EXHIBIT 10.12
GUARANTEE
AGREEMENT
GUARANTEE AGREEMENT dated as of
August , 2004, by and between
DELTIC TIMBER CORPORATION, a Delaware corporation (the “
Guarantor ”), and SUNTRUST BANK, a Georgia banking
corporation as administrative agent (the “ Administrative
Agent ”) for the Lenders (as defined in the Credit
Agreement referred to below).
Reference is made to the Letter of
Credit and Term Loan Agreement dated as of August
, 2004 (as amended, supplemented or
otherwise modified from time to time, the “ Credit
Agreement ”), among Del-Tin Fiber LLC, as the borrower
(the “ Borrower ”), the lenders from time to
time party thereto (the “ Lenders ”) and
SunTrust Bank, as administrative agent for the Lenders (in such
capacity, the “ Administrative Agent ”) and
Issuing Bank (in such capacity, the “ Issuing Bank
”). Capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in the Credit
Agreement.
The Lenders have agreed to make Term
Loans, Advances as Reimbursement Obligations and LC Loans to the
Borrower, and the Issuing Bank has agreed to issue a Letter of
Credit for the account of the Borrower, pursuant to, and upon the
terms and subject to the conditions specified in, the Credit
Agreement. The Guarantor acknowledges that it will derive
substantial benefit from the making of the Term Loans, Advances as
Reimbursement Obligations and LC Loans by the Lenders, and the
issuance of the Letter of Credit by the Issuing Bank. The
obligations of the Lenders to make the Term Loans, Advances as
Reimbursement Obligations and LC Loans and of the Issuing Bank to
issue the Letter of Credit are conditioned on, among other things,
the execution and delivery by the Guarantor of this Guarantee
Agreement. As consideration therefore and in order to induce the
Lenders to make the Term Loan, Advances as Reimbursement
Obligations and LC Loans and the Issuing Bank to issue the Letter
of Credit, the Guarantor executes this Guarantee
Agreement.
Accordingly, the parties hereto
agree as follows:
1. Guarantee . Guarantor
unconditionally guarantees, as a primary obligor and not merely as
a surety, (a) the due and punctual payment of (i) fifty percent
(50%) of the principal of and premium, if any, and interest
(including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) on the Term Loans,
Advances as Reimbursement Obligations and LC Loans, when and as
due, whether at maturity, by acceleration, upon one or more dates
set for prepayment or otherwise, (ii) fifty percent (50%) each
payment required to be made by the Borrower under the Credit
Agreement in respect of the Letter of Credit or any Reimbursement
Obligation, when and as due, including payments in respect of
reimbursement or disbursements, and interest thereon, and (iii)
fifty percent (50%) of all other monetary obligations, including
fees, costs, expenses and indemnities, whether primary, secondary,
direct, contingent, fixed or otherwise (including monetary
obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), of the Borrower
to the Administrative Agent and the Lenders under the Credit
Agreement and the other Loan Documents, (b) the due and punctual
performance of all covenants, agreements, and fifty percent (50%)
of the obligations and liabilities of the Borrower under or
pursuant to the Credit Agreement and the other Loan Documents; and
(c) fifty percent (50%) of the due and punctual payment and
performance of all obligations of the Borrower under each Hedging
Agreement entered into with a counterparty that is a Lender or an
Affiliate of a Lender at the time such Hedging Agreement was
entered into (all the monetary and other obligations referred to in
the preceding clauses (a) through (c) being collectively called the
“ Obligations ”). Guarantor further agrees that
the Obligations may be extended or renewed, in whole or in part,
without notice to or further assent from it, and that it will
remain bound upon its guarantee notwithstanding any extension or
renewal of any Obligation.
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2.
Obligations Not Waived . To the fullest extent permitted by
applicable law, Guarantor waives presentment to, demand of payment
from and protest to the Borrower of any of the Obligations, and
also waives notice of acceptance of its guarantee and notice of
protest for nonpayment. To the fullest extent permitted by
applicable law, the obligations of Guarantor hereunder shall not be
affected by (a) the failure of the Administrative Agent or any
Lender to assert any claim or demand or to enforce or exercise any
right or remedy against the Borrower or any other guarantor under
the provisions of the Credit Agreement, any other Loan Document or
otherwise, (b) any rescission, waiver, amendment or
modification of, or any release from any of the terms or provisions
of, this Agreement, any other Loan Document, or any other
agreement, including with respect to any other guarantor, or (c)
the failure to perfect any security interest in, or the release of,
any of the security held by or on behalf of the Administrative
Agent or any Lender.
