Exhibit10.2

 

EXECUTION

 

Second AMENDED AND RESTATED

GUARANTY AGREEMENT

 

This SECOND AMENDED AND RESTATED GUARANTY AGREEMENT (as such may be amended,
amended and restated, modified, supplemented or restated from time to time, this
“Guaranty”) is dated as of April 1, 2016 by RENTECH, INC., a Colorado
corporation (“Parent Guarantor”), each Person that is a signatory hereto as a
Subsidiary Guarantor (collectively, the “Subsidiary Guarantors” and, together
with Parent Guarantor and each Additional Guarantor (as hereinafter defined)
added hereto as a Guarantor pursuant to Section 27, the “Guarantors” and each a
“Guarantor”) in favor of CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as
administrative agent (“Administrative Agent”) for the benefit of the Lender
Parties (as defined in the Credit Agreement referenced below).

Reference is made to the Amended and Restated Term Loan Credit Agreement, dated
as of February 12, 2015, by and among Rentech Nitrogen Holdings, Inc.
(“Borrower”), the lenders from time to time party thereto and Administrative
Agent (as amended prior to the date hereof, the “Existing Restated Credit
Agreement”), pursuant to which the Lender Parties made loans to Borrower.

Borrower, Lenders and Administrative Agent have agreed to amend and restate the
Existing Restated Credit Agreement pursuant to the Second Amended and Restated
Term Loan Credit Agreement of even date herewith, by and among Borrower, Lenders
and Administrative Agent (as such may be amended, amended and restated,
modified, supplemented or restated from time to time, the “Credit Agreement”),
which will evidence the loans made by the Lender Parties prior to the date
hereof.  Capitalized terms used but not defined herein shall have the meanings
(i) specified in Section 36 hereof or (ii) specified in the Credit Agreement,
and the principles of construction contained in Section 1.04 of the Credit
Agreement shall apply herein as if set forth herein.  

The Guarantors are party to that certain Amended and Restated Guaranty
Agreement, dated as of February 12, 2015, by Parent Guarantor and the other
Guarantors in favor of the Administrative Agent for the benefit of the Lender
Parties (as amended prior to the date hereof, the “Existing Restated Guaranty”).

As a condition to the amendment and restatement of the Credit Agreement, the
Guarantors have agreed to execute this Guaranty in favor of Administrative Agent
and amend and restate the Existing Restated Guaranty, as herein provided.

Borrower and each Subsidiary Guarantor are direct or indirect subsidiaries of
Parent Guarantor, and Parent Guarantor and each Subsidiary Guarantor will
benefit, directly or indirectly from the financial accommodations provided by
the Lender Parties to Borrower.

FOR VALUE RECEIVED, the sufficiency of which is hereby acknowledged, and in
consideration of credit and/or financial accommodation heretofore or hereafter
from time to time made or granted to Borrower by Lender Parties pursuant to the
Credit Agreement and the other Loan Documents, each Guarantor hereby furnishes
its guaranty of the Guaranteed Obligations (as hereinafter defined) in favor of
Administrative Agent, for itself and for the benefit of the Lender Parties, as
follows:

1.  Guaranty.  Each Guarantor jointly and severally hereby absolutely and
unconditionally guarantees, as a guaranty of payment and performance and not
merely as a guaranty of collection, prompt payment when

 

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

 

due, whether at stated maturity, by required prepayment, upon acceleration,
demand or otherwise, and at all times thereafter, of any and all existing and
future indebtedness and liabilities of every kind, nature and character, direct
or indirect, absolute or contingent, liquidated or unliquidated, voluntary or
involuntary and whether for principal, interest, premiums, fees, indemnities,
damages, costs, expenses or otherwise, of Borrower to the Lender Parties under
the Credit Agreement and the other Loan Documents (including all renewals,
extensions, amendments, refinancings and other modifications thereof and all
costs, attorneys’ fees and expenses incurred by the Lender Parties in connection
with the collection or enforcement thereof), and whether recovery upon such
indebtedness and liabilities may be or hereafter become unenforceable or shall
be an allowed or disallowed claim under any proceeding or case commenced by or
against Borrower or any Guarantor under the Bankruptcy Code (Title 11, United
States Code), any successor statute or any other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization or similar debtor relief laws of the
United States or other applicable jurisdictions from time to time in effect and
affecting the rights of creditors generally (collectively, “Debtor Relief
Laws”), and including interest that accrues after the commencement by or against
Borrower of any proceeding under any Debtor Relief Laws (collectively, the
“Guaranteed Obligations”).  Administrative Agent’s books and records showing the
amount of the Guaranteed Obligations shall, absent manifest error, be admissible
in evidence in any action or proceeding, and shall be binding upon each
Guarantor and conclusive for the purpose of establishing the amount of the
Guaranteed Obligations.  This Guaranty shall not be affected by the genuineness,
validity, regularity or enforceability of the Guaranteed Obligations or any
instrument or agreement evidencing any Guaranteed Obligations, or by the
existence, validity, enforceability, perfection, non-perfection or extent of any
collateral therefor, or by any fact or circumstance relating to the Guaranteed
Obligations (other than payment in full of the Guaranteed Obligations) which
might otherwise constitute a defense to the obligations of any Guarantor under
this Guaranty, and each Guarantor hereby irrevocably waives any defenses it may
now have or hereafter acquire in any way relating to any or all of the
foregoing.

Notwithstanding anything herein to the contrary, the guaranty granted by any
Guarantor incorporated under the laws of the Grand Duchy of Luxembourg (the
“Luxembourg Guarantor”) under this Guaranty for the Guaranteed Obligations of
the Borrower shall be limited at any time to an aggregate amount not exceeding
90% of such Luxembourg Guarantor’s own funds (“capitaux propres”), as referred
to in annex I to the grand-ducal regulation dated 18 December 2015 defining the
form and content of the presentation of balance sheet and profit and loss
account, and enforcing the Luxembourg law dated 19 December 2002 relating to the
Register of Commerce and Companies as well as the accounting and the annual
accounts of companies, as amended, determined in its last accounts duly approved
and available, as at the date on which a demand is made under this Guaranty.

2.  Taxes; Payments.  Each Guarantor represents and warrants that it is
organized and resident in the United States of America, except as set forth on
Schedule 2 hereto or, in the case of an Additional Guarantor, in the applicable
Addendum to Guaranty (as hereinafter defined).  Each Guarantor shall make all
payments hereunder without setoff or counterclaim and free and clear of and
without deduction for any Taxes, subject to the provisions of Section 2.08 of
the Credit Agreement and the related defined terms therein. Each Guarantor shall
make all payments to Administrative Agent under this Guaranty at the
Administrative Agent’s office in New York, New York. The obligations of each
Guarantor under this paragraph shall survive the payment in full of the
Guaranteed Obligations and termination of this Guaranty.  

3.  Rights of Administrative Agent.  Each Guarantor consents and agrees that
Administrative Agent may, at any time and from time to time, without notice or
demand, and without affecting the enforceability or continuing effectiveness
hereof: (a) amend, extend, renew, compromise, discharge, accelerate or otherwise
change the time for payment or the terms of the Guaranteed Obligations or any

2

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

 

part thereof; (b) take, hold, exchange, enforce, waive, release, fail to
perfect, sell, or otherwise dispose of any collateral security for the payment
of this Guaranty or any Guaranteed Obligations; (c) apply such collateral
security and direct the order or manner of sale thereof as Administrative Agent
in its sole discretion may determine; and (d) release or substitute one or more
of any endorsers or other guarantors of any of the Guaranteed
Obligations.  Without limiting the generality of the foregoing, each Guarantor
consents to the taking of, or failure to take, any action which might in any
manner or to any extent vary the risks of any Guarantor under this Guaranty or
which, but for this provision, might operate as a discharge of any Guarantor.

4.  Certain Waivers.  Each Guarantor waives (a) any defense arising by reason of
any disability or other defense of Borrower or any other guarantor, or the
cessation from any cause whatsoever (including any act or omission of
Administrative Agent) of the liability of Borrower or any other Guarantor;
(b) any defense based on any claim that any Guarantor’s obligations exceed or
are more burdensome than those of Borrower; (c) the benefit of any statute of
limitations affecting any Guarantor’s liability hereunder; (d) any right to
require Administrative Agent to proceed against Borrower or any other Guarantor,
proceed against or exhaust any collateral security for the Guaranteed
Obligations, or pursue any other remedy in Administrative Agent’s power
whatsoever; (e) any benefit of and any right to participate in any security now
or hereafter held by Administrative Agent; (f) any bankruptcy or insolvency of
Borrower; (g) any change in ownership of Borrower or any other Guarantor; (h)
any defense based on any act or failure to act of Administrative Agent referred
to in Section 3; and (i) to the fullest extent permitted by law, any and all
other defenses or benefits that may be derived from or afforded by applicable
Law limiting the liability of or exonerating guarantors or sureties including
any defenses based on suretyship or impairment of collateral.  Each Guarantor
expressly waives all setoffs and counterclaims and all presentments, demands for
payment or performance, notices of nonpayment or nonperformance, protests,
notices of protest, notices of dishonor and all other notices or demands of any
kind or nature whatsoever with respect to the Guaranteed Obligations, and all
notices of acceptance of this Guaranty or of the existence, creation or
incurrence of new or additional Guaranteed Obligations.

5.  Obligations Independent.  The obligations of each Guarantor hereunder are
those of primary obligor, and not merely as surety, and are independent of the
Guaranteed Obligations and the obligations of any other guarantor, and a
separate action may be brought against each Guarantor to enforce this Guaranty
whether or not Borrower or any other person or entity is joined as a party.

6.  Representations and Warranties.  Each Guarantor represents and warrants
that:

(a)  It (i) is duly organized, incorporated or formed, validly existing and in
good standing (if applicable) under the Laws of the jurisdiction of its
organization, incorporation or formation, (ii) is duly qualified and in good
standing (if applicable) as a foreign corporation or other applicable entity in
each other jurisdiction in which it owns or leases property or in which the
conduct of its business requires it to so qualify or be licensed and where, in
each case, failure so to qualify and be in good standing could have a Material
Adverse Effect, and (iii) has all requisite company or corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted and as proposed to be conducted.

(b)  The execution, delivery and performance by such Guarantor of this Guaranty
and the other Loan Documents to which it is a party and the grant by such
Guarantor of any security interest contemplated thereby are within its company
or corporate powers, have been duly authorized by all necessary company or
corporate action, and do not (i) contravene its Constituent Documents,
(ii) contravene any contractual restriction binding on it or require any consent
under any material agreement or instrument to which it is a party or by which
any of its properties or assets is bound, (iii) result in or require the
creation or imposition of any Liens upon any property or assets of such

3

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

 

Guarantor (other than Permitted Liens), or (iv) violate any Law (including, but
not limited to, the Securities Act of 1933 and the Exchange Act and the
regulations thereunder) or writ, judgment, injunction, determination or award.

(c)  Neither such Guarantor nor any Subsidiary thereof has incurred any Debt,
other than Debt permitted by Section 8(d). Such Guarantor has delivered to
Lenders copies of all material documentation relating to such Debt listed on
Schedule 8(d) certified by a Responsible Officer of the Parent Guarantor as
being true, correct and complete, provided that the parties agree that (i) the
documentation for the Debt referred to in Item 20 of Schedule 8(d) of this
Guaranty shall not be required to be delivered until the tenth Business Day
after the Second Restatement Date and (ii) the Parent Guarantor covenants to
cause such delivery to occur on or prior to such date.

