Execution Version

 

AMENDMENT NO. 3 TO CREDIT AGREEMENT

 

This Amendment No. 3 to Credit Agreement (this “Agreement”), dated as of May 22,
2008, is made by and among TEMPLE-INLAND INC., a Delaware corporation (the
“Borrower”), BANK OF AMERICA, N.A., a national banking association organized and
existing under the laws of the United States (“Bank of America”), in its
capacity as administrative agent for the Lenders (as defined in the Credit
Agreement (as defined below)) (in such capacity, the “Administrative Agent”),
and each of the Lenders signatory hereto.

W I T N E S S E T H:

WHEREAS, the Borrower, the Administrative Agent and the Lenders have entered
into that certain Credit Agreement dated as of July 28, 2005, as amended by that
certain Amendment No. 1 to Credit Agreement and Extension of Maturity Date dated
as of September 11, 2006 and that certain Amendment No. 2 to Credit Agreement
dated as of September 28, 2007 (as hereby amended and as from time to time
hereafter further amended, modified, supplemented, restated, or amended and
restated, the “Credit Agreement”; capitalized terms used in this Agreement not
otherwise defined herein shall have the respective meanings given thereto in the
Credit Agreement), pursuant to which the Lenders have made available to the
Borrower a revolving credit facility, including a letter of credit subfacility;
and

WHEREAS, the Borrower has advised the Administrative Agent and the Lenders that
it desires to amend certain provisions of the Credit Agreement as set forth
below and the Administrative Agent and the Lenders hereto, subject to the terms
and conditions contained herein, are willing to effect such amendments on the
terms and conditions contained in this Agreement;

NOW, THEREFORE, in consideration of the premises and further valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:

1.        Amendments to Credit Agreement. Subject to the terms and conditions
set forth herein, the Credit Agreement is hereby amended as follows:

(a)      The definition of “Applicable Rate” in Section 1.01 of the Credit
Agreement is hereby amended by deleting the chart titled “Applicable Rate” in
the definition thereof in its entirety and replacing it with the following chart
in lieu thereof:

 

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Applicable Rate

 

Pricing Level

Debt Ratings S&P/Moody’s

Facility Fee

Eurodollar
Rate +
––––––––––
Letters of Credit

Base Rate +

1

A-/A3 or better

0.30%

0.70%

0.00%

2

BBB+/Baa1

0.45%

0.925%

0.00%

3

BBB/Baa2

0.50%

1.00%

0.00%

4

BBB-/Baa3

0.55%

1.45%

0.45%

5

BB+/Ba1

0.65%

1.85%

0.85%

6

BB/Ba2 or worse

0.75%

2.25%

1.25%

 

(b)      The definition of “Gross Interest Expense” in Section 1.01 of the
Credit Agreement is hereby amended by deleting such definition in its entirety
and replacing it with the following in lieu thereof:

““Gross Interest Expense” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis based on the Parent Company Financial
Statements, interest expense for such period (including all commissions,
discounts, fees and other charges under letters of credit and similar
instruments, but specifically excluding any interest expense related to the
Monetization SPV) classified and accounted for as interest expense in accordance
with GAAP.”

(c)      The definition of “Interest Coverage Ratio” in Section 1.01 of the
Credit Agreement is hereby amended by deleting such definition in its entirety
and replacing it with the following in lieu thereof:

““Interest Coverage Ratio” means, as of any date of determination, the ratio of
(a) EBITDDA for the period of the four of the five prior fiscal quarters of the
Borrower ending on such date, as selected by the Borrower, to (b) Net Interest
Expense for such selected period of four fiscal quarters of the Borrower;
provided, however, for purposes of calculating the Interest Coverage Ratio, the
Borrower may not apply the EBITDDA or Net Interest Expense for the fiscal
quarter of the Borrower ending on December 29, 2007, but, provided, further, for
the fiscal quarters of the Borrower ending on March 29, 2008, June 28, 2008,
September 27, 2008 and January 3, 2009 only, the Borrower may instead substitute
the EBITDDA and Net Interest Expense for the fiscal quarter of the Borrower
ending on September 29, 2007 in lieu of the EBITDDA and Net Interest Expense for
the fiscal quarter of the Borrower ending on December 29, 2007.”

