder and, to the
extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (3) it has received a copy of this Agreement, together with copies
of the most recent financial statements referred to in Section 4.01 or delivered
pursuant to Section 5.01, and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance and to purchase the Assigned Interest on the
basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent, the assigning Lender or any other Lender,
and (4) it is an Eligible Assignee; and (B) agrees that (1) it will,
independently and without reliance on the Administrative Agent, the assigning
Lender or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Loan Documents, and (2) it will perform in
accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.

(c) Upon its receipt of an Assignment and Acceptance executed by an assigning
Lender and an assignee representing that it is an Eligible Assignee the
Administrative Agent shall, if such Assignment and Acceptance has been completed
and is in substantially the form of Exhibit F hereto, (i) accept such Assignment
and Acceptance, (ii) record the information contained therein in the Register
and (iii) in the event when consent of Rayonier for such Assignment and
Acceptance is not required, give notice thereof to Rayonier.

 

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(d) The Administrative Agent shall maintain at its address referred to in
Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted
by it and a register for the recordation of the names and addresses of each of
the Lenders and the Commitment of, and principal amount of the Revolving Credit
Advances owing to, each Lender from time to time and proportionate interest of
such Lender in LC Exposure (the “Register”). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and any
Borrower, the Administrative Agent and the Lenders may treat each Person whose
name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by any Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

(e) Each Lender may sell participations to one or more banks or other entities
(other than any Borrower or any of its Affiliates) in or to all or a portion of
its rights and obligations under this Agreement (including, without limitation,
all or a portion of its Commitment, the Revolving Credit Advances owing to it
and any Notes held by it); provided, however, that (i) such Lender’s obligations
under this Agreement (including, without limitation, its Commitment to the
Borrowers hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note for all
purposes of this Agreement, (iv) the Borrowers, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
(v) no participant under any such participation shall have any right to approve
any amendment or waiver of any provision of this Agreement, any Note or any
other Loan Document, or any consent to any departure by any Borrower therefrom,
except to the extent that such amendment, waiver or consent would reduce the
principal of, or interest on, the Notes or any fees or other amounts payable
hereunder, in each case to the extent subject to such participation, or postpone
any date fixed for any payment of principal of, or interest on, the Notes or any
fees or other amounts payable hereunder, in each case to the extent subject to
such participation.

(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 8.07, disclose to
the assignee or participant or proposed assignee or participant, any information
relating to any Borrower furnished to such Lender by or on behalf of such
Borrower; provided that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree to preserve the
confidentiality of any Confidential Information relating to such Borrower
received by it from such Lender.

(g) Notwithstanding any other provision set forth in this Agreement, any Lender
may at any time create a security interest (or any other similar interest) in
all or any portion of its rights under this Agreement (including, without
limitation, the Revolving Credit Advances owing to it and any Note or Notes held
by it) in favor of any Federal Reserve Bank in accordance with Regulation A of
the Board of Governors of the Federal Reserve System.

 

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(h) Notwithstanding anything to the contrary contained herein, any Lender (a
“Granting Bank”) may grant to a special purpose funding vehicle (a “SPC”),
identified as such in writing from time to time by the Granting Bank to the
Administrative Agent and each Borrower, the option to provide to the Borrowers
all or any part of any Revolving Credit Advance that such Granting Bank would
otherwise be obligated to make to the Borrowers pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to
make any Revolving Credit Advance, (ii) if a SPC elects not to exercise such
option or otherwise fails to provide all or any part of such Revolving Credit
Advance, the Granting Bank shall be obligated to make such Revolving Credit
Advance pursuant to the terms hereof. The making of a Revolving Credit Advance
by a SPC hereunder shall utilize the Commitment of the Granting Bank to the same
extent, and as if, such Revolving Credit Advance were made by such Granting
Bank. Each party hereto hereby agrees that no SPC shall be liable for any
indemnity or similar payment obligation under this Agreement (all liability for
which shall remain with the Granting Bank). In furtherance of the foregoing,
each party hereto hereby agrees (which agreement shall survive the termination
of this Agreement) that, prior to the date that is one year and one day after
the payment in full of all outstanding commercial paper or other senior
indebtedness of any SPC, it will not institute against, or join any other person
in instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof. In addition, notwithstanding anything to the contrary contained
in this Section, any SPC may (i) with notice to, but without the prior written
consent of, each Borrower and the Administrative Agent and without paying any
processing fee therefor, assign all or a portion of its interests in any
Revolving Credit Advances to the Granting Bank or to any financial institutions
(consented to by each Borrower and Administrative Agent) providing liquidity
and/or credit support to or for the account of such SPC to support the funding
or maintenance of Revolving Credit Advances and (ii) disclose on a confidential
basis any non-public information relating to its Revolving Credit Advances to
any rating agency, commercial paper dealer or provider of any surety, guarantee
or credit or liquidity enhancement to such SPC. This section may not be amended
without the written consent of the SPC.

(i) If any Lender has failed to consent to a proposed amendment, waiver or other
action that pursuant to the terms of Section 8.01 requires the consent of all
the Lenders affected and with respect to which the Required Lenders shall have
granted their consent (any such Lender referred to above, a “Non-Consenting
Lender”), then so long as no Event of Default then exists, the Borrower shall
have the right (unless such Non-Consenting Lender grants such consent) to
replace any such Non-Consenting Lender by requiring such Non-Consenting Lender
to assign its Revolving Credit Advances and Commitments hereunder to one or more
assignees reasonably acceptable to the Administrative Agent and the Issuing
Banks; provided, that (i) all obligations of the Borrower owing to such
Non-Consenting Lender being replaced, including obligations arising under
Section 8.04(c) as a result of such replacement and all accrued fees and other
accrued amounts (other than accrued interest paid pursuant to clause (ii)) shall
be paid in full to such Non-Consenting Lender concurrently with such assignment,
and (ii) the replacement Lender shall purchase the foregoing by paying to such
Non-Consenting Lender a price equal to the principal amount thereof plus accrued
and unpaid interest thereon. In connection with any such assignment, the
Borrower, the Administrative Agent, such Non-Consenting Lender and the
replacement Lender shall

 

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otherwise comply with Section 8.07(a); except that the assigning Lender shall be
deemed to have assigned and executed an assignment that otherwise complies with
such Section.

SECTION 8.08. Confidentiality. Neither the Administrative Agent nor any Lender
shall disclose any Confidential Information to any other Person without the
consent of each Borrower other than (a) to the Administrative Agent’s or such
Lender’s Affiliates and their officers, directors, employees, agents and
advisors and, as contemplated by Section 8.07(f), to actual or prospective
assignees and participants, and then only on a confidential basis, (b) as
required by any law, rule or regulation or judicial process, (c) in connection
with the enforcement of any Loan Document or in connection with the defense of
any litigation or other claim or action brought by or on behalf of Rayonier or
any Subsidiary of Rayonier, and (d) as requested or required by any state,
federal or foreign authority or examiner regulating banks or banking.
Notwithstanding anything herein to the contrary, any party hereto (and any
employee, representative or other agent of such party) may disclose to any and
all persons, without limitation of any kind, the tax treatment and tax structure
of the transactions contemplated by this Agreement and all materials of any kind
(including opinions or other tax analyses) that are provided to it relating to
such tax treatment and tax structure, except that tax treatment and tax
structure shall not include the identity of any existing or future party (or any
affiliate of such party) to this Agreement. For this purpose, the tax treatment
of the transactions contemplated by this Agreement is the purported or claimed
U.S. federal income tax treatment of such transactions and the tax structure of
such transactions is any fact that may be relevant to understanding the
purported or claimed U.S. federal income tax treatment of such transactions.

SECTION 8.09. Governing Law. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.

SECTION 8.10. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties hereto hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement, the Notes or the other Loan Documents to which it is a party, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in any such New York State
court or, to the extent permitted by law, in such federal court. Each of the
parties hereto agrees that a final judgment in any such

 

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action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that any party may otherwise
have to bring any action or proceeding relating to this Agreement, the Notes or
the other Loan Documents to which it is a party in the courts of any
jurisdiction, except that each of the Loan Parties agrees that (i) it will not
bring any such action or proceeding in any court other than New York Courts (it
being acknowledged and agreed by the parties hereto that any other forum would
be inconvenient and inappropriate in view of the fact that more of the Lenders
who would be affected by any such action or proceeding have contacts with the
State of New York than any other jurisdiction), and (ii) in any such action or
proceeding brought against any Loan Party in any other court, it will not assert
any cross-claim, counterclaim or setoff, or seek any other affirmative relief,
except to the extent that the failure to assert the same will preclude such Loan
Party from asserting or seeking the same in the New York Courts.

(b) Each of the parties hereto irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection that it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, the Notes or the other Loan
Documents to which it is a party in any New York State or federal court. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.

SECTION 8.12. Waiver of Jury Trial. Each of the Borrowers, the Administrative
Agent and the Lenders hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to this Agreement, the Notes or the other
Loan Documents to which it is a party or the actions of the Administrative Agent
or any Lender in the negotiation, administration, performance or enforcement
thereof.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.

 

RAYONIER INC.

By  

/s/ Carl E. Kraus

  Name: Carl E. Kraus   Title: Senior Vice President RAYONIER TRS HOLDINGS INC.
By  

/s/ Timothy H. Brannon

  Name: Timothy H. Brannon   Title: Vice President RAYONIER FOREST RESOURCES,
L.P.

by RAYONIER TIMBERLANDS

MANAGEMENT, LLC, its Managing General Partner

By  

/s/ Timothy H. Brannon

  Name: Timothy H. Brannon   Title: Vice President

--------------------------------------------------------------------------------

Lenders Administrative Agent CREDIT SUISSE, Cayman Islands Branch By  

/s/ Judith Smith

  Name: Judith Smith   Title: Director By  

/s/ Doreen Barr

  Name: Doreen Barr   Title: Vice President BANK OF AMERICA, N.A. By  

/s/ Michael Balok

  Name: Michael Balok   Title: Senior Vice President CoBank, ACB By  

/s/ Michael Tousignant

  Name: Michael Tousignant   Title: Vice President SunTrust Bank By  

/s/ Stacy Lewis

  Name: Stacy Lewis   Title: Vice President CAPE FEAR FARM CREDIT, ACA By  

/s/ Randy T. Pope

  Name: Randy T. Pope   Title: Vice President

--------------------------------------------------------------------------------

WELLS FARGO BANK, NATIONAL ASSOCIATION By  

/s/ Gus Martin

  Name: Gus Martin   Title: Vice President The Bank of New York By  

/s/ Kenneth R. McDonnell

  Name: Kenneth R. McDonnell   Title: Vice President JP Morgan Chase Bank, N.A.
By  

/s/ Steven A. Willmann

  Name: Steven A. Willmann   Title: Vice President WACHOVIA BANK, NATIONAL
ASSOCIATION By  

/s/ Robert G. McGill Jr.

  Name: Robert G. McGill Jr.   Title: Director Northwest Farm Credit Services,
PCA By  

/s/ Jim D. Allen

  Name: Jim D. Allen   Title: Senior Vice President Compass Bank By  

/s/ French Yarbrough Jr

  Name: French Yarbrough Jr   Title: Senior Vice President

--------------------------------------------------------------------------------

The Northern Trust Company By  

/s/ Karen E. Dahl

  Name: Karen E. Dahl   Title: Vice President CITIBANK, N.A. By  

/s/ James Buchanan

  Name: James Buchanan   Title: Vice President

--------------------------------------------------------------------------------

SCHEDULE I

COMMITMENT AMOUNTS AND

APPLICABLE LENDING OFFICES

 

Name of Initial

Lender

 

Commitment

Amount

 

Domestic Lending Office

 

Eurocurrency Lending Office

Credit Suisse,

Cayman Islands

Branch

  $25,000,000  

Eleven Madison Avenue

New York, NY 10010

Attn: Ethan Fu

T: 212-538-9860

F: 212-538-9884

 

Eleven Madison Avenue

New York, NY 10010

Attn: Ethan Fu

T: 212-538-9860

F: 212-538-9884

Bank of America,

N.A.

  $25,000,000  

315 Montgomery Street

San Francisco, CA 94140-1866

Attn: Andrew Stinson

T: 925-675-7478

F: 888-969-9281

 

315 Montgomery Street

San Francisco, CA 94140-1866

Attn: Andrew Stinson

T: 925-675-7478

F: 888-969-9281

CoBank, ACB

  $25,000,000  

5500 S. Quebec St.

Greenwood Village, CO 80111

Attn: Marshall Allen

T: 303-740-4386

F: 303-740-4021

 

5500 S. Quebec St.

Greenwood Village, CO 80111

Attn: Marshall Allen

T: 303-740-4386

F: 303-740-4021

SunTrust Bank

  $20,000,000  

200 S. Orange Avenue, MC 1108

Orlando, FL 32801

Attn: Lois Keezel

T: 407-237-4855

F: 407-588-4400

 

200 S. Orange Avenue, MC 1108

Orlando, FL 32801

Attn: Lois Keezel

T: 407-237-4855

F: 407-588-4400

AgFirst Farm Credit

Bank

  $20,000,000  

1401 Hampton Street

Columbia, SC 29201

Attn: Michelle Rice

T: 803-753-2510

F: 803-256-7139

 

1401 Hampton Street

Columbia, SC 29201

Attn: Michelle Rice

T: 803-753-2510

F: 803-256-7139

Wells Fargo Bank,

National

Association

  $20,000,000  

1740 Broadway

Denver Colorado 80274

Attn: Marlene Rieb

T: 303-863-5163

F: 303-763-2729

 

1740 Broadway

Denver Colorado 80274

Attn: Marlene Rieb

T: 303-863-5163

F: 303-763-2729

The Bank of New

York

  $20,000,000  

One Wall St. 21st Floor

New York, NY 10286

Attn: Larry Geter

T: 212-635-6740

F: 212-635-6399 or 6877

 

One Wall St. 21st Floor

New York, NY 10286

Attn: Larry Geter

T: 212-635-6740

F: 212-635-6399 or 6877

JPMorgan Chase

Bank, N.A.

  $20,000,000  

3475 Piedmont Rd NE,

18th Floor

 

1111 Fannin Street,

9th Floor

 

1

--------------------------------------------------------------------------------

   

Atlanta, GA 30305

Attn: Eric Martin

T: 713-750-7924

F: 713-750-2228

 

Houston, TX 77002

Attn: Eric Martin

T: 713-750-7924

F: 713-750-2228

Wachovia Bank,

National

Association

  $20,000,000  

301 South College Street, NC5562

Charlotte, NC 28288

Attn: William Dunn

T: 704-715-7608

F: 704-715-0097

 

201 South College Street, NC1183

Charlotte, NC 28202

Attn: William Dunn

T: 704-715-7608

F: 704-715-0097

Northwest Farm

Credit

Services, PCA

  $15,000,000  

1700 South Assembly Street Spokane, WA 99224

Attn: Technical Accounting Services

T: 800-216-4535

F: 509-340-5508

 

1700 South Assembly Street Spokane, WA 99224

Attn: Technical Accounting Services

T: 800-216-4535

F: 509-340-5508

Compass Bank

  $15,000,000  

10060 Skinner Lake Drive

Jacksonville, FL 32246

Attn: Carolyn Stoner

T: 904-564-8822

F: 904-564-8830

 

10060 Skinner Lake Drive

Jacksonville, FL 32246

Attn: Carolyn Stoner

T: 904-564-8822

F: 904-564-8830

The Northern Trust

Company

  $10,000,000  

50 S. LaSalle Street

Chicago, IL 60675

Attn: Sharon Jackson

T: 312-630-1609

F: 312-630-1566

 

50 S. LaSalle Street

Chicago, IL 60675

Attn: Sharon Jackson

T: 312-630-1609

F: 312-630-1566

Citibank, N.A.

  $15,000,000  

2 Pennsway Suite 100

New Castle, DE 19720

Attn: Vannessa White

T: 302-894-6029

F: 212-994-0847

 

2 Pennsway Suite 100

New Castle, DE 19720

Attn: Vannessa White

T: 302-894-6029

F: 212-994-0847

Total:

  $250,000,000    

 

2

--------------------------------------------------------------------------------

SCHEDULE 4.01(g)

DISCLOSED LITIGATION

For purposes of completeness, the following constitutes a list of the
significant current claims and litigation involving the Borrowers, although not
all claims and litigation. Inclusion on this Schedule does not necessarily imply
that any such litigation or potential claim could be reasonably likely to have a
Material Adverse Effect.

PENDING LITIGATION

1. Gilchrist Timber vs. ITT Rayonier, Inc. (U.S. District Court, Northern
District of Florida). Plaintiffs alleged fraudulent misrepresentation regarding
zoning in connection with a 1985 timberland sale. A jury verdict against the
Company for $1.676 million, which was later set aside by the trial judge, was
reinstated on November 18, 1997 by the U.S. Court of Appeals for the Eleventh
Circuit, and the case was remanded to the trial court for the limited purpose of
presenting to a jury the question of the comparative negligence of the
Plaintiffs (sophisticated buyers) and the surveyor (who made a zoning mistake in
the survey upon which Plaintiffs allegedly relied). The re-trial of this matter
concluded on September 3, 2004, with the jury assessing 67% responsibility to
the Company and 33% responsibility to Plaintiff. Rayonier’s exposure for the
jury verdict was established at $1,123,255. On September 28, 2005, the trial
court entered judgment in the case and denied Plaintiffs’ claim for prejudgment
interest in its entirety. Accepting most of Rayonier’s arguments, the court
permitted post judgment interest from the date of the original jury verdict date
(January 31, 1992) on the amount of the September 2004 verdict at the federal
case rate of 4.02% per annum. While the Plaintiffs have appealed this ruling
with respect to pre-judgment interest, Rayonier has paid the Plaintiffs the
amount of the judgment plus interest as directed by the court ($1,950,788.11) to
stop the running of post judgment interest. The matter has been fully briefed
and we are awaiting a ruling from the appellate court.

2. U.S. v. Beckman, Coulter, Inc. et al. and New Jersey Department of
Environmental Protection et al. v. American Thermoplastics Corp., et al. (U. S.
District Court, New Jersey). The EPA brought these suits under CERCLA for past
response costs and ongoing operation and maintenance costs incurred by the EPA
and the State of New Jersey at the Combe Fill South landfill in Chester and
Washington Townships, New Jersey. Waste generated in the 1960’s and 1970’s by
the Company’s former Eastern Research Division was disposed of at this and other
public landfills by its waste hauler. There are over 200 primary and third party
defendants in this action.

A court-appointed neutral has been working for several years on an allocation
report in which he will attempt to allocate responsibility to each of the PRPs
based on various factors. This 2400-page report was finally delivered in early
April, and indicates that Rayonier was treated favorably (about 0.6% of the
“waste-in”). We hope that the report will now be used to accelerate settlement
discussions. Estimates of the costs incurred to date by the EPA and State of New
Jersey with respect to investigations and remediation of this site exceed $100
million.

--------------------------------------------------------------------------------

3. United States of America and State of Louisiana vs. Marine Shale Processors,
Inc. and Recycling Park, Inc. vs. Southern Wood Piedmont Company vs. GTX, Inc.
aka Earthlock Technology (United States District Court, Western District of
Louisiana, Lafayette Division). This action arises out of a complaint filed in
1990 by the U.S. and Louisiana governments (referred to collectively as the
“Government”) against Marine Shale alleging violation of various environmental
regulations at its recycling facility and to force disposal of certain waste
that the Government alleges is hazardous. This includes approximately 150,000
tons of material excavated by Southern Wood Piedmont (“SWP”) from its
remediation sites and recycled by Marine Shale. In June, SWP and the Government
reached agreement on a negotiated consent decree that resolves SWP’s liability
for the Marine Shale plant site and a related site where SWP material was placed
(the “RPI Site”). Under this agreement, which was approved by the U.S. District
Court on June 6, SWP will oversee and pay for certain capping and related work
to be performed at the RPI site and pay the Government $200,000. SWP and
Rayonier will receive a covenant not to sue from the Government and contribution
protection against claims by third parties relating to the Marine Shale and RPI
sites. A public hearing on the settlement was held on July 19 and the public
comment period ended July 31. The government will be preparing a motion for
final court approval of the consent decree shortly.

4. Wayne County, GA Property Tax Dispute. In connection with the tax assessment
of the real and personal property of the Company’s Wayne County facilities for
the year 2002, including the Company’s Jesup mill and related facilities, the
Wayne County Tax Assessor assessed the fair market value of Rayonier’s property
to be approximately $468 million, as compared to approximately $305 million in
2001. This assessment increase, exclusive of a millage increase applicable to
all Wayne County taxpayers, would result in an increase in the Company’s 2002
Wayne County property taxes of approximately $1.7 million over taxes paid by the
Company for tax year 2001. The Company was required to pay, and did pay, 85% of
the ad valorem tax bills issued based on the increased assessment. (These
payments were expensed.) The Company appealed the assessment to the Wayne County
Board of Equalization, which ruled in favor of the County on September 8, 2003.
The Company then appealed this decision, challenging the increase in assessment
valuation, including a number of issues relating to the county’s calculation of
fair market value of the Company’s real and personal property. The parties
executed an agreement to resolve this matter through binding arbitration, and on
December 22, 2004, the arbitration agreement was approved by the Superior Court
of Wayne County, Georgia. This agreement also calls for binding arbitration of
the assessments for tax years 2003 and 2004, respectively, which raise
substantially similar issues as the 2002 tax year.