(d)  Except for any filings specifically provided for in any Security Document
to which such Guarantor is a party, no order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption or waiver by, any Governmental Authority or any other third party
(except as have been obtained or made and are in full force and effect), is
required to authorize, or is required in connection with, (i) the execution,
delivery and performance by such Guarantor of this Guaranty or the other Loan
Documents to which it is a party, (ii) the legality, validity, binding effect or
enforceability of this Guaranty or the other Loan Documents to which it is a
party, or (iii) the creation, validity or perfection of the Liens created by the
Security Documents to which it is a party; provided that, after the date hereof,
the registration of the Guaranty with the Administration de l'enregistrement et
des Domaines may be requested in case of legal proceedings before a Luxembourg
courts or when the Guaranty has to be produced before an official Luxembourg
authority.

(e)  Such Guarantor and each Subsidiary thereof is in compliance with the
requirements of all Laws and all orders, writs, injunctions and decrees
applicable to it or to its properties, except in such instances in which
(i) such requirement of Law or order, writ, injunction or decree is being
contested in good faith by appropriate proceedings diligently conducted, or (ii)
the failure to comply therewith, either individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.

(f)  This Guaranty and the other Loan Documents to which such Guarantor is a
party are and will be legal, valid and binding obligations of such Guarantor
enforceable against such Guarantor in accordance with their respective terms in
all respects.

(g)  No Default exists and no Event of Default has occurred and is continuing,
or would result after giving effect to the borrowing of any Loan.

(h)  Since the First Restatement Date, no event or condition has resulted in, or
could be reasonably expected to cause, either individually or in the aggregate,
a Material Adverse Effect.

(i)  There are no actions, suits, proceedings, claims or disputes pending or, to
the knowledge of such Guarantor after due and diligent investigation, threatened
or contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against such Guarantor or against any of its Subsidiaries,
properties or revenues that (i) could reasonably be expected to have a Material
Adverse Effect or (ii) purport to affect the legality, validity or
enforceability of this Guaranty or the other Loan Documents to which such
Guarantor is a party, or that involves a reasonable likelihood of prohibiting,
restricting, delaying or otherwise materially affecting the performance of any
of the Loan Documents or the making or repayment of the Loans.

(j)  Neither such Guarantor nor any Subsidiary thereof is required to register
as an “investment company” as such term is defined in the United States
Investment Company Act of 1940.

4

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

 

(k)  Such Guarantor and each Subsidiary thereof owns all of its assets free and
clear of Liens, other than Liens permitted by Section 8(e), and has not made any
registrations, filings or recordations in any jurisdiction evidencing a security
interest in any of its assets including, but not limited to, the filing of a
register of mortgages, charges and other encumbrances or filings of financing
statements pursuant to UCC-1 or other comparable legislation applicable in
non-U.S. jurisdictions, other than with respect to Liens permitted by Section
8(e).

(l)  Such Guarantor and each Subsidiary thereof has filed all U.S. federal and
state tax returns and all other tax returns which are required to be filed by it
in all jurisdictions and has paid all taxes, assessments, claims, governmental
charges or levies imposed on it or its properties, except where the failure to
file such tax returns or pay such taxes or other amounts could not reasonably be
expected to have a Material Adverse Effect or for taxes contested in good faith
by appropriate proceedings diligently conducted and as to which adequate
reserves have been provided in accordance with GAAP.  Neither such Guarantor nor
any Subsidiary thereof has entered into an agreement or waiver or been requested
in writing to enter into an agreement or waiver extending any statute of
limitations relating to the payment or collection of taxes of such Person and is
not aware of any circumstances that would cause the taxable years or other
taxable periods of such Person not to be subject to the normally applicable
statute of limitations, except as would not reasonably be expected to have a
Material Adverse Effect.

(m)  (i) The present fair value of such Guarantor’s assets exceeds the total
amount of such Guarantor’s liabilities (including, without limitation,
contingent liabilities), (ii) such Guarantor has capital and assets sufficient
to carry on its businesses, (iii) such Guarantor is not engaged and is not
contemplating engagement in a business or a transaction for which its remaining
assets are unreasonably small in relation to such business or transaction,
(iv) such Guarantor does not intend to incur or believe that it will incur debts
beyond its ability to pay as they become due, and (v) such Guarantor will not be
rendered insolvent by the execution, delivery and performance of documents
relating to this Guaranty or by the consummation of the transactions
contemplated under this Guaranty, provided that no representation or warranty in
this subsection (m) is provided with respect to RTK CAB LLC, Rentech Services
Corporation, SilvaGas Corporation, GCSEC Holdings, LLC, Gulf Coast Synthetic
Energy Center, LLC, RTK WP3 Canada, ULC, RTK WP Dev Canada, ULC, RTK WP4 Canada,
ULC, RTK WP5 Canada, ULC, RTK Canada Energy Holdings ULC, Olympiad Renewable
Energy Centre, ULC, and Rentech Energy Technology Center, LLC.

(n)  Such Guarantor has complied with its applicable reporting obligations, if
any, with respect to the Underlying Equity and the Loan Documents (i) under
Sections 13 and 16 of the Exchange Act, including any required filings with the
SEC and (ii) under applicable securities laws of any other jurisdiction.

(o)  Such Guarantor has not engaged in or entered into any transaction
prohibited under Section 2.15 of the Credit Agreement.

(p)  Neither such Guarantor nor any Subsidiary thereof nor any of the assets,
properties or revenues of any such Person has any right of immunity on the
grounds of sovereignty or otherwise from jurisdiction of any court or from
setoff or any legal process (whether through service or notice, attachment prior
to judgment, attachment in aid of execution, execution or otherwise) under the
Law of any jurisdiction.

(q)  The Guaranteed Obligations constitute direct, general, unconditional and
unsubordinated Debt of such Guarantor and rank pari passu in right of payment
with all other senior Debt of such Guarantor.  The Guaranty is not entered into
by such Guarantor with the intent of facilitating a disposition of the
Collateral Shares.

5

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

 

(r)  All written information provided with respect to such Guarantor and its
Affiliates by or on behalf of such Guarantor to Administrative Agent or any
Lender in connection with the negotiation, execution and delivery of this
Guaranty and the other Loan Documents or the transactions contemplated hereby
and thereby including, but not limited to, any financial statements provided to
Administrative Agent, was or will be, on or as of the applicable date of
provision thereof, when taken as a whole, complete and correct in all material
respects and did not (or will not) contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements contained
therein not misleading in light of the time and circumstances under which such
statements were made.

(s)  All financial statements delivered or to be delivered to Administrative
Agent pursuant to Section 7(b)(i) and (ii) of this Guaranty or Sections 3.01 or
5.01(b) of the Credit Agreement have been or will be prepared in accordance with
GAAP consistently applied and do or will, in all material respects, present
fairly the financial condition of the Persons covered thereby as at the dates
thereof and the results of their operations for the periods then ended.

(t)  Each material agreement to which such Guarantor or any Subsidiary thereof
is a party that requires an 8-K filing by or on behalf of such Person with the
SEC is in full force and effect, and neither such Guarantor nor any Subsidiary
thereof is in default under any provision of any indenture, mortgage, deed of
trust, credit agreement, loan agreement or any other material agreement or
instrument to which such Person is a party or by which such Person or any of its
properties or assets is bound which could reasonably be expected to result in a
Material Adverse Effect.

(u)  All licenses, permits, approvals, concessions or other authorizations
necessary to the conduct of the business of such Guarantor have been duly
obtained and are in full force and effect, except where the failure to obtain
and maintain any of the foregoing could not reasonably be expected to result in
a Material Adverse Effect.  There are no restrictions or requirements which
limit such Guarantor’s ability to lawfully conduct its business or limit such
Guarantor’s ability to perform its obligations under this Guaranty or any other
Loan Document.

(v)  No Guarantor nor any Subsidiary thereof is engaged in any business in the
United States other than as described in its Constituent Documents, if any.

(w)  Such Guarantor understands that upon the occurrence of an Event of Default
and the exercise of remedies pursuant to the Loan Documents, (i) the Collateral
may be sold which may result in substantially discounted realization value with
respect to the Collateral compared with the then market price and (ii)(A) a bulk
sale of the Collateral may occur which may result in a substantially discounted
realization value with respect to the Collateral compared to the then current
market price and (B) a private sale of the Collateral may occur which may result
in less proceeds than a public sale. Such Guarantor acknowledges and agrees that
(x) any such bulk sale or private sale shall be a commercially reasonable
disposition under the Uniform Commercial Code or other applicable laws
notwithstanding any loss to it from a lower sale price, (y) the Lender Parties
shall not have any liability or responsibility for any losses to such Guarantor
or Borrower arising from any such exercise of remedies, and (z) any such bulk
sale or private sale shall not affect the validity or enforceability of this
Guaranty or the obligations of such Guarantor hereunder.

(x)  Schedule 6(x) sets forth as of the Second Restatement Date a list of all
Subsidiaries of the Guarantors and all other Equity Interests owned, directly or
indirectly, by the Guarantors.  All such Equity Interests are fully paid and
non-assessable.

(y)  (i) Except as could not reasonably be expected to result in a Material
Adverse Effect, (A) each Plan has been maintained in compliance with the
applicable provisions of the Internal Revenue Code

6

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

 

and ERISA; (B) no ERISA Event has occurred or is reasonably expected to occur;
and (C) as of the most recent valuation date, the present value of all
accumulated benefits under each Pension Plan (based on the assumptions used for
purposes of Accounting Standards Codification No. 715: Compensation-Retirement
Benefits) do not exceed the fair market value of the assets of such Pension Plan
allocable to such accrued benefits; and (ii) the underlying assets of any
Guarantor do not constitute Plan Assets (provided that any reference to Borrower
in any embedded definitions in the Credit Agreement shall be construed to refer
to Parent Guarantor for purposes of this Section 6(y)).

(z)(i)  There is no pending or, to such Guarantor’s knowledge, threatened,
Environmental Claim against such Guarantor or each Subsidiary thereof or any
properties or assets owned, leased or operated by such Person, and such
Guarantor and any Subsidiary thereof has not received any notice of any such
Environmental Claim, and no proceeding has been instituted raising any such
Environmental Claim, except as could not, in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

(ii)  Such Guarantor and each Subsidiary thereof has obtained all Permits that
are required pursuant to Environmental Law for the operation of its business and
all such Permits are in full force and effect, except as could not, in the
aggregate, reasonably be expected to result in a Material Adverse Effect.

(iii)  Such Guarantor does not have knowledge of any facts which could
reasonably be expected to give rise to any Environmental Claim, public or
private, including any violation of Environmental Laws, any Release of Hazardous
Materials or any damage to the Environment emanating from, occurring on or in
any way related to any real properties or other assets now or formerly owned,
leased or operated by such Guarantor or any Subsidiary thereof, except such as
could not, in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

(iv)  No Hazardous Materials have been used, generated, manufactured, stored,
Released, transported or treated by any such Guarantor nor any Subsidiary
thereof or on, at, under or from any real properties or other assets now or
formerly owned, leased or operated by such Person, except, in the case of any of
the foregoing, (A) in the ordinary course of business or (B) in a manner that
could not, in the aggregate, reasonably be expected to result in a Material
Adverse Effect.

