SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended Commission File
December 31, 1995 Number 1-5313
POTLATCH
Potlatch Corporation
A Delaware Corporation (IRS Employer Identification
Number 82-0156045)
One Maritime Plaza
San Francisco, California 94111
Telephone (415) 576-8800
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, New York Stock Exchange
($1 par value) Pacific Stock Exchange
Chicago Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing require-
ments for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registrant at January 31, 1996, was approximately $1,060 million.
The number of shares of common stock outstanding as of January 31, 1996:
28,939,006 shares of Common Stock, par value of $1 per share.
Documents Incorporated by Reference
Portions of the definitive proxy statement for the 1996 annual meeting of stock-
holders are incorporated by reference in Part III hereof.
<PAGE>
POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES
Index to 1995 Form 10-K
Page
Number
PART I
ITEM 1. Business 2 - 4
ITEM 2. Properties 5
ITEM 3. Legal Proceedings 6
ITEM 4. Submission of Matters to a Vote of Security Holders 6
Executive Officers of the Registrant 7
PART II
ITEM 5. Market for Registrant's Common Equity and
Related Stockholder Matters 8
ITEM 6. Selected Financial Data 8
ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
ITEM 8. Financial Statements and Supplementary Data 8
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 9
PART III
ITEM 10. Directors and Executive Officers of the
Registrant 9
ITEM 11. Executive Compensation 9
ITEM 12. Security Ownership of Certain Beneficial
Owners and Management 9
ITEM 13. Certain Relationships and Related Transactions 9
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K 9
SIGNATURES 10
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES 11
EXHIBIT INDEX 39 - 41
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<PAGE>
PART I
ITEM 1. Business
General
Potlatch Corporation (the "company"), incorporated in 1903, is an
integrated forest products company with substantial timber resources. It is
engaged principally in the growing and harvesting of timber and the
manufacture and sale of wood products, printing papers and other pulp-based
products. Its timberlands and all of its manufacturing facilities are located
within the continental United States.
Information relating to the amounts of revenue, operating profit or loss
and identifiable assets attributable to each of the company's industry
segments for 1993-1995 is included in Note 13 to the financial statements on
pages 33-34 of this report.
Fiber Resources
The principal source of raw material used in the company's operations is
timber obtained from its own timberlands and purchased on the open market.
The company owns in fee approximately 1.5 million acres of timberland: 497,000
acres in Arkansas, 681,000 acres in Idaho and 351,000 acres in Minnesota. In
addition, the company owns and is developing 22,000 acres in Oregon as a
hybrid poplar plantation for pulp fiber.
The amount of timber harvested in any one year from company-owned lands
varies according to the requirements of sound forest management, as well as
the supply of timber available for purchase on the open market. By
continually improving forestry and silviculture techniques and other forest
management practices, the company has been able to increase the volume of wood
fiber available from its timberlands and to provide for a continuous supply
of wood fiber in the future. In most cases, the cost of timber from company
land is substantially less than that of timber obtained on the open market.
The company's fee lands provided approximately 72 percent of its sawlogs
and plywood logs in 1995 and an average of 63 percent over the past five
years. Including the raw materials used for pulp, oriented strand board and
particleboard the percentages were 40 percent for 1995 and 38 percent for the
past five years.
Additional logs were purchased under cutting contracts from federal, state
and local governments and from private landowners. Such cutting contracts
cover areas of varying size and generally have terms ranging from a few months
to several years. The company enters into many such contracts each year.
At December 31, 1995, the company estimated its total commitment under such
contracts was $74.1 million. The market value of uncut timber remaining under
timber cutting contracts approximated $59.7 million at December 31, 1995.
Depending on the market value of timber at time of harvest, the difference
between the current market value and the commitment amount at December 31,
1995, may or may not result in an economic disadvantage for the company.
At the present time, timber from the company's own lands, together with
outside purchases, is adequate to support manufacturing operations. In recent
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years the timber supply from federal lands has been increasingly curtailed
largely due to environmental pressures that are expected to continue into the
foreseeable future. Although this trend has had a favorable effect on
earnings for the company as a whole, it has had an adverse effect on wood
costs. The long-term effect of this trend on company earnings cannot be
predicted. However, the company has implemented plans to develop additional
chip fiber supplies, primarily hybrid poplar, for the Lewiston, Idaho, pulp
mill and by the year 2000 expects to provide approximately 70 percent of chip
fiber requirements for this mill from resources it owns, compared with
approximately 30 percent for 1995.