On September 10, 2005, the arbitration panel issued its ruling, which almost
completed adopted the Company’s position. Assessed valuations were held to be
approximately $202.3 million for 2002, $191.6 million for 2003 and $174.7
million for 2004. The decision means that the County owes the Company not less
than $4.8 million in refunds for excess taxes paid, and that other amounts
reserved for these tax years on the Company’s books will not need to be paid. On
March 24, the Georgia Superior Court upheld the arbitration agreement except for
one provision governing the calculation of property taxes in future years,
confirmed the arbitrators’ award and ordered the parties to agree upon the
amount of the pollution control equipment designation (which has now been
completed). In July, the Company and the County reached an agreement in
principle to resolve this dispute, subject to mutual agreement on final
documentation. The tentative agreement, among other things, establishes a fair
market value assessment for the mill

 

Page 2

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and research and development facility for each of the years 2002 through 2006,
and a framework for computing the fair market value of these properties for
years 2007 through 2011. The tentative agreement would also resolve several
other ancillary issues related to this matter. The proposed settlement, for
which documents are currently being drafted, will require approvals of Wayne
County Commission and Board of Assessors.

5. United Association of Plumbers and Pipefitters (AFL-CIO) Local 473 and
William C. Tresher v. Rayonier (U.S. District Court, Southern District of
Georgia, Brunswick Division). Plaintiffs allege that Mr. Tresher, a former Jesup
mill employee and member of Local 473, was wrongfully denied disability
retirement benefits due him under the terms of the collective bargaining
agreement (the “CBA”) between Local 473 and the Company. The Company’s position
was that the decision of the Retirement Committee, which administers the
retirement plan, was final and not subject to the terms of the CBA. The Company
and the plaintiff each filed motions for summary judgment on February 10, 2005
and a decision was received on June 24. The Court ruled in Rayonier’s favor on
the issue of whether disability benefits had to be paid to Plaintiff based on
the past practice under the CBA, but also held that under the CBA, Rayonier was
required to arbitrate the issue of plaintiff’s eligibility for such benefits
under the applicable retirement plan. While the Company has successfully
defended similar claims in the past, it is too early to determine the extent or
probability of potential loss. Recently, the attorney for the plaintiff died,
which has delayed the arbitration of this matter. The Company and the local
union have initiated discussions in an attempt to resolve this matter.

6. Johnny Odum v. Rayonier Inc., Steve Worthington, John Enlow, Don Ray, and
John Doe (U.S. District Court for the Southern District of Georgia, Brunswick
Division). On December 9, 2004, Rayonier and three named employees of its
Rayonier Wood Procurement LLC subsidiary were sued by Odum, an employee
currently on long term disability. The complaint alleges that the Rayonier
corporate and individual defendants conspired to influence Odum’s testimony in a
case brought by a supplier in October 2000 (Grant Lewis v. Rayonier Inc.) and
that following Odum’s testimony, Rayonier and its employees retaliated against
Odum by giving him false performance reviews. These alleged actions are claimed
by Odum to have caused him stress-related injuries and damages in excess of
$1,000,000, as well as punitive damage and attorneys fees. On December 14, 2005,
the trial judge granted Rayonier partial summary judgment, disposing of the
state law tort claim and ruling that the influencing testimony claim was barred
by the statute of limitations; however, the court denied summary judgment on the
retaliation claim. The trial has been scheduled to begin October 16, 2006.

7. William Milledge et al v. Rayonier Inc. (U. S. District Court for the
Southern District of Georgia, Brunswick Division). On February 3, 2005, the
Company was sued by Milledge and three other Jesup mill hourly employees, who
claimed that they were discriminated against based on race in that less
qualified white employees were promoted to positions that they claim they should
have been awarded. Their claims include violations of Title VII of the Civil
Rights Act of 1964 - specifically race discrimination in promotion and hostile
work environment - and generalized claims of emotional distress. One of the
individuals dismissed his claim with prejudice. The District Court granted
summary judgment on all three remaining Plaintiffs’ claims. All three Plaintiffs
appealed, and both Plaintiffs and Rayonier have filed briefs with the Eleventh
Circuit Court of Appeals. We currently await a ruling.

 

Page 3

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NEW MATTERS

1. Chattanooga Creek Remediation Settlement - Southern Wood Piedmont. The EPA
initiated cleanup of a creek located adjacent to SWP’s discontinued operations
in Chattanooga, Tennessee. Following receipt of notification from EPA that SWP
was considered a potentially responsible party (PRP), SWP, two other companies
and the United States government reached a settlement under which SWP paid $1.65
million out of a total settlement package of $31.2 million and the three
nongovernmental PRPs managed the remediation of the Creek. Under the settlement
documentation, SWP could potentially incur additional amounts above the $1.65
million in the event of any remediation cost overruns or unforeseen
remediation-related issues. Earlier this year the EPA conducted some testing in
a section of the creek that has been partially remediated, referred to as the
“Oxbow” section of the creek, and determined that the section does not meet the
remedial requirements of the settlement documents. Pursuant to a letter dated
June 20, 2006, EPA opined that the SWP site is the source of a continuing
discharge to the Oxbow. SWP and its experts disagree with EPA’s assessment and
methodology. It is too early to reach any conclusions about EPA’s letter or its
opinions, or its impact on SWP, or the PRP group as a whole. SWP, its experts
and the PRP group are working to address the issues promptly so as not to impede
continued remediation progress on the Creek. The outcome of this issue, and any
need for additional funding to address it, is undeterminable at this time.

CLAIMS NOT YET RISING TO LITIGATION

1. Holley Electric Site. In an April 22, 2005 letter from the Georgia EPD,
Rayonier was identified as one of 60 potentially responsible parties under the
Georgia Hazardous Site Response Act, for the Holley Electric Corporation
(“Holley”) site in Jesup. Holley’s operations involved services related to PCBs,
including waste PCB hauling and storage. The site was closed in the early 1980s
and was listed on the Georgia Hazardous Site Inventory in 1994, although it is
not listed on the federal National Priorities List (Superfund). It appears that
our Jesup and Fernandina mills, as well as Baxley, utilized Holley’s services
while it was in operation. We are currently participating in a joint defense
group, although the EPD has taken no action on this site for several months.

2. Chalecki; Keifer v. Do+Able Products Inc. (Arizona Superior Court, Mohave
County). This is a personal injury case in which plaintiffs claim injury as a
result of exposure to formaldehyde emitted from MDF board manufactured by
Rayonier MDF and used by Do+Able Products in manufacturing a “slotwall” product
sold in retail stores such as Home Depot. Rayonier is not currently a party in
this action. Attorneys for Do+Able Products tendered the defense of the claim to
Rayonier in late December, 2005. We rejected the tender on the basis that
Rayonier sold the stock of Rayonier MDF New Zealand (now renamed Dongwha Patinna
Limited), the company which currently owns the MDF plant, in August, 2005.
Do+Able Products subsequently tendered the defense to Dongwha Patinna, and it
has also rejected the tender, largely on the grounds that it has no contractual
indemnification obligation to the defendants. We are unable to make a
determination of the Company’s potential liability, if any.

REMEDIAL ACTIVITY AT DISCONTINUED OPERATIONS SITES

 

Page 4

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The sites of several discontinued operations are in various stages of
environmental remediation. These sites include, but are not limited to, the
former dissolving pulp mill site in Port Angeles, Washington; a property in
Shelton, Washington formerly used as a landfill and to dispose of spent pulping
liquor from a former Rayonier pulp mill closed in 1957; and ten current and
former Southern Wood Piedmont (“SWP”) sites. The SWP sites, located in several
states, are former wood treatment operations that were mostly shuttered in the
1980’s. The SWP sites are contaminated at various levels with creosote, creosote
coal tar, pentachlorophenol and/or chromium copper arsenate (all of which were
used as wood preservatives when the sites were operating), and various
constituents of these materials. The sites are in various stages of
investigation and remediation, and most are being addressed under the RCRA
program, with the remainder being administered under state versions of CERCLA.
Regulatory participation with applicable state agencies and U.S. EPA varies from
site to site, as does the nature and status of remedial activity. From time to
time the Borrowers engage in litigation concerning investigation or remediation
requirements relating to these sites, either with regulatory agencies or private
parties. With the exception of litigation discussed above, no litigation has
been filed by a regulatory agency and is pending, although all of the sites are
at some stage of the regulatory process.

ENVIRONMENTAL MATTERS

1. Jesup Mill “Pre-Steaming” Issue. Internal evaluation undertaken in connection
with the mill’s pulp and paper “Cluster Rule” compliance program revealed an
issue relating to the control of certain methanol emissions from the
“pre-steaming” portion of the hardwood cook process. The issue is whether these
particular emissions, which the mill had not been collecting, are required to be
collected under Cluster Rule requirements. (Note that the mill is now capturing
these emissions.) While we believe the language of the applicable regulation to
be, at best, ambiguous, we reported the situation to the Georgia Environmental
Protection Division (“EPD”) out of an abundance of caution and have met with EPD
representatives on the issue. There have been settlement discussions involving a
proposal by EPD for the payment of a penalty in the low hundred thousand dollar
range, plus performance of a supplemental environmental project at the mill.
However, no formal agreement has yet been reached.

ITEMS LISTED ON SCHEDULE 4.01(l)

All items included on Schedule 4.01(l) to the Credit Agreement are hereby
incorporated into this Schedule 4.01(g).

ITEMS DISCLOSED IN SEC FILINGS

All items and risk factors otherwise disclosed in Rayonier Inc.’s public filings
with the Securities and Exchange Commission, including without limitation,
Rayonier’s 2005 Annual Report on Form 10-K, are hereby incorporated into this
Schedule 4.01(g)

 

Page 5

--------------------------------------------------------------------------------

SCHEDULE 4.01(l)

ENVIRONMENTAL MATTERS

For purposes of completeness, the following constitutes a list of the
significant current environmental matters involving the Borrowers, although not
all environmental matters. Inclusion on this Schedule does not necessarily imply
that any such item or issue could be reasonably likely to have a Material
Adverse Effect.

 

A. GENERAL

1. The disclosures and risk factors set forth in the Borrower’s public filings
with the Securities and Exchange Commission (“SEC”), including, without
limitation, its 2005 Annual Report on Form 10-K, are hereby incorporated herein.

2. The disclosures set forth in Schedule 4.01(g) of this Agreement are hereby
incorporated herein.

3. Permits. The Borrowers are permittees under numerous operating and
environmental permits affecting their facilities. These include, without
limitation, permits governing air emissions, effluent discharges, waste
generation and handling and groundwater use consumption. Many of these permits
include numerous conditions and requirements that impact production and
production levels, among other things. At any time a number of these permits may
be in the course of application for renewal or amendment. The renewal process
often includes discussions and negotiations with governmental agencies and third
party stakeholders over various conditions to be included in each respective
permit, many of which could cost significant amounts to implement if included in
the permit. At times, litigation may result if no agreement can be reached. No
assurances are given that the renewal or amendment of any of Borrowers’ permits
will not result in one or more additional or modified permit conditions that
could result in a Material Adverse Effect

 

B. CLEAN AIR ACT AND CLEAN WATER ACT COMPLIANCE

1. Cluster Rules. U.S. EPA uses this term to identify parallel rule-making,
largely implemented in 1998, for water and air technology-based discharge limits
for pulp and paper mills. The Company is currently in compliance in all material
respects with its obligations under the Cluster Rules, subject to the Jesup
“Pre-Cook” issue discussed below. The most significant remaining Cluster Rule
requirement is the pending development (timeline uncertain) of “Best Available
Technology”-based limits for effluent discharges from dissolving pulp mills. As
there are only four currently operating dissolving pulp mills in the U.S. (soon
to be three, as one has announced its closure), U.S. EPA has delegated
development of these limits to the states in which these mills are located
(Florida and Georgia). We have one dissolving pulp mill in each of these states
(Fernandina and Jesup). While it is unclear exactly what these limits will be,
it is not expected that they will have a Material Adverse Effect, although there
can be no assurance of same.

--------------------------------------------------------------------------------

2. Jesup “Pre-Steaming” Issue. See the discussion set forth in Schedule 4.01(g).

3. Jesup Mill NPDES (National Pollution Discharge Elimination System) Permit
Renewal. In 2002 Rayonier and the Altamaha Riverkeeper (ARK) reached an
agreement relating to ARK’s challenge to Rayonier’s NPDES effluent discharge
permit for the Jesup mill, which was issued by the Georgia EPD. As part of the
settlement Rayonier agreed to a goal of making significant reductions in
effluent foam, odor and color. To date, the foam and odor issues have largely
been resolved due to various projects implemented by the mill. While there is no
express regulatory requirement to limit effluent color, Rayonier agreed to work
toward a goal of 50% reduction in effluent color, contingent on finding
technology that was, in Rayonier’s judgment, reliable and cost effective.

Rayonier’s efforts to reduce color have been only partially successful to date,
largely due to overall increased mill production and the ultra high purity of
the mill’s acetate product grades. Our application for renewal of the mill’s
NPDES permit was submitted in October of 2005 and the Georgia EPD has extended
the current permit for two additional years. We are commencing a third party
technology study to determine other potential solutions to effluent color
loading at the mill. Discussions are also being held with ARK to attempt to
avoid litigation over the new permit. While it is not expected that any
expenditures necessary to address effluent color issues at the mill will have a
Material Adverse Effect, there can be no assurance of same.

 

  C. DISCONTINUED OPERATIONS

1. Port Angeles, WA Site. Over the past two years, the Company has prepared and
submitted to the Washington Department of Ecology (“Ecology”) various draft
investigation reports required under the Model Toxics Control Act, Washington’s
state version of CERCLA. These reports cover the “uplands” portion of the mill
site, the “marine” areas and ecological risk assessment relating to the overall
impact on plant and animal life. As a result of several extended delays largely
caused by Ecology and the Lower Elwha Klallam Tribe (to whom Ecology has given
significant authority in the remediation process), none of these reports yet
have been released for public review. After finalization of these reports,
actual feasibility and remedial requirements will be determined in the next
steps of the process. In addition, Rayonier is currently commencing additional
marine sampling largely relating to potential PCB presence in marine areas
around the mill.

Separately, in November, 2005 the Company filed a lawsuit against Ecology which
challenged Ecology’s use of an overly stringent remedial standard for off-site
(i.e., non-industrial) dioxin without formally vetting this standard through the
required rulemaking process. The case was settled in 2006 when Ecology and the
Washington Attorney General acceded to Rayonier’s position, but since then
Ecology has announced proposed rulemaking that would, in effect, negate the
settlement. A legal challenge to any new rule is contemplated. While it is not
expected that resolution of this issue will have a Material Adverse Effect,
there can be no assurance of same.

 

Page 2

--------------------------------------------------------------------------------

2. Goose Lake (Shelton), WA. A Shelton, Washington pulp mill closed by Rayonier
in the 1950’s disposed of spent sulfite liquor in an off-site lake owned by the
Company, and the former Rayonier Research Center in Shelton deposited debris in
a landfill near the lake through the mid-1970’s. Soil and groundwater sampling
have been conducted under an agreed order with Ecology and the results were
reported to Ecology last year. We are responding to comments submitted by
Ecology and the scope of required remediation is currently unclear.

3. Hylebos Waterway. In 1993 the EPA identified the Company as a PRP at the
Commencement Bay Nearshore/Tideflats Superfund Site in Tacoma, Washington as a
result of the Company’s operation of a pulp mill on the Hylebos Waterway between
1937 and 1942. A group of other PRPs has begun remediation of the Waterway and
has sought the Company’s financial participation. To date, there has been no
action taken by either the EPA or the other PRPs to force participation. As
there is no evidence that the Company used, stored or released any of the
hazardous substances of concern, we have declined to contribute toward
remediation or a proposed settlement of alleged natural resources damages
claims. However, after participating in a voluntary mediation process, the
Company joined a group of PRPs who are negotiating with the natural resource
trustees for the site to settle their alleged joint liability for natural
resource damages. If the arrangement negotiated at the mediation holds and is
accepted by the trustees, the Company will participate in the settlement.

4. Southern Wood Piedmont Sites. See discussion in Schedule 4.01(g).

 

Page 3

--------------------------------------------------------------------------------

SCHEDULE 4.01(o)

POST RETIREMENT BENEFIT OBLIGATIONS

Accumulated Post-Retirement Benefit Obligations

as of December 31, 2005

 

Accumulated Post-Retirement Benefit Obligations within meaning of FASB 106

   $ 40,073,000

--------------------------------------------------------------------------------

SCHEDULE 5.03(b)

EXISTING LIENS

None

--------------------------------------------------------------------------------

SCHEDULE 5.04(b)

EXISTING INVESTMENTS

None

--------------------------------------------------------------------------------

SCHEDULE 5.04(e)

EXISTING SUBSIDIARY PAYMENT RESTRICTIONS

None

--------------------------------------------------------------------------------

EXHIBIT A – FORM OF

REVOLVING CREDIT

PROMISSORY NOTE

 

U.S.$         

  Dated:             , 20    

FOR VALUE RECEIVED, the undersigned, [NAME OF A BORROWER], a [            ]
corporation/limited partnership/limited liability company (the “Borrower”),
HEREBY PROMISES TO PAY to the order of                      (the “Lender”) for
the account of its Applicable Lending Office on the Termination Date (each as
defined in the Credit Agreement referred to below) the principal sum of
U.S.$[amount of the Lender’s Commitment in figures] or, if less, the aggregate
principal amount of the Revolving Credit Advances made by the Lender to the
Borrower pursuant to the Five-Year Revolving Credit Agreement dated as of
            , 2006 among Rayonier Inc., Rayonier TRS Holdings, Inc., Rayonier
Forest Resources, L.P., and any Additional Borrower (as defined therein), as
borrowers, the Lender and certain other lenders parties thereto, the issuing
banks parties thereto, and Credit Suisse, acting through its Cayman Islands
Branch (“CS”), as Administrative Agent for the Lender and such other lenders (as
amended or modified from time to time, the “Credit Agreement”; the terms defined
therein being used herein as therein defined) outstanding on the Termination
Date.

The Borrower promises to pay interest on the unpaid principal amount of each
Revolving Credit Advance from the date of such Revolving Credit Advance until
such principal amount is paid in full, at such interest rates, and payable at
such times, as are specified in the Credit Agreement.

Both principal and interest are payable in lawful money of the United States of
America to CS, as Administrative Agent, at The Bank of New York, ABA No.
02100018, Account No. 8900492627, Attn: Agency Cayman, Reference: Rayonier or
such other account in the United States as the Administrative Agent may
designate from time to time by notice to the Borrower, in same day funds. Each
Revolving Credit Advance made by the Lender to the Borrower pursuant to the
Credit Agreement, and all payments made on account of principal thereof, shall
be recorded by the Lender and, prior to any transfer hereof, endorsed on the
grid attached hereto which is part of this Promissory Note.

This Promissory Note is one of the Notes referred to in, and is entitled to the
benefits of, the Credit Agreement. The Credit Agreement, among other things,
(i) provides for the making of Revolving Credit Advances by the Lender to the
Borrower from time to time in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above mentioned, the indebtedness of
the Borrower resulting from each such Revolving Credit Advance being evidenced
by this Promissory Note and (ii) contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.

 

Exh. A - 1

--------------------------------------------------------------------------------

The Borrower hereby waives presentment, demand, protest and notice of any kind.
No failure to exercise, and no delay in exercising, any rights hereunder on the
part of the holder hereof shall operate as a waiver of such rights.

This Promissory Note shall be governed by, and construed in accordance with, the
laws of the State of New York.