(aa)(i)  Neither such Guarantor nor any of its Subsidiaries are, and to such
Guarantor’s knowledge none of its or their respective Affiliates are, in
violation of any requirement of Law relating to terrorism or money laundering
(collectively, “AML Laws”), including, but not limited to, Executive Order No.
13224 on Terrorist Financing, effective September 24, 2001 (the “Executive
Order”), the Patriot Act, and any other enabling legislation or executive order
relating thereto, and other federal, provincial, state, local or foreign laws
relating to “know your customer” and antimony laundering rules and regulations.

(ii)  Neither such Guarantor nor any of its Subsidiaries and, to such
Guarantor’s knowledge, none of its or their respective Affiliates and no broker
or other agent of any Loan Party acting in any capacity in connection with the
Loan Documents is any of the following: (A) a Person that is listed in the annex
to, or is otherwise subject to the provisions of, the Executive Order or any
other applicable OFAC regulation; (B) a Person owned or controlled by, or acting
on behalf of, any Person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order or any other applicable OFAC
regulation; (C) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any applicable AML Law; (D) a Person
that commits, threatens or conspires to commit or supports “terrorism”

7

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

 

as defined in the Executive Order or other applicable OFAC regulations; or (E) a
Person that is named as a “specially designated national” or “blocked person” on
the most current list published by OFAC at its official website, currently
available at www.treas.gov/offices/enforcement/ofac/ or any replacement website
or other replacement official publication of such list.

(iii)  Neither such Guarantor nor any of its Subsidiaries and, to such
Guarantor’s knowledge, none of its or their respective Affiliates and no broker
or other agent of any Loan Party acting in any capacity in connection with the
Facility (A) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any person
described in clause (ii) above, (B) deals in, or otherwise engages in any
transaction relating to, any property or interests in property blocked pursuant
to the Executive Order or other applicable OFAC regulations, or (C) engages in
or conspires to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in any applicable AML Law.

(iv)  No part of the proceeds of any Loan will be used directly or indirectly
for any payments to any government official or employee, political party,
official of a political party, candidate for political office, or anyone else
acting in an official governmental capacity, in order to obtain, retain or
direct business or obtain any improper advantage, in violation of any applicable
Laws.

If such Guarantor acquires or forms any Subsidiary, each of the foregoing
representations and warranties referring to any Subsidiary of such Guarantor
shall be thereafter deemed modified to cover, on a prospective basis, such
Guarantor and its respective Subsidiaries (including such Guarantor’s newly
acquired or formed Subsidiary), mutatis mutandis.

7.  Affirmative Covenants.  Parent Guarantor shall, and shall cause each
Subsidiary thereof to:

(a)  Existence.  Preserve and maintain its existence and material rights and
franchises; provided that any Subsidiary may merge, consolidate or take any
actions that may terminate its existence and/or material rights and franchises,
as permitted under Section 8(f).

(b)  Reporting Requirements. Furnish to Administrative Agent or cause to be
furnished to Administrative Agent:

(i)  as soon as available, but in any event within ninety (90) days after the
end of each of its fiscal years, Parent Guarantor’s annual audited consolidated
financial statements, including all notes thereto, which statements shall
include a consolidated statement of financial position as of the end of the
relevant fiscal year and a statement of operations and a statement of cash flows
for such fiscal year, all setting forth in comparative form the corresponding
figures from the previous fiscal year, all prepared in conformity with GAAP and
accompanied by an unqualified report and opinion of independent certified public
accountants with an accounting firm of national standing and reputation, which
shall state that such financial statements, in the opinion of such accountants,
present fairly, in all material respects, the consolidated financial position of
Parent Guarantor as of the date thereof and the results of its operations and
cash flows for the period covered thereby in conformity with GAAP, consistently
applied;

(ii)  as soon as available, but in any event no later than forty-five (45) days
after the end of each of the first three fiscal quarters of each fiscal year of
Parent Guarantor, Parent Guarantor’s quarterly unaudited consolidated financial
statements prepared in respect of such fiscal quarter and for the portion of
Parent Guarantor’s fiscal year then ended, in each case setting

8

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

 

forth in comparative form, as applicable, the figures for the corresponding
fiscal quarter of the previous fiscal year and the corresponding portion of the
previous fiscal year, all in reasonable detail, certified by a Responsible
Officer of Parent Guarantor as fairly presenting the financial condition,
results of operations, shareholders’ equity and cash flows of Parent Guarantor
in accordance with GAAP, subject only to normal year-end audit adjustments and
the absence of footnotes;

(iii)  concurrently with such distributions or filing with the SEC, copies of
all financial reports distributed by or on behalf of Parent Guarantor to all of
its shareholders;

(iv)  no later than thirty (30) days after the start of each calendar year, a
consolidated budget for Parent Guarantor and its Subsidiaries for such calendar
year;

(v)  [intentionally omitted];

(vi)  [intentionally omitted];

(vii)  copies of all general communications delivered by Parent Guarantor to all
shareholders of Parent Guarantor within two (2) Business Days of the day such
communications were first delivered to such shareholders or filed with the SEC;
and

(viii)  promptly, and in any event within two (2) Business Days after receipt
thereof by Parent Guarantor or any Affiliate of Parent Guarantor, copies of each
notice or other correspondence received from the SEC concerning any
investigation or possible investigation or other similar inquiry by such agency
regarding Parent Guarantor or any Loan Party (for the avoidance of doubt,
routine trading inquiries not involving any Loan Party shall not be covered by
this clause (viii));

(ix)  as soon as possible and in any event within two (2) Business Days after
Parent Guarantor obtains actual knowledge of the occurrence of (A) any Event of
Default or Default, (B) any actual or threatened litigation which, if adversely
determined to Parent Guarantor or any Subsidiary thereof, could reasonably be
expected to result in a Material Adverse Effect or (C) any event which could
reasonably be expected to result in a Material Adverse Effect, in each case, a
statement of a Responsible Officer of Parent Guarantor setting forth the details
thereof and the action which Parent Guarantor or such Subsidiary has taken and
proposes to take with respect thereto;

(x)  [intentionally omitted];

(xi)  promptly after request therefor, such other business and financial
information respecting the condition or operations, financial or otherwise, of
Parent Guarantor, other than MNPI, as Administrative Agent may from time to time
reasonably request; and

(xii)  promptly but in any event within twenty (20) days after any Guarantor
knows, or has reason to know, that any ERISA Event has occurred or will occur
(provided that any reference to Borrower in any embedded definitions in the
Credit Agreement shall be construed to refer to Parent Guarantor for purposes of
this clause (xii)).

Each Guarantor shall use commercially reasonable efforts to not provide any MNPI
in any document or notice required to be delivered pursuant to, or in connection
with, this Guaranty or any other Loan Document to any Lender Party.  Each
Guarantor acknowledges and agrees that

9

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

 

if any Lender Party or any of its Affiliates, acting in such capacities in
connection with the Facility, received from any Guarantor or any of its
Affiliates any such MNPI, such Lender Party or Affiliate may disclose such MNPI
publicly in connection with any foreclosure conducted in connection with any
property of a Guarantor.

Each Guarantor hereby acknowledges that the Lender Parties acting in their
respective capacities in connection with this Guaranty and any other Loan
Document as such do not wish to receive MNPI.  Each Guarantor hereby agrees that
upon provision of any materials or information provided by or on behalf of such
Guarantor hereunder (collectively, “Guarantor Materials”), such Guarantor shall
be deemed to (x) have represented that such Guarantor Materials contain no MNPI
and (y) have authorized each Lender Party to treat such Guarantor Materials as
not containing any MNPI; provided, however, that (i) to the extent such
Guarantor Materials constitute Information, they shall be treated as set forth
in Section 8.12 of the Credit Agreement and (ii) to the extent such Guarantor
Materials contains MNPI, such Guarantor shall so notify the Lender
Parties.  Each Lender Party acknowledges that such Guarantor may withhold
information otherwise required to be delivered pursuant to any Loan Document to
the extent such Guarantor believes in good faith that such information
constitutes MNPI, and such Guarantor shall not be deemed to have failed to
comply with any requirement to deliver such information.

Documents required to be delivered pursuant to clause (i), (ii), (iii) or (vii)
above may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date on which Parent Guarantor posts such documents,
or provides a link thereto on Parent Guarantor’s website on the Internet at the
website address listed in Section 8.02 of the Credit Agreement; provided that:
(i) if Administrative Agent so requests, Parent Guarantor shall deliver paper
copies of such documents to Administrative Agent until a written request to
cease delivering paper copies is given by Administrative Agent and (ii) Parent
Guarantor shall notify (which may be by facsimile or electronic mail)
Administrative Agent of the posting of any such documents. For the avoidance of
doubt, Parent Guarantor may deliver any documents via facsimile or electronic
mail in accordance with Section 8.02 of the Credit Agreement.

(c)  Payment of Obligations.  Pay and discharge as the same shall become due and
payable, all its material obligations and liabilities, including: (i) all
material taxes, assessments, claims and governmental charges or levies imposed
upon it or upon its property; provided, however, that such Person shall not be
required to pay or discharge any such tax, assessment, claim or charge that is
being diligently contested in good faith and by proper proceedings and as to
which appropriate reserves are being maintained; and (ii) all lawful claims
which, if unpaid, would become a Lien on its property.

(d)  Keeping of Books.  Keep proper books of record and account as are necessary
to prepare financial statements in accordance with GAAP or with the generally
accepted accounting principles applicable to the relevant Subsidiary in its
jurisdiction of incorporation as may be approved by a significant segment of the
accounting profession in such jurisdiction that are applicable to the
circumstances as of the date of determination, consistently applied.

(e)  Inspection Rights.  At any reasonable time during normal business hours and
upon reasonable prior notice, from time to time permit any Lender Party or any
agent or representative thereof (in each case, subject to Section 8.12 of the
Credit Agreement) to (i) visit and inspect the properties of such Person and
discuss the affairs, finances, assets and accounts of such Person with any of
such Person’s officers, directors or other representatives and (ii) discuss the
affairs, finances, assets and accounts of such Person with such Person’s
independent certified public accountants and to examine and make copies of and
abstracts from their records and books of account, all at the expense of such
Guarantor; provided, however, that after the occurrence of an Event of Default,
any Lender Party (or any of their respective

10

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

 

representatives or independent contractors) may do any of the foregoing at the
expense of such Guarantor at any time during normal business hours and without
advance notice.

(f)  Compliance with Laws.  Comply with all disclosure / filing requirements of
applicable Law associated with entering into the Guaranty and the other Loan
Documents, as applicable, and comply with all other requirements of all Laws and
all orders, writs, injunctions and decrees applicable to it or to its business
or property, except in such instances in which (i) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings diligently conducted; or (ii) the failure to comply
therewith could not reasonably be expected to result in a Material Adverse
Effect.

(g)  Compliance with Environmental Laws.