The company assumes substantially all risk of loss from fire and other
hazards on the standing timber it owns, as do most owners of timber tracts in
the United States.
Wood Products
The company manufactures and markets oriented strand board, plywood,
particleboard, lumber and other wood products. These products are sold
through the company's sales offices primarily to wholesalers for nationwide
distribution.
To produce these solid wood products, the company owns and operates several
manufacturing facilities in Arkansas, Idaho and Minnesota. A description of
these facilities is included under Item 2 of this report.
The forest products industry is highly competitive, and the company
competes with substantially larger forest products companies and companies
which manufacture substitutes for wood and wood fiber products. For lumber,
plywood and particleboard, the company's share of the market is not
significant to the total U. S. market for these products. However, the
company does have a significant market share of oriented strand board, which
is a product that competes with plywood. The company's principal methods of
competing are product quality, service and price.
Printing Papers
The company produces coated free sheet printing papers at two facilities
in Minnesota. A description of these facilities is included under Item 2 of
this report.
Pulp for these paper mills is supplied primarily by the company's bleached
kraft pulp mill in Minnesota and secondarily by purchases of market pulp,
including recycled pulp. Coated papers are used primarily for annual reports,
showroom catalogs, art reproductions and high quality advertising.
Printing papers are sold principally to paper merchants for distribution.
Various company sales offices located throughout the United States are
utilized to service our customers. Although the company does not consider
itself among the larger manufacturers of printing papers, it is one of the
nation's leading producers of premium coated papers. The principal methods
of competing are product quality, service and price.
Other Pulp-Based Products
The company produces and markets bleached kraft pulp and paperboard,
tissue, toweling and napkins. A description of the facilities used to produce
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these products is included under Item 2 of this report.
The company is a major producer of bleached kraft paperboard in the United
States. Bleached kraft paperboard manufactured by the company is used
primarily for the packaging of milk and other foods, pharmaceuticals and
toiletries, and for paper cups and paper plates. The company does not
consider itself among the larger national manufacturers of any of its other
pulp-based products. However, the company is the leading west coast producer
of private label household tissue products. The company's principal methods
of competing are product quality, service and price.
The company produces household tissues which are packaged to order for
grocery and drug chains, club stores and cooperative buying organizations.
Facial and bathroom tissues, paper towels and napkins are sold to consumers
under customer brand names. These products compete with nationally advertised
and other private label brands.
Methods of sale and distribution of the company's other pulp-based products
vary for its several products. The majority of pulp sales are generally
through brokers. The company, in general, maintains domestic sales offices
through which it sells paperboard to packaging converters. The majority of
international paperboard sales are made through sales representative offices
in Japan and Australia. The balance of such sales are made through brokers
and agents. Tissue products are sold through food brokers or directly to
major retail outlets.
Environment
Information regarding environmental matters is included under Item 3 -
Legal Proceedings on page 6 and Management's Discussion and Analysis of
Financial Condition and Results of Operations on page 15 of this report.
Employees
As of December 31, 1995, the company had approximately 6,600 employees.
Labor contracts expiring in 1996 are as follows:
<TABLE>
<CAPTION>
Approximate
Contract Number of
Expiration Hourly
Date Location Union Employees
<S> <C> <C> <C>
June 1 Wood Products International 670
Western Division Woodworkers of
Lewiston, Idaho America
June 30 Nursery United Paperworkers 20
Lewiston, Idaho International Union
September 1 Idaho Pulp & Paperboard United Paperworkers 1,240
and Consumer Products International Union
Lewiston, Idaho & International
Brotherhood of
Electrical Workers
</TABLE>
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<PAGE>
ITEM 2. Properties
The principal manufacturing facilities of the company, together with
their respective 1995 capacities and production are as follows:
<TABLE>
<CAPTION>
Capacity Production
<S> <C> <C>
Wood Products
Oriented Strand Board Plants: (A)
Bemidji, Minnesota 500,000 m.sq.ft. 489,734 m.sq.ft.
Cook, Minnesota 240,000 m.sq.ft. 231,163 m.sq.ft.
Grand Rapids, Minnesota 350,000 m.sq.ft. 341,952 m.sq.ft.
Sawmills:
Prescott, Arkansas 63,000 m.bd.ft. 62,747 m.bd.ft.
Warren, Arkansas (B) 120,000 m.bd.ft. 106,347 m.bd.ft.
Lewiston, Idaho 140,000 m.bd.ft. 112,562 m.bd.ft.