 

[NAME OF A BORROWER]

By

 

 

Name:

 

Title:

 

 

Exh. A - 2

--------------------------------------------------------------------------------

ADVANCES AND PAYMENTS OF PRINCIPAL

 

Date  

Amount of

Revolving

Credit Advance

 

Amount of

Principal Paid

or Prepaid

  

Unpaid

Principal

Balance

  

Notation

Made By

                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                                                                               
                        

 

Exh. A - 3

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EXHIBIT B – FORM OF NOTICE OF

REVOLVING CREDIT BORROWING

Credit Suisse,

acting through its Cayman Islands Branch,

as Administrative Agent

for the Lenders parties

to the Credit Agreement

referred to below

Eleven Madison Avenue

New York, New York 10010

[Date]

Attention: [Agency Department Manager]

Ladies and Gentlemen:

The undersigned, [NAME OF A BORROWER], refers to the Five-Year Revolving Credit
Agreement, dated as of             , 2006 (as amended or modified from time to
time, the “Credit Agreement”, the terms defined therein being used herein as
therein defined), among Rayonier Inc., Rayonier TRS Holdings Inc., Rayonier
Forest Resources, L.P., and any Additional Borrower (as defined therein), as
borrowers, certain Lenders parties thereto, certain Issuing Banks parties
thereto, and Credit Suisse, acting through its Cayman Islands Branch (“CS”), as
Administrative Agent for said Lenders, and hereby gives you notice, irrevocably,
pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby
requests a Revolving Credit Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Revolving Credit
Borrowing (the “Proposed Revolving Credit Borrowing”) as required by
Section 2.02(a) of the Credit Agreement:

(i) The Business Day of the Proposed Revolving Credit Borrowing is             ,
20    .

(ii) The Type of Advances comprising the Proposed Revolving Credit Borrowing is
[Alternate Base Rate Advances] [Eurodollar Rate Advances].

(iii) The aggregate amount of the Proposed Revolving Credit Borrowing is
$        .

(iv) Proceeds of the Proposed Revolving Credit Borrowing are to be wire
-transferred in accordance with the following instructions:

 

Exh. B - 1

--------------------------------------------------------------------------------

 

 

 

 

 

[(v) The initial Interest Period for each Eurodollar Rate Advance made as part
of the Proposed Revolving Credit Borrowing is              month[s].]

The undersigned hereby certifies that, as of the Proposed Revolving Credit
Borrowing, all the applicable conditions contained in Section 3.02 of the Credit
Agreement have been satisfied (or waived pursuant to Section 8.01 of the Credit
Agreement).

 

Very truly yours,

[NAME OF A BORROWER]

By

 

 

Name:

 

Title:

 

 

Exh. B - 2

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EXHIBIT C-1 – FORM OF

GUARANTEE

AGREEMENT

GUARANTEE AGREEMENT dated as of             , 2006, among (a) RAYONIER INC., a
North Carolina corporation (“Rayonier”),(b) RAYONIER TRS HOLDINGS INC., a
Delaware corporation (“TRS”), (c) from and after any Additional Borrower
Effective Date, the Additional Borrower (as such terms are defined in the Credit
Agreement referred to below) (Rayonier, TRS and, from and after any such
Additional Borrower Effective Date, such Additional Borrower, each a “Guarantor”
and collectively, the “Guarantors”), and (d) CREDIT SUISSE, acting though its
Cayman Islands Branch, as administrative agent (the “Administrative Agent”) for
the Guaranteed Parties (as defined below).

Reference is made to the Five-Year Revolving Credit Agreement dated as of
            , 2006 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Rayonier, TRS, Rayonier Forest Resources,
L.P. (“RFR”) and any Additional Borrower, as borrowers (Rayonier, TRS, RFR and
any Additional Borrower, each individually, a “Borrower” and collectively, the
“Borrowers”), the lenders from time to time party thereto (the “Lenders”), the
Issuing Banks from time to time party thereto (the “Issuing Banks”) and Credit
Suisse, as Administrative Agent. Capitalized terms used and not defined herein
have the meanings assigned to them in the Credit Agreement.

The Lenders have agreed to make Revolving Credit Advances to the Borrowers, and
the Issuing Banks have agreed to issue Letters of Credit for the account of the
Borrowers, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Guarantors is a Borrower under
the Credit Agreement and acknowledges that it will derive substantial benefit
from the making of the Revolving Credit Advances by the Lenders and the issuance
of the Letters of Credit by the Issuing Banks. The obligations of the Lenders to
make Revolving Credit Advances and of the Issuing Banks to issue Letters of
Credit are conditioned on, among other things, the execution and delivery by the
Guarantors of a Guarantee Agreement in the form hereof. As consideration
therefor and in order to induce the Lenders to make Revolving Credit Advances
and the Issuing Banks to issue Letters of Credit, the Guarantors are willing to
execute this Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantees. Each Guarantor unconditionally guarantees, jointly with
each other Guarantor and severally, as a primary obligor and not merely as a
surety, (a) the due and punctual payment by each Borrower (other than itself) of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Revolving Credit Advances made to such Borrower, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by such Borrower
under the Credit Agreement in respect of any Letter of Credit, when and as due,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and indemnities, whether primary,

 

Exh. C-1 - 1

--------------------------------------------------------------------------------

secondary, direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or
allowable in such proceeding), of such Borrower to the Administrative Agent and
each Lender under the Credit Agreement and the other Loan Documents
(collectively, the “Guaranteed Parties”), whether such amounts shall have
accrued prior to, on or after the Closing Date, (b) the due and punctual payment
and performance of all covenants, agreements, obligations and liabilities of
each Borrower (other than itself), monetary or otherwise, under or pursuant to
the Credit Agreement and the other Loan Documents and (c) the due and punctual
payment and performance of all obligations of each Borrower (other than itself),
monetary or otherwise, under each Interest Rate Agreement in effect on the date
hereof to which any Lender (or an Affiliate of a Lender) is a party and each
Interest Rate Agreement entered into after the date hereof with any counterparty
that is a Lender (or an Affiliate of a Lender) at the time such Interest Rate
Agreement is entered into (all the monetary and other obligations referred to in
the preceding clauses (a) through (c) being collectively called the
“Obligations”).

Anything contained in this Agreement to the contrary notwithstanding, the
obligations of TRS hereunder, and the obligations of any Additional Borrower in
respect of the obligations of Rayonier, shall be limited to a maximum aggregate
amount equal to the greatest amount that would not render such obligations
subject to avoidance as a fraudulent transfer or conveyance under Section 548 of
Title 11 of the United States Code or any provisions of applicable law
(collectively, the “Fraudulent Transfer Laws”), in each case after giving effect
to all other liabilities of TRS or such Additional Borrower, contingent or
otherwise, that are relevant under the Fraudulent Transfer Laws and after giving
effect as assets to the value (as determined under the applicable provisions of
the Fraudulent Transfer Laws) of any rights to subrogation, contribution,
reimbursement, indemnity or similar rights of TRS or such Additional Borrower,
as the case may be, pursuant to (i) applicable law or (ii) any agreement
providing for an equitable allocation among TRS or such Additional Borrower, as
the case may be, and other Affiliates of Rayonier of obligations arising under
Guarantees by such parties.

Each Guarantor further agrees that the Obligations may be extended or renewed,
in whole or in part, without notice to or further assent from it, and that it
will remain bound upon its guarantee notwithstanding any extension or renewal of
any Obligation.

SECTION 2. Obligations Not Waived. To the fullest extent permitted by applicable
law, each Guarantor waives presentment to, demand of payment from and protest to
the applicable Borrower and any other guarantor of any of the Obligations, and
also waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Guarantor hereunder shall not be affected by, and each Guarantor hereby
waives any defense arising by reason of, (a) the failure of the Administrative
Agent or any other Guaranteed Party to assert any claim or demand or to enforce
or exercise any right or remedy against the applicable Borrower or any other
guarantor under the provisions of the Credit Agreement, any other Loan Document
or otherwise, (b) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of this Agreement, any other Loan
Document, any Guarantee or any other agreement, including with respect to any
other Guarantor under this Agreement, (c) the failure to take or perfect any
security interest in, or the release of, any collateral security held by or on
behalf of any Guaranteed Party or (d) the failure of any person to comply with
Section 5.01(l) of the Credit

 

Exh. C-1 - 2

--------------------------------------------------------------------------------

Agreement, Section 19 of the RFR Subsidiary Guarantee Agreement, Section 19 of
the TRS Subsidiary Guarantee Agreement or Section 19 of the any Additional
Subsidiary Guarantor Guarantee Agreement.

SECTION 3. Guarantee of Payment. Each Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Administrative Agent
or any other Guaranteed Party to any collateral security held for payment of the
Obligations or any balance of any deposit or other account or credit on the
books of the Administrative Agent or any other Guaranteed Party in favor of the
applicable Borrower or any other person.

SECTION 4. No Discharge or Diminishment of Guarantee. The obligations of each
Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the applicable Borrower’s Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the applicable
Borrower’s Obligations, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality or unenforceability of such Obligations, any law or regulation of any
jurisdiction or any other event affecting any term of an Obligation or any other
circumstance that might constitute a defense of the Borrower or any Guarantor.
Without limiting the generality of the foregoing, the obligations of each
Guarantor hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Administrative Agent or any other Guaranteed Party to assert
any claim or demand or to enforce any remedy under the Credit Agreement, any
other Loan Document or any other agreement, by any waiver or modification of any
provision of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the applicable Borrower’s Obligations, or by
any other act or omission that may or might in any manner or to any extent vary
the risk of any Guarantor or that would otherwise operate as a discharge of each
Guarantor as a matter of law or equity (other than the indefeasible payment in
full in cash of all the applicable Borrower’s Obligations), and each Guarantor
hereby waives any defense arising by reason of any of the foregoing actions.

SECTION 5. Defenses of Borrower Waived. To the fullest extent permitted by
applicable law, each of the Guarantors waives any defense based on or arising
out of any defense of the applicable Borrower or the unenforceability of the
applicable Borrower’s Obligations or any part thereof from any cause or the
cessation from any cause of the liability of the applicable Borrower (other than
the final and indefeasible payment in full in cash of such Borrower’s
Obligations). The Administrative Agent and the other Guaranteed Parties may, at
their election, foreclose on any collateral security held by one or more of them
by one or more judicial or nonjudicial sales, accept an assignment of any such
collateral security in lieu of foreclosure, compromise or adjust any part of the
applicable Borrower’s Obligations, make any other accommodation with the
applicable Borrower or any other guarantor or exercise any other right or remedy
available to them against the applicable Borrower or any other guarantor,
without affecting or impairing in any way the liability of any Guarantor
hereunder except to the extent the applicable Borrower’s Obligations have been
fully, finally and indefeasibly paid in cash. Pursuant to applicable law, each
of the Guarantors waives any defense arising out of any such election even
though such election operates, pursuant to applicable law, to impair or to
extinguish any right of reimbursement or subrogation or other right or remedy of
such Guarantor

 

Exh. C-1 - 3

--------------------------------------------------------------------------------

against the applicable Borrower, any other Guarantor or guarantor, as the case
may be, or any collateral security.

SECTION 6. Agreement to Pay; Subordination. In furtherance of the foregoing and
not in limitation of any other right that the Administrative Agent or any other
Guaranteed Party has at law or in equity against any Guarantor by virtue hereof,
each Guarantor hereby agrees that, upon the failure of any Borrower (other than
itself) to pay any of its Obligations when and as the same shall become due,
whether at maturity, by acceleration, after notice of prepayment or otherwise,
such Guarantor hereby promises to and will forthwith pay, or cause to be paid,
to the Administrative Agent or such other Guaranteed Party as designated thereby
in cash the amount of such unpaid Obligations. Upon payment by any Guarantor of
any sums to the Administrative Agent or any Guaranteed Party as provided above,
all rights of such Guarantor against the applicable Borrower arising as a result
thereof by way of right of subrogation, contribution, reimbursement, indemnity
or otherwise shall in all respects be subordinate and junior in right of payment
to the prior indefeasible payment in full in cash of all the respective
Borrower’s Obligations. In addition, any indebtedness of any Borrower now or
hereafter held by any Guarantor (other than indebtedness of RFR held by TRS) is
hereby subordinated in right of payment to the prior payment in full of the
Obligations during the existence of an Event of Default. If any amount shall
erroneously be paid to any Guarantor on account of (i) such subrogation,
contribution, reimbursement, indemnity or similar right or (ii) any such
indebtedness of any Borrower (other than indebtedness of RFR held by TRS), such
amount shall be held in trust for the benefit of the Guaranteed Parties and
shall forthwith be paid to the Administrative Agent to be credited against the
payment of the applicable Borrower’s Obligations, whether matured or unmatured,
in accordance with the terms of the Loan Documents.

SECTION 7. Information. Each of the Guarantors assumes all responsibility for
being and keeping itself informed of each applicable Borrower’s financial
condition and assets, all other circumstances bearing upon the risk of
nonpayment of such Borrower’s Obligations and the nature, scope and extent of
the risks that such Guarantor assumes and incurs hereunder, and agrees that none
of the Administrative Agent or the other Guaranteed Parties will have any duty
to advise any of the Guarantors of information known to it or any of them
regarding such circumstances or risks.

SECTION 8. Representations and Warranties; Taxes. Each of the Guarantors
represents and warrants as to itself that all representations and warranties
relating to it contained in the Credit Agreement or any other Loan Document are
true and correct. Each Guarantor agrees that the provisions of Section 2.15 of
the Credit Agreement shall apply equally to each Guarantor with respect to the
payments made by it hereunder.

SECTION 9. Termination. The Guarantees made hereunder (a) shall terminate when
all the Obligations have been indefeasibly paid in full and the Lenders have no
further commitment to lend under the Credit Agreement, the LC Exposure has been
reduced to zero and the Issuing Banks have no further obligation to issue
Letters of Credit under the Credit Agreement and (b) shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligation is rescinded or must otherwise be restored

 

Exh. C-1 - 4

--------------------------------------------------------------------------------

by any Guaranteed Party or any Guarantor upon the bankruptcy or reorganization
of any Borrower or any Guarantor or otherwise.

SECTION 10. Binding Effect; Several Agreement; Assignments. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of the Guarantors that are contained in
this Agreement shall bind and inure to the benefit of each party hereto and
their respective successors and assigns. This Agreement shall become effective
as to any Guarantor when a counterpart hereof executed on behalf of such
Guarantor shall have been delivered to the Administrative Agent and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent (or, in the case of any Additional Borrower, when an Additional Borrower
Assumption Agreement has been executed and delivered by the such Additional
Borrower and the Additional Borrower Effective Date has occurred), and
thereafter shall be binding upon such Guarantor and the Administrative Agent and
their respective successors and assigns, and shall inure to the benefit of such
Guarantor, the Administrative Agent and the other Guaranteed Parties, and their
respective successors and assigns, except that no Guarantor shall have the right
to assign its rights or obligations hereunder or any interest herein (except in
connection with any transaction permitted by Section 5.03(c) of the Credit
Agreement), and any such attempted assignment shall be void. This Agreement
shall be construed as a separate agreement with respect to each Guarantor and
may be amended, modified, supplemented, waived or released with respect to any
Guarantor without the approval of any other Guarantor and without affecting the
obligations of any other Guarantor hereunder.

SECTION 11. Waivers; Amendment. (a) No failure or delay of the Administrative
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent hereunder
and of the other Guaranteed Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Guarantor therefrom shall in any event be effective unless the
same shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice or demand on any Guarantor in any case shall entitle such
Guarantor to any other or further notice or demand in similar or other
circumstances.

(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to a written agreement entered into between the
Guarantors with respect to which such waiver, amendment or modification relates
and the Administrative Agent, with the prior written consent of the Required
Lenders (except as otherwise provided in the Credit Agreement).

SECTION 12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF

 

Exh. C-1 - 5

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(OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK).

SECTION 13. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 8.02 of the Credit Agreement.

SECTION 14. Survival of Agreement; Severability. (a) All covenants, agreements,
representations and warranties made by the Guarantors herein and in the
certificates or other instruments prepared or delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Administrative Agent and the other Guaranteed
Parties and shall survive the making by the Lenders of the Revolving Credit
Advances and the issuance of the Letters of Credit by the Issuing Banks
regardless of any investigation made by the Guaranteed Parties or on their
behalf, and shall continue in full force and effect as long as the principal of
or any accrued interest on any Revolving Credit Advance or any other fee or
amount payable under this Agreement or any other Loan Document is outstanding
and unpaid, the LC Exposure does not equal zero or the Commitments and the LC
Commitment have not been terminated.

(b) In the event any one or more of the provisions contained in this Agreement
or in any other Loan Document should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION 15. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.

SECTION 16. Rules of Interpretation. The rules of interpretation specified in
Article I of the Credit Agreement shall be applicable to this Agreement.

SECTION 17. Jurisdiction; Consent to Service of Process. (a) Each Guarantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any New York State court or federal court of
the United States of America sitting in New York City, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other

 

Exh. C-1 - 6

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manner provided by law. Nothing in this Agreement shall affect any right that
the Administrative Agent or any other Guaranteed Party may otherwise have to
bring any action or proceeding relating to this Agreement or the other Loan
Documents against any Guarantor or its properties in the courts of any
jurisdiction, except that each of the Guarantors agrees that (i) it will not
bring any such action or proceeding in any court other than New York Courts (it
being acknowledged and agreed by the parties hereto that any other forum would
be inconvenient and inappropriate in view of the fact that more of the Lenders
who would be affected by any such action or proceeding have contacts with the
State of New York than any other jurisdiction), and (ii) in any such action or
proceeding brought against any Guarantor in any other court, it will not assert
any cross-claim, counterclaim or setoff, or seek any other affirmative relief,
except to the extent that the failure to assert the same will preclude such
Guarantor from asserting or seeking the same in the New York Courts.

(b) Each Guarantor hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or the other Loan Documents in any New York
State or federal court. Each of the parties hereto hereby irrevocably waives, to
the fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.

(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 13. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

SECTION 18. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.

SECTION 19. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Guaranteed Party is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other Debt at any time owing by such Guaranteed Party to or for
the credit or the account of any Guarantor against any or all the obligations of
such Guarantor now or hereafter existing under this Agreement and the other Loan
Documents held by such Guaranteed Party, irrespective of whether or not such
Guaranteed Party shall have made any demand under this Agreement or any other
Loan Document and although such obligations may be unmatured. After any exercise
of such right of setoff, the Guaranteed Party shall give notice of such exercise
to the Administrative Agent and such Guarantor;

 

Exh. C-1 - 7

--------------------------------------------------------------------------------

provided, however, that failure to give such notice shall not in any way affect
the rights of any Guaranteed Party. The rights of each Guaranteed Party under
this Section 19 are in addition to other rights and remedies (including other
rights of setoff) which such Guaranteed Party may have.

 

Exh. C-1 - 8

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

RAYONIER INC.,

By

 

 

Name:

 

Title:

 

RAYONIER TRS HOLDINGS INC.,

By

 

 

Name:

 

Title:

 

CREDIT SUISSE, acting through its Cayman

Islands Branch, as Administrative Agent,

By

 

 

Name:

 

Title:

 

By

 

 

Name:

 

Title:

 

 

Exh. C-1 - 9

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EXHIBIT C-2 – FORM OF RFR

SUBSIDIARY GUARANTEE

AGREEMENT

SUBSIDIARY GUARANTEE AGREEMENT dated as of             , 20    , among each of
the subsidiaries listed on Schedule I hereto or becoming a party hereto as
provided in Section 19 (each such subsidiary individually, a “Subsidiary
Guarantor” and collectively, the “Subsidiary Guarantors”) of RAYONIER FOREST
RESOURCES, L.P., a Delaware limited partnership (“RFR”), and CREDIT SUISSE,
acting though its Cayman Islands Branch, as administrative agent (the
“Administrative Agent”) for the Guaranteed Parties (as defined below).

Reference is made to the Five-Year Revolving Credit Agreement dated as of
            , 2006 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Rayonier Inc., Rayonier TRS Holdings Inc.,
RFR and any Additional Borrower (as defined therein), as borrowers
(collectively, the “Borrowers”), the lenders from time to time party thereto
(the “Lenders”), the Issuing Banks from time to time party thereto (the “Issuing
Banks”) and Credit Suisse, as Administrative Agent. Capitalized terms used and
not defined herein have the meanings assigned to them in the Credit Agreement.