(i)  Comply with all Environmental Laws, except such non-compliance as could
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

(ii)  Obtain, maintain in full force and effect and comply with all Permits
necessary to the ownership and operation of its properties and assets or to the
conduct of its business, except to the extent that a failure to do so could not,
in the aggregate, reasonably be expected to have a Material Adverse Effect.

(iii)  Comply in a timely manner with all Environmental Laws including those
relating to the Release of Hazardous Materials, together with any other
applicable legal requirements for conducting, on a timely basis, periodic tests,
monitoring and remediation of contamination of the Environment, and diligently
comply with the regulations of the United States Environmental Protection Agency
and other applicable Governmental Authorities, except where the failure to do so
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

(h)  AML Laws.  Carry out its business in compliance with, and direct its
Affiliates to carry out their businesses to enable each Guarantor to comply
with, each of the representations and warranties under Section 6(aa).

(i)  Minimum Liquidity.  At all times, the Guarantors, taken as a single group,
shall   maintain at least $5 million aggregate amount of Unrestricted Cash.

(j)  Joinder of Emancipated Subsidiaries.  Within twenty (20) days after the
date of the termination or ineffectiveness of any restriction arising under
applicable Law or contract that restricts or prevents any Subsidiary  from
becoming a Guarantor hereunder or becoming a party to any Security Document that
otherwise would be applicable to such Subsidiary, Parent Guarantor shall cause
such Subsidiary, to the extent it is then permitted to do so under applicable
Law and the agreements to which it is a party or is subject, to enter into the
documents referred to in Section 8(n) of this Guaranty.

(k)  Insurance.  Parent Guarantor will (i) use commercially reasonable efforts
after the Second Restatement Date to cause all insurance policies covering it
and the other Guarantors to provide that no cancellation, material reduction, or
material change in coverage of any such insurance will become effective until at
least thirty (30) days after receipt by the Administrative Agent of written
notice thereof and (ii) prior to the time such notice obligation is contained in
all of its insurance policies, provide notice to the Administrative Agent as
soon as it becomes aware that any such cancellation, material reduction, or
material change in coverage has occurred or will occur.  The provisions of this
Section 7(k) are without prejudice to other obligations that the Parent
Guarantor and the other Guarantors have under the Loan Documents with regard to
insurance.  

11

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

 

(l)  Further Assurance. Upon the request of Administrative Agent, execute and/or
deliver any additional agreements, documents and instruments, and take such
further actions as may be reasonably requested by Administrative Agent from time
to time, to carry out the provisions and purposes of this Guaranty and the other
Loan Documents.

8.  Negative Covenants.  Parent Guarantor shall not, directly or indirectly, nor
shall it permit any Subsidiary thereof to, directly or indirectly:

(a)  Restricted Transactions. Enter into any transactions prohibited by Section
2.15 of the Credit Agreement, or take any action which could reasonably be
expected to create any restrictions on transfer or disposition of the Collateral
Shares or otherwise cause the representations and warranties in Section 4.01(o)
or (p) of the Credit Agreement to be inaccurate as of any date.

(b)  Investment Company. Become an “investment company,” as such term is defined
in the United States Investment Company Act of 1940.

(c)  Compliance with Margin Regulations. Take any action with respect to the
Loan Documents that would result in a violation of Regulation T, U, or X.

(d)  Additional Debt.  Create, incur, assume or suffer to exist any Debt, other
than (i) Debt incurred pursuant to the Loan Documents, (ii) Debt of any Loan
Party owing to another Loan Party, in each case, for intercompany loans or
advances, (iii) Debt of any Subsidiary that is not a Loan Party owing to another
Subsidiary that is not a Loan Party, in each case, for intercompany loans or
advances, (iv) Debt of any Loan Party owing to any Subsidiary that is not a Loan
Party, in an aggregate outstanding principal amount at any time not exceeding
$5,000,000, in each case, for intercompany loans or advances, (v) [intentionally
omitted], (vi) Debt of any Subsidiary that is not a Loan Party owing to any Loan
Party, in an aggregate outstanding principal amount at any time not exceeding
$3,000,000, for intercompany loans or advances, (vii) Debt existing on the date
hereof and listed on Schedule 8(d), and extensions, renewals, refinancings and
replacements thereof, provided that (x) for all Debt listed on Schedule 8(d)
other than the Debt described in clauses (10) – (20) thereof, no such extension,
renewal, refinancing or replacement shall add additional obligors in respect of
such Debt or result in an increase in the outstanding principal amount of such
Debt in excess of that in effect immediately prior to giving effect to such
extension, renewal, refinancing or replacement except by an amount equal to any
premium, accrued interest, and reasonable fees and expenses incurred in
connection therewith and (y) for all Debt described in clauses (10) – (20) of
Schedule 8(d), no such extension, renewal, refinancing or replacement thereof
shall add additional obligors in respect of such Debt or result in an increase
in the outstanding principal amount of such Debt at any time in excess of
$22,000,000 and an amount equal to any premium, accrued interest, and reasonable
fees and expenses incurred in connection therewith, (viii) [intentionally
omitted], (ix) Debt under performance bonds or with respect to workers’
compensation claims, in each case incurred in the ordinary course of business,
in an aggregate outstanding amount at any time not exceeding $2,000,000, (x)
Debt consisting of capital lease obligations in an aggregate outstanding amount
at any time not exceeding $2,000,000, (xi) Debt described in clause (c) of the
definition of “Debt” in the Credit Agreement incurred in the ordinary course of
business and arising under unsecured Swap Agreements that are not speculative in
nature, in an aggregate outstanding amount at any time not exceeding $3,000,000,
(xii) Debt not exceeding $1,125,000 outstanding at any time incurred to finance
the payment of property insurance premiums relating to its wood fiber business,
(xiii) [intentionally omitted], (xiv) [intentionally omitted], and (xv) other
Debt in an amount not exceeding $1,000,000 in the aggregate at any time.

(e)  Limitation of Liens.  Create, incur, assume or suffer to exist any Lien,
other than (i) Liens created under the Loan Documents, (ii) Liens existing on
the date hereof and listed in clause (1) of Schedule 8(e) and Liens securing
extensions, refinancings, renewals and replacements thereof of the Debt

12

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

 

secured thereby, provided that no such extension, renewal, refinancing or
replacement shall add additional obligors in respect of such Debt or result in
an increase in the outstanding principal amount (except as permitted pursuant to
Section 8(d)(vii)(y) above) of obligations secured by such Lien or the assets
covered by such Lien in excess of that in effect immediately prior to giving
effect to such extension, renewal, refinancing or replacement except by an
amount equal to any premium, accrued interest, and reasonable fees and expenses
incurred in connection therewith, (iii) [intentionally omitted], and (iv) Liens
described in clauses (2) through (12) of Schedule 8(e).

(f)  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 property and assets (whether now
owned or hereafter acquired) to any Person, except that any Subsidiary of Parent
Guarantor (other than Borrower) (i) may merge or consolidate with or into Parent
Guarantor or convey, transfer, lease or otherwise dispose of, all or
substantially all of its property and assets to Parent Guarantor, provided that
Parent Guarantor shall be the surviving Person, or (ii) may merge or consolidate
with or into any other Loan Party (other than Fulghum Fibres, Inc.) or convey,
transfer, lease or otherwise dispose of, all or substantially all of its
property and assets to another Loan Party (other than Fulghum Fibres, Inc.),
provided that the surviving Person is a Loan Party.

(g)  [Intentionally Omitted].  

(h)  No New Business.  Engage in any business other than (i) the business it is
principally engaged in on the Second Restatement Date and (ii) any business
transactions expressly permitted by the terms of the Loan Documents.

(i)  No Amendment of Constituent Documents, Etc.  Amend, supplement or otherwise
modify, or consent to any amendment, supplement or other modification of, any of
the terms or provisions of its Constituent Documents that could reasonably be
expected to have an adverse effect on any Loan Party or Lenders.

(j)  Restricted Payments.  Declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payments or incur any obligation to do so, except
that (i) each Subsidiary of Parent Guarantor may make Restricted Payments to
Parent Guarantor or any other Subsidiary of Parent Guarantor that directly owns
Equity Interests in such Person (and, in the case of any Subsidiary of Parent
Guarantor that is not wholly-owned by a Subsidiary of Parent Guarantor,
Restricted Payments may be made pro rata to the other shareholders of such
Subsidiary) and (ii) with the prior written consent of the Required Lenders,
Parent Guarantor may make Restricted Payments so long as no Default or Event of
Default has occurred and is continuing or would result therefrom.

(k)  Loans and Investments. (i) Lend money or credit, make advances to, or
provide guarantees or credit support for the benefit of, any Person except (x)
in connection with Debt permitted pursuant to Section 8(d)(ii) – (vi) or
8(d)(xiii) or (y) for guarantees or credit support provided in the ordinary
course of business and consistent with past practice in an aggregate outstanding
principal amount at any time not exceeding $2,500,000 or (ii) purchase or
acquire any stock, obligations or securities of, or any other interest in, or
make any capital contribution to, any other Person other than to (x) Loan
Parties (other than Fulghum Fibres, Inc.) or (y) Subsidiaries formed or acquired
in compliance with Section 8(n).

(l)  Disposition of Assets.  Dispose of any asset, other than (i) any
Disposition in a single transaction or series of related transactions that
involves assets having a fair market value or that results in generating Net
Cash Proceeds, in either case, of less than $2,000,000, (ii) any Disposition of
inventory in the ordinary course of business, (iii) any Disposition of damaged,
worn-out or obsolete assets in the ordinary course of business, (iv) any
Disposition of Underlying Equity that does not constitute Collateral,

13

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

 

(v) [intentionally omitted], or (vi) any Disposition in a single transaction or
series of related transactions that results in generating Net Cash Proceeds of
greater than or equal to $2,000,000; provided that Borrower makes an offer to
prepay a principal amount of the Loans in an amount equal to the difference of
(x) such Net Cash Proceeds and (y) prepayments the applicable Subsidiary is
required to make pursuant to the terms of Debt documentation applicable to such
Subsidiary listed on Schedule 8(d), in accordance with Section 2.05(c) of the
Credit Agreement.

(m)  Transactions with Affiliates.  Enter into any transaction with or make any
payment or transfer to any Affiliate of Parent Guarantor, except (i) for any
such transaction with, or payment or transfer to, a Loan Party (other than
Fulghum Fibres, Inc.), (ii) for any such transaction with, or payment or
transfer between Subsidiaries who are not Loan Parties, (iii) for any such
transaction with, or payment or transfer between Fulghum Fibres, Inc. and
Subsidiaries who are not Loan Parties, (iv) in the ordinary course of business
and upon fair and reasonable terms no less favorable to such Person than would
be obtained in a comparable arm’s-length transaction with a Person not an
Affiliate of Parent Guarantor or (v) as expressly permitted hereunder, provided
that any transaction or payment or transfer referred to in clauses (i) through
(v) of this subsection (m) is otherwise permitted by the terms of the Loan
Documents.