St. Maries, Idaho 82,000 m.bd.ft. 78,843 m.bd.ft.
Bemidji, Minnesota 80,000 m.bd.ft. 80,340 m.bd.ft.
Plywood Plants: (A)
Jaype, Idaho 155,000 m.sq.ft. 138,584 m.sq.ft.
St. Maries, Idaho 158,000 m.sq.ft. 150,197 m.sq.ft.
Particleboard Plant: (C)
Post Falls, Idaho 70,000 m.sq.ft. 66,777 m.sq.ft.
Printing Papers
Pulp Mill:
Cloquet, Minnesota 194,000 tons 194,314 tons
Printing Paper Mills:
Brainerd, Minnesota 140,000 tons 142,470 tons
Cloquet, Minnesota 200,000 tons 201,645 tons
Other Pulp-Based Products
Pulp Mills:
Cypress Bend, Arkansas 250,000 tons 250,217 tons
Lewiston, Idaho 450,000 tons 428,294 tons
Bleached Paperboard Mills:
Cypress Bend, Arkansas 270,000 tons 270,578 tons
Lewiston, Idaho 340,000 tons 311,864 tons
Tissue Mill:
Lewiston, Idaho 150,000 tons 143,683 tons
Tissue Converting Facilities:
Lewiston, Idaho 108,000 tons 93,060 tons
North Las Vegas, Nevada 28,000 tons 27,623 tons
(A) 3/8" Basis
(B) There are two sawmills in Warren.
(C) 3/4" Basis
</TABLE>
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<PAGE>
ITEM 3. Legal Proceedings
In August 1993, the company received a Notice of Violation ("NOV") from the
U. S. Environmental Protection Agency ("EPA"). The NOV alleged that
construction of the company's three oriented strand board plants in Minnesota
commenced prior to obtaining proper permits and that particulate emissions
from the dryers at one plant exceeded applicable limits. The Minnesota
Pollution Control Agency ("MPCA") had previously issued NOVs to the company
which set forth the same allegations. In early January 1994, the company
entered into an agreement with the MPCA which resolved the alleged violations
under its NOVs by agreeing to install additional pollution control equipment
at all three plants and pay a civil penalty of $300,000. The agreement did
not resolve the EPA allegations. In January 1995, the EPA informed the
company that it referred the matter to the United States Department of Justice
to commence a civil enforcement action against the company. As of December
31, 1995, no such action had been filed against the company. The company
believes that it has legal and equitable defenses to the alleged violations.
In December 1995, the company paid a civil penalty of $400,000 in
settlement of an NOV issued by the Idaho Department of Health and Welfare
("IDHW") in June 1994, alleging 41 violations of State of Idaho environmental
laws relating to air quality at the company's facilities in Lewiston, Idaho.
The settlement also resolved all alleged violations of Federal New Source
Performance Standards which were set forth in a list submitted by the IDHW.
In December 1995, the company filed a complaint against Beloit Corporation
in the District Court of the State of Idaho, Nez Perce County: Second
District. The complaint alleges that a pulp washer system supplied by Beloit
Corporation and installed at the company's pulp mill in Lewiston, Idaho, has
experienced massive defects and deficiencies and has failed to meet contract
performance requirements and criteria. The company is seeking in this action
recovery of damages in an amount in excess of $130 million.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of the fiscal year ended December 31, 1995.
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<PAGE>
Executive Officers of the Registrant
Information as of March 1, 1996, and for the past five years concerning the
executive officers of the company is as follows:
John M. Richards (age 58), first elected an officer in 1972, has served as
Chairman of the Board and Chief Executive Officer since May 1994. Prior to
May 1994 he was President and Chief Operating Officer. He was elected a
director of the company effective January 1991. He is a member of the Finance
Committee of the Board of Directors.
L. Pendleton Siegel (age 53), first elected an officer in 1983, has served
as President and Chief Operating Officer since May 1994. From August 1993 to
May 1994, he was Executive Vice President, Pulp-Based Operations and Planning.
From March 1992 through July 1993, he was Group Vice President, Pulp and
Paperboard. Prior to March 1992, he was Group Vice President, Wood Products.
In addition, from October 1990 through May 1994, he was also responsible for
planning and business development.
Robert V. Hershey (age 63), first elected an officer in 1993, has served
as Vice President, Northwest Paper Division since August 1993. From June 1991
through July 1993, he was an appointed officer serving as Vice President,
Manufacturing, Northwest Paper Division. Prior to that he served as Vice
President, Manufacturing, for the Northwest Paper Division's Cloquet plant.