The Lenders have agreed, among other things, to make Revolving Credit Advances
to RFR, and the Issuing Banks have agreed, among other things, to issue Letters
of Credit at the request of or for the account of RFR, pursuant to, and upon the
terms and subject to the conditions specified in, the Credit Agreement. Each of
the Subsidiary Guarantors is a direct or indirect Subsidiary of RFR and
acknowledges that it will derive substantial benefit from the making of such
Revolving Credit Advances by the Lenders and the issuance of such Letters of
Credit by the Issuing Banks. The obligations of the Lenders to make such
Revolving Credit Advances and of the Issuing Banks to issue such Letters of
Credit are conditioned on, among other things, the execution and delivery by the
Subsidiary Guarantors of a Subsidiary Guarantee Agreement in the form hereof. As
consideration therefor and in order to induce the Lenders to make such Revolving
Credit Advances and the Issuing Banks to issue such Letters of Credit, the
Subsidiary Guarantors are willing to execute this Agreement. For the avoidance
of doubt, the obligations guaranteed hereby are solely the obligations of RFR
under the Loan Documents and not of any other Borrower. Revolving Credit
Advances made thereunder to any other Borrower, and Letters of Credit issued
thereunder but neither requested by RFR nor for its account, shall not have the
benefit of the guarantee provided hereby.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally guarantees,
jointly with the other Subsidiary Guarantors and severally, as a primary obligor
and not merely as a surety, (a) the due and punctual payment by RFR of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Revolving Credit Advances made to RFR, when and as due, whether at maturity,
by acceleration, upon one or more dates set for prepayment or otherwise, (ii)
each payment required to be made by RFR under the Credit Agreement in respect of
any Letter of

 

Exh. C-2 - 1

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Credit, when and as due, including payments in respect of reimbursement of
disbursements, interest thereon and obligations to provide cash collateral and
(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of RFR to the Administrative Agent and
each Lender under the Credit Agreement and the other Loan Documents
(collectively, the “Guaranteed Parties”), whether such amounts shall have
accrued prior to, on or after the Closing Date, (b) the due and punctual payment
and performance of all covenants, agreements, obligations and liabilities of
RFR, monetary or otherwise, under or pursuant to the Credit Agreement and the
other Loan Documents and (c) the due and punctual payment and performance of all
obligations of RFR, monetary or otherwise, under each Interest Rate Agreement in
effect on the date hereof to which any Lender (or an Affiliate of a Lender) is a
party and each Interest Rate Agreement entered into after the date hereof with
any counterparty that is a Lender (or an Affiliate of a Lender) at the time such
Interest Rate Agreement is entered into (all the monetary and other obligations
referred to in the preceding clauses (a) through (c) being collectively called
the “Obligations”). Each Subsidiary Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.

Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Subsidiary Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the greatest amount that would not render such
Subsidiary Guarantor’s obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any provisions of applicable law (collectively, the “Fraudulent
Transfer Laws”), in each case after giving effect to all other liabilities of
such Subsidiary Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws and after giving effect as assets to the value (as
determined under the applicable provisions of the Fraudulent Transfer Laws) of
any rights to subrogation, contribution, reimbursement, indemnity or similar
rights of such Subsidiary Guarantor pursuant to (i) applicable law or (ii) any
agreement providing for an equitable allocation among such Subsidiary Guarantor
and other Affiliates of RFR of obligations arising under Guarantees by such
parties.

Each Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.

SECTION 2. Obligations Not Waived. To the fullest extent permitted by applicable
law, each Subsidiary Guarantor waives presentment to, demand of payment from and
protest to RFR or any other guarantor of any of the Obligations, and also waives
notice of acceptance of its guarantee and notice of protest for nonpayment. To
the fullest extent permitted by applicable law, the obligations of each
Subsidiary Guarantor hereunder shall not be affected by, and each Subsidiary
Guarantor hereby waives any defense arising by reason of, (a) the failure of the
Administrative Agent or any other Guaranteed Party to assert any claim or demand
or to enforce or exercise any right or remedy against RFR or any other guarantor
under the provisions of the Credit Agreement, any other Loan Document or
otherwise, (b) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of this

 

Exh. C-2 - 2

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Agreement, any other Loan Document, any Guarantee or any other agreement,
including with respect to any other Subsidiary Guarantor under this Agreement,
(c) the failure to take or perfect any security interest in, or the release of,
any collateral security held by or on behalf of any Guaranteed Party or (d) the
failure of any person to comply with Section 5.01(l) of the Credit Agreement or
Section 19 hereof.

SECTION 3. Guarantee of Payment. Each Subsidiary Guarantor further agrees that
its guarantee constitutes a guarantee of payment when due and not of collection,
and waives any right to require that any resort be had by the Administrative
Agent or any other Guaranteed Party to any collateral security held for payment
of the Obligations or to any balance of any deposit or other account or credit
on the books of the Administrative Agent or any other Guaranteed Party in favor
of RFR or any other person.

SECTION 4. No Discharge or Diminishment of Guarantee. The obligations of each
Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations, any law or regulation of any jurisdiction
or any other event affecting any term of an Obligation or any other circumstance
that might constitute a defense of the Borrower or any Guarantor. Without
limiting the generality of the foregoing, the obligations of each Subsidiary
Guarantor hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Administrative Agent or any other Guaranteed Party to assert
any claim or demand or to enforce any remedy under the Credit Agreement, any
other Loan Document or any other agreement, by any waiver or modification of any
provision of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or
omission that may or might in any manner or to any extent vary the risk of any
Subsidiary Guarantor or that would otherwise operate as a discharge of each
Subsidiary Guarantor as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations), and each Subsidiary Guarantor
hereby waives any defense arising by reason of any of the foregoing actions.

SECTION 5. Defenses of Borrower Waived. To the fullest extent permitted by
applicable law, each of the Subsidiary Guarantors waives any defense based on or
arising out of any defense of RFR or the unenforceability of the Obligations or
any part thereof from any cause or the cessation from any cause of the liability
of RFR (other than the final and indefeasible payment in full in cash of the
Obligations). The Administrative Agent and the other Guaranteed Parties may, at
their election, foreclose on any collateral security held by one or more of them
by one or more judicial or nonjudicial sales, accept an assignment of any such
collateral security in lieu of foreclosure, compromise or adjust any part of the
Obligations, make any other accommodation with RFR or any other guarantor or
exercise any other right or remedy available to them against RFR or any other
guarantor, without affecting or impairing in any way the liability of any
Subsidiary Guarantor hereunder except to the extent the Obligations have been
fully, finally and indefeasibly paid in cash. Pursuant to applicable law, each
of the Subsidiary Guarantors waives any defense arising out of any such election
even though such election operates, pursuant to applicable law, to impair or to
extinguish any right of reimbursement or

 

Exh. C-2 - 3

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subrogation or other right or remedy of such Subsidiary Guarantor against RFR or
any other Subsidiary Guarantor or guarantor, as the case may be, or any
collateral security.

SECTION 6. Agreement to Pay; Subordination. In furtherance of the foregoing and
not in limitation of any other right that the Administrative Agent or any other
Guaranteed Party has at law or in equity against any Subsidiary Guarantor by
virtue hereof, upon the failure of RFR or any other Loan Party to pay any
Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Subsidiary Guarantor
hereby promises to and will forthwith pay, or cause to be paid, to the
Administrative Agent or such other Guaranteed Party as designated thereby in
cash the amount of such unpaid Obligation. Upon payment by any Subsidiary
Guarantor of any sums to the Administrative Agent or any Guaranteed Party as
provided above, all rights of such Subsidiary Guarantor against RFR arising as a
result thereof by way of right of subrogation, contribution, reimbursement,
indemnity or otherwise shall in all respects be subordinate and junior in right
of payment to the prior indefeasible payment in full in cash of all the
Obligations. In addition, any indebtedness of RFR now or hereafter held by any
Subsidiary Guarantor is hereby subordinated in right of payment to the prior
payment in full of the Obligations during the existence of an Event of Default.
If any amount shall erroneously be paid to any Subsidiary Guarantor on account
of (i) such subrogation, contribution, reimbursement, indemnity or similar right
or (ii) any such indebtedness of RFR, such amount shall be held in trust for the
benefit of the Guaranteed Parties and shall forthwith be paid to the
Administrative Agent to be credited against the payment of the Obligations,
whether matured or unmatured, in accordance with the terms of the Loan
Documents.

SECTION 7. Information. Each of the Subsidiary Guarantors assumes all
responsibility for being and keeping itself informed of RFR’s financial
condition and assets, all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of
the Administrative Agent or the other Guaranteed Parties will have any duty to
advise any of the Subsidiary Guarantors of information known to it or any of
them regarding such circumstances or risks.

SECTION 8. Representations and Warranties; Taxes. Each of the Subsidiary
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement or any other Loan
Document are true and correct. Each Subsidiary Guarantor agrees that the
provisions of Section 2.15 of the Credit Agreement shall apply equally to each
Subsidiary Guarantor with respect to the payments made by it hereunder.

SECTION 9. Termination. The Guarantees made hereunder (a) shall terminate when
all the Obligations have been indefeasibly paid in full and the Lenders have no
further commitment to lend to RFR under the Credit Agreement, the LC Exposure
with respect to Letters of Credit issued at the request of or for the account of
RFR has been reduced to zero and the Issuing Banks have no further obligation to
issue Letters of Credit at the request of or for the account of RFR under the
Credit Agreement and (b) shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Guaranteed Party or any
Subsidiary Guarantor upon the bankruptcy or reorganization of RFR or any
Subsidiary Guarantor or otherwise.

 

Exh. C-2 - 4

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SECTION 10. Binding Effect; Several Agreement; Assignments; Releases. Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Subsidiary Guarantors
that are contained in this Agreement shall bind and inure to the benefit of each
party hereto and their respective successors and assigns. This Agreement shall
become effective as to any Subsidiary Guarantor when a counterpart hereof (or an
instrument in the form of Annex I hereto) executed on behalf of such Subsidiary
Guarantor shall have been delivered to the Administrative Agent and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent, and thereafter shall be binding upon such Subsidiary Guarantor and the
Administrative Agent and their respective successors and assigns, and shall
inure to the benefit of such Subsidiary Guarantor, the Administrative Agent and
the other Guaranteed Parties, and their respective successors and assigns,
except that no Subsidiary Guarantor shall have the right to assign its rights or
obligations hereunder or any interest herein (except in connection with any
transaction permitted by Section 5.03(c) of the Credit Agreement), and any such
attempted assignment shall be void. This Agreement shall be construed as a
separate agreement with respect to each Subsidiary Guarantor and may be amended,
modified, supplemented, waived or released with respect to any Subsidiary
Guarantor without the approval of any other Subsidiary Guarantor and without
affecting the obligations of any other Subsidiary Guarantor hereunder. The
Administrative Agent is hereby expressly authorized to, and agrees upon request
of RFR it will, release any Subsidiary Guarantor from its obligations hereunder
in the event that all the Capital Stock of such Subsidiary Guarantor shall be
sold, transferred or otherwise disposed of to a person that is not an Affiliate
of RFR in a transaction not prohibited by the Credit Agreement.

SECTION 11. Waivers; Amendment. (a) No failure or delay of the Administrative
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent hereunder
and of the other Guaranteed Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Subsidiary Guarantor therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in similar or other circumstances.

(b) Except as expressly provided in Section 19, neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to a written
agreement entered into between the Subsidiary Guarantors with respect to which
such waiver, amendment or modification relates and the Administrative Agent,
with the prior written consent of the Required Lenders (except as otherwise
provided in the Credit Agreement).

SECTION 12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF

 

Exh. C-2 - 5

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(OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK).

SECTION 13. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 8.02 of the Credit Agreement. All
communications and notices hereunder to each Subsidiary Guarantor shall be given
to it in care of RFR at the address set forth in the Credit Agreement.

SECTION 14. Survival of Agreement; Severability. (a) All covenants, agreements,
representations and warranties made by the Subsidiary Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Administrative Agent and the other Guaranteed
Parties and shall survive the making by the Lenders of the Revolving Credit
Advances and the issuance of the Letters of Credit by the Issuing Banks
regardless of any investigation made by the Guaranteed Parties or on their
behalf, and shall continue in full force and effect as long as any Obligation is
outstanding and unpaid, the LC Exposure with respect to Letters of Credit issued
at the request of or for the account of RFR does not equal zero or the
Commitments and the LC Commitment with respect to RFR have not been terminated.

(b) In the event any one or more of the provisions contained in this Agreement
or in any other Loan Document should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION 15. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.

SECTION 16. Rules of Interpretation. The rules of interpretation specified in
Article I of the Credit Agreement shall be applicable to this Agreement.

SECTION 17. Jurisdiction; Consent to Service of Process. (a) Each Subsidiary
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal

 

Exh. C-2 - 6

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court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any other Guaranteed Party may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against any
Subsidiary Guarantor or its properties in the courts of any jurisdiction, except
that each of the Subsidiary Guarantors agrees that (i) it will not bring any
such action or proceeding in any court other than New York Courts (it being
acknowledged and agreed by the parties hereto that any other forum would be
inconvenient and inappropriate in view of the fact that more of the Lenders who
would be affected by any such action or proceeding have contacts with the State
of New York than any other jurisdiction), and (ii) in any such action or
proceeding brought against any Subsidiary Guarantor in any other court, it will
not assert any cross-claim, counterclaim or setoff, or seek any other
affirmative relief, except to the extent that the failure to assert the same
will preclude such Subsidiary Guarantor from asserting or seeking the same in
the New York Courts.

(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 13. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

SECTION 18. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.

SECTION 19. Additional Subsidiary Guarantors. Certain additional Subsidiaries of
RFR may be required from time to time, under the terms of Credit Agreement, to
enter into this Agreement as Subsidiary Guarantors. Upon execution and delivery
by the Administrative Agent and a Subsidiary of an instrument in the form of
Annex I hereto, such Subsidiary shall become a Subsidiary Guarantor hereunder
with the same force and effect as if originally named as a Subsidiary Guarantor
herein. The execution and delivery of any such instrument shall not require the
consent of any other Subsidiary Guarantor hereunder. The rights and obligations
of

 

Exh. C-2 - 7

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each Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.

SECTION 20. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Guaranteed Party is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other Debt at any time owing by such Guaranteed Party to or for
the credit or the account of any Subsidiary Guarantor against any or all the
obligations of such Subsidiary Guarantor now or hereafter existing under this
Agreement and the other Loan Documents held by such Guaranteed Party,
irrespective of whether or not such Guaranteed Party shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. After any exercise of such right of setoff, the Guaranteed
Party shall give notice of such exercise to the Administrative Agent and RFR;
provided, however, that failure to give such notice shall not in any way affect
the rights of any Guaranteed Party. The rights of each Guaranteed Party under
this Section 20 are in addition to other rights and remedies (including other
rights of setoff) which such Guaranteed Party may have.

 

Exh. C-2 - 8

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

THE SUBSIDIARY GUARANTORS LISTED

ON SCHEDULE I HERETO,

By

 

 

Name:

 

Title:

 

CREDIT SUISSE, acting through its Cayman

Islands Branch, as Administrative Agent,

By

 

 

Name:

 

Title:

 

By

 

 

Name:

 

Title:

 

 

Exh. C-2 - 9

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Schedule I to the

Subsidiary Guarantee Agreement

Subsidiary Guarantor

  

Address

                       

 

Exh. C-2 - 10

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Annex I to the

Subsidiary Guarantee Agreement

SUPPLEMENT NO.      dated as of             , 20    , to the Subsidiary
Guarantee Agreement dated as of             , 200    , among each of the
subsidiaries parties thereto (each such subsidiary individually, a “Subsidiary
Guarantor” and collectively, the “Subsidiary Guarantors”) of RAYONIER FOREST
RESOURCES, L.P., a Delaware limited partnership (“RFR”), and CREDIT SUISSE,
acting through its Cayman Islands Branch, as Administrative Agent (the
“Administrative Agent”) for the Guaranteed Parties (as defined in the Subsidiary
Guarantee Agreement).

A. Reference is made to the Five-Year Revolving Credit Agreement dated as of
            , 2006 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Rayonier Inc., Rayonier TRS Holdings Inc.,
RFR, and, any Additional Borrower (as defined therein), as borrowers, the
lenders from time to time party thereto (the “Lenders”), the Issuing Banks from
time to time party thereto (the “Issuing Banks”) and Credit Suisse, as
Administrative Agent. Capitalized terms used and not otherwise defined herein
have the meanings assigned to them in the Subsidiary Guarantee Agreement and the
Credit Agreement.

B. The Subsidiary Guarantors have entered into the Subsidiary Guarantee
Agreement in order to induce the Lenders to make Revolving Credit Advances to
RFR and the Issuing Banks to issue Letters of Credit at the request of or for
the account of RFR. The undersigned Subsidiary of RFR (the “New Subsidiary
Guarantor”) is executing this Supplement in accordance with the requirements of
the Credit Agreement to become a Subsidiary Guarantor under the Subsidiary
Guarantee Agreement in order to induce the Lenders to make additional Revolving
Credit Advances and the Issuing Banks to issue additional Letters of Credit and
as consideration for Revolving Credit Advances previously made and Letters of
Credit previously issued.

Accordingly, the Administrative Agent and the New Subsidiary Guarantor agree as
follows:

SECTION 1. In accordance with Section 19 of the Subsidiary Guarantee Agreement,
the New Subsidiary Guarantor by its signature below becomes a Subsidiary
Guarantor under the Subsidiary Guarantee Agreement with the same force and
effect as if originally a party thereto as a Subsidiary Guarantor and the New
Subsidiary Guarantor hereby (a) agrees to all the terms and provisions of the
Subsidiary Guarantee Agreement applicable to it as a Subsidiary Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Subsidiary Guarantor thereunder are true and correct
on and as of the date hereof except for representation and warranties which by
their terms refer to a specific date. Each reference to a “Subsidiary Guarantor”
in the Subsidiary Guarantee Agreement shall be deemed to include the New
Subsidiary Guarantor. The Subsidiary Guarantee Agreement is hereby incorporated
herein by reference.

SECTION 2. The New Subsidiary Guarantor represents and warrants to the
Administrative Agent and the other Guaranteed Parties that this Supplement has
been duly

 

Exh. C-2 - 11

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authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms subject
to applicable bankruptcy, insolvency, or moratorium laws relating to any
bankruptcy or insolvency of the New Subsidiary Guarantor, other laws affecting
creditor’s rights generally and general principles of equity regardless of
whether considered in a proceeding in equity or at law.

SECTION 3. This Supplement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Administrative
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Subsidiary Guarantor and the
Administrative Agent. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Subsidiary Guarantee
Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICT OF LAWS THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).

SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Subsidiary Guarantee Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing and
given as provided in Section 13 of the Subsidiary Guarantee Agreement. All
communications and notices hereunder to the New Subsidiary Guarantor shall be
given to it in care of RFR Inc. at its address set forth in the Credit
Agreement.

SECTION 8. The New Subsidiary Guarantor agrees to reimburse the Administrative
Agent for its out-of-pocket expenses in connection with this Supplement,
including the fees, disbursements and other charges of counsel for the
Administrative Agent.

 

Exh. C-2 - 12

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IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Administrative Agent
have duly executed this Supplement to the Guarantee Agreement as of the day and
year first above written.

 

[Name Of New Subsidiary Guarantor],

By

 

 

Name:

 

Title:

 

CREDIT SUISSE, acting through its Cayman

Islands Branch, as Administrative Agent,

By

 

 

Name:

 

Title:

 

By

 

 

Name:

 

Title:

 

 

Exh. C-2 - 13

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EXHIBIT C-3 – FORM OF TRS

SUBSIDIARY GUARANTEE

AGREEMENT

SUBSIDIARY GUARANTEE AGREEMENT dated as of             , 20    , among each of
the subsidiaries listed on Schedule I hereto or becoming a party hereto as
provided in Section 19 (each such subsidiary individually, a “Subsidiary
Guarantor” and collectively, the “Subsidiary Guarantors”) of RAYONIER TRS
HOLDINGS INC., a Delaware corporation (“TRS”), and CREDIT SUISSE, acting though
its Cayman Islands Branch, as administrative agent (the “Administrative Agent”)
for the Guaranteed Parties (as defined below).

Reference is made to the Five-Year Revolving Credit Agreement dated as of
            _, 2006 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Rayonier Inc. (“Rayonier”), TRS, Rayonier
Forest Resources, L.P., and any Additional Borrower (as defined therein), as
borrowers (collectively, the “Borrowers”), the lenders from time to time party
thereto (the “Lenders”), the Issuing Banks from time to time party thereto (the
“Issuing Banks”) and Credit Suisse, as Administrative Agent. Capitalized terms
used and not defined herein have the meanings assigned to them in the Credit
Agreement.

The Lenders have agreed, among other things, to make Revolving Credit Advances
to the Borrowers, and the Issuing Banks have agreed, among other things, to
issue Letters of Credit at the request of or for the account of the Borrowers,
pursuant to, and upon the terms and subject to the conditions specified in, the
Credit Agreement. Each of the Subsidiary Guarantors is a direct or indirect
Subsidiary of TRS and Rayonier (and, upon the occurrence of any Additional
Borrower Effective Date, will be a direct or indirect Subsidiary of the
Additional Borrower) and acknowledges that it will derive substantial benefit
from the making of such Revolving Credit Advances by the Lenders and the
issuance of such Letters of Credit by the Issuing Banks. The obligations of the
Lenders to make such Revolving Credit Advances and of the Issuing Banks to issue
such Letters of Credit are conditioned on, among other things, the execution and
delivery by the Subsidiary Guarantors of a Subsidiary Guarantee Agreement in the
form hereof. As consideration therefor and in order to induce the Lenders to
make such Revolving Credit Advances and the Issuing Banks to issue such Letters
of Credit, the Subsidiary Guarantors are willing to execute this Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally guarantees,
jointly with the other Subsidiary Guarantors and severally, as a primary obligor
and not merely as a surety, (a) the due and punctual payment by each Borrower of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Revolving Credit Advances made to such Borrower, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by such Borrower
under the Credit Agreement in respect of any Letter of Credit, when and as due,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and (iii) all other monetary
obligations, including fees, costs, expenses and

 

Exh. C-4 - 1

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indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of such Borrower to the Administrative
Agent and each Lender under the Credit Agreement, the Guarantee Agreement and
the other Loan Documents (collectively, the “Guaranteed Parties”), whether such
amounts shall have accrued prior to, on or after the Closing Date, (b) the due
and punctual payment and performance of all covenants, agreements, obligations
and liabilities of each Borrower, monetary or otherwise, under or pursuant to
the Credit Agreement, the Guarantee Agreement and the other Loan Documents and
(c) the due and punctual payment and performance of all obligations of each
Borrower, monetary or otherwise, under each Interest Rate Agreement in effect on
the date hereof to which any Lender (or an Affiliate of a Lender) is a party and
each Interest Rate Agreement entered into after the date hereof with any
counterparty that is a Lender (or an Affiliate of a Lender) at the time such
Interest Rate Agreement is entered into (all the monetary and other obligations
referred to in the preceding clauses (a) through (c) being collectively called
the “Obligations”). Each Subsidiary Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligation.

Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Subsidiary Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the greatest amount that would not render such
Subsidiary Guarantor’s obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any provisions of applicable law (collectively, the “Fraudulent
Transfer Laws”), in each case after giving effect to all other liabilities of
such Subsidiary Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws and after giving effect as assets to the value (as
determined under the applicable provisions of the Fraudulent Transfer Laws) of
any rights to subrogation, contribution, reimbursement, indemnity or similar
rights of such Subsidiary Guarantor pursuant to (i) applicable law or (ii) any
agreement providing for an equitable allocation among such Subsidiary Guarantor
and other Affiliates of Rayonier of obligations arising under Guarantees by such
parties.

Each Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.

SECTION 2. Obligations Not Waived. To the fullest extent permitted by applicable
law, each Subsidiary Guarantor waives presentment to, demand of payment from and
protest to TRS or any other guarantor of any of the Obligations, and also waives
notice of acceptance of its guarantee and notice of protest for nonpayment. To
the fullest extent permitted by applicable law, the obligations of each
Subsidiary Guarantor hereunder shall not be affected by, and each Subsidiary
Guarantor hereby waives any defense arising by reason of, (a) the failure of the
Administrative Agent or any other Guaranteed Party to assert any claim or demand
or to enforce or exercise any right or remedy against any Borrower or any other
guarantor under the provisions of the Credit Agreement, any other Loan Document
or otherwise, (b) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of this Agreement, any other Loan
Document, any Guarantee or any other agreement, including with

 

Exh. C-3 - 2

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respect to any other Subsidiary Guarantor under this Agreement, (c) the failure
to take or perfect any security interest in, or the release of, any collateral
security held by or on behalf of any Guaranteed Party or (d) the failure of any
person to comply with Section 5.01(l) of the Credit Agreement or Section 19
hereof.

SECTION 3. Guarantee of Payment. Each Subsidiary Guarantor further agrees that
its guarantee constitutes a guarantee of payment when due and not of collection,
and waives any right to require that any resort be had by the Administrative
Agent or any other Guaranteed Party to any collateral security held for payment
of the Obligations or to any balance of any deposit or other account or credit
on the books of the Administrative Agent or any other Guaranteed Party in favor
of any Borrower or any other person.

SECTION 4. No Discharge or Diminishment of Guarantee. The obligations of each
Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations, any law or regulation of any jurisdiction
or any other event affecting any term of an Obligation or any other circumstance
that might constitute a defense of the Borrower or any Guarantor. Without
limiting the generality of the foregoing, the obligations of each Subsidiary
Guarantor hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Administrative Agent or any other Guaranteed Party to assert
any claim or demand or to enforce any remedy under the Credit Agreement, the
Guarantee Agreement, any other Loan Document or any other agreement, by any
waiver or modification of any provision of any thereof, by any default, failure
or delay, willful or otherwise, in the performance of the Obligations, or by any
other act or omission that may or might in any manner or to any extent vary the
risk of any Subsidiary Guarantor or that would otherwise operate as a discharge
of each Subsidiary Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations), and each
Subsidiary Guarantor hereby waives any defense arising by reason of any of the
foregoing actions.

SECTION 5. Defenses of Borrower Waived. To the fullest extent permitted by
applicable law, each of the Subsidiary Guarantors waives any defense based on or
arising out of any defense of any Borrower or the unenforceability of the
Obligations or any part thereof from any cause or the cessation from any cause
of the liability of any Borrower (other than the final and indefeasible payment
in full in cash of the Obligations). The Administrative Agent and the other
Guaranteed Parties may, at their election, foreclose on any collateral security
held by one or more of them by one or more judicial or nonjudicial sales, accept
an assignment of any such collateral security in lieu of foreclosure, compromise
or adjust any part of the Obligations, make any other accommodation with any
Borrower or any other guarantor or exercise any other right or remedy available
to them against any Borrower or any other guarantor, without affecting or
impairing in any way the liability of any Subsidiary Guarantor hereunder except
to the extent the Obligations have been fully, finally and indefeasibly paid in
cash. Pursuant to applicable law, each of the Subsidiary Guarantors waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Subsidiary
Guarantor against any

 

Exh. C-3 - 3

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Borrower or any other Subsidiary Guarantor or guarantor, as the case may be, or
any collateral security.

SECTION 6. Agreement to Pay; Subordination. In furtherance of the foregoing and
not in limitation of any other right that the Administrative Agent or any other
Guaranteed Party has at law or in equity against any Subsidiary Guarantor by
virtue hereof, upon the failure of any Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Subsidiary Guarantor
hereby promises to and will forthwith pay, or cause to be paid, to the
Administrative Agent or such other Guaranteed Party as designated thereby in
cash the amount of such unpaid Obligation. Upon payment by any Subsidiary
Guarantor of any sums to the Administrative Agent or any Guaranteed Party as
provided above, all rights of such Subsidiary Guarantor against any Borrower
arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and
junior in right of payment to the prior indefeasible payment in full in cash of
all the Obligations. In addition, any indebtedness of any Borrower now or
hereafter held by any Subsidiary Guarantor is hereby subordinated in right of
payment to the prior payment in full of the Obligations during the existence of
an Event of Default. If any amount shall erroneously be paid to any Subsidiary
Guarantor on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of any Borrower, such
amount shall be held in trust for the benefit of the Guaranteed Parties and
shall forthwith be paid to the Administrative Agent to be credited against the
payment of the Obligations, whether matured or unmatured, in accordance with the
terms of the Loan Documents.

SECTION 7. Information. Each of the Subsidiary Guarantors assumes all
responsibility for being and keeping itself informed of each Borrower’s
financial condition and assets, all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of
the Administrative Agent or the other Guaranteed Parties will have any duty to
advise any of the Subsidiary Guarantors of information known to it or any of
them regarding such circumstances or risks.

SECTION 8. Representations and Warranties; Taxes. Each of the Subsidiary
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement or any other Loan
Document are true and correct. Each Subsidiary Guarantor agrees that the
provisions of Section 2.15 of the Credit Agreement shall apply equally to each
Subsidiary Guarantor with respect to the payments made by it hereunder.

SECTION 9. Termination. The Guarantees made hereunder (a) shall terminate when
all the Obligations have been indefeasibly paid in full and the Lenders have no
further commitment to lend to any Borrower under the Credit Agreement, the LC
Exposure with respect to Letters of Credit has been reduced to zero and the
Issuing Banks have no further obligation to issue Letters of Credit under the
Credit Agreement and (b) shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by any Guaranteed Party or any
Subsidiary Guarantor upon the bankruptcy or reorganization of any Borrower or
any Subsidiary Guarantor or otherwise.

 

Exh. C-3 - 4

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SECTION 10. Binding Effect; Several Agreement; Assignments; Releases. Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Subsidiary Guarantors
that are contained in this Agreement shall bind and inure to the benefit of each
party hereto and their respective successors and assigns. This Agreement shall
become effective as to any Subsidiary Guarantor when a counterpart hereof (or an
instrument in the form of Annex I hereto) executed on behalf of such Subsidiary
Guarantor shall have been delivered to the Administrative Agent and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent, and thereafter shall be binding upon such Subsidiary Guarantor and the
Administrative Agent and their respective successors and assigns, and shall
inure to the benefit of such Subsidiary Guarantor, the Administrative Agent and
the other Guaranteed Parties, and their respective successors and assigns,
except that no Subsidiary Guarantor shall have the right to assign its rights or
obligations hereunder or any interest herein (except in connection with any
transaction permitted by Section 5.03(c) of the Credit Agreement), and any such
attempted assignment shall be void. This Agreement shall be construed as a
separate agreement with respect to each Subsidiary Guarantor and may be amended,
modified, supplemented, waived or released with respect to any Subsidiary
Guarantor without the approval of any other Subsidiary Guarantor and without
affecting the obligations of any other Subsidiary Guarantor hereunder. The
Administrative Agent is hereby expressly authorized to, and agrees upon request
of TRS it will, release any Subsidiary Guarantor from its obligations hereunder
in the event that all the Capital Stock of such Subsidiary Guarantor shall be
sold, transferred or otherwise disposed of to a person that is not an Affiliate
of TRS in a transaction not prohibited by the Credit Agreement.

SECTION 11. Waivers; Amendment. (a) No failure or delay of the Administrative
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent hereunder
and of the other Guaranteed Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Subsidiary Guarantor therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in similar or other circumstances.

(b) Except as expressly provided in Section 19, neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to a written
agreement entered into between the Subsidiary Guarantors with respect to which
such waiver, amendment or modification relates and the Administrative Agent,
with the prior written consent of the Required Lenders (except as otherwise
provided in the Credit Agreement).

SECTION 12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF

 

Exh. C-3 - 5

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(OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK).

SECTION 13. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 8.02 of the Credit Agreement. All
communications and notices hereunder to each Subsidiary Guarantor shall be given
to it in care of TRS at the address set forth in the Credit Agreement.

SECTION 14. Survival of Agreement; Severability. (a) All covenants, agreements,
representations and warranties made by the Subsidiary Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Administrative Agent and the other Guaranteed
Parties and shall survive the making by the Lenders of the Revolving Credit
Advances and the issuance of the Letters of Credit by the Issuing Banks
regardless of any investigation made by the Guaranteed Parties or on their
behalf, and shall continue in full force and effect as long as any Obligation is
outstanding and unpaid, the LC Exposure does not equal zero or the Commitments
and the LC Commitment have not been terminated.

(b) In the event any one or more of the provisions contained in this Agreement
or in any other Loan Document should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION 15. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.

SECTION 16. Rules of Interpretation. The rules of interpretation specified in
Article I of the Credit Agreement shall be applicable to this Agreement.

SECTION 17. Jurisdiction; Consent to Service of Process. (a) Each Subsidiary
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding

 

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shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent or any other Guaranteed Party may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Subsidiary Guarantor or its properties in
the courts of any jurisdiction, except that each Subsidiary Guarantor agrees
that (i) it will not bring any such action or proceeding in any court other than
New York Courts (it being acknowledged and agreed by the parties hereto that any
other forum would be inconvenient and inappropriate in view of the fact that
more of the Lenders who would be affected by any such action or proceeding have
contacts with the State of New York than any other jurisdiction), and (ii) in
any such action or proceeding brought against any Subsidiary Guarantor in any
other court, it will not assert any cross-claim, counterclaim or setoff, or seek
any other affirmative relief, except to the extent that the failure to assert
the same will preclude such Subsidiary Guarantor from asserting or seeking the
same in the New York Courts.

(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 13. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

SECTION 18. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.

SECTION 19. Additional Subsidiary Guarantors. Certain additional Subsidiaries of
TRS may be required from time to time, under the terms of Credit Agreement, to
enter into this Agreement as Subsidiary Guarantors. Upon execution and delivery
by the Administrative Agent and a Subsidiary of an instrument in the form of
Annex I hereto, such Subsidiary shall become a Subsidiary Guarantor hereunder
with the same force and effect as if originally named as a Subsidiary Guarantor
herein. The execution and delivery of any such instrument shall not require the
consent of any other Subsidiary Guarantor hereunder. The rights and obligations
of each Subsidiary Guarantor hereunder shall remain in full force and effect
notwithstanding the addition of any new Subsidiary Guarantor as a party to this
Agreement.

 

Exh. C-3 - 7

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SECTION 20. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Guaranteed Party is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other Debt at any time owing by such Guaranteed Party to or for
the credit or the account of any Subsidiary Guarantor against any or all the
obligations of such Subsidiary Guarantor now or hereafter existing under this
Agreement and the other Loan Documents held by such Guaranteed Party,
irrespective of whether or not such Guaranteed Party shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. After any exercise of such right of setoff, the Guaranteed
Party shall give notice of such exercise to the Administrative Agent and TRS;
provided, however, that failure to give such notice shall not in any way affect
the rights of any Guaranteed Party. The rights of each Guaranteed Party under
this Section 20 are in addition to other rights and remedies (including other
rights of setoff) which such Guaranteed Party may have.

 

Exh. C-3 - 8

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

THE SUBSIDIARY GUARANTORS LISTED

ON SCHEDULE I HERETO,

By

 

 

Name:

 

Title:

 

CREDIT SUISSE, acting through its Cayman

Islands Branch, as Administrative Agent,

By

 

 

Name:

 

Title:

 

By

 

 

Name:

 

Title:

 

 

Exh. C-3 - 9

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Schedule I to the

Subsidiary Guarantee Agreement

 

Subsidiary Guarantor

  

Address

                       

 

Exh. C-3 - 10

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Annex I to the

Subsidiary Guarantee Agreement

SUPPLEMENT NO.      dated as of              , 20    , to the Subsidiary
Guarantee Agreement dated as of             , 200    , among each of the
subsidiaries parties thereto (each such subsidiary individually, a “Subsidiary
Guarantor” and collectively, the “Subsidiary Guarantors”) of RAYONIER TRS
HOLDINGS INC., a Delaware limited partnership (“TRS”), and CREDIT SUISSE, acting
through its Cayman Islands Branch, as Administrative Agent (the “Administrative
Agent”) for the Guaranteed Parties (as defined in the Subsidiary Guarantee
Agreement).

A. Reference is made to the Five-Year Revolving Credit Agreement dated as of
            , 2006 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Rayonier Inc., TRS, Rayonier Forest
Resources, L.P., and any Additional Borrower (as defined therein), as borrowers,
the lenders from time to time party thereto (the “Lenders”), the Issuing Banks
from time to time party thereto (the “Issuing Banks”) and Credit Suisse, as
Administrative Agent. Capitalized terms used and not otherwise defined herein
have the meanings assigned to them in the Subsidiary Guarantee Agreement and the
Credit Agreement.

B. The Subsidiary Guarantors have entered into the Subsidiary Guarantee
Agreement in order to induce the Lenders to make Revolving Credit Advances to
the Borrowers and the Issuing Banks to issue Letters of Credit at the request of
or for the account of the Borrowers. The undersigned Subsidiary of TRS (the “New
Subsidiary Guarantor”) is executing this Supplement in accordance with the
requirements of the Credit Agreement to become a Subsidiary Guarantor under the
Subsidiary Guarantee Agreement in order to induce the Lenders to make additional
Revolving Credit Advances and the Issuing Banks to issue additional Letters of
Credit and as consideration for Revolving Credit Advances previously made and
Letters of Credit previously issued.

Accordingly, the Administrative Agent and the New Subsidiary Guarantor agree as
follows:

SECTION 1. In accordance with Section 19 of the Subsidiary Guarantee Agreement,
the New Subsidiary Guarantor by its signature below becomes a Subsidiary
Guarantor under the Subsidiary Guarantee Agreement with the same force and
effect as if originally a party thereto as a Subsidiary Guarantor and the New
Subsidiary Guarantor hereby (a) agrees to all the terms and provisions of the
Subsidiary Guarantee Agreement applicable to it as a Subsidiary Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Subsidiary Guarantor thereunder are true and correct
on and as of the date hereof except for representation and warranties which by
their terms refer to a specific date. Each reference to a “Subsidiary Guarantor”
in the Subsidiary Guarantee Agreement shall be deemed to include the New
Subsidiary Guarantor. The Subsidiary Guarantee Agreement is hereby incorporated
herein by reference.

SECTION 2. The New Subsidiary Guarantor represents and warrants to the
Administrative Agent and the other Guaranteed Parties that this Supplement has
been duly

 

Exh. C-3 - 11

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authorized, executed and delivered by it and constitutes its legal, valid and
binding obligation, enforceable against it in accordance with its terms subject
to applicable bankruptcy, insolvency, or moratorium laws relating to any
bankruptcy or insolvency of the New Subsidiary Guarantor, other laws affecting
creditor’s rights generally and general principles of equity regardless of
whether considered in a proceeding in equity or at law.

SECTION 3. This Supplement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Administrative
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Subsidiary Guarantor and the
Administrative Agent. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Subsidiary Guarantee
Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICT OF LAWS THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).

SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Subsidiary Guarantee Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing and
given as provided in Section 13 of the Subsidiary Guarantee Agreement. All
communications and notices hereunder to the New Subsidiary Guarantor shall be
given to it in care of TRS at its address set forth in the Credit Agreement.

SECTION 8. The New Subsidiary Guarantor agrees to reimburse the Administrative
Agent for its out-of-pocket expenses in connection with this Supplement,
including the fees, disbursements and other charges of counsel for the
Administrative Agent.

 

Exh. C-3 - 12

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IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Administrative Agent
have duly executed this Supplement to the Guarantee Agreement as of the day and
year first above written.

 

[Name Of New Subsidiary Guarantor],

By

 

 

Name:

 

Title:

 

CREDIT SUISSE, acting through its Cayman

Islands Branch, as Administrative Agent,

By

 

 

Name:

 

Title:

 

By

 

 

Name:

 

Title:

 

 

Exh. C-3 -13

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EXHIBIT C-4 – FORM OF

ADDITIONAL SUBSIDIARY

GUARANTOR GUARANTEE AGREEMENT

ADDITIONAL SUBSIDIARY GUARANTOR GUARANTEE AGREEMENT dated as of             ,
200    , among each of the subsidiaries listed on Schedule I hereto or becoming
a party hereto as provided in Section 19 (each such subsidiary individually, a
“Subsidiary Guarantor” and collectively, the “Subsidiary Guarantors”) of
RAYONIER INC. and, after any Additional Borrower Effective Date, the Additional
Borrower (as such terms are defined in the Credit Agreement referred to below),
and CREDIT SUISSE, acting though its Cayman Islands Branch, as administrative
agent (the “Administrative Agent”) for the Guaranteed Parties (as defined
below).

Reference is made to the Five-Year Revolving Credit Agreement dated as of
            , 2006 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Rayonier Inc., Rayonier TRS Holdings Inc.,
Rayonier Forest Resources, L.P., and any Additional Borrower, as borrowers
(collectively, the “Borrowers”), the lenders from time to time party thereto
(the “Lenders”), the Issuing Banks from time to time party thereto (the “Issuing
Banks”) and Credit Suisse First Boston, as Administrative Agent. Capitalized
terms used and not defined herein have the meanings assigned to them in the
Credit Agreement.

The Lenders have agreed, among other things, to make Revolving Credit Advances
to the Borrowers, and the Issuing Banks have agreed, among other things, to
issue Letters of Credit at the request of or for the account of to the
Borrowers, pursuant to, and upon the terms and subject to the conditions
specified in, the Credit Agreement. Each of the Subsidiary Guarantors
acknowledges that it will derive substantial benefit from the making of such
Revolving Credit Advances by the Lenders and the issuance of such Letters of
Credit by the Issuing Banks. The obligations of the Lenders to make such
Revolving Credit Advances and of the Issuing Banks to issue such Letters of
Credit are conditioned on, among other things, the execution and delivery by the
Subsidiary Guarantors of a Subsidiary Guarantee Agreement in the form hereof. As
consideration therefor and in order to induce the Lenders to make such Revolving
Credit Advances and the Issuing Banks to issue such Letters of Credit, the
Subsidiary Guarantors are willing to execute this Agreement.