(n)  Formation of Subsidiaries. Form, create, organize, incorporate or acquire
any direct or indirect Subsidiary (other than a Subsidiary of a Group Entity
that is not a Loan Party) (the foregoing, a “New Subsidiary”), unless (i) the
holders of the Equity Interests in such New Subsidiary simultaneously deliver to
the Administrative Agent a supplement to Schedule 2(a) of the Pledge Agreement
(Other Equity) and all certificates, investment securities and other instruments
and documents which are part of such Equity Interests, and otherwise comply with
the terms of the Pledge Agreement (Other Equity) (or applicable foreign law
equivalent) with respect thereto and (ii) such New Subsidiary simultaneously
executes and delivers to the Administrative Agent (A) an Addendum to Guaranty in
compliance with Section 27, (B) an Addendum to Security Agreement (as defined in
the Security Agreement) in compliance with Section 25 of the Security Agreement
(or applicable foreign law equivalent), (C) an Acknowledgment substantially in
the form of a Group Entity Acknowledgment and (D) if such New Subsidiary owns
any Equity Interests, an Addendum to Pledge Agreement (as defined in the Pledge
Agreement (Other Equity)) in compliance with Section 10 of the Pledge Agreement
(Other Equity) (or applicable foreign law equivalent).

(o)  ERISA.  (i) Establish any new Pension Plan; or (ii) without the approval of
all Lenders, take any action that would cause its underlying assets to
constitute Plan Assets (provided that any reference to Borrower in the embedded
definitions in the Credit Agreement shall be construed to refer to Parent
Guarantor for purposes of this Section 8(o)).

(p)  Restrictions on Subsidiary Restricted Payments and Loans.  Enter into or
suffer to exist or become effective any consensual encumbrance or restriction
that by its terms limits the ability of any Subsidiary of Parent Guarantor to
(x) make Restricted Payments in respect of any Equity Interests of such
Subsidiary held by, or pay any Debt owed to, Borrower or any Guarantor or (y)
provide loans or advances to Parent Guarantor or any other Loan Party, except
for such encumbrances or restrictions (i) existing under the Loan Documents or
agreements governing permitted Debt existing on the Second Restatement Date or
(ii) existing under agreements governing Debt permitted by Section 8(d) as long
as such restrictions and encumbrances are no more restrictive than those
existing on the Second Restatement Date.

9.  Covenants of Subsidiary Guarantors and Additional Guarantors.  Each
Subsidiary Guarantor and Additional Guarantor agrees to be bound by and to
comply with each covenant in Section 7 and Section 8 hereof insofar as each such
covenant is applicable to it or to the extent compliance by Parent Guarantor
with such covenant would require that such Subsidiary Guarantor or Additional
Guarantor take or refrain

14

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

 

from taking any action, and the compliance or non-compliance with each such
covenant shall be determined by reference to the actions of each Subsidiary
Guarantor or Additional Guarantor in addition to those of Parent
Guarantor.  Section 7 and Section 8 are hereby incorporated by reference as
direct covenants of each Subsidiary Guarantor and Additional Guarantor, mutatis
mutandis.

10.  Subrogation.  No Guarantor shall exercise any right of subrogation,
contribution, indemnity, reimbursement or similar rights with respect to any
payments it makes under this Guaranty until all of the Guaranteed Obligations
and any amounts payable under this Guaranty have been paid and performed in full
and any commitments of Administrative Agent or facilities provided by
Administrative Agent with respect to the Guaranteed Obligations are
terminated.  If any amounts are paid to any Guarantor in violation of the
foregoing limitation, then such amounts shall be held in trust for the benefit
of Administrative Agent and shall forthwith be paid to Administrative Agent to
reduce the amount of the Guaranteed Obligations, whether matured or unmatured.

11.  Termination; Reinstatement.  This Guaranty is a continuing and irrevocable
guaranty of all Guaranteed Obligations now or hereafter existing and shall
remain in full force and effect until all Guaranteed Obligations and any other
amounts payable (other than contingent indemnity obligations) under this
Guaranty are paid in full in cash and any commitments of Administrative Agent or
facilities provided by Administrative Agent with respect to the Guaranteed
Obligations are terminated.  Notwithstanding the foregoing, this Guaranty shall
continue in full force and effect or be revived, as the case may be, if any
payment by or on behalf of Borrower or any Guarantor is made, or Administrative
Agent exercises its right of setoff, in respect of the Guaranteed Obligations
and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement entered into by Administrative
Agent in its discretion) to be repaid to a trustee, receiver or any other party,
in connection with any proceeding under any Debtor Relief Laws or otherwise, all
as if such payment had not been made or such setoff had not occurred and whether
or not Administrative Agent is in possession of or has released this Guaranty
and regardless of any prior revocation, rescission, termination or
reduction.  The obligations of each Guarantor under this paragraph shall survive
termination of this Guaranty.

12.  Subordination.  Each Guarantor hereby subordinates the payment of all
obligations and indebtedness of Borrower owing to such Guarantor, whether now
existing or hereafter arising, including but not limited to, any obligation of
Borrower to such Guarantor as subrogee of Administrative Agent or any Lender
Party or resulting from such Guarantor’s performance under this Guaranty, to the
payment in full in cash of all Guaranteed Obligations.  If Administrative Agent
so requests, any such obligation or indebtedness of Borrower to such Guarantor
shall be enforced and performance received by such Guarantor as trustee for
Administrative Agent and the proceeds thereof shall be paid over to
Administrative Agent on account of the Guaranteed Obligations, but without
reducing or affecting in any manner the liability of such Guarantor under this
Guaranty.

13.  Stay of Acceleration.  In the event that acceleration of the time for
payment of any of the Guaranteed Obligations is stayed, in connection with any
case commenced by or against any Guarantor or Borrower under any Debtor Relief
Laws, or otherwise, all such amounts shall nonetheless be payable by such
Guarantor immediately upon demand by Administrative Agent.

14.  Expenses.  Each Guarantor jointly and severally agrees to pay on demand all
out-of-pocket expenses (including attorneys’ fees and expenses and the allocated
cost and disbursements of internal legal counsel) in any way relating to the
enforcement or protection of Administrative Agent’s rights under this Guaranty
or in respect of the Guaranteed Obligations, including any incurred during any
“workout” or restructuring in respect of the Guaranteed Obligations and any
incurred in the preservation, protection or enforcement of any rights of
Administrative Agent in any proceeding under any Debtor Relief Laws.  The
obligations

15

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

 

of each Guarantor under this paragraph shall survive the payment in full of the
Guaranteed Obligations and termination of this Guaranty.

15.  Miscellaneous.  No provision of this Guaranty may be waived, amended,
supplemented or modified, except by a written instrument executed by
Administrative Agent and each Guarantor.  No failure by Administrative Agent to
exercise, and no delay in exercising, any right, remedy or power hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy or power hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy.  The remedies herein
provided are cumulative and not exclusive of any remedies provided by law or in
equity.  The unenforceability or invalidity of any provision of this Guaranty
shall not affect the enforceability or validity of any other provision
herein.  Unless otherwise agreed by Administrative Agent and each Guarantor in
writing, this Guaranty is not intended to supersede or otherwise affect any
other guaranty now or hereafter given by any Guarantor for the benefit of
Administrative Agent or any term or provision thereof.

16.  Condition of Borrower and Other Guarantors.  Each Guarantor acknowledges
and agrees that it has the sole responsibility for, and has adequate means of,
obtaining from Borrower and any other guarantor such information concerning the
financial condition, business and operations of Borrower and any such other
guarantor as such Guarantor requires, and that no Lender Party has any duty, and
such Guarantor is not relying on any Lender Party at any time, to disclose to
such Guarantor any information relating to the business, operations or financial
condition of Borrower or any other guarantor (the guarantor waiving any duty on
the part of any Lender Party to disclose such information and any defense
relating to the failure to provide the same).

17.  Survival of Representations.  All representations and warranties made
hereunder or in connection herewith shall survive the execution and delivery
hereof.  Such representations and warranties have been or will be relied upon by
Administrative Agent and each other Lender Party, regardless of any
investigation made by Administrative Agent or any other Lender Party or on their
behalf and notwithstanding that Administrative Agent or any other Lender Party
may have had notice or knowledge of any Default or Event of Default, and shall
continue in full force and effect as long as any Loan or any Guaranteed
Obligation hereunder shall remain unpaid or unsatisfied.

18.  No Advisory or Fiduciary Relationship.  In connection with all aspects of
each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
each Guarantor acknowledges and agrees that: (a)(i) the services regarding this
Guaranty provided by Administrative Agent, the other Lender Parties and their
respective Affiliates are arm’s-length commercial transactions between such
Guarantor and its Affiliates, on the one hand, and Administrative Agent and its
Affiliates and the other Lender Parties, on the other hand, (ii) such Guarantor
has consulted its own legal, accounting, regulatory and tax advisors to the
extent it has deemed appropriate, and (iii) such Guarantor is capable of
evaluating, and understands and accepts, the terms, risks and conditions of the
transactions contemplated hereby and by the other Loan Documents;
(b)(i) Administrative Agent and each other Lender Party is and has been acting
solely as a principal and, except as expressly agreed in writing by the relevant
parties, has not been, is not, and will not be acting as an advisor, agent or
fiduciary for such Guarantor or any of its Affiliates, or any other Person and
(ii) Administrative Agent and the other Lender Parties have no obligation to
such Guarantor or any of its Affiliates with respect to the transactions
contemplated hereby except those obligations expressly set forth herein and in
the other Loan Documents; and (c) Administrative Agent, the other Lender Parties
and their respective Affiliates may be engaged in a broad range of transactions
that involve interests that differ from those of such Guarantor and its
Affiliates, and Administrative Agent and the other Lender Parties have no
obligations to disclose any of such interests to such Guarantor or any of its
Affiliates.  To the fullest extent permitted by law, such Guarantor hereby
waives and releases any claims that it may have

16

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

 

against Administrative Agent, any other Lender Party or their respective
Affiliates with respect to any breach or alleged breach of agency or fiduciary
duty in connection with any aspect of any transaction contemplated hereby.

19.  USA PATRIOT Act Notice.  Each Lender Party that is subject to the Act (as
hereinafter defined) and Administrative Agent (for itself and not on behalf of
any other Lender Party) hereby notifies each Guarantor that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into
law October 26, 2001)) (the “Act”), it is required to obtain, verify and record
information that identifies each Guarantor, which information includes the name
and address of each Guarantor and other information that will allow such Lender
Party or Administrative Agent, as applicable, to identify each Guarantor in
accordance with the Act. Guarantor agrees to promptly provide any Lender Party
or Administrative Agent with all of the information requested by such Person to
the extent such Person deems such information reasonably necessary to identify
each Guarantor in accordance with the Act.

20.  Credit Agreement.  Each Guarantor acknowledges receipt of a copy of the
Credit Agreement, the Pledge Agreement, the Pledge Agreement (Other Equity), the
Group Entity Acknowledgments, the Security Agreement and the other Loan
Documents.

21.  Maximum Rate of Interest.  Notwithstanding anything contained in this
Guaranty or any other Loan Document to the contrary, no Guarantor resident in or
otherwise subject to the laws of Canada will be obliged to make any payment of
interest or other amounts payable to any Lender Party in excess of the amount or
rate that would be permitted by applicable Law or would result in the receipt by
the Lender Parties of interest at a criminal rate (with “interest” and “criminal
rate” being construed as contemplated under the Criminal Code (Canada)).  If the
making of any payment by such Guarantor would result in a payment being made
that is in excess of such amount or rate, the applicable Lender Party will
determine the payment or payments that are to be reduced or refunded, as the
case may be, so that such result does not occur.