3.
Guarantee of Payment . Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had
by the Administrative Agent or any Lender to any of the security
held for payment of the Obligations or to any balance of any
deposit account or credit on the books of the Administrative Agent
or any Lender in favor of the Borrower or any other
person.
4. No
Discharge or Diminishment of Guarantee . The obligations of
Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason (other than
the indefeasible payment in full in cash of the Obligations),
including any claim of waiver, release, surrender, alteration or
compromise of any of the Obligations, and shall not be subject to
any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of Guarantor
hereunder shall not be discharged or impaired or otherwise affected
by the failure of the Administrative Agent or any Lender to assert
any claim or demand or to enforce any remedy under the Credit
Agreement, any other Loan Document or any other agreement, by any
waiver or modification of any provision of any thereof, by any
default, failure or delay, willful or otherwise, in the performance
of the Obligations, or by any other act or omission that may or
might in any manner or to the extent vary the risk of Guarantor or
any other guarantor or that would otherwise operate as a discharge
of Guarantor or any other guarantor as a matter of law or equity
(other than the indefeasible payment in full in cash of all the
Obligations).
5.
Defenses of Borrower Waived . To the fullest extent
permitted by applicable law, Guarantor waives any defense based on
or arising out of any defense of the Borrower or the
unenforceability of the Obligations or any part thereof from any
cause, or the cessation from any cause of the liability of the
Borrower, other than the final and indefeasible payment in full in
cash of the Obligations. The Administrative Agent and the Lenders
may, at their election, foreclose on any security held by one or
more of them by one or more judicial or nonjudicial sales, accept
an assignment of any such security in lieu of foreclosure,
compromise or adjust any part of the Obligations, make any other
accommodation with the Borrower or any other guarantor, without
affecting or impairing in any way the liability of Guarantor
hereunder except to the extent the Obligations have been fully,
finally and indefeasibly paid in cash. Pursuant to applicable law,
Guarantor waives any defense arising out of any such election even
though such election operates, pursuant to applicable law, to
impair or to extinguish any right of reimbursement or subrogation
or other right or remedy of Guarantor against the Borrower or any
other guarantor, as the case may be, or any security.
6.
Agreement to Pay; Subordination . In furtherance of the
foregoing and not in limitation of any other right that the
Administrative Agent or any Lender has at law or in equity against
Guarantor by virtue hereof, upon the failure of the Borrower to pay
any Obligation when and as the same shall become due, whether at
maturity, by acceleration, after notice of prepayment or otherwise,
Guarantor hereby
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promises to and will forthwith pay, or cause to
be paid, to the Administrative Agent for the benefit of the Lenders
in cash its portion of the unpaid Obligations as set forth in
Section 1. Upon payment by Guarantor of any sums to the
Administrative Agent, all rights of Guarantor against the Borrower
arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all
respects be subordinate and junior in right of payment to the prior
indefeasible payment in full in cash of all the Obligations. In
addition, any indebtedness of the Borrower now or hereafter held by
Guarantor is hereby subordinated in right of payment to the prior
payment in full in cash of the Obligations. If any amount shall
erroneously be paid to Guarantor on account of (i) such
subrogation, contribution, reimbursement, indemnity or similar
right or (ii) any such indebtedness of the Borrower, such amount
shall be held in trust for the benefit of the Administrative Agent
and the Lenders and shall forthwith be paid to the Administrative
Agent to be credited against the payment of the Obligations,
whether matured or unmatured, in accordance with the terms of the
Loan Documents.
7.
Information . Guarantor assumes all responsibility for being
and keeping itself informed of the Borrower’s financial
condition and assets, and of all other circumstances bearing upon
the risk of nonpayment of the Obligations and the nature, scope and
extent of the risks that Guarantor assume