Accordingly, the parties hereto agree as follows:

SECTION 1. Guarantee. Each Subsidiary Guarantor unconditionally guarantees,
jointly with the other Subsidiary Guarantors and severally, as a primary obligor
and not merely as a surety, (a) the due and punctual payment by each Borrower of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Revolving Credit Advances made such Borrower, when and as
due, whether at maturity, by acceleration, upon one or more dates set for
prepayment or otherwise, (ii) each payment required to be made by such Borrower
under the Credit Agreement in respect of any Letter of Credit, when and as due,
including payments in respect of reimbursement of disbursements, interest
thereon and obligations to provide cash collateral and

 

Exh. C-4 - 1

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(iii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of such Borrower to the Administrative
Agent and each Lender under the Credit Agreement and the other Loan Documents
(collectively, the “Guaranteed Parties”), whether such amounts shall have
accrued prior to, on or after the Closing Date, (b) the due and punctual payment
and performance of all covenants, agreements, obligations and liabilities of
each Borrower, monetary or otherwise, under or pursuant to the Credit Agreement
and the other Loan Documents and (c) the due and punctual payment and
performance of all obligations of each Borrower, monetary or otherwise, under
each Interest Rate Agreement in effect on the date hereof to which any Lender
(or an Affiliate of a Lender) is a party and each Interest Rate Agreement
entered into after the date hereof with any counterparty that is a Lender (or an
Affiliate of a Lender) at the time such Interest Rate Agreement is entered into
(all the monetary and other obligations referred to in the preceding clauses (a)
through (c) being collectively called the “Obligations”). Each Subsidiary
Guarantor further agrees that the Obligations may be extended or renewed, in
whole or in part, without notice to or further assent from it, and that it will
remain bound upon its guarantee notwithstanding any extension or renewal of any
Obligation.

Anything contained in this Agreement to the contrary notwithstanding, the
obligations of each Subsidiary Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the greatest amount that would not render such
Subsidiary Guarantor’s obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any provisions of applicable law (collectively, the “Fraudulent
Transfer Laws”), in each case after giving effect to all other liabilities of
such Subsidiary Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws and after giving effect as assets to the value (as
determined under the applicable provisions of the Fraudulent Transfer Laws) of
any rights to subrogation, contribution, reimbursement, indemnity or similar
rights of such Subsidiary Guarantor pursuant to (i) applicable law or (ii) any
agreement providing for an equitable allocation among such Subsidiary Guarantor
and other Affiliates of the Borrowers of obligations arising under Guarantees by
such parties.

Each Subsidiary Guarantor further agrees that the Obligations may be extended or
renewed, in whole or in part, without notice to or further assent from it, and
that it will remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.

SECTION 2. Obligations Not Waived. To the fullest extent permitted by applicable
law, each Subsidiary Guarantor waives presentment to, demand of payment from and
protest to any Borrower or any other guarantor of any of the Obligations, and
also waives notice of acceptance of its guarantee and notice of protest for
nonpayment. To the fullest extent permitted by applicable law, the obligations
of each Subsidiary Guarantor hereunder shall not be affected by, and each
Subsidiary Guarantor hereby waives any defense arising by reason of, (a) the
failure of the Administrative Agent or any other Guaranteed Party to assert any
claim or demand or to enforce or exercise any right or remedy against any
Borrower or any other guarantor under the provisions of the Credit Agreement,
any other Loan Document or otherwise, (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions of this
Agreement, any other Loan Document, any Guarantee or any other

 

Exh. C-4 - 2

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agreement, including with respect to any other Subsidiary Guarantor under this
Agreement, (c) the failure to take or perfect any security interest in, or the
release of, any collateral security held by or on behalf of any Guaranteed Party
or (d) the failure of any person to comply with Section 5.01(l) of the Credit
Agreement or Section 19 hereof.

SECTION 3. Guarantee of Payment. Each Subsidiary Guarantor further agrees that
its guarantee constitutes a guarantee of payment when due and not of collection,
and waives any right to require that any resort be had by the Administrative
Agent or any other Guaranteed Party to any collateral security held for payment
of the Obligations or to any balance of any deposit or other account or credit
on the books of the Administrative Agent or any other Guaranteed Party in favor
of any Borrower or any other person.

SECTION 4. No Discharge or Diminishment of Guarantee. The obligations of each
Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than the
indefeasible payment in full in cash of the Obligations), including any claim of
waiver, release, surrender, alteration or compromise of any of the Obligations,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations, any law or regulation of any jurisdiction
or any other event affecting any term of an Obligation or any other circumstance
that might constitute a defense of the Borrower or any Guarantor. Without
limiting the generality of the foregoing, the obligations of each Subsidiary
Guarantor hereunder shall not be discharged or impaired or otherwise affected by
the failure of the Administrative Agent or any other Guaranteed Party to assert
any claim or demand or to enforce any remedy under the Credit Agreement, any
other Loan Document or any other agreement, by any waiver or modification of any
provision of any thereof, by any default, failure or delay, willful or
otherwise, in the performance of the Obligations, or by any other act or
omission that may or might in any manner or to any extent vary the risk of any
Subsidiary Guarantor or that would otherwise operate as a discharge of each
Subsidiary Guarantor as a matter of law or equity (other than the indefeasible
payment in full in cash of all the Obligations), and each Subsidiary Guarantor
hereby waives any defense arising by reason of any of the foregoing actions.

SECTION 5. Defenses of Borrower Waived. To the fullest extent permitted by
applicable law, each of the Subsidiary Guarantors waives any defense based on or
arising out of any defense of any Borrower or the unenforceability of the
Obligations or any part thereof from any cause or the cessation from any cause
of the liability of any Borrower (other than the final and indefeasible payment
in full in cash of the Obligations). The Administrative Agent and the other
Guaranteed Parties may, at their election, foreclose on any collateral security
held by one or more of them by one or more judicial or nonjudicial sales, accept
an assignment of any such collateral security in lieu of foreclosure, compromise
or adjust any part of the Obligations, make any other accommodation with any
Borrower or any other guarantor or exercise any other right or remedy available
to them against any Borrower or any other guarantor, without affecting or
impairing in any way the liability of any Subsidiary Guarantor hereunder except
to the extent the Obligations have been fully, finally and indefeasibly paid in
cash. Pursuant to applicable law, each of the Subsidiary Guarantors waives any
defense arising out of any such election even though such election operates,
pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Subsidiary
Guarantor against any

 

Exh. C-4 - 3

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Borrower or any other Subsidiary Guarantor or guarantor, as the case may be, or
any collateral security.

SECTION 6. Agreement to Pay; Subordination. In furtherance of the foregoing and
not in limitation of any other right that the Administrative Agent or any other
Guaranteed Party has at law or in equity against any Subsidiary Guarantor by
virtue hereof, upon the failure of any Borrower or any other Loan Party to pay
any Obligation when and as the same shall become due, whether at maturity, by
acceleration, after notice of prepayment or otherwise, each Subsidiary Guarantor
hereby promises to and will forthwith pay, or cause to be paid, to the
Administrative Agent or such other Guaranteed Party as designated thereby in
cash the amount of such unpaid Obligation. Upon payment by any Subsidiary
Guarantor of any sums to the Administrative Agent or any Guaranteed Party as
provided above, all rights of such Subsidiary Guarantor against any Borrower
arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subordinate and
junior in right of payment to the prior indefeasible payment in full in cash of
all the Obligations. In addition, any indebtedness of any Borrower now or
hereafter held by any Subsidiary Guarantor is hereby subordinated in right of
payment to the prior payment in full of the Obligations during the existence of
an Event of Default. If any amount shall erroneously be paid to any Subsidiary
Guarantor on account of (i) such subrogation, contribution, reimbursement,
indemnity or similar right or (ii) any such indebtedness of any Borrower, such
amount shall be held in trust for the benefit of the Guaranteed Parties and
shall forthwith be paid to the Administrative Agent to be credited against the
payment of the Obligations, whether matured or unmatured, in accordance with the
terms of the Loan Documents.

SECTION 7. Information. Each of the Subsidiary Guarantors assumes all
responsibility for being and keeping itself informed of each Borrower’s
financial condition and assets, all other circumstances bearing upon the risk of
nonpayment of the Obligations and the nature, scope and extent of the risks that
such Subsidiary Guarantor assumes and incurs hereunder, and agrees that none of
the Administrative Agent or the other Guaranteed Parties will have any duty to
advise any of the Subsidiary Guarantors of information known to it or any of
them regarding such circumstances or risks.

SECTION 8. Representations and Warranties; Taxes. Each of the Subsidiary
Guarantors represents and warrants as to itself that all representations and
warranties relating to it contained in the Credit Agreement or any other Loan
Document are true and correct. Each Subsidiary Guarantor agrees that the
provisions of Section 2.15 of the Credit Agreement shall apply equally to each
Subsidiary Guarantor with respect to the payments made by it hereunder.

SECTION 9. Termination. The Guarantees made hereunder (a) shall terminate when
all the Obligations have been indefeasibly paid in full and the Lenders have no
further commitment to lend to any Borrower under the Credit Agreement, the LC
Exposure has been reduced to zero and the Issuing Banks have no further
obligation to issue Letters of Credit under the Credit Agreement and (b) shall
continue to be effective or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligation is rescinded or must otherwise
be restored by any Guaranteed Party or any Subsidiary Guarantor upon the
bankruptcy or reorganization of any Borrower or any Subsidiary Guarantor or
otherwise.

 

Exh. C-4 - 4

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SECTION 10. Binding Effect; Several Agreement; Assignments; Releases. Whenever
in this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Subsidiary Guarantors
that are contained in this Agreement shall bind and inure to the benefit of each
party hereto and their respective successors and assigns. This Agreement shall
become effective as to any Subsidiary Guarantor when a counterpart hereof (or an
instrument in the form of Annex I hereto) executed on behalf of such Subsidiary
Guarantor shall have been delivered to the Administrative Agent and a
counterpart hereof shall have been executed on behalf of the Administrative
Agent, and thereafter shall be binding upon such Subsidiary Guarantor and the
Administrative Agent and their respective successors and assigns, and shall
inure to the benefit of such Subsidiary Guarantor, the Administrative Agent and
the other Guaranteed Parties, and their respective successors and assigns,
except that no Subsidiary Guarantor shall have the right to assign its rights or
obligations hereunder or any interest herein (except in connection with any
transaction permitted by Section 5.03(c) of the Credit Agreement), and any such
attempted assignment shall be void. This Agreement shall be construed as a
separate agreement with respect to each Subsidiary Guarantor and may be amended,
modified, supplemented, waived or released with respect to any Subsidiary
Guarantor without the approval of any other Subsidiary Guarantor and without
affecting the obligations of any other Subsidiary Guarantor hereunder. The
Administrative Agent is hereby expressly authorized to, and agrees upon request
of Rayonier it will, release any Subsidiary Guarantor from its obligations
hereunder in the event that all the Capital Stock of such Subsidiary Guarantor
shall be sold, transferred or otherwise disposed of to a person that is not an
Affiliate of Rayonier in a transaction not prohibited by the Credit Agreement.

SECTION 11. Waivers; Amendment. (a) No failure or delay of the Administrative
Agent in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Administrative Agent hereunder
and of the other Guaranteed Parties under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have. No waiver of any provision of this Agreement or consent to any
departure by any Subsidiary Guarantor therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in similar or other circumstances.

(b) Except as expressly provided in Section 19, neither this Agreement nor any
provision hereof may be waived, amended or modified except pursuant to a written
agreement entered into between the Subsidiary Guarantors with respect to which
such waiver, amendment or modification relates and the Administrative Agent,
with the prior written consent of the Required Lenders (except as otherwise
provided in the Credit Agreement).

SECTION 12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF

 

Exh. C-4 - 5

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(OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE
STATE OF NEW YORK).

SECTION 13. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 8.02 of the Credit Agreement. All
communications and notices hereunder to each Subsidiary Guarantor shall be given
to it in care of Rayonier at the address set forth in the Credit Agreement.

SECTION 14. Survival of Agreement; Severability. (a) All covenants, agreements,
representations and warranties made by the Subsidiary Guarantors herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the Administrative Agent and the other Guaranteed
Parties and shall survive the making by the Lenders of the Revolving Credit
Advances and the issuance of the Letters of Credit by the Issuing Banks
regardless of any investigation made by the Guaranteed Parties or on their
behalf, and shall continue in full force and effect as long as any Obligation is
outstanding and unpaid, the LC Exposure with respect to Letters of Credit does
not equal zero or the Commitments and the LC Commitment have not been
terminated.

(b) In the event any one or more of the provisions contained in this Agreement
or in any other Loan Document should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be affected or
impaired thereby (it being understood that the invalidity of a particular
provision in a particular jurisdiction shall not in and of itself affect the
validity of such provision in any other jurisdiction). The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION 15. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which when taken together
shall constitute a single contract, and shall become effective as provided in
Section 10. Delivery of an executed signature page to this Agreement by
facsimile transmission shall be as effective as delivery of a manually executed
counterpart of this Agreement.

SECTION 16. Rules of Interpretation. The rules of interpretation specified in
Article I of the Credit Agreement shall be applicable to this Agreement.

SECTION 17. Jurisdiction; Consent to Service of Process. (a) Each Subsidiary
Guarantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
federal court of the United States of America sitting in New York City, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or the other Loan Documents, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding

 

Exh. C-4 - 6

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shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent or any other Guaranteed Party may
otherwise have to bring any action or proceeding relating to this Agreement or
the other Loan Documents against any Subsidiary Guarantor or its properties in
the courts of any jurisdiction, except that each of the Subsidiary Guarantors
agrees that (i) it will not bring any such action or proceeding in any court
other than New York Courts (it being acknowledged and agreed by the parties
hereto that any other forum would be inconvenient and inappropriate in view of
the fact that more of the Lenders who would be affected by any such action or
proceeding have contacts with the State of New York than any other
jurisdiction), and (ii) in any such action or proceeding brought against any
Subsidiary Guarantor in any other court, it will not assert any cross-claim,
counterclaim or setoff, or seek any other affirmative relief, except to the
extent that the failure to assert the same will preclude such Subsidiary
Guarantor from asserting or seeking the same in the New York Courts.

(b) Each Subsidiary Guarantor hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection that it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or federal court. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 13. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.

SECTION 18. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 18.

SECTION 19. Additional Subsidiary Guarantors. Certain additional Subsidiaries of
Rayonier may be required from time to time, under the terms of Credit Agreement,
to enter into this Agreement as Subsidiary Guarantors. Upon execution and
delivery by the Administrative Agent and a Subsidiary of an instrument in the
form of Annex I hereto, such Subsidiary shall become a Subsidiary Guarantor
hereunder with the same force and effect as if originally named as a Subsidiary
Guarantor herein. The execution and delivery of any such instrument shall not
require the consent of any other Subsidiary Guarantor hereunder. The rights and
obligations of each Subsidiary Guarantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Subsidiary Guarantor as a
party to this Agreement.

 

Exh. C-4 - 7

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SECTION 20. Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Guaranteed Party is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other Debt at any time owing by such Guaranteed Party to or for
the credit or the account of any Subsidiary Guarantor against any or all the
obligations of such Subsidiary Guarantor now or hereafter existing under this
Agreement and the other Loan Documents held by such Guaranteed Party,
irrespective of whether or not such Guaranteed Party shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured. After any exercise of such right of setoff, the Guaranteed
Party shall give notice of such exercise to the Administrative Agent and
Rayonier Inc.; provided, however, that failure to give such notice shall not in
any way affect the rights of any Guaranteed Party. The rights of each Guaranteed
Party under this Section 20 are in addition to other rights and remedies
(including other rights of setoff) which such Guaranteed Party may have.

 

Exh. C-4 - 8

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.

 

THE SUBSIDIARY GUARANTORS LISTED

ON SCHEDULE I HERETO,

By

 

 

Name:

 

Title:

 

CREDIT SUISSE, acting through its Cayman

Islands Branch, as Administrative Agent,

By

 

 

Name:

 

Title:

 

By

 

 

Name:

 

Title:

 

 

Exh. C-4 - 9

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Annex I to the

Subsidiary Guarantee Agreement

SUPPLEMENT NO.      dated as of             , 20    , to the Subsidiary
Guarantee Agreement dated as of             , 20    , among each of the
subsidiaries parties thereto (each such subsidiary individually, a “Subsidiary
Guarantor” and collectively, the “Subsidiary Guarantors”) of RAYONIER INC., and
CREDIT SUISSE, acting through its Cayman Islands Branch, as Administrative Agent
(the “Administrative Agent”) for the Guaranteed Parties (as defined in the
Subsidiary Guarantee Agreement).

A. Reference is made to the Five-Year Revolving Credit Agreement dated as of
            , 2006 (as amended, supplemented or otherwise modified from time to
time, the “Credit Agreement”), among Rayonier Inc., Rayonier TRS Holdings Inc.,
Rayonier Forest Resources, L.P., any Additional Borrower (as defined therein),
as borrowers, the lenders from time to time party thereto (the “Lenders”), the
Issuing Banks from time to time party thereto (the “Issuing Banks”) and Credit
Suisse, as Administrative Agent. Capitalized terms used and not otherwise
defined herein have the meanings assigned to them in the Subsidiary Guarantee
Agreement and the Credit Agreement.

B. The Subsidiary Guarantors have entered into the Subsidiary Guarantee
Agreement in order to induce the Lenders to make Revolving Credit Advances to
the Borrowers and the Issuing Banks to issue Letters of Credit at the request of
or for the account of the Borrowers. The undersigned Subsidiary of Rayonier Inc.
(the “New Subsidiary Guarantor”) is executing this Supplement in accordance with
the requirements of the Credit Agreement to become a Subsidiary Guarantor under
the Additional Subsidiary Guarantor Guarantee Agreement in order to induce the
Lenders to make additional Revolving Credit Advances and the Issuing Banks to
issue additional Letters of Credit and as consideration for Revolving Credit
Advances previously made and Letters of Credit previously issued.

Accordingly, the Administrative Agent and the New Subsidiary Guarantor agree as
follows:

SECTION 1. In accordance with Section 19 of the Subsidiary Guarantee Agreement,
the New Subsidiary Guarantor by its signature below becomes a Subsidiary
Guarantor under the Subsidiary Guarantee Agreement with the same force and
effect as if originally a party thereto as a Subsidiary Guarantor and the New
Subsidiary Guarantor hereby (a) agrees to all the terms and provisions of the
Subsidiary Guarantee Agreement applicable to it as a Subsidiary Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Subsidiary Guarantor thereunder are true and correct
on and as of the date hereof except for representation and warranties which by
their terms refer to a specific date. Each reference to a “Subsidiary Guarantor”
in the Subsidiary Guarantee Agreement shall be deemed to include the New
Subsidiary Guarantor. The Additional Subsidiary Guarantor Guarantee Agreement is
hereby incorporated herein by reference.

SECTION 2. The New Subsidiary Guarantor represents and warrants to the
Administrative Agent and the other Guaranteed Parties that this Supplement has
been duly authorized, executed and delivered by it and constitutes its legal,
valid and binding obligation,

 

Exh. C-4 - 10

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enforceable against it in accordance with its terms subject to applicable
bankruptcy, insolvency, or moratorium laws relating to any bankruptcy or
insolvency of the New Subsidiary Guarantor, other laws affecting creditor’s
rights generally and general principles of equity regardless of whether
considered in a proceeding in equity or at law.

SECTION 3. This Supplement may be executed in counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Supplement shall become effective when the Administrative
Agent shall have received counterparts of this Supplement that, when taken
together, bear the signatures of the New Subsidiary Guarantor and the
Administrative Agent. Delivery of an executed signature page to this Supplement
by facsimile transmission shall be as effective as delivery of a manually
executed counterpart of this Supplement.

SECTION 4. Except as expressly supplemented hereby, the Subsidiary Guarantee
Agreement shall remain in full force and effect.

SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF
CONFLICT OF LAWS THEREOF (OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK).

SECTION 6. In case any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and in the Subsidiary Guarantee Agreement shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a
particular provision hereof in a particular jurisdiction shall not in and of
itself affect the validity of such provision in any other jurisdiction). The
parties hereto shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

SECTION 7. All communications and notices hereunder shall be in writing and
given as provided in Section 13 of the Subsidiary Guarantee Agreement. All
communications and notices hereunder to the New Subsidiary Guarantor shall be
given to it in care of Rayonier Inc. at its address set forth in the Credit
Agreement.

SECTION 8. The New Subsidiary Guarantor agrees to reimburse the Administrative
Agent for its out-of-pocket expenses in connection with this Supplement,
including the fees, disbursements and other charges of counsel for the
Administrative Agent.

 

Exh. C-4 - 11

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Administrative Agent
have duly executed this Supplement to the Guarantee Agreement as of the day and
year first above written.

 

[Name Of New Subsidiary Guarantor],

By

 

 

Name:

 

Title:

 

CREDIT SUISSE, acting through its Cayman

Islands Branch, as Administrative Agent,

By

 

 

Name:

 

Title:

 

By

 

 

Name:

 

Title:

 

 

Exh. C-4 -12

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EXHIBIT D-1 – FORM OF OPINION

OF RAYONIER’S VICE PRESIDENT AND COUNSEL

[Letterhead of Rayonier Inc.]