22.  Interest Act (Canada).  For the purposes of this Guaranty, whenever
interest to be paid by a Guarantor resident in or otherwise subject to the laws
of Canada is to be calculated on the basis of 360 days or any other period of
time that is less than a calendar year, the yearly rate of interest to which the
rate determined pursuant to such calculation is equivalent is the rate so
determined multiplied by the actual number of days in the calendar year in which
the same is to be ascertained and divided by 360 or such other number of days in
such period, as the case may be.

23.  Setoff.  If an Event of Default shall have occurred and be continuing,
Administrative Agent and each other Lender Party, and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable Law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held, and other obligations (in whatever currency) at any time owing, by
Administrative Agent or such Lender Party or any such Affiliate, to or for the
credit or the account of each Guarantor against any and all of the obligations
of such Guarantor now or hereafter existing under this Guaranty or any other
Loan Document to Administrative Agent or such Lender Party or its Affiliates,
irrespective of whether or not such Person or Affiliate shall have made any
demand hereunder or under any other Loan Document and although such obligations
of such Guarantor may be contingent or unmatured or are owed to a branch, office
or Affiliate of such Person or Lender Party different from the branch, office or
Affiliate holding such deposit or obligated on such indebtedness.  The rights of
Administrative Agent and each Lender Party and its Affiliates under this Section
are in addition to other rights and remedies (including other rights of setoff)
that Administrative Agent and such Lender Party or its Affiliates may
have.  Each Lender Party agrees to notify such Guarantor and Administrative
Agent promptly after any such setoff and application; provided that the failure
to give such notice shall not affect the validity of such setoff and
application.  

17

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

 

24.  Indemnification; Consequential Damages and Survival.  

(a)  Each Guarantor jointly and severally agrees to indemnify Administrative
Agent (and any sub-agent thereof), each other Lender Party and each Related
Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the fees,
charges and disbursements of any counsel for any Indemnitee) incurred by any
Indemnitee or asserted against any Indemnitee by any third party or by any
Guarantor or any Related Party of any Guarantor arising out of, in connection
with, or as a result of (i) the execution or delivery of this Guaranty or any
other Loan Document, or any agreement or instrument contemplated hereby or
thereby, the performance by the parties hereto of their respective obligations
hereunder or thereunder or the consummation of the transactions contemplated
hereby or thereby, or the administration of this Guaranty and the other Loan
Documents, (ii) any Loan or the use or proposed use of the proceeds therefrom,
or (iii) any actual or prospective claim, litigation, investigation or
proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory, whether brought by a third party or by any Guarantor or any
Related Party of any Guarantor, and regardless of whether any Indemnitee is a
party thereto, provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted primarily from the gross negligence
or willful misconduct of such Indemnitee.  This Section 24(a) shall not apply
with respect to Taxes other than any Taxes that represent losses, claims,
damages, etc. arising from any non-Tax claim.

(b)  To the fullest extent permitted by applicable Law, each Guarantor shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Guaranty, any other Loan Document or any agreement or instrument
contemplated hereby, the transactions contemplated hereby or thereby, any Loan
or the use of the proceeds thereof.  No Indemnitee referred to in Subsection (a)
above shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed by it through
telecommunications, electronic or other information transmission systems in
connection with this Guaranty or the other Loan Documents or the transactions
contemplated hereby or thereby.

(c)  All amounts due under this Section shall be payable not later than ten (10)
Business Days after demand therefor.

(d)  The obligations of each Guarantor under this Section shall survive the
payment in full of the Guaranteed Obligations and termination of this Guaranty.

25.  Governing Law; Assignment; Jurisdiction; Notices.  This Guaranty shall be
governed by, and construed in accordance with, the law of the State of New York,
without giving effect to its conflict of laws provisions other than
Section 5-1401 of the New York General Obligations Law.  This Guaranty shall
(a) bind each Guarantor and its successors and assigns, provided that no
Guarantor may assign its rights or obligations under this Guaranty without the
prior written consent of Administrative Agent (and any attempted assignment
without such consent shall be void), and (b) inure to the benefit of
Administrative Agent and its successors and assigns and Administrative Agent
may, without notice to any Guarantor and without affecting any Guarantor’s
obligations hereunder, assign, sell or grant participations in the Guaranteed
Obligations and this Guaranty, in whole or in part.  Each Guarantor hereby
irrevocably (i) submits to the exclusive jurisdiction of the United States
District Court of the Southern District of the State of New York, and all
appropriate appellate courts or, if jurisdiction in such court is lacking, any
New York State court of competent jurisdiction sitting in New York County (and
all appropriate appellate courts), in any action or proceeding arising out of or
relating to this Guaranty or any other Loan

18

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

 

Document, (ii) agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State court or, to the
fullest extent permitted by applicable Law, in such Federal court, (iii) waives
to the fullest extent permitted by law (A) any objection that it may now or
hereafter have to the laying of venue of any action or proceeding arising out of
or relating to this Guaranty or any other Loan Document in any such Federal or
state court and (B) any defense asserting an inconvenient forum in connection
therewith, and (iv) 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
Guaranty or in any other Loan Document shall affect any right that
Administrative Agent or any Lender may otherwise have to bring any action or
proceeding relating to this Guaranty or any other Loan Document against any
Guarantor or the properties of such party in the courts of any
jurisdiction.  Each party hereto irrevocably consents to service of process in
the manner provided for notices in Section 8.02(a) of the Credit
Agreement.  Nothing in this Agreement will affect the right of any party hereto
to serve process in any other manner permitted by applicable Law.  Each
Guarantor agrees that Administrative Agent may disclose to any assignee of or
participant in, or any prospective assignee of or participant in, any of its
rights or obligations hereunder any and all information in Administrative
Agent’s possession concerning any Guarantor, this Guaranty and any security for
this Guaranty. All notices and other communications to any Guarantor and
Administrative Agent under this Guaranty shall be in writing and shall be
delivered in the manner set forth in Section 8.02 of the Credit Agreement to the
addresses specified therein for such Person.

26.  WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON
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 FACILITY DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

27.  Enforcement of Guaranty.  Administrative Agent may enforce this Guaranty
with respect to all or a portion of the Guaranteed Obligations. Each Guarantor
hereby acknowledges that no failure on the part of any Lender Party to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof nor shall the single or partial exercise of any such right preclude any
other or further exercise thereof or the exercise of any other right.  

28.  Judgment Currency.

(a)  If, for the purposes of obtaining judgment in any court, it is necessary to
convert a sum due to a Lender Party in any currency (the "Original Currency")
into another currency (the "Other Currency"), the Lender Parties and the
Guarantors agree, to the fullest extent that they may effectively do so, that
the rate of exchange used shall be that at which, in accordance with normal
banking procedures, such Lender Party could purchase the Original Currency with
the Other Currency on the Business Day preceding the day on which final judgment
is given or, if permitted by applicable law, on the day on which the judgment is
paid or satisfied.

29.  The obligations of any Guarantor not resident in the U.S. in respect of any
sum due in the Original Currency from it to a Lender Party under any of the Loan
Documents shall, notwithstanding any

19

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

 

judgment in any Other Currency, be discharged only to the extent that on the
Business Day following receipt by such Lender Party of any sum adjudged to be so
due in the Other Currency, the Lender Party may, in accordance with normal
banking procedures, purchase the Original Currency with such Other Currency.  If
the amount of the Original Currency so purchased is less than the sum originally
due to such Lender Party in the Original Currency, each Guarantor jointly and
severally agrees, as a separate obligation and notwithstanding the judgment, to
indemnify such Lender Party, against any loss, and, if the amount of the
Original Currency so purchased exceeds the sum originally due to such Lender
Party in the Original Currency, such Lender Party shall remit such excess to the
applicable Guarantor.

30.  Entire Agreement.  This Guaranty and the other Loan Documents constitute
the entire agreement between the parties hereto relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral or
written, between the parties hereto relating to the subject matter hereof.

31.  Additional Guarantors.  From time to time subsequent to the date hereof,
pursuant to Section 7(j) or Section 8(n), as the case may be, additional
Subsidiaries of Parent Guarantor or newly formed or acquired wholly-owned
Subsidiaries of Parent Guarantor may become parties hereto as additional
Guarantors (“Additional Guarantors”) by executing an Addendum to Guaranty
substantially in the form attached hereto as Exhibit A (an “Addendum to
Guaranty”).  Upon delivery of any Addendum to Guaranty to the Administrative
Agent, notice of which is hereby waived by the Guarantors, each such Additional
Guarantor shall be a Guarantor hereunder and shall be as fully a party hereto as
if such Additional Guarantor were an original signatory hereto as of the date of
such Addendum to Guaranty.  Each Guarantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or release
of any Guarantor hereunder, nor by any election of the Administrative Agent or
the Secured Parties not to cause any wholly-owned Subsidiary of Parent Guarantor
to become an Additional Guarantor hereunder.  This Guaranty shall be fully
effective as to any Guarantor that is or becomes a party hereto regardless of
whether any other Person becomes or fails to become or ceases to be a Guarantor
hereunder.

32.  Fulghum Fibres, Inc.  Notwithstanding anything in this Guaranty to the
contrary, it is not the intent of any party hereto to grant any security
interest in the assets of Fulghum Fibres, Inc. (other than equity interests in
Fulghum Fibres Chile S.A.).

33.  Limitation of Guaranty.  Any term or provision of this Guaranty or any
other Loan Document to the contrary notwithstanding, the maximum aggregate
amount for which any Guarantor shall be liable hereunder shall not exceed the
maximum amount for which such Guarantor can be liable without rendering this
Guaranty or any other Loan Document, as it relates to such Guarantor, subject to
avoidance under applicable requirements of Law relating to fraudulent conveyance
or fraudulent transfer (including the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act and Section 548 of title 11 of the United States
Code or any applicable provisions of comparable requirements of Law)
(collectively, “Fraudulent Transfer Laws”). Any analysis of the provisions of
this Guaranty for purposes of Fraudulent Transfer Laws shall take into account
the right of contribution established in Section 34 and, for purposes of such
analysis, give effect to any discharge of intercompany debt as a result of any
payment made under the Guaranty.

34.  Contribution.  To the extent that any Guarantor shall be required hereunder
to pay any portion of any Guaranteed Obligation exceeding the greater of (a) the
amount of the value actually received by such Guarantor and its Subsidiaries
from the Loans and other Obligations and (b) the amount such Guarantor would
otherwise have paid if such Guarantor had paid the aggregate amount of the
Guaranteed Obligations (excluding the amount thereof repaid by Borrower) in the
same proportion as such Guarantor’s net worth on the date enforcement is sought
hereunder bears to the aggregate net worth of all

20

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

 

the Guarantors on such date, then such Guarantor shall be reimbursed by such
other Guarantors for the amount of such excess, pro rata, based on the
respective net worth of such other Guarantors on such date.

35.  Amendment and Restatement.  This Guaranty amends and restates the Existing
Restated  Guaranty.  All obligations evidenced by the Existing Restated Guaranty
that remain outstanding and in effect as of the Second Restatement Date are
continued by this Guaranty with such modifications as are set forth herein.