Richard L. Paulson (age 54), first elected an officer in 1992, has served
as Vice President, Consumer Products since January 1993. Prior to that he was
an appointed officer serving as Vice President, Manufacturing, for the
Northwest Paper Division's Brainerd plant.
George E. Pfautsch (age 60), first elected an officer in 1971, is Senior
Vice President, Finance and Chief Financial Officer. From January 1993
through May 1994, he also served as Treasurer.
Charles R. Pottenger (age 56), first elected an officer in 1991, has served
as Group Vice President, Pulp and Paperboard since August 1993. Prior to
that, he was Vice President, Northwest Paper Division.
Thomas J. Smrekar (age 53), first elected an officer in 1992, has served
as Group Vice President, Wood Products since March 1992. Prior to March 1992,
he was an appointed officer serving as Minnesota Wood Products Division Vice
President.
NOTE: The aforementioned officers of the company are elected to hold office
until the next annual meeting of the Board of Directors. Each officer holds
office until the officer's successor has been duly elected and has qualified
or until the earlier of the officer's death, resignation, retirement or
removal by the board.
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<PAGE>
PART II
ITEM 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The company's common stock is traded on the New York, Chicago and Pacific
Stock Exchanges. Quarterly and yearly price ranges were:
<TABLE>
<CAPTION>
1995 1994
Quarter High Low High Low
<S> <C> <C> <C> <C>
1st $44.00 $37.13 $49.50 $40.50
2nd 44.00 41.25 42.25 38.00
3rd 44.13 39.50 44.25 38.00
4th 42.25 38.63 41.38 35.50
Year 44.13 37.13 49.50 35.50
</TABLE>
In general, all holders of Potlatch common stock who own shares 48
consecutive calendar months or longer ("long-term holders") are entitled to
exercise four votes per share of stock so held, while stockholders who are not
long-term holders are entitled to one vote per share. All stockholders are
entitled to only one vote per share on matters arising under certain
provisions of the company's charter. There were approximately 3,300 common
stockholders of record at December 31, 1995.
Quarterly dividend payments per common share for the past two years were:
<TABLE>
<CAPTION>
Quarter 1995 1994
<S> <C> <C>
1st $ .40 $ .39
2nd .40 .39
3rd .40 .39
4th .415 .40
------ -----
$1.615 $1.57
====== =====
</TABLE>
ITEMS 6, 7 and 8.
The information called for by Items 6, 7 and 8, inclusive, of Part II of
this form, is contained in the following sections of this Report at the pages
indicated below:
Page
Number
ITEM 6 Selected Financial Data 12
ITEM 7 Management's Discussion
and Analysis of Financial
Condition and Results of
Operations 12 - 17
ITEM 8 Financial Statements and
Supplementary Data 18 - 38
-8-
<PAGE>
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
ITEM 10. Directors and Executive Officers of the Registrant
Information regarding the directors of the company is set forth under the
heading "Information with Respect to Nominees for Election and Directors
Continuing in Office" on pages 3-5 of the company's definitive proxy
statement, dated March 27, 1996, for the 1996 annual meeting of stockholders
(the "1996 Proxy Statement"), which information is incorporated herein by
reference. Information concerning Executive Officers is included in Part I
of this report following Item 4.
ITEM 11. Executive Compensation
Information set forth under the heading "Compensation of Directors and the
Named Executive Officers" on pages 9-19 of the 1996 Proxy Statement, is
incorporated herein by reference.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding security ownership of management, included under the
heading "Stock Ownership of Directors and Executive Officers" on pages 7-8
of the 1996 Proxy Statement, is incorporated herein by reference.
ITEM 13. Certain Relationships and Related Transactions
Information set forth under the heading "Certain Transactions" on page 19
of the 1996 Proxy Statement, is incorporated herein by reference.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
1. Exhibits are listed in the Exhibit Index on pages 39-41 of this
Form 10-K.
2. Financial statement schedules are listed in the Index to Consolidated
Financial Statements and Schedules on page 11 of this Form 10-K.
3. The company filed a current report on Form 8-K under Item 5, Other Events
dated December 8, 1995, which reported the filing of a lawsuit against
Beloit Corporation.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
POTLATCH CORPORATION
(Registrant)
Date: March 26, 1996 By John M. Richards
---------------------
John M. Richards
Chairman of the Board
and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below on March 26, 1996, by the following persons on
behalf of the company in the capacities indicated.