August 4, 2006

Each of the Addressees Listed on

the Attached Schedule 1

Re: Five-Year Revolving Credit Agreement referred to below

Ladies and Gentlemen:

I am the Vice President and General Counsel of Rayonier Inc., a corporation
organized under the laws of the State of North Carolina (“Rayonier”), in
connection with the transactions provided for in the Five-Year Revolving Credit
Agreement, dated as of August 4, 2006 (the “Credit Agreement”), among:
(i) Rayonier, Rayonier TRS Holdings Inc., a corporation organized under the laws
of the State of Delaware (“TRS”), and Rayonier Forest Resources, L.P., a limited
partnership organized under the laws of the State of Delaware (“RFR”), as
Borrowers; (ii) the several lenders from time to time parties thereto; (iii) the
issuing banks from time to time parties thereto; (iv) Credit Suisse, acting
through one or more of its branches, as Administrative Agent (the
“Administrative Agent”); (v) Credit Suisse Securities (USA) LLC (“Credit Suisse
Securities”), as Sole Bookrunner; (vi) Credit Suisse Securities (USA) LLC and
Bank of America, N.A., as Co-Syndication Agents; (vii) JPMorgan Chase Bank, Sun
Trust Bank and The Bank of New York, as Co-Documentation Agents; and
(viii) Credit Suisse Securities and Banc of America Securities LLC, as Joint
Lead Arrangers. This opinion letter is furnished to you pursuant to
Section 3.01(e)(i) of the Credit Agreement. Unless otherwise defined herein,
capitalized terms used herein have the meanings assigned to such terms in the
Credit Agreement.

Rayonier, TRS and RFR are collectively referred to herein as the “Borrowers”.
The entities listed on Schedule 2 attached hereto are collectively referred to
herein as the “Guarantors”.

I have reviewed the Credit Agreement, the Guarantee Agreement and the TRS
Subsidiary Guarantee Agreement (together with the Guarantee Agreement, the
“Guarantees”). In rendering this opinion, I have relied upon certificates of
public officials and officers of the Borrowers, the Guarantors and the Managing
General Partner with respect to the accuracy of the factual matters contained in
such certificates.

 

--------------------------------------------------------------------------------

In connection with such review, I have assumed with your permission (a) that the
Credit Agreement, the Guarantees and all other documents that are the subject of
this opinion or on which this opinion is based have been properly authorized,
executed and delivered by each of the respective parties thereto and have been
properly executed and delivered by all parties by or through competent
individuals having the legal capacity to do so; (b) that the Credit Agreement
and the Guarantees constitute the enforceable obligations of all the parties
thereto other than the Borrowers and the Guarantors; (c) the genuineness of all
signatures; (d) the authenticity of all documents submitted to me as originals
and the conformity to original documents of all documents submitted to me as
certified or photostatic copies; and (e) the proper issuance and accuracy of
certificates of public officials and officers and agents of the Borrowers, the
Guarantors and the Managing General Partner.

Whenever any opinion below as to the existence or absence of facts is qualified
by the phrase “to my knowledge,” such phrase indicates only that I have no
conscious awareness of the existence or absence of such facts. Except to the
extent expressly stated herein, I have not undertaken any independent
investigation to determine the existence or absence of any such facts, and no
inference as to my knowledge of the existence or absence of such facts should be
drawn from the fact of my representation of the Borrowers.

This opinion is limited to the Corporate and Partnership Laws of the State of
Delaware and, for the purpose of any opinion expressed in paragraph 5 herein,
the United States Federal laws and regulations, and I am expressing no opinion
as to the effect of the laws of any other jurisdiction.

Based on and subject to the foregoing and the qualifications and limitations set
forth below, and having regard for such legal considerations as I deem relevant,
it is my opinion that:

1. The Credit Agreement has been duly executed and delivered on behalf of each
Borrower by its authorized officer.

2. Each Guarantee has been duly executed and delivered on behalf of Rayonier,
TRS and each Guarantor party thereto by their respective authorized officers.

3. The execution, delivery and performance of the Credit Agreement by each
Borrower and the Managing General Partner and each of the Guarantees by
Rayonier, TRS and each Guarantor which is a party thereto:

 

  (a)

do not require any consent or approval of, or any other action by, any third
party, except (i) such as has been obtained or made and is in full force and
effect and (ii) actions the failure to obtain which, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect;

--------------------------------------------------------------------------------

  (b)

to my knowledge, does not violate or constitute a default under any indenture,
material agreement (other than any limited liability company agreement,
operating agreement, partnership agreement or similar agreement) or other
material instrument binding upon any Borrower, any Guarantor or the Managing
General Partner, or its respective assets; and

 

  (c)

to my knowledge, does not result in the creation or imposition of any Lien other
than a Permitted Lien on any assets of any Borrower, any Guarantor or the
Managing General Partner.

4. To my knowledge, there are no actions, suits or proceedings by or before any
arbitrator or governmental authority pending or threatened against any Borrower,
any Guarantor or the Managing General Partner (except as may be set forth on
Schedules to the Credit Agreement) (a) as to which there is a reasonable
possibility of any adverse determination and that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect or (b) that involve the Credit Documents or the
transactions provided for therein.

5. No Borrower is an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940.

I express no opinion as to the laws of any jurisdiction other than those
specifically referred to in the fifth paragraph of this opinion letter.

This opinion letter is rendered as of the date set forth above. I expressly
disclaim any obligation to update this letter after such date.

This opinion letter is given solely for your benefit and the benefit of the
Lenders party from time to time to the Credit Agreement in connection with the
transactions contemplated by the Loan Documents and may not be furnished to, or
relied upon by, any other person or for any other purpose without my prior
written consent.

Very truly yours,

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EXHIBIT D-2 – FORM OF OPINION

OF COUNSEL FOR THE BORROWERS

[Letterhead of Womble Carlyle & Rice]

August 4, 2006

Each of the Addressees Listed on

the Attached Schedule 1

Re: Five-Year Revolving Credit Agreement referred to below

Ladies and Gentlemen:

We have acted as special North Carolina counsel for Rayonier Inc., a corporation
organized under the laws of the State of North Carolina (“Rayonier”), in
connection with the transactions provided for in the Five-Year Revolving Credit
Agreement, dated as of August 4, 2006 (the “Credit Agreement”), among:
(i) Rayonier, Rayonier TRS Holdings Inc., a corporation organized under the laws
of the State of Delaware (“TRS”), and Rayonier Forest Resources, L.P., a limited
partnership organized under the laws of the State of Delaware (“RFR”), as
Borrowers; (ii) the several lenders from time to time parties thereto; (iii) the
issuing banks from time to time parties thereto; (iv) Credit Suisse, acting
through one or more of its branches, as Administrative Agent (the
“Administrative Agent”); (v) Credit Suisse Securities (USA) LLC (“Credit Suisse
Securities”), as Sole Bookrunner; (vi) Credit Suisse Securities (USA) LLC and
Bank of America, N.A., as Co-Syndication Agents; (vii) JPMorgan Chase Bank, Sun
Trust Bank and The Bank of New York, as Co-Documentation Agents; and
(viii) Credit Suisse Securities and Banc of America Securities LLC, as Joint
Lead Arrangers. This opinion letter is furnished to you pursuant to
Section 3.0l(e)(ii) of the Credit Agreement. Unless otherwise defined herein,
capitalized terms used herein have the meanings assigned to such terms in the
Credit Agreement.

In rendering the opinions set forth below, we have reviewed an execution copy of
the following documents and instruments:

(i) the Credit Agreement;

(ii) the form of Revolving Credit Promissory Note, attached as Exhibit A to the
Credit Agreement (the “Note”);

(iii) the Guarantee Agreement; and

--------------------------------------------------------------------------------

  (iv)

the TRS Subsidiary Guarantee Agreement.

--------------------------------------------------------------------------------

The documents listed in clauses (i) and (ii) above are referred to herein as the
“Credit Documents”. The documents listed in clauses (iii) and (iv) above are
referred to herein as the “Guarantees”. Rayonier, TRS and RFR are collectively
referred to herein as the “Borrowers”. The entities listed on Schedule 2
attached hereto are collectively referred to herein as the “Guarantors”.
Rayonier Timberlands Management, LLC, a Delaware limited liability company and
Managing General Partner of RFR, is referred to herein as the “Managing General
Partner”.

In addition, we have reviewed the organizational documents listed on Schedule 3
attached hereto furnished by the Borrowers, the Guarantors and the Managing
General Partner pursuant to Article III of the Credit Agreement, which the
Borrowers, the Guarantors and the Managing General Partner have represented to
us are the only documents pursuant to which the Borrowers, the Guarantors and
the Managing General Partner are currently organized and/or which govern their
affairs with respect to the transactions provided for in the Credit Documents.
The organizational documents of each Borrower, each Guarantor and the Managing
General Partner listed on Schedule 3 attached hereto are hereinafter referred
to, as applicable, as such Borrower’s, such Guarantor’s or the Managing General
Partner’s “Organizational Documents”.

In rendering the opinions set forth herein, we have, with your consent, relied
only upon examination of the documents described above and have made no
independent verification or investigation of the factual matters set forth
therein. As to any facts material to our opinions, we have made no independent
investigation of such facts and have relied, to the extent that we deem such
reliance proper, upon statements and certificates of public officials and
officers or other representatives of the Borrowers, the Guarantors and the
Managing General Partner and on the representations and warranties set forth in
the Credit Documents.

Whenever any opinion below as to the existence or absence of facts is qualified
by the phrase “to our knowledge,” such phrase indicates only that the lawyers of
this firm substantively involved in the representation of the Borrowers, the
Guarantors and the Managing General Partner in the transactions provided for in
the Credit Documents have no actual knowledge of the existence or absence of
such facts. Except to the extent expressly stated herein, we have not undertaken
any independent investigation to determine the existence or absence of any such
facts, and no inference as to our knowledge of the existence or absence of such
facts should be drawn from the fact of our representation of the Borrowers.

In rendering the opinions expressed below, we have assumed the legal capacity of
all natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as copies, which assumptions we have
not independently verified. In addition, we have assumed that (i) each party to
the Credit Documents and the Guarantees (each, a “Credit Party”) is a
corporation, partnership, limited liability company or other entity duly
organized under the laws of the jurisdiction of its organization; (ii) the
execution, delivery and performance by each Credit Party of the Credit Documents
and the Guarantees to which it is a party do not conflict with or result in the
breach of any document or instrument binding on it; (iii) the execution,
delivery and performance by each Credit Party of the Credit Documents and the
Guarantees to which it is a party do not contravene any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award applicable to any of them (except that we

--------------------------------------------------------------------------------

have not made such assumption with respect to Applicable Laws as defined below)
applicable to the Borrowers or the Guarantors, as to which we express our
opinion in paragraphs 7 and 8); (iv) no authorization, approval, consent, order,
license, franchise, permit or other action by, and no notice to or filing with,
any Governmental Authority or any other third party is required for the due
execution, delivery and performance by each Credit Party of the Credit Documents
to which it is a party that has not been duly obtained or made and that is not
in full force and effect (except that we have not made such assumption with
respect to Governmental Approvals as defined below) required to be obtained or
taken by the Borrowers, the Guarantors or the Managing General Partner, as to
which we express our opinion in paragraph 9; (v) the Credit Documents constitute
valid, binding and enforceable obligations of each party thereto (other than the
Borrowers, Guarantors and the Managing General Partner); and (vi) the laws of
any jurisdiction other than the laws that are the subject of this opinion letter
do not affect the terms of the Credit Documents.

Based upon the foregoing, and subject to the assumptions, qualifications,
exceptions and limitations set forth herein, it is our opinion that:

 

  1.

Each Borrower (other than Rayonier), each Guarantor and the Managing General
Partner is a corporation, limited liability company or partnership, as
applicable, validly existing and in good standing under the laws of its
jurisdiction of organization or formation. Rayonier is a corporation validly
existing under the laws of the State of North Carolina.

 

  2.

Each Borrower, each Guarantor and the Managing General Partner has all requisite
corporate power and authority to carry on its business as now conducted.

 

  3.

The execution, delivery and performance of the Credit Agreement are within each
Borrower’s and the Managing General Partner’s corporate, limited liability
company or partnership powers, as applicable, and have been duly authorized by
all necessary corporate, limited liability company or partnership action, as
applicable, on behalf of each Borrower and the Managing General Partner.

 

  4.

The execution, delivery and performance of the Guarantees are within Rayonier’s,
TRS’s and each Guarantor’s corporate, limited liability company or partnership
powers, as applicable, and have been duly authorized by all necessary corporate,
limited liability company or partnership action, as applicable, on behalf of
Rayonier, TRS and each Guarantor party to any Guarantee.

 

  5.

Each Credit Document (other than the Note) to which any Borrower is a party
would be, under the laws of the State of North Carolina, the valid and binding
obligation of such Borrower and enforceable against such Borrower in accordance
with its terms and each Note, when executed and delivered by any Borrower, would
be, under the laws of the State of North Carolina, the valid and binding
obligation of such Borrower and enforceable against such Borrower in accordance
with its terms.

--------------------------------------------------------------------------------

  6.

Each Guarantee to which Rayonier, TRS or any Guarantor is a party would be,
under the laws of the State of North Carolina, the valid and binding obligation
of Rayonier, TRS or such Guarantor, as applicable, and enforceable against
Rayonier, TRS or such Guarantor, as applicable, in accordance with its terms.

 

  7.

The execution and delivery by each Borrower of each Credit Document to which it
is a party and the performance by each Borrower of their respective obligations
under such Credit Documents (a) do not violate such Borrower’s Organizational
Documents and (b) do not violate any Applicable Laws as defined below) that are
binding on such Borrower.

 

  8.

The execution and delivery by Rayonier, TRS and each Guarantor of each Guarantee
to which it is a party and the performance by Rayonier, TRS and each Guarantor
of their respective obligations under such Guarantees (a) do not violate
Rayonier’s, TRS’s or such Guarantor’s Organizational Documents and (b) do not
violate any Applicable Laws that are binding on such Guarantor, Rayonier or TRS,
as applicable.

 

  9.

No Governmental Approval (as defined below) which has not been obtained or taken
and is not in full force and effect, is required to be obtained or taken by any
Borrower, Guarantor or the Managing General Partner for the execution and
delivery by each Borrower, each Guarantor and the Managing General Partner, of
each Credit Document or Guarantee, as applicable, to which it is a party or the
performance by such Borrower, such Guarantor or the Managing General Partner, as
applicable, of its obligations thereunder. “Governmental Approvals” means any
consent, approval, license, authorization or validation of, or filing or
registration with, any Governmental Authority pursuant to any Applicable Laws
(as defined below).

The opinions set forth herein are subject to the following exceptions and
qualifications:

(a) In rendering our opinions in paragraph I, we have relied solely upon (i) the
good standing certificates regarding the Borrowers (other than Rayonier), the
Guarantors (other than Rayonier) and the Managing General Partner issued by the
Secretary of State of Delaware listed on Schedule 3 attached hereto and (ii) a
certificate of existence regarding Rayonier issued by the Secretary of State of
North Carolina dated August 3, 2006.

(b) Enforceability of the Credit Documents and the Guarantees may be limited by
the effect of bankruptcy, insolvency, fraudulent conveyance, fraudulent
transfer, reorganization, moratorium and other similar state or federal laws
affecting the rights and remedies of creditors or the collection of debtors’
obligations in general. This exception includes without limitation the effect of
the Federal Bankruptcy Code, in its entirety including matters of contract
rejection, fraudulent transfer and obligation, turnover, preference, equitable
subordination, automatic stay, conversion of a non-recourse obligation into a
recourse obligation, and substantive consolidation. This exception also includes
state laws regarding fraudulent transfers, obligations, and conveyances, and
state receivership laws.

--------------------------------------------------------------------------------

(c) Enforceability of the Credit Documents and the Guarantees may be limited by
the effect of general principles of equity, whether applied by a court of law or
equity. This exception includes without limitation the following concepts:
(i) principles governing the availability of specific performance, injunctive
relief or other traditional equitable remedies; (ii) principles affording
traditional equitable defenses (e.g., waiver, laches and estoppel); (iii) good
faith and fair dealing; (iv) reasonableness; (v) materiality of the breach;
(vi) impracticability or impossibility of performance; (vii) the effect of
obstruction, failure to perform or otherwise to act in accordance with an
agreement by any person other than the Borrower or the Guarantors; (viii) the
effect of § 1-102(3) of the UCC; and (ix) unconscionability.

(d) The possible unenforceability of provisions requiring indemnification for,
or providing exculpation, release or exemption from liability for, action or
inaction, to the extent such action or inaction involves negligence or willful
misconduct or to the extent otherwise contrary to public policy.

(e) The possible unenforceability of provisions imposing increased interest
rates upon delinquency in payment or default or providing for liquidated
damages, or for premiums on acceleration, redemption, cancellation, or
termination, to the extent any such provisions are deemed to be penalties or
forfeitures.

(f) The possible unenforceability of waivers or advance consents that have the
effect of waiving as to the jurisdiction of courts or to service of process in
any particular manner, the venue of actions, the right to jury trial or, in
certain cases, notice.

(g) The possible unenforceability of provisions that waivers or consents by a
party may not be given unless in writing or in compliance with particular
requirements or that a person’s course of dealing, course of performance, or the
like, or failure or delay in taking actions, may not constitute a waiver of
related rights or provisions or that one or more waivers may not under certain
circumstances constitute a waiver of other matters of the same kind.

(h) The effect of course of dealing, course of performance, or the like, that
would modify the terms of an agreement or the respective rights or obligations
of the parties under an agreement.

(i) The possible unenforceability of provisions that enumerated remedies are not
exclusive or that a party has the right to pursue multiple remedies without
regard to other remedies elected or that all remedies are cumulative.

(j) The effect of judicial discretion regarding the determination of damages and
entitlement to attorneys’ fees and other costs.

(k) The possible unenforceability of provisions that determination by a party or
a party’s designee are conclusive.

--------------------------------------------------------------------------------

(1) The possible unenforceability of provisions permitting modification of an
agreement only in writing.

(m) The possible unenforceability of provisions permitting the exercise, under
certain circumstances, of rights without notice or without providing opportunity
to cure failures to perform.

(n) The effect of agreements as to rights of set off otherwise than in
accordance with the applicable law.

(o) The effect of judicial discretion regarding the enforcement of forum
selection clauses.

(p) We express no opinion as to the enforceability of any provisions of any of
the Credit Documents or the Guarantees which impose liquidated damages,
penalties, forfeitures, or an increase in interest rate upon default; that
appoint the Administrative Agent or any Lender or others as the agent or
attorney-in-fact for any Borrower, any Guarantor or the Managing General
Partner.

(q) With respect to any Guarantee, we express no opinion on any waiver of any
Guarantor’s rights under North Carolina General Statutes 26-7 et seq.

(r) Certain waivers of the Guarantees may not be enforceable, but such
enforceability will not render the Guarantees invalid as a whole or preclude the
obligation of any Guarantor to repay the principal of the loans provided for
under the Credit Agreement (the “Loans”), together with non-default interest
thereon.

(s) Our opinions are subject to limitations imposed by the valid exercise of the
police power and any emergency powers of the United States or the State of North
Carolina, or by the valid exercise of any federal or the State of North Carolina
criminal or civil forfeiture laws.

(t) We express no opinion as to the enforceability of any severability clauses
in the Credit Documents.

(u) We express no opinion as to the enforceability of contractual provisions
providing for choice of governing law.

(v) North Carolina General Statutes Section 6-21.2 sets forth the procedures and
limitations applicable to the collection of attorneys’ fees pursuant to the
Credit Documents and the Guarantees, and North Carolina case law requires that
attorneys’ fees charged to borrowers by lenders be reasonable in amount.
Accordingly, any provisions in the Credit Documents and the Guarantees relating
to the ability of either the Administrative Agent or any Lender to collect
attorneys’ fees are subject to those limitations.

--------------------------------------------------------------------------------

(w) We express no opinion in respect of any provision of the Guarantee pursuant
to which Rayonier, TRS or any Guarantor has guaranteed the obligations of any
Borrower under any Interest Rate Agreement.

(x) We have assumed that no Borrower is an “investment company” within the
meaning of, or subject to regulation as an “investment company” under, the
Investment Company Act of 1940, as amended.

(y) We express no opinion as to the laws of any jurisdiction other than
Applicable Laws.

This opinion is limited to, and any reference herein to “Applicable Laws” means,
the laws of the State of North Carolina, and for purposes of the opinions in
paragraphs numbered (1) through (4) above the general corporate, limited
liability company, or partnership laws, as applicable, of the State of Delaware,
and to the laws of the United States of America that are applicable to loan
transactions generally, excluding the following legal issues or the application
of any such laws or regulations to the matters on which our opinions are
referenced: (i) federal and state securities laws; (ii) the local laws of the
State of North Carolina (i.e., the statutes, ordinances, the administrative
decisions and the rules and regulations of counties and municipalities of the
State of North Carolina); (iii) federal and state antitrust and unfair
competition laws and regulations; (iv) federal and state tax laws and
regulations; (v ) federal and state regulatory laws and regulations applicable
to any entity as a result of its nonprofit status or solely because of the
business in which it is engaged; (vi) federal and state environmental laws and
regulations; and (vii) laws, rules and regulations relating to money laundering
and terrorist groups (including any requirements imposed under the USA Patriot
Act of 2001, as amended). We are expressing no opinion as to the effect of the
laws of any other jurisdiction. This opinion is rendered solely to the
Administrative Agent and the Lenders in connection with the Loans and may be
relied upon only by the Administrative Agent and the Lenders, any participants
in the Loans, and any successors and assigns of the Lenders. This opinion may
not be quoted in whole or in part or relied upon by any other party or for any
other purpose other than the purposes herein stated without our prior written
consent.