36.  Certain Defined Terms.  The following terms shall have the following
meanings when used herein:

“Environment” shall mean ambient and indoor air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata or sediment and natural resources such as flora and fauna.

“Environmental Claim” shall mean any and all suits, demands, demand letters,
claims, Liens, notices of non-compliance or violation, notices of liability or
potential liability, investigations, adversarial proceedings, consent orders,
consent decrees or consent agreements arising out of or pursuant to any
Environmental Law, the presence or Release of, or human exposure to, any
Hazardous Material or natural resource damages.

“Environmental Law” shall mean, collectively, all applicable federal,
provincial, state, local or foreign laws, including common law, ordinances,
regulations, rules, legal codes, orders, judgments or other Law that relate to
(a) the prevention, abatement or elimination of pollution, or the protection or
preservation of the Environment, wildlife or natural resources, (b) the use,
generation, handling, treatment, storage, Release, transportation or regulation
of, or exposure to, Hazardous Materials and (c) the protection of employee
health and workplace safety, including the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., the Endangered
Species Act, 16 U.S.C. §§ 1531 et seq., the Solid Waste Disposal Act, as amended
by the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., the
Clean Air Act, 42 U.S.C. §§ 7401 et seq., the Clean Water Act, 33 U.S.C. §§ 1251
et seq., the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq., the
Emergency Planning and Community Right to Know Act, 42 U.S.C. §§ 11001 et seq.,
and the Oil Pollution Act of 1990, 33 U.S.C. §§ 2701 et seq., each as amended,
and their applicable foreign, state or local counterparts or equivalents.

“Hazardous Materials” shall mean all pollutants, contaminants, wastes,
chemicals, materials, substances and constituents, including explosive or
radioactive substances or petroleum or petroleum distillates, asbestos or
asbestos containing materials, polychlorinated biphenyls or radon gas, of any
nature, in each case subject to regulation or which can give rise to liability
under any Environmental Law.

“NEWP” shall mean New England Wood Pellet, LLC, a Delaware limited liability
company.

“Permits” shall mean any and all franchises, licenses, leases, permits,
approvals, notifications, certifications, registrations, authorizations,
exemptions, qualifications, and other rights, privileges and approvals required
under or issued pursuant to any Law.

“Release” shall mean any placing, spilling, leaking, seepage, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
disposing or depositing or migrating in, onto or through the Environment.

[Remainder of Page Intentionally Left Blank]

 

 

21

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

 

Executed as of the date first set forth above.

Parent Guarantor:

RENTECH INC.

 

By:

/s/ Jeffrey R. Spain

Name:

Jeff Spain

Title:

Chief Financial Officer and Senior Vice President

 

Subsidiary Guarantors:

 

RENTECH DEVELOPMENT CORPORATION

RENTECH WP U.S. INC.

FULGHUM FIBRES, INC.

RTK WP HOLDINGS, ULC

RTK WP CANADA, ULC

RTK WP2 HOLDINGS, ULC

RTK WP2 CANADA, ULC

RTK WP3 CANADA, ULC

RTK WP4 CANADA, ULC

RTK WP5 CANADA, ULC

RTK WP DEV CANADA, ULC

RENTECH ENERGY TECHNOLOGY CENTER, LLC

RENTECH SERVICES CORPORATION

SILVAGAS CORPORATION

GCSEC HOLDINGS, LLC

GULF COAST SYNTHETIC ENERGY CENTER, LLC

RTK CANADA ENERGY HOLDINGS, ULC

OLYMPIAD RENEWABLE ENERGY CENTRE, ULC

RTK CAB LLC

 

 

By:

/s/ Colin Morris

Name:

Colin Morris

Title:

Authorized Signatory

 

Signature Page to Guaranty Agreement

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

 

RENTECH (LUXEMBOURG) WP,

 

 

Société à responsabilité limitée, registered office at 412F, route d’Esch,
L-2086 Luxembourg, with a share capital of CAD 19.980 L-1980 and registered with
the Luxembourg Register of Commerce and Companies under number B176704.

 

 

By:

/s/ Jeffrey R. Spain

Name:

Jeffrey Spain

Title:

Class A Manager

 

 

 

Signature Page to Guaranty Agreement

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

 

SCHEDULE 2

 

FOREIGN GUARANTORS

 

RTK WP HOLDINGS, ULC

RTK WP CANADA, ULC

RTK WP2 HOLDINGS, ULC

RTK WP2 CANADA, ULC

RTK WP3 CANADA, ULC

RTK WP4 CANADA, ULC

RTK WP5 CANADA, ULC

RTK WP DEV CANADA, ULC

RTK CANADA ENERGY HOLDINGS, ULC

OLYMPIAD RENEWABLE ENERGY CENTRE, ULC

RTK (LUXEMBOURG) WP S.A.R.L.

 

 

Schedule 2 to Guaranty

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

 

SCHEDULE 6(x)

 

SUBSIDIARIES AND EQUITY INTERESTS1

 

Guarantor

Subsidiary and Percentage Owned

 

Rentech, Inc.

 

Rentech Services Corporation (100%)

ClearFuels Technology, Inc. (95%)

Rentech Development Corporation (100%)

SilvaGas Corporation (100%)

GCSEC Holdings, LLC (100%)

RTK Canada Energy Holdings, ULC (100%)

DSHC, LLC (100%)

Rentech WP U.S. Inc. (100%)

 

Rentech Development Corporation

 

Rentech Nitrogen Holdings, Inc. (100%)

Rentech Energy Technology Center, LLC (100%)

 

Rentech Nitrogen Holdings, Inc.

 

None

 

GCSEC Holdings, LLC

 

Gulf Center Synthetic Energy Center , LLC (100%)

 

RTK Canada Energy Holdings, ULC

 

Olympiad Renewable Energy Centre, ULC (100%)

 

Rentech WP U.S. Inc.

 

RTK (Luxembourg) WP S.A.R.L. (100%)

Rentech Graanul LLC (50%)

Fulghum Fibres, Inc. (100%)

New England Wood Pellet, LLC (100%)

RTK CAB LLC (100%)

 

indirectly owned via RTK (Luxembourg) WP:

RTK WP Holdings, ULC (100%)

RTK WP2 Holdings, ULC (100%)

RTK WP Dev Canada ULC (100%)

 

indirectly owned via Rentech Graanul LLC:

Fulghum Graanul Oliver, LLC (100%)

Fulghum Graanul Woodland, LLC (100%)

 

indirectly owned via New England Wood Pellet, LLC:

Schuyler Wood Pellet, LLC (100%)

Deposit Wood Pellet, LLC (100%)

 

1 

To the extent entries would have been duplicative because a Guarantor is a
Subsidiary of another Guarantor, equity interests have been disclosed at the
level closest to the issuer of such equity interest.

Schedule 6(x) to Guaranty

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

 

Guarantor

Subsidiary and Percentage Owned

 

RTK WP Holdings, ULC

 

RTK WP Canada, ULC (100%)

 

RTK WP2 Holdings, ULC

 

RTK WP2 Canada, ULC (100%)

RTK WP3 Canada, ULC (100%)

RTK WP4 Canada, LLC (100%)

RTK WP5 Canada, ULC (100%)

 

Fulghum Fibres, Inc.

 

Fulghum Fibres Cullins, Inc. (100%)

Fulghum Fibres Florida, Inc. (100%)

Fulghum Fibrefuels, Ltd. (100%)

West Monroe Fibre Processing Company, Inc. (100%)

Fulghum Fibres New Zealand Limited (50%)

Fulghum Fibres Uruguay S.A. (87%)

Fulghum Fibres Chile S.A. (87.5%)

 

indirectly owned via Fulghum Fibres Chile S.A.:

Forestal Pacifico S.A. (99.9%)

Forestal Los Andes S.A. (99.9%)

 

 

Schedule 6(x) to Guaranty

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

 

SCHEDULE 8(d)

 

EXISTING DEBT2

 

 

1.

[intentionally omitted]

 

 

2.

Credit Agreement dated as of November 25, 2013 between Rentech, Inc. and Bank of
Montreal, as amended on April 8, 2014 in an amount up to $10,000,000.

 

 

3.

Guarantee Agreement, dated as of April 30, 2013 by Rentech, Inc. in favor or
Quebec Stevedoring Limited.

 

 

4.

Indemnity Agreement, dated June 7, 2013 by Rentech, Inc. in favor of Ontario
Power Generation.

 

 

5.

Note Purchase Agreement between Fulghum Fibres, Inc. and the ”Holders” (as
defined therein), dated November 24, 1997, as amended certain (i) First
Amendment to Note Purchase Agreement dated September 30, 1998, (ii) First [sic]
Amendment to Note Purchase Agreement dated May 9, 2000, (iii) Third Amendment to
Note Purchase Agreement dated November 21, 2001, (iv) Fourth Amendment to Note
Purchase Agreement dated December 1, 2002, (v) Fifth Amendment to Note Purchase
Agreement dated August 31, 2005, (vi) Sixth Amendment to Note Purchase Agreement
dated May 31, 2006, (vii) Seventh Amendment to Note Purchase Agreement dated
June 15, 2007, (viii) Eighth Amendment to Note Purchase Agreement dated July 25,
2008, (ix) Ninth Amendment to Note Purchase Agreement dated April 12, 2011, and
(x) Tenth Amendment to Note Purchase Agreement dated May 1, 2013, together with
the “Financing Documents” (as defined therein).  The aggregate outstanding
principal and accrued interest owing as of the Second Restatement Date is
approximately $35,000.

 

 

6.

Note Purchase Agreement dated September 30, 1998, between Fulghum Fibres
Florida, Inc., and the “Holders” (as defined therein), as amended by that
certain First Amendment to Note Purchase Agreement dated October 23, 2001, and
as amended and restated in that certain Amended and Restated Note Purchase
Agreement dated as of August 31, 2005, as amended by that certain (i) First
Amendment to Amended and Restated Note Purchase Agreement dated May 31, 2006
(ii) Second Amendment to Amended and Restated Note Purchase Agreement dated June
15, 2007, (iii) Third Amendment to Amended and Restated Note Purchase Agreement
dated July 25, 2008, (iv) Fourth Amendment to Amended and Restated Note Purchase
Agreement dated on or about April 12, 2011, and (v) Fifth Amendment to Amended
and Restated Note Purchase Agreement dated on May, 2013, together with the
“Financing Documents” (as defined therein).  The aggregate outstanding principal
and accrued interest owing as of the Second Restatement Date is approximately
$3,710,000.

 

 

7.

Note Purchase Agreement between Fulghum Fibres, Inc. and the “Holders” (as
defined therein), dated August 31, 2005, as amended by that certain (i) First
Amendment to 2005 (August) Note Purchase Agreement dated May 31, 2006, (ii)
Second Amendment to 2005 (August) Note Purchase Agreement dated June 15, 2007,
(iii) Third Amendment to 2005 (August) Note Purchase Agreement dated July 25,
2008, (iv) Fourth Amendment to 2005 (August) Note Purchase Agreement dated April
12, 2011, and (v) Fifth Amendment to 2005(August) Note

 

2 

Debt amounts for items 5-9 and 21 – 29 are calculated as of February 29, 2016
and debt amounts for items 10 – 20 are calculated as of March 31, 2016.