(d)      The definition of “Net Interest Expense” in Section 1.01 of the Credit
Agreement is hereby amended by deleting such definition in its entirety and
replacing it with the following in lieu thereof:

 

 

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““Net Interest Expense” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis based on the Parent Company Financial
Statements for such period (a) Gross Interest Expense for such period, less (b)
interest income (but specifically excluding any interest income related to the
Monetization SPV) for such period determined in accordance with GAAP, less (c)
an amount equal to $12,500,000 for each quarter that the Borrower owned the
businesses listed in Schedule 7.02 that is included in the calculation for such
period beginning March 29, 2008.”

(e)      The definition of “Total Capitalization” in Section 1.01 of the Credit
Agreement is hereby amended by deleting such definition in its entirety and
replacing it with the following in lieu thereof:

““Total Capitalization” means, as of any date of determination, for the Borrower
and its Subsidiaries on a consolidated basis based on the Parent Company
Financial Statements, the sum of Funded Indebtedness plus the total
shareholders’ equity (but specifically excluding accumulated other comprehensive
income or loss) of the Borrower and its consolidated Subsidiaries, determined in
accordance with GAAP; provided that the effect of any changes to GAAP related to
any Plan, Multi-Employer Plan or Pension Plans shall be eliminated.”

(f)        Section 7.09 of the Credit Agreement is hereby amended by deleting
such Section in its entirety and replacing it with the following in lieu
thereof:

“7.09   Leverage Ratio. The Borrower shall not permit the Leverage Ratio at any
time to be greater than 0.70 to 1.00.”

(g)      Exhibit C to the Credit Agreement (“Form of Compliance Certificate”) is
hereby amended by deleting such Exhibit in its entirety and replacing it with
the Exhibit C attached hereto.

2.        Effectiveness; Conditions Precedent. The effectiveness of this
Agreement and the amendments to the Credit Agreement provided in Section 1
hereof are each subject to the satisfaction of the following conditions
precedent:

(a)       the Administrative Agent shall have received each of the following
documents or instruments in form and substance reasonably acceptable to the
Administrative Agent:

(i)        four (4) original counterparts of this Agreement, duly executed by
the Borrower, the Administrative Agent and the Required Lenders;

(ii)      such other documents, instruments, opinions, certifications,
undertakings, further assurances and other matters as the Administrative Agent
shall reasonably request; and

 

 

3

 

 

 

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(iii)      a duly completed Compliance Certificate, prepared as of the last day
of the fiscal quarter of the Borrower ended March 29, 2008, signed by a
Responsible Officer of the Borrower giving effect to the amendments herein; and

(b)       both (i) an upfront fee to each Lender executing this Agreement by
5:00 p.m. (New York, New York time) on May 21, 2008, for the account of each
such Lender, paid to the Administrative Agent, equal to twelve and one-half
basis points (12.5 “bps”) multiplied by each such Lender’s Commitment
immediately prior to the effective date of this Agreement; and (ii) all other
fees and expenses payable to the Administrative Agent and the Lenders (including
the fees and expenses of counsel to the Administrative Agent) estimated to date
shall have been paid in full (without prejudice to final settling of accounts
for such fees and expenses).

3.        Representations and Warranties. In order to induce the Administrative
Agent and the Lenders to enter into this Agreement, the Borrower represents and
warrants to the Administrative Agent and the Lenders as follows:

(a)       The representations and warranties made by the Borrower in Article V
of the Credit Agreement or any other Loan Document, or which are contained in
any document furnished at any time under or in connection therewith, are true
and correct on and as of the date hereof, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they shall be true and correct as of such earlier date, and except that for
purposes of this Section 3(a), the representations and warranties contained in
subsections (a) and (b) of Section 5.05 of the Credit Agreement shall be deemed
to refer to the most recent statements furnished pursuant to clauses (a) and
(b), respectively, of Section 6.01 of the Credit Agreement; provided that the
representations and warranties set forth in Sections 5.05(a)(iii) and 5.05(c) of
the Credit Agreement shall be deemed to refer to the most recent financial
statements furnished pursuant to clause (a) or clause (b) of Section 6.01 of the
Credit Agreement, whichever is more recent;

(b)       Since the date of the most recent financial reports of the Borrower
delivered pursuant to Section 6.01(a) of the Credit Agreement, no act, event,
condition or circumstance has occurred or arisen which, singly or in the
aggregate with one or more other acts, events, occurrences or conditions
(whenever occurring or arising), has had or could reasonably be expected to have
a Material Adverse Effect;

(c)       This Agreement has been duly authorized, executed and delivered by the
Borrower and constitutes a legal, valid and binding obligation of the Borrower,
except as may be limited by general principles of equity or by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors’ rights generally; and

(d)       No Default or Event of Default has occurred and is continuing either
before or after giving effect to the amendments.