This opinion letter is rendered as of the date set forth above. We expressly
disclaim any obligation to update this letter after such date.

 

Very truly yours,

WOMBLE CARLYLE SANDRIDGE & RTCE

A Professional Limited Liability Company

--------------------------------------------------------------------------------

EXHIBIT D-3 – FORM OF OPINION

OF SPECIAL NEW YORK COUNSEL FOR THE BORROWERS

[Letterhead of Vinson & Elkins]

August 4, 2006

Each of the Addressees Listed in

the Attached Schedule I

Re: Five year revolving credit agreement.

Ladies and Gentlemen:

We have acted as special New York counsel for Rayonier Inc., a corporation
organized under the laws of the State of North Carolina (“Rayonier”), in
connection with the transactions contemplated by the Five Year Revolving Credit
Agreement, dated as of August 4, 2006 (the “Credit Agreement”), among:
(i) Rayonier, Rayonier TRS Holdings Inc., a corporation organized under the laws
of the State of Delaware (“TRS”), and Rayonier Forest Resources, L.P., a limited
partnership organized under the laws of the State of Delaware (“RFR”), as
Borrowers; (ii) the several lenders from time to time parties thereto; (iii) the
issuing banks from time to time parties thereto; (iv) Credit Suisse, acting
through its Cayman Islands Branch, as Administrative Agent (the “Administrative
Agent”); (v) Credit Suisse Securities (USA) LLC and Bank of America, N.A., as
Co-Syndication Agents; (vi) JPMorgan Chase Bank, Sun Trust Bank and The Bank Of
New York, as Co-Documentation Agents; and (vii) Credit Suisse Securities (USA)
LLC and Banc of America Securities LLC, as Joint Lead Arrangers. This opinion
letter is furnished to you pursuant to Section 3.0l(e)(iii) of the Credit
Agreement. Unless otherwise defined herein, capitalized terms used herein have
the meanings assigned to such terms in the Credit Agreement.

In rendering the opinions set forth below, we have reviewed an execution copy of
the following documents and instruments:

(i) the Credit Agreement;

(ii) the form of Revolving Credit Promissory Note, attached as Exhibit A to the
Credit Agreement (the “Promissory Note”);

(iii) the Guarantee Agreement, dated as of August 4, 2006 (the “Rayonier
Guarantee”), among Rayonier, TRS and the Administrative Agent; and

--------------------------------------------------------------------------------

(iv) the TRS Subsidiary Guarantee Agreement, dated as of August 4, 2006 (the
“TRS Subsidiary Guarantee”), among the guarantors listed on Schedule II (the
“TRS Subsidiary Guarantors”) and the Administrative Agent.

The documents listed in clauses (i) through (iv) above are referred to herein as
the “Transaction Documents”. Rayonier, TRS, RFR, and the TRS Subsidiary
Guarantors, are collectively referred to herein as the “Opinion Parties”). In
rendering the opinions set forth herein, we have, with your consent, relied only
upon examination of the documents described above and have made no independent
verification or investigation of the factual matters set forth therein. We did
not participate in the negotiation or preparation of the Transaction Documents
and except as set forth herein have not advised any of the Opinion Parties with
respect to such documents or the lending transactions contemplated therein. As
to any facts material to our opinions, we have made no independent investigation
of such facts and have relied, to the extent that we deem such reliance proper,
upon statements of public officials and officers or other representatives of the
Opinion Parties and on the representations and warranties set forth in the
Transaction Documents.

In rendering the opinions expressed below, we have assumed the legal capacity of
all natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to authentic original
documents of all documents submitted to us as copies, which assumptions we have
not independently verified. In addition, we have assumed that (i) each party to
the Transaction Documents teach, a (“Transaction Party”) is a corporation,
partnership, limited liability company or other entity duly organized and
validly existing under the laws of the jurisdiction of its organization;
(ii) each Transaction Party has all necessary corporate, partnership or limited
liability company power and authority to execute, deliver and perform its
obligations under the Transaction Documents to which it is a party; (iii) each
Transaction Document has been duly executed and delivered by each Transaction
Party that is a party thereto; (iv) the execution, delivery and performance by
each Transaction Party of the Transaction Documents to which it is a party have
been duly authorized by all necessary corporate, partnership or limited
liability company action and do not contravene the bylaws or other constituent
documents of such Transaction Party; (v) the execution, delivery and performance
by each Transaction Party of the Transaction Documents to which it is a party do
not conflict with or result in the breach of any document or instrument binding
on it; (vi) the execution, delivery and performance by each Transaction Party of
the Transaction Documents to which it is a party do not contravene any provision
of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award applicable to any of them (except that we have not made
such assumption with respect to Applicable Laws (as defined below) applicable to
the Opinion Parties, as to which we express our opinion in paragraph 2);
(vii) no authorization, approval, consent, order, license, franchise, permit or
other action by, and no notice to or filing with, any Governmental Authority or
any other third party is required for the due execution, delivery and
performance by each Transaction Party of the Transaction Documents to which it
is a party that has not been duly obtained or made and that is not

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in full force and effect (except that we have not made such assumption with
respect to Governmental Approvals (as defined below) required to be obtained or
taken by the Opinion Parties as to which we express our opinion in paragraph 3);
(viii) the Transaction Documents constitute valid, binding and enforceable
obligations of each party thereto (other than the Opinion Parties); and (ix) the
laws of any jurisdiction other than the laws that are the subject of this
opinion letter do not affect the terms of the Transaction Documents.

Based upon the foregoing, and subject to the assumptions, qualifications,
exceptions and limitations set forth herein, it is our opinion that:

 

  1.

Each Transaction Document (other than the Promissory Note) to which any Opinion
Party is a party constitutes the valid and binding obligation of such Opinion
Party enforceable against such Opinion Party in accordance with its terms. Each
Promissory Note, when executed and delivered by an Opinion Party, will
constitute the valid and binding obligation of such Opinion Party enforceable
against such Opinion Party in accordance with its terms.

 

  2.

The execution and delivery by each Opinion Party of each Transaction Document to
which it is a party do not, and the performance by such Opinion Party of its
obligations thereunder will not, result in any violation by any Opinion Party of
any Applicable Law (as defined below). “Applicable Laws” means those laws, rules
and regulations of the State of New York and the rules and regulations adopted
thereunder, that, in our experience, are normally applicable to transactions of
the type contemplated by the Transaction Documents. However, the term
“Applicable Laws” does not include, and we express no opinion with regard to:
(i) any federal laws, rules or regulations; (ii) any state laws, rules or
regulations relating to: (A) pollution or protection of the environment;
(B) zoning, land use, building or construction; (C) occupational safety and
health or other similar matters; (D) labor, employee rights and benefits;
(E) the regulation of utilities; (F) antitrust and trade regulation; (G) tax;
(H) securities; and (I) copyrights, patents and trademarks; and (iii) any laws,
rules or regulations of any county, municipality or similar political
subdivision or any agency or instrumentality thereof.

 

  3.

No Governmental Approval (as defined below) which has not been obtained or taken
and is not in full force and effect, is required to be obtained or taken by any
Opinion Party to authorize, or is required in connection with, the execution and
delivery by each Opinion Party of each Transaction Document to which it is a
party or the performance by such Opinion Party of its obligations thereunder.
“Governmental Approvals” means any consent, approval, license, authorization or
validation of, or

--------------------------------------------------------------------------------

 

filing, recording or registration with, any Governmental Authority pursuant to
any Applicable Laws (as defined in paragraph 2 above).

The opinions set forth above are subject to the following qualifications and
exceptions:

(a) The enforceability of each Transaction Document and the provisions thereof
may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or other laws now or hereafter in effect relating to or affecting
enforcement of creditors’ rights generally and by general principles of equity
(including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing), regardless of whether such enforcement is considered in
a proceeding in equity or at law.

(b) With respect to our opinion set forth in paragraph 1 above, we express no
opinion with respect to the validity or enforceability of the following
provisions to the extent that they are contained in the Transaction Documents:
(i) provisions releasing, exculpating or exempting a party from, or requiring
indemnification or contribution of a party for, liability for its own negligence
or to the extent that the same are inconsistent with public policy;
(ii) provisions purporting to waive, subordinate or not give effect to rights to
notice, demands, legal defenses or other rights or benefits that cannot be
waived, subordinated or rendered ineffective under applicable law;
(iii) provisions purporting to provide remedies inconsistent with applicable
law; (iv) provisions relating to the creation, attachment, perfection or
enforceability of any security interest; (v) provisions relating to severability
or set-offs; (vi) provisions stating that a guarantee will not be affected by a
modification of the obligation guaranteed in cases in which that modification
materially changes the nature or amount of such obligation; (vii) provisions
restricting access to courts or purporting to affect the jurisdiction or venue
of courts (other than the courts of the State of New York with respect to
Transaction Documents governed by the laws of the State of New York);
(viii) provisions purporting to exclude all conflicts-of-law rules; and
(ix) provisions providing that decisions by a party are conclusive or may be
made in its sole discretion.

(c) Insofar as our opinion set forth in paragraph 1 above relates to the
enforceability under New York law of the provisions of the Transaction Documents
choosing New York law as the governing law thereof, such opinion is rendered
solely in reliance upon the Act of July 19, 1984, ch. 421, 1984 McKinney’s Sess.
Law of N.Y. 1406 (codified at N.Y. Gen. Oblig. Law §§5-1401 (McKinney 1989))
(the “Act”) and is subject to the qualifications that such enforceability (i) as
specified in the Act, does not apply to the extent provided to the contrary in
subsection two of Section 1-105 of the NY UCC, (ii) may be limited by public
policy considerations of any jurisdiction in which enforcement of such
provisions is sought, and (iii) is subject to any U.S. Constitutional
requirement under the Full Faith and Credit Clause or the Due Process Clause
thereof or the exercise of any applicable judicial discretion in favor of
another jurisdiction.

(d) We express no opinion in respect of any provision of the Rayonier Guarantee
or the TRS Subsidiary Guarantee Agreement pursuant to which any Opinion

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Party has guaranteed the obligations of any other Opinion Party under any
Interest Rate Agreement.

(e) We have assumed that no Opinion Party is an “investment company” within the
meaning of, or subject to regulation as an “investment company” under, the
Investment Company Act of 1940, as amended.

We express no opinion as to the laws of any jurisdiction other than Applicable
Laws.

This opinion letter is rendered as of the date set forth above. We expressly
disclaim any obligation to update this letter after such date.

This opinion letter is given solely for your benefit and the benefit of the
Lenders from time to time party to the Credit Agreement in connection with the
transactions contemplated by the Transaction Documents and may not be furnished
to, or relied upon by, any other person or for any other purpose without our
prior written consent.

Very truly yours,

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EXHIBIT E - FORM OF

CLOSING CERTIFICATE

[NAME OF A BORROWER]

Pursuant to Section 3.01(f) of the Five-Year Revolving Credit Agreement dated as
of             , 2006 among Rayonier Inc., Rayonier TRS Holdings Inc., Rayonier
Forest Resources, L.P., and any Additional Borrower (as defined therein), as
borrowers, the lenders parties thereto, the issuing banks parties thereto, and
Credit Suisse, acting through one or more of its branches (“CS”), as
Administrative Agent for the lenders (as amended or modified from time to time,
the “Credit Agreement”; the terms defined therein being used herein as therein
defined), the undersigned hereby certifies that [he or she] is the
                     of [NAME OF A BORROWER] (the “Borrower”) and in such
capacity further certifies as follows:

1. The representations and warranties of the Borrower set forth in the Credit
Agreement and each of the other Loan Documents to which the Borrower is a party,
are true and correct in all material respects on and as of the date hereof.

2. No Default or Event of Default has occurred and is continuing as of the date
hereof or after giving effect to the transactions to be consummated under the
Credit Agreement on the date hereof.

IN WITNESS WHEREOF, the undersigned has hereunto set his name.

 

   

 

   

Name:

 

Date:             , 200    

   

Title:

 

 

Exh. E - 1

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EXHIBIT F - FORM OF

ASSIGNMENT AND ACCEPTANCE

This Assignment and Acceptance (the “Assignment and Acceptance”) is dated as of
the date set forth below (the “Effective Date”) and is entered into by and
between the Assignor (as defined below) and the Assignee (as defined below).
Capitalized terms used in this Assignment and Acceptance and not otherwise
defined herein have the meanings specified in the Five-Year Revolving Credit
Agreement dated as of             , 2006 (as amended or modified from time to
time, the “Credit Agreement”) among Rayonier Inc., Rayonier TRS Holdings Inc.,
Rayonier Forest Resources, L.P., and any other Additional Borrower (as defined
in the Credit Agreement), as borrowers, the Lenders (as defined in the Credit
Agreement), the Issuing Banks (as defined in the Credit Agreement), and Credit
Suisse, acting through its Cayman Islands Branch (“CS”), as Administrative Agent
for the Lenders (the “Administrative Agent”). Receipt of a copy of the Credit
Agreement is hereby acknowledged by the Assignee. The Standard Terms and
Conditions set forth in Annex I attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Acceptance as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all the Assignor’s rights and
obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the facility identified below
(including any Letters of Credit or Guarantees included in such facility) and
(ii) to the extent permitted to be assigned under applicable law, all claims,
suits, causes of action and any other right of the Assignor (in its capacity as
a Lender) against any Person, whether known or unknown, arising under or in
connection with the Credit Agreement, any other documents or instruments
delivered pursuant thereto or the loan transactions governed thereby or in any
way based on or related to any of the foregoing, including contract claims, tort
claims, malpractice claims, statutory claims and all other claims at law or in
equity related to the rights and obligations sold and assigned pursuant to
clause (i) above (the rights and obligations sold and assigned pursuant to
clauses (i) and (ii) above being referred to herein collectively as the
“Assigned Interest”). Such sale and assignment is without recourse to the
Assignor and, except as expressly provided in this Assignment and Acceptance,
without representation or warranty by the Assignor.

 

1.

Assignor (the “Assignor”):

 

2.

Assignee (the “Assignee”):

 

3.

Assigned Interest:

 

Exh. F - 1

--------------------------------------------------------------------------------

Facility Assigned

   Aggregate Amount  of
Commitment/Revolving
Credit Advances of all
Lenders    Amount of
Commitment/
Revolving
Credit Advances
Assigned    Percentage Assigned  of
Commitment/Revolving
Credit Advances 1

Revolving Credit Advance

   $      $      %

Effective Date:              , 20    [TO BE INSERTED BY THE ADMINISTRATIVE AGENT
AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER
THEREFOR].

 

 

1

Set forth, to at least 9 decimals, as a percentage of the Commitment/ Revolving
Credit Advances of all Lenders thereunder.

 

Exh. F - 2

--------------------------------------------------------------------------------

The terms set forth in this Assignment and Acceptance are hereby agreed to:

 

[NAME OF ASSIGNOR], as Assignor,

By

 

 

Name:

 

Title:

 

[NAME OF ASSIGNEE], as Assignee,

By

 

 

Name:

 

Title:

 

 

Exh. F - 3

--------------------------------------------------------------------------------

[Consented to and]2 Accepted:

CREDIT SUISSE, acting through its Cayman Islands Branch, as Administrative
Agent,

By

 

 

Name:

 

Title:

 

By

 

 

Name:

 

Title:

 

[Consented to:

NAME OF BORROWER

By

 

 

Name:

 

Title:]3

 

 

2

To the extent required by the Credit Agreement.

3

To the extent required by the Credit Agreement.

 

Exh. F - 4

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[Consented to:

[NAME OF ISSUING BANK],as Issuing Bank,

By

 

 

Name:

 

Title:]4

 

 

4

To the extent required by the Credit Agreement.

 

Exh. F - 5

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ANNEX 1

CREDIT AGREEMENT5

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE

1. Representations and Warranties.

1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal
and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim created by the
Assignor and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and Acceptance and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of any Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by any Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

1.2 Assignee. The Assignee (a) represents and warrants that (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Acceptance and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it satisfies the
requirements, if any, specified in the Credit Agreement that are required to be
satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it has
received a copy of the Credit Agreement, together with copies of the most recent
financial statements referred to in Section 4.01 of the Credit Agreement or
delivered pursuant to Section 5.01 of the Credit Agreement, 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 and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, (v) it is an Eligible Assignee, and (vi) if it is
a Lender organized under the laws of a jurisdiction outside the United States,
attached to this Assignment and Acceptance is any documentation required to be
delivered by it pursuant to Section 2.15(e) of the Credit Agreement, duly
completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other

 

 

5

Capitalized terms used in this Assignment and Acceptance and not otherwise
defined herein have the meanings specified in the Five-Year Revolving Credit
Agreement dated as of             , 2006 (as amended or modified from time to
time, the “Credit Agreement”) among Rayonier Inc., Rayonier TRS Holdings Inc.,
Rayonier Forest Resources, L.P., and any Additional Borrwer, as borrowers (each
a “Borrower” and, collectively, the “Borrowers”), the Lenders (as defined in the
Credit Agreement), the Issuing Banks (as defined in the Credit Agreement), and
Credit Suisse, acting through its Cayman Islands Branch (“CS”), as
Administrative Agent for the Lenders (the “Administrative Agent”).

1

--------------------------------------------------------------------------------

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 Loan Documents, and (ii) it will perform in accordance with
their terms all of the obligations which by the terms of the Loan Documents are
required to be performed by it as a Lender.

2. Payments. 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 but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

3. General Provisions. This Assignment and Acceptance shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns. This Assignment and Acceptance may be executed in counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. Delivery of an executed counterpart of a signature page of this
Assignment and Acceptance by facsimile or other electronic transmission shall be
as effective as delivery of a manually executed counterpart of this Assignment
and Acceptance. This Assignment and Acceptance shall be construed in accordance
with and governed by the law of the State of New York.

 

2

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EXHIBIT G — FORM OF ADDITIONAL

BORROWER DESIGNATION

Credit Suisse,

acting through its Cayman Islands Branch,

as Administrative Agent

for the Lenders parties

to the Credit Agreement

referred to below

Eleven Madison Avenue

New York, New York 10010

[Date]

Attention: [Agency Department Manager]

Ladies and Gentlemen:

The undersigned, Rayonier Inc., refers to the Five-Year Revolving Credit
Agreement, dated as of             , 2006 (as amended or modified from time to
time, the “Credit Agreement”, the terms defined therein being used herein as
therein defined), among Rayonier Inc., Rayonier TRS Holdings Inc., Rayonier
Forest Resources, L.P., and any Additional Borrower (as defined therein), as
borrowers, certain Lenders parties thereto, certain Issuing Banks parties
thereto, and Credit Suisse, acting through its Cayman Islands Branch (“CS”), as
Administrative Agent for said Lenders, and hereby gives you notice, irrevocably,
pursuant to the Credit Agreement, that the undersigned hereby designates
                    , a                     , as an Additional Borrower under
the Credit Agreement. Such designation is subject to fulfillment (or waiver by
the Required Lenders) of the conditions precedent set forth in Section 3.03 of
the Credit Agreement.

 

Very truly yours,

RAYONIER INC.

By

 

 

Name:

 

Title:

 

 

1

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EXHIBIT H — FORM OF ADDITIONAL

SUBSIDIARY GUARANTOR DESIGNATION

Credit Suisse,

acting through its Cayman Islands Branch,

as Administrative Agent

for the Lenders parties

to the Credit Agreement

referred to below

Eleven Madison Avenue

New York, New York 10010

[Date]

Attention: [Agency Department Manager]

Ladies and Gentlemen:

The undersigned, Rayonier Inc., refers to the Five-Year Revolving Credit
Agreement, dated as of             , 2006 (as amended or modified from time to
time, the “Credit Agreement”, the terms defined therein being used herein as
therein defined), among Rayonier Inc., Rayonier TRS Holdings Inc., Rayonier
Forest Resources, L.P., and any Additional Borrower (as defined therein), as
borrowers, certain Lenders parties thereto, certain Issuing Banks parties
thereto, and Credit Suisse, acting through its Cayman Islands Branch (“CS”), as
Administrative Agent for said Lenders, and hereby gives you notice, irrevocably,
pursuant to the Credit Agreement, that the undersigned hereby designates
                    , a                     , as an Additional Subsidiary
Guarantor under the Credit Agreement. Such designation is subject to fulfillment
(or waiver by the Required Lenders) of the conditions precedent set forth in
Section 3.04 of the Credit Agreement.

 

Very truly yours,

RAYONIER INC.

By

 

 

Name:

 

Title:

 

 

1