By John M. Richards
-----------------------------
John M. Richards RICHARD A. CLARKE*
Director and Chairman of Director
the Board and Chief KENNETH T. DERR*
Executive Officer Director
(Principal Executive Officer) ALLEN F. JACOBSON*
Director
By L. Pendleton Siegel GEORGE F. JEWETT, JR.*
----------------------------- Director
L. Pendleton Siegel RICHARD B. MADDEN*
President and Chief Director
Operating Officer RICHARD M. MORROW*
(Principal Operating Officer) Director
VIVIAN W. PIASECKI*
By George E. Pfautsch Director
----------------------------- TONI REMBE*
George E. Pfautsch Director
Senior Vice President, REUBEN F. RICHARDS*
Finance and Chief Director
Financial Officer RICHARD M. ROSENBERG*
(Principal Financial Officer) Director
ROBERT G. SCHWARTZ*
By Terry L. Carter Director
----------------------------- CHARLES R. WEAVER*
Terry L. Carter Director
Controller FREDERICK T. WEYERHAEUSER*
(Principal Accounting Officer) Director
DR. WILLIAM T. WEYERHAEUSER*
Director
*By Betty R. Fleshman
------------------
Betty R. Fleshman
(Attorney-in-fact)
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<PAGE>
POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES
Index to Consolidated Financial Statements and Schedules
Page
Number
The following documents are filed as part of this Report:
Consolidated Financial Statements:
Selected Financial Data 12
Management's Discussion and Analysis of
Financial Condition and Results of Operations 12 - 17
Statements of Earnings for the years ended December 31,
1995, 1994 and 1993 18
Balance Sheets at December 31, 1995 and 1994 19
Statements of Cash Flows for the years ended December 31,
1995, 1994 and 1993 20
Statements of Stockholders' Equity for the years ended
December 31, 1995, 1994 and 1993 21
Summary of Principal Accounting Policies 22 - 23
Notes to Financial Statements 24 - 36
Independent Auditors' Report 37
Schedules:
II. Valuation and Qualifying Accounts 38
All other schedules are omitted because they are
not required, not applicable or the required
information is given in the consolidated
financial statements.
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<PAGE>
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Selected Financial Data
(Dollars in thousands - except per-share amounts)
<CAPTION>
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $1,605,206 $1,471,258 $1,368,854 $1,326,612 $1,236,988
Net earnings:
Before accounting changes 108,546 48,995 38,339 78,914 55,802
After accounting changes 108,546 48,995 6,635 78,914 55,802
Working capital 128,066 142,728 129,138 153,537 125,190
Current ratio 1.4 to 1 1.6 to 1 1.7 to 1 1.9 to 1 1.7 to 1
Long-term debt
(noncurrent portion) $ 616,132 $ 633,473 $ 707,131 $ 634,209 $ 563,014
Stockholders' equity 962,492 920,207 919,664 955,581 914,750
Debt to stockholders'
equity ratio .64 to 1 .69 to 1 .77 to 1 .66 to 1 .62 to 1
Capital expenditures $ 170,654 $ 104,389 $ 201,655 $ 179,539 $ 267,038
Total assets 2,265,311 2,081,229 2,085,652 2,015,747 1,908,631
Net earnings per common share:
Before accounting changes $ 3.72 $1.68 $ 1.31 $ 2.71 $1.92
After accounting changes 3.72 1.68 .22 2.71 1.92
Cash dividends
per common share 1.615 1.57 1.515 1.425 1.34
========================================================================================================================
</TABLE>
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity
Liquidity of a company can be measured by several factors. Of major
importance are:
Capability of generating earnings and cash flow
Maintenance of a sound financial structure
Access to capital markets
Maintenance of adequate working capital
In 1995, the company's net cash provided by operations, excluding working
capital changes, as presented in the Statements of Cash Flows on page 20,
totaled $273.4 million, compared with $197.9 million in 1994 and $170.7
million in 1993.
The ratio of long-term debt to stockholders' equity was .64 to 1 at
December 31, 1995, compared with .69 to 1 at December 31, 1994, and .77 to 1
at December 31, 1993. Several transactions during the year affected the
ratio. In August the company issued $25.0 million of revenue bonds to fund
qualifying capital projects in Arkansas. Also during 1995, the company repaid
$20.0 million of commercial paper, which was classified as long-term debt at
December 31, 1994. In addition, the company reclassified $35.0 million of
medium-term notes to current, due to the notes maturing in 1996. The net
effect of these transactions, combined with an increase in stockholders'
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equity, was largely responsible for the favorable comparison to the December
31, 1994 ratio.