 

 

4

 

 

 

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4.        Entire Agreement. This Agreement, together with all the Loan Documents
(collectively, the “Relevant Documents”), sets forth the entire understanding
and agreement of the parties hereto in relation to the subject matter hereof and
supersedes any prior negotiations and agreements among the parties relating to
such subject matter. No promise, condition, representation or warranty, express
or implied, not set forth in the Relevant Documents shall bind any party hereto,
and no such party has relied on any such promise, condition, representation or
warranty. Each of the parties hereto acknowledges that, except as otherwise
expressly stated in the Relevant Documents, no representations, warranties or
commitments, express or implied, have been made by any party to the other in
relation to the subject matter hereof or thereof. None of the terms or
conditions of this Agreement may be changed, modified, waived or canceled orally
or otherwise, except in writing and in accordance with Section 10.01 of the
Credit Agreement.

5.        Full Force and Effect of Agreement. Except as hereby specifically
amended, modified or supplemented, the Credit Agreement and all other Loan
Documents are hereby confirmed and ratified in all respects and shall be and
remain in full force and effect according to their respective terms.

6.        Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original as against any party
whose signature appears thereon, and all of which shall together constitute one
and the same instrument. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy or other electronic means (including .pdf) shall
be effective as delivery of a manually executed counterpart of this Agreement.

7.        Governing Law. This Agreement shall in all respects be governed by,
and construed in accordance with, the laws of the State of New York applicable
to contracts executed and to be performed entirely within such State, and shall
be further subject to the provisions of Sections 10.14 and 10.15 of the Credit
Agreement.

8.        Enforceability. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable as to one or more of the
parties hereto, all other provisions nevertheless shall remain effective and
binding on the parties hereto.

9.        References. All references in any of the Loan Documents to the “Credit
Agreement” shall mean the Credit Agreement, as amended hereby.

10.      Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Borrower, the Administrative Agent and each of the
Lenders, and their respective successors, legal representatives, and assignees
to the extent such assignees are permitted assignees as provided in Section
10.06 of the Credit Agreement.

 

[Signature pages follow.]

 

 

5

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be made,
executed and delivered by their duly authorized officers as of the day and year
first above written.

 

 

BORROWER:

 

 

TEMPLE-INLAND INC.

 

 

 

By: /s/ David W. Turpin

 

Name: David W. Turpin

 

Title:

Treasurer

 

 

ADMINISTRATIVE AGENT:

 

BANK OF AMERICA, N.A.

 

 

By: /s/ Anthea Del Bianco

 

Name: Anthea Del Bianco

 

Title:

Vice President

 

LENDERS:

 

 

BANK OF AMERICA, N.A.

 

 

By: /s/ Michael L. Letson, Jr.

 

Name: Michael L. Letson, Jr.

 

Title:

Vice President

 

BNP PARIBAS

 

 

By: /s/ Rick Pace

 

Name: Rick Pace

 

Title:

Managing Director

 

 

By: /s/ Shayn March

 

Name: Shayn March

 

Title:

Managing Director

 

 

6

 

 

 

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THE BANK OF NOVA SCOTIA

 

 

By: /s/ James Forward

 

Name: James Forward

 

Title:

Managing Director

 

CALYON NEW YORK BRANCH

 

 

By: /s/ Rod Hurst

 

Name: Rod Hurst

 

Title:

Managing Director

 

 

By: /s/ Pascale Arnaud

 

Name: Pascale Arnaud

 

Title:

Managing Director

 

CITIBANK, N.A.

 

 

By: /s/ Rob Jokhai

 

Name: Rob Jokhai

 

Title:

Vice President

 

JPMORGAN CHASE BANK, N.A.

 

 

By: /s/ Peter S. Predun

 

Name: Peter S. Predun

 

Title:

Executive Director

 

KBC BANK N.V.