Schedule 8(d) to Guaranty

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

 

 

Purchase Agreement dated May 1, 2013, together with the “Financing Documents”
(as defined therein).  The aggregate outstanding principal and accrued interest
owing as of the Second Restatement Date is approximately $1,770,000. 

 

 

8.

[intentionally omitted]

 

 

9.

Note Purchase Agreement between Fulghum Fibres, Inc. and the “Holders” (as
defined therein), dated June 15, 2007, as amended by that certain (i) First
Amendment to Note Purchase Agreement dated July 25, 2008, (ii) Second Amendment
to Note Purchase Agreement dated April 12, 2011, and (iii) Third Amendment to
Note Purchase Agreement dated May 1, 2013, together with the “Financing
Documents” (as defined therein). The aggregate outstanding principal and accrued
interest owing as of the Second Restatement Date is approximately $22,810,000.

 

 

10.

Notes Payable in favor of Banco de Crédito e Inversiones by Fulghum Fibres
Chile, S.A. up to an aggregate amount of $31,000.

 

 

11.

Notes Payable in favor of Santader by Fulghum Fibres Chile, S.A. up to an
aggregate amount of $271,000.

 

 

12.

Notes Payable in favor of Security by Fulghum Fibres Chile, S.A. up to an
aggregate amount of $1,920,000.

 

 

13.

Notes Payable in favor of Scotiabank by Fulghum Fibres Chile, S.A. up to an
aggregate amount of $8,990,000.

 

 

14.

Notes Payable in favor of Corpbanca by Fulghum Fibres Chile, S.A. up to an
aggregate amount of $856,000.

 

 

15.

Notes Payable in favor of Banco de Chile by Fulghum Fibres Chile, S.A. up to an
aggregate amount of $1,850,000.

 

 

16.

Notes Payable in favor of Security by Forestal Los Andes S.A. up to an aggregate
amount of $1,300,000.

 

 

17.

Notes Payable in favor of Banco de Chile by Forestal Los Andes S.A. up to an
aggregate amount of $2,200,000.

 

 

18.

Notes Payable in favor of Scotiabank by Forestal Los Andes S.A. up to an
aggregate amount of $1,000,000.

 

 

19.

Notes Payable in favor of Corpbanca by Forestal Los Andes S.A. up to an
aggregate amount of $2,000,000.

 

 

20.

Notes Payable in favor of Santander by Forestal Los Andes S.A. up to an
aggregate amount of $650,000.

 

 

21.

Loan Agreement, dated as of January 23, 2015 among NEWP, Deposit Wood Pellet,
LLC, Schuyler Wood Pellet, LLC and T.D. Bank, N.A. in a principal amount of
approximately $6,700,000.

 

Schedule 8(d) to Guaranty

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

 

 

22.

NEWP, Weldingwood Mills, LLC, and Biofuel Energy Systems, LLC are parties to
that certain Loan Agreement with TD Bank, N.A., dated July 25, 2006, pursuant to
which TD Bank, N.A. made a mortgage term loan to the Company as evidenced by a
promissory note in the original principal amount of $1,000,000; this note is
scheduled to mature on July 25, 2016 and as of the Second Restatement Date has
an outstanding principal balance of approximately $530,000.   

 

 

23.

NEWP is party to that certain Note with TD Bank, N.A., dated as of July 25, 2006
and subsequently amended, supplemented or modified, pursuant to which TD Bank,
N.A. made a revolving line of credit available to the Company with a borrowing
limit of $6,000,000 (with a one-time exemption for a maximum twelve-month period
commencing on written notice to the Administrative Agent for an increase in the
borrowing limit to $8,000,000).

 

 

24.

NEWP, Schuyler Wood Pellet, LLC, and Herkimer County Industrial Development
Agency (HCIDA), are parties to that certain Amended and Restated Installment
Sale Agreement dated as of December 1, 2007 (the “Schuyler Installment Sale
Agreement”); under the Schuyler Installment Sale Agreement, NEWP and Schuyler
Wood Pellet, LLC are responsible to make installment purchase payments, which
include amounts equal to the debt service on the Industrial Development Revenue
Bond (Schuyler Wood Pellet, LLC Project), Series 2007 in the original amount of
$9,000,000 (the “Schuyler Bonds”).  As of the Second Restatement the outstanding
principal balance of Schuyler Bonds is approximately $3,200,000.

 

 

25.

NEWP, Deposit Wood Pellet, LLC, and County of Delaware Industrial Development
Agency (DIDA), are parties to that certain Installment Sale Agreement dated as
of March 1, 2010 (the “Deposit Installment Sale Agreement”); under the Deposit
Installment Sale Agreement, the Company and Deposit Wood Pellet. LLC are
responsible to make installment purchase payments, which include amounts equal
to the debt service payments on the Industrial Development Revenue Bonds
(Deposit Wood Pellet, LLC Project) Series 2010A in the original amount of
$9,000,000 (the “Deposit Bonds”). As of the Second Restatement the outstanding
principal balance of the Deposit Bonds is approximately $5,250,000.

 

 

26.

[intentionally omitted].

 

 

27.

Capital lease obligations pursuant to the Master Services Agreement, dated April
30, 2013, among RTK WP Canada, ULC and Quebec Stevedoring Company Limited.  As
of December 31, 2014 the outstanding principal balance of capital lease
obligations under such agreement was $19,445,834.  The outstanding principal
balance under this agreement could increase to $24,000,000 because the capital
investment by Quebec Stevedoring Company Limited is not complete and because the
agreement is subject to CAD/USD exchange rate fluctuations.

 

 

28.

Interest rate swaps at NEWP:

 

 

(a)

ISDA Master Agreement dated as of July 25, 2006 between TD Banknorth, N.A. and
NEWP and related schedules.

 

 

(b)

ISDA Master Agreement dated as of December 28, 2007 among TD Banknorth, N.A.,
Schuyler Wood Pellet, LLC and NEWP and related schedules.

 

 

(c)

ISDA Master Agreement dated as of April 2, 2010 among TD Bank, N.A., Deposit
Wood Pellet, LLC and NEWP.

Schedule 8(d) to Guaranty

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

 

 

As of February 29, 2016

 

 

 

Swap 1 - NEWP

 

$

11,181.22

Swap 2 - NEWP

 

$

154,490.90

Swap 3 - NEWP

 

$

275,000.50

Total

 

 

 

 

 

29.

Interest rate swaps at Fulghum Fibres Chile:

 

 

 

 

 

Contract

 

Fair value as of,

Entity

 

Bank

 

Number

 

Febnruary 29, 2016

Fulghum Fibres Chile

 

Corpbanca

 

9525

 

($165,764)

Fulghum Fibres Chile

 

Scotiabank

 

4332

 

($935,665)

Fulghum Fibres Chile

 

Banco Security

 

1866

 

($187,016)

Forestal Los Andes

 

Banco Security

 

878

 

($307,109)

 

 

 

 

 

 

 

 

 

 

Schedule 8(d) to Guaranty

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

 

SCHEDULE 8(e)

 

PERMITTED LIENS

 

(1)  Liens securing the Debt listed in clauses (1), (2) (5) - through (25) of
Schedule 8(d).

(2)  any Lien existing on any property or asset prior to the acquisition thereof
or existing on any property or assets of any Person that becomes a Subsidiary of
Parent Guarantor after the date hereof prior to the time such Person becomes a
Subsidiary of Parent Guarantor, as the case may be; provided that (i) such Lien
does not apply to any other property or assets of Parent Guarantor or any
Subsidiary of Parent Guarantor, (ii) such Lien secures only those obligations
which it secures on the date of such acquisition or the date such Person becomes
a Subsidiary of Parent Guarantor, as the case may be and (iii) such Person is in
compliance with Section 8(n) on the date of such acquisition or the date such
Person becomes a Subsidiary of Parent Guarantor, as the case may be;

(3)  Liens for taxes not yet delinquent or which are being contested in
compliance with Section 6(l);

(4)  carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other
like Liens arising in the ordinary course of business and securing obligations
that are not due and payable or which are being contested in compliance with
Section 6(l);

(5)  pledges and deposits made in the ordinary course of business in compliance
with workmen’s compensation, unemployment insurance and other social security
laws or regulations;

(6)  deposits to secure the performance of bids, trade contracts (other than for
Debt), leases (other than capital lease obligations), statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;

(7)  zoning restrictions, easements, rights-of-way, restrictions on use of real
property and other similar encumbrances incurred in the ordinary course of
business which, in the aggregate, are not substantial in amount and do not
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the business of Parent Guarantor or any of its
Subsidiaries;

(8)  judgment Liens securing judgments not constituting an Event of Default
under clause (i) of Section 6.01 of the Credit Agreement;

 

(9)  Permitted Liens;

 

(10)  Liens securing Debt permitted by clause (27) of Schedule 8(d) and Section
8(d)(x); provided that the Debt secured thereby does not exceed the fair market
value of such assets;

(11)  any interest or title of a lessor or sublessor under, and Liens arising
from UCC financing statements (or equivalent foreign filings, registrations or
agreements in foreign jurisdictions) relating to leases and subleases entered
into in the ordinary course of business; and

(12)  other Liens securing liabilities in an aggregate amount not to exceed
$1,000,000 at any time outstanding.

 

 

 

Schedule 8(e) to Guaranty

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

 

EXHIBIT A

ADDENDUM TO GUARANTY

[_______ __], 201[_]

Each of the undersigned, ______________________, a _______ [corporation/limited
liability company/unlimited liability corporation] (each, a “New Guarantor”,
together the “New Guarantors”):

(i)  agrees to all of the provisions of the Second Amended and Restated Guaranty
Agreement, dated as of April 1, 2016 (as amended, amended and restated,
modified, supplemented or restated from time to time, the “Guaranty”), made by
the signatories thereto as Guarantors (collectively, the “Guarantors”), in favor
of CREDIT SUISSE AG, CAYMAN ISLANDS BRANCH, as administrative agent
(“Administrative Agent”) for the benefit of the Lender Parties pursuant to the
Second Amended and Restated Credit Agreement, dated as of April 1, 2016 (as
amended, amended and restated, modified, supplemented or restated from time to
time, the “Credit Agreement”) by and among RENTECH NITROGEN HOLDINGS, INC., as
borrower, the lenders from time to time party thereto and Administrative Agent.

(ii)   effective on the date hereof becomes a party to the Guaranty, as a
Guarantor, with the same effect as if each of the undersigned were an original
signatory to the Guaranty (with the representations and warranties contained
therein being deemed to be made by each New Guarantor on and as of the date
hereof).

(iii)  [represents and warrants that it is [organized/incorporated] and resident
in [_____].]3

Capitalized terms used but not defined herein shall have the meanings given in
the Credit Agreement. This Addendum to Guaranty shall be governed by, and
construed in accordance with, the law of the State of New York, without giving
effect to its conflict of laws provisions other than Section 5-1401 of the New
York General Obligations Law.

 

 

3 

For Additional Guarantors not resident in the United States of America.

Exhibit A to Guaranty

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

 

IN WITNESS WHEREOF, the undersigned has caused this Addendum to Guaranty to be
duly executed and delivered to the Administrative Agent by its duly authorized
officer as of the date first set forth above.

[NAME OF NEW GUARANTOR], as Guarantor

 

By:

 

Name:

 

Title:

 

 

Exhibit A to Guaranty