In December 1995 the company issued $100.0 million of corporate debentures,
bearing an interest rate of 6.95 percent. The company intends to use the
proceeds to redeem $100.0 million of its 9.625 percent sinking fund debentures
due 2016. The redemption is scheduled to take place on or after April 15,
1996. The company plans to redeem $85.0 million of the debentures in 1996,
with the balance to be redeemed in early 1997. Because the company intends
to redeem $85.0 million of the sinking fund debentures in 1996, that portion
of the debt was classified as current at December 31, 1995.
At December 31, 1995, the company had credit lines totaling $150.0 million
for general corporate purposes. Of that amount, $50.0 million was in short-
term lines and $100.0 million was in a revolving credit and term loan
agreement. At December 31, 1995, there were no borrowings by the company
under any credit lines.
One of the company's stated objectives is to maintain a sound financial
structure. In that regard, the company believes that debt ratings within
investment grade categories are important for long-term access to capital
markets. At the end of 1995, the company's senior long-term debt was rated
A- by Standard & Poors and Duff and Phelps, and Baa1 by Moody's. With the
company's ability to generate cash flow and its access to capital markets, the
company believes it is capable of funding capital expenditures, working
capital and other liquidity needs for the foreseeable future.
At December 31, 1995, working capital was $128.1 million, compared with
$142.7 million at December 31, 1994, and $129.1 million at December 31, 1993.
The change during 1995 was largely due to increases of $103.2 million in
current installments on long-term debt and $30.3 million in accounts payable
and accrued liabilities. Partially offsetting these amounts were increases
of $55.8 million in short-term investments, $15.0 million in receivables and
$38.9 million in inventories.
Capital Resources and Funding
Capital expenditures totaled $170.7 million in 1995, compared with $104.4
million in 1994 and $201.7 million in 1993.
In 1995, the company spent $41.8 million in the wood products segment. A
significant portion of this amount related to the installation of pollution
control equipment at the company's three oriented strand board plants in
Minnesota. At the Prescott, Arkansas, sawmill, a modernization of the mill's
dry end commenced. The project will remove a bottleneck in the sawmill,
improve efficiency and allow significant gains in productivity. Other
important projects begun in 1995 include the modernization of the company's
two plywood plants in Idaho. The investment will enable the two plants to
compete in the higher-realization industrial plywood markets instead of
commodity sheathing markets.
Capital spending in the printing papers segment totaled $90.6 million. The
modernization and expansion of the Cloquet, Minnesota, pulp mill continued
throughout the year, where major emphasis was on the new fiber line portion
of the project. The rebuild of a paper machine at the Brainerd, Minnesota,
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facility was completed in late 1995. The rebuild will help maintain the
machine's dependability and product quality, which is critical in the
manufacture of high-line coated papers.
Spending in the other pulp-based products segment totaled $38.0 million.
A large portion of these expenditures was for the development of the company's
hybrid poplar plantation in Boardman, Oregon. The fiber produced by these
trees will be used by the Lewiston, Idaho, pulp mill. Harvesting of these
trees is expected to begin in 1999. Capital additions in this segment also
included expenditures for numerous small projects designed to improve
efficiency and product quality.
Authorized but unexpended appropriations totaled $489.9 million at
December 31, 1995. Of that amount, $313.2 million is budgeted to be expended
in 1996. Such expenditures will include the continuing modernization and
expansion of the Cloquet pulp mill, where work on a recovery boiler and
turbine generator are scheduled to begin and work on the fiber line will
continue; the continued development of the hybrid poplar plantation in
Boardman; the upgrade of the dry end at the Prescott, Arkansas, sawmill; and
the modernization of the Idaho plywood plants. The company also plans to
begin replacing the washers at its Lewiston pulp mill. As in 1995, the 1996
capital program will be funded primarily from internally generated sources.
Historically, the company has spent less on capital expenditures than the
annual amount budgeted. In 1995, the company spent $54.4 million less than
the $225.1 million budgeted. Spending on projects may be delayed due to
acquisition of environmental permits, acquisition of equipment, engineering,
weather and other factors. It is likely that the company will again spend
less than the budgeted amount in 1996.