 

 

By: /s/ William Cavanaugh

 

Name: William Cavanaugh

 

Title:

Vice President

 

 

By: /s/ Thomas G. Jackson

 

Name: Thomas G. Jackson

 

Title:

First Vice President

 

 

 

 

Amendment No. 3 to Credit Agreement

 

Temple-Inland Inc.

 

Signature Page

 

 

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KEYBANK NATIONAL ASSOCIATION

 

 

By: /s/ Marcel Fournier

 

Name: Marcel Fournier

 

Title:

Vice President

 

MIZUHO CORPORATE BANK, LTD.

 

 

By: /s/ Raymond Ventura

 

Name: Raymond Ventura

 

Title:

Deputy General Manager

 

NORTHWEST FARM CREDIT SERVICES PCA

 

 

By: /s/ Jim D. Allen

 

Name: Jim D. Allen

 

Title:

Senior Vice President

 

PNC BANK, NATIONAL ASSOCIATION

 

 

By: /s/ Dorothy G.W. Brailer

 

Name: Dorothy G.W. Brailer

 

Title:

Vice President

 

COÖPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A., “RABOBANK NEDERLAND”, NEW
YORK BRANCH

 

 

By: /s/ Brett Delfino

 

Name: Brett Delfino

 

Title:

Executive Director

 

 

By: /s/ Thomas K. Martin

 

Name: Thomas K. Martin

 

Title:

Vice President

 

 

 

Amendment No. 3 to Credit Agreement

 

Temple-Inland Inc.

 

Signature Page

 

 

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                                                     REGIONS BANK

 

 

By: /s/ Robin Ingram

 

Name: Robin Ingram

 

Title:

Sr. Vice President

 

 

SUNTRUST BANK

 

 

 

By: /s/ Baerbel Freudenthaler

 

Name: Baerbel Freudenthaler

 

Title:

Vice President

 

 

UBS LOAN FINANCE LLC

 

 

 

By: /s/ Irja R. Otsa

 

Name: Irja R. Otsa

 

Title:

Associate Director

 

 

By: /s/ Mary E. Evans

 

Name: Mary E. Evans

 

Title:

Associate Director

 

 

WELLS FARGO BANK, NATIONAL ASSOCIATION

 

 

 

By: /s/ Dean Adansi

 

Name: Dean Adansi

 

Title:

Vice President

 

 

WESTLB AG

 

 

 

By: /s/ Salvatore Battinelli

 

Name: Salvatore Battinelli

 

Title:

Managing Director

 

 

By: /s/ Brendan McGlynn

 

Name: Brendan McGlynn

 

Title:

Manager

 

 

 

 

Amendment No. 3 to Credit Agreement

 

Temple-Inland Inc.

 

Signature Page

 

 

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EXHIBIT C

FORM OF COMPLIANCE CERTIFICATE

 

Financial Statement Date: __________, _____

To:

Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Credit Agreement, dated as of July 28, 2005
(as amended, restated, extended, supplemented or otherwise modified in writing
from time to time, the “Agreement;” the terms defined therein being used herein
as therein defined), among Temple-Island Inc., a Delaware corporation (the
“Borrower”), the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent and L/C Issuer.

The undersigned Responsible Officer hereby certifies as of the date hereof that
he/she is the                                           
                                     of the Borrower, and that, as such, he/she
is authorized to execute and deliver this Certificate to the Administrative
Agent on the behalf of the Borrower, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1.         Attached hereto as Schedule 1 are the year-end audited financial
statements required by Section 6.01(a) of the Agreement for the fiscal year of
the Borrower ended as of the above date, together with the report and opinion of
an independent certified public accountant required by such section.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1.         Attached hereto as Schedule 1 are the unaudited financial statements
required by Section 6.01(b) of the Agreement for the fiscal quarter of the
Borrower ended as of the above date. Such financial statements fairly present
the financial condition, results of operations and cash flows of the Borrower
and its Subsidiaries in accordance with GAAP as at such date and for such
period, subject only to normal year-end audit adjustments and the absence of
footnotes.

2.         The undersigned has reviewed and is familiar with the terms of the
Agreement and has made, or has caused to be made under his/her supervision, a
detailed review of the transactions and condition (financial or otherwise) of
the Borrower during the accounting period covered by the attached financial
statements.