In December 1994, the company announced a stock repurchase program which
authorizes the company to purchase up to 1 million shares of its common stock
over several years. Under the program, the company can purchase shares of
common stock from time to time through open market and privately negotiated
transactions at prices deemed appropriate by management. In conjunction with
the program, the company issued put options on 400,000 shares of its stock in
1995. The put options gave the purchaser the right to sell shares of Potlatch
stock to the company at prices ranging from $40.38 to $41.50 per share on
specific dates in 1995, 1996 and 1997. In 1995, 100,000 of the put options
became exercisable and as a result the company purchased 100,000 shares of its
stock for $4.2 million. Together with 171,600 shares purchased on the open
market, the company purchased a total of 271,600 shares under the program in
1995.
-14-
<PAGE>
Environment
The company is subject to extensive federal and state environmental control
regulations at its operating facilities. The company endeavors to comply with
all environmental regulations and monitors its activities on a regular basis
for such compliance. Compliance with environmental regulations requires
capital expenditures as well as additional operating costs. Capital
expenditures specifically designated for environmental compliance totaled
approximately $20.0 million during 1995 and are budgeted to be $22.0 million
in 1996. In addition, the company made expenditures for pollution control
facilities as part of major mill modernizations and expansions currently under
way.
In late 1993, the Environmental Protection Agency published proposed
regulations applicable to the pulp and paper industry. This extensive set of
regulations is designed to address both air and water emissions. As proposed,
the regulations would require modifications to process equipment and
procedures. Based on an examination of the capital costs of the proposals,
the company estimates that compliance would require capital expenditures in
the broad range of $200.0 million. Of this amount, approximately $100.0
million is already included in the planned expansion and modernization project
under way at the Cloquet, Minnesota, pulp mill, which is expected to cost in
excess of $500.0 million. The company does not expect that such compliance
costs would have a material adverse effect on its competitive position.
Results of Operations
Comparison of 1995 with 1994
Potlatch consolidated net sales of $1.61 billion increased 9 percent from
1994's $1.47 billion. Net earnings were $108.5 million, significantly
improved when compared with the $49.0 million earned in 1994. Net earnings
per common share for 1995 were $3.72 versus $1.68 for 1994. The 1994 amount
included a $.21 per share first quarter charge for early retirement programs.
Market improvements throughout the company's pulp-based businesses in 1995
resulted in increased earnings for this portion of Potlatch's operations,
which more than offset lower results for solid wood products. At the end of
1995, most markets for pulp-based products had begun to soften.
The wood products segment reported operating income of $122.2 million, down
from the $160.3 million earned in 1994. Lower net sales realizations for most
of the company's lumber and panel products were the primary factor in the
decline. Realizations were lower due to decreased demand from the high levels
in 1994 and also due to increased imports from Canada. Results for 1995
include a $2.0 million charge related to early retirement programs in
Arkansas.
At the present time, timber from the company's own lands, together with
outside purchases, is adequate to support manufacturing operations. In recent
years the timber supply from federal lands has been increasingly curtailed
largely due to environmental pressures that are expected to continue into the
foreseeable future. Although this trend has had a favorable effect on
earnings for the company as a whole, it has had an adverse effect on wood
costs. The long-term effect of this trend on company earnings cannot be
-15-
<PAGE>
predicted. However, the company has implemented plans to develop additional
chip fiber supplies for the Lewiston, Idaho, pulp mill and by the year 2000
expects to provide approximately 70 percent of chip fiber requirements for
this mill from resources it owns, compared with approximately 30 percent for
1995.
Operating income for the printing papers segment was $50.6 million, a 26
percent increase over 1994's $40.2 million. Higher net sales realizations
were largely responsible for the increase. Higher pulp costs and slightly
lower shipments partially offset the improved results.
The other pulp-based products segment, which includes the Pulp and
Paperboard Group and the Consumer Products Division, reported operating
income of $70.8 million versus a loss of $53.5 million for 1994. The 1994
results included a first quarter charge for early retirement programs of $10.0
million, which is included in Other income (expense), net, in the Statements
of Earnings. Substantially higher net sales realizations for pulp,
paperboard and tissue combined with higher shipments were the primary reasons
behind the favorable comparison. The Consumer Products Division operated well
during 1995. Also, during the first half of 1995, both of the company's pulp
and paperboard mills in Lewiston, Idaho, and McGehee, Arkansas, operated at
improved levels over 1994. The Arkansas mill continued to operate well during
the second half of 1995. However, during the annual maintenance shutdown at
the Lewiston mill in September, additional structural problems with the pulp
mill washers were discovered. Temporary repairs were made during the fourth
quarter. These problems had an adverse effect upon segment earnings. The
company will begin replacing the pulp mill washers in 1996. The company
anticipates the washers will be replaced with minimal disruption of chip pulp
production at the mill. The company has commenced a legal action against the
washer manufacturer for reimbursement of the replacement cost as well as other
damages.