3.         A review of the activities of the Borrower during such fiscal period
has been made under the supervision of the undersigned with a view to
determining whether during such fiscal period the Borrower performed and
observed all its Obligations under the Loan Documents, and

 

 

Amendment No. 3 to Credit Agreement

 

Temple-Inland Inc.

 

Signature Page

 

 

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[select one:]

[to the best knowledge of the undersigned during such fiscal period, the
Borrower performed and observed each covenant and condition of the Loan
Documents applicable to it, and no Default has occurred and is continuing.]

--or--

[the following covenants or conditions have not been performed or observed and
the following is a list of each such Default and its nature and status:]

4.         The representations and warranties of the Borrower contained in
Article V of the Agreement, and any representations and warranties of the
Borrower that are contained in any document furnished at any time under or in
connection with the Loan Documents, are true and correct in all material
respects on and as of the date hereof, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct in all material respects as of such earlier date,
and except that for purposes of this Compliance Certificate, the representations
and warranties contained in subsections (a) and (b) of Section 5.05 of the
Agreement shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01 of the Agreement,
including the statements in connection with which this Compliance Certificate is
delivered.

5.         The financial covenant analyses and information set forth on
Schedules 2 and 3 attached hereto are true and accurate on and as of the date of
this Certificate.

IN WITNESS WHEREOF, the undersigned has executed this Compliance Certificate as
of _______________, _____.

 

TEMPLE-INLAND INC.

 

By:  

Name:                                           
                                                                     

Title:                                           
                                                                     

 

 

Amendment No. 3 to Credit Agreement

 

Temple-Inland Inc.

 

Signature Page

 

 

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For the Quarter/Year ended ___________________ (“Statement Date”)

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

I.

Section 7.08 – Interest Coverage Ratio.

 

A.

Consolidated EBITDDA for four of the five prior fiscal quarters of the Borrower
ending on the above date1 (“Subject Period”):

 

 

1.

Income From Continuing Operations Before Taxes for Subject
Period:                                          
                                         $                                          
                                                                   

 

2.

Net Interest Expense to the extent included in the determination of Income From
Continuing Operations Before Taxes for Subject
Period:                          $                                          
                             

 

3.

Depreciation and the amortization of intangibles of any kind to the extent
included in the determination of Income From Continuing Operations Before Taxes,
plus all amounts treated as expenses for the depletion of Timber from the
Timberlands owned by the Borrower or any of its consolidated Subsidiaries to the
extent included in the determination of Income From Continuing Operations Before
Taxes:                                          
                          $              

 

4.

Portion of Pension Plan expenses reducing Income From Continuing Operations
Before Taxes during Subject Period but not required by ERISA or the Code to be
funded in cash (whether or not actually funded in
cash):                                          
                                          
      $                                          
                                                            

 

5.

$70,000,000 for each quarter that the Borrower owned the businesses listed in
Schedule 7.02 to the Agreement that is included in the calculation for such
period beginning March 29,
2008:                                     $                                          
                 

_________________________

1 For purposes of calculating the Interest Coverage Ratio, the Borrower may not
apply the EBITDDA or Net Interest Expense for the fiscal quarter of the Borrower
ending on December 29, 2007, but, provided that, for the fiscal quarters of the
Borrower ending on March 29, 2008, June 28, 2008, September 27, 2008 and January
3, 2009 only, the Borrower may instead substitute the EBITDDA and Net Interest
Expense for the fiscal quarter of the Borrower ending on September 29, 2007 in
lieu of the EBITDDA and Net Interest Expense for the fiscal quarter of the
Borrower ending on December 29, 2007.

 

 

Amendment No. 3 to Credit Agreement

 

Temple-Inland Inc.

 

Signature Page

 

 

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6.

Consolidated EBITDDA (Lines I.A.1 + 2 + 3 + 4 - 5):
                                          
                                          
                                  $                                          
                                  

 

B.

Net Interest Expense for Subject Period:

$

 

C.

Interest Coverage Ratio (Line I.A.6 ÷ Line I.B):

to 1

 

Minimum required:

3.00 to 1

II.

Section 7.09 – Leverage Ratio.

 

A.

Funded Indebtedness at Statement Date:

$

 

B.

Total Capitalization at Statement Date:

$

 

C.

Consolidated Leverage Ratio (Line II.A ÷ Line II.B):

to 1

 

Maximum permitted:

0.70 to 1

 

 

 

Form of Compliance Certificate