Comparison of 1994 with 1993
Potlatch consolidated net sales of $1.47 billion in 1994 increased 7
percent from 1993's $1.37 billion. Net earnings were $49.0 million, compared
with $38.3 million before the one-time effects of accounting changes for 1993.
Net earnings per common share for 1994 were $1.68, which included a $.21 per
share first quarter charge for early retirement programs. Earnings per share
for 1993 were $1.31 before the one-time effects of accounting changes.
Market improvements in most of the company's pulp-based businesses, along
with continued favorable market conditions for wood products, resulted in
higher earnings for 1994. The operating difficulties experienced by the
Lewiston, Idaho, pulp and paperboard mill in 1993 were reduced in 1994, but
some problems continued with the pulp mill washers.
The wood products segment reported operating income of $160.3 million,
approximately equal to the $160.2 million earned in 1993. Higher net sales
realizations for the company's lumber and panel products were offset by
startup costs of the new sawmill in Warren, Arkansas, and costs associated
with the installation of new log processing equipment at the Lewiston, Idaho,
sawmill.
Operating income for the printing papers segment was $40.2 million, a
-16-
<PAGE>
substantial improvement over 1993's $15.8 million. Higher shipments and net
sales realizations, resulting from a strengthening marketplace, along with
production improvements at the segment's facilities, were largely responsible
for the increase. An improved product mix also contributed to the positive
results.
The other pulp-based products segment, which includes the Pulp and
Paperboard Group and the Consumer Products Division, reported a loss of $53.5
million versus a loss of $40.9 million for 1993. The 1994 results included
the first quarter charge for early retirement programs of $10.0 million.
Higher paperboard shipments for the Pulp and Paperboard Group were partially
offset by lower paperboard net sales realizations and costs associated with
operating problems during the year. Sales of market pulp, which had been
curtailed since late 1993, resumed during the second quarter of 1994. The
Consumer Products Division increased product shipments 10 percent in 1994, but
higher pulp costs and a very competitive tissue market more than offset this
improvement.
Income Taxes
The company's effective tax rates for 1995, 1994 and 1993 were 36.5
percent, 35.5 percent and 41.0 percent, respectively.
-17-
<PAGE>
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Statements of Earnings
(Dollars in thousands - except per-share amounts)
<CAPTION>
For the years ended December 31 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $1,605,206 $1,471,258 $1,368,854
- ----------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Depreciation, amortization and cost of
fee timber harvested 137,031 138,251 123,544
Materials, labor and other operating
expenses 1,158,002 1,121,491 1,064,260
Selling, general and administrative
expenses 90,569 82,799 83,958
- ----------------------------------------------------------------------------------------------------------------------
1,385,602 1,342,541 1,271,762
- ----------------------------------------------------------------------------------------------------------------------
Earnings from operations 219,604 128,717 97,092
Interest expense, net of capitalized
interest of $4,083 ($2,799 in 1994 and
$6,384 in 1993) (47,976) (51,137) (46,230)
Interest and dividend income 2,019 348 1,352
Other income (expense), net (Note 14) (2,708) (1,967) 12,790
- ----------------------------------------------------------------------------------------------------------------------
Earnings before taxes on income and cumulative
effect of accounting changes 170,939 75,961 65,004
Provision for taxes on income (Note 4) 62,393 26,966 26,665
- ----------------------------------------------------------------------------------------------------------------------
Net earnings before cumulative
effect of accounting changes 108,546 48,995 38,339
Cumulative effect of accounting
changes for postretirement
benefits and income taxes,
net of tax (Notes 4 and 11) - - (31,704)
- ----------------------------------------------------------------------------------------------------------------------
Net earnings $ 108,546 $ 48,995 $ 6,635
======================================================================================================================
Net earnings per common share:
Before accounting changes* $3.72 $1.68 $1.31
After accounting changes* 3.72 1.68 .22
======================================================================================================================
<FN>
* Net earnings per common share for 1994 include a charge of $.21 for early retirement programs.
The accompanying notes and summary of principal accounting policies are an integral part of these financial statements.
</TABLE>
-18-
<PAGE>
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Balance Sheets
(Dollars in thousands - except per-share amounts)
<CAPTION>
At December 31 1995 1994
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash (Note 9) $ 7,571 $ 9,018
Short-term investments (Note 9) 102,583 46,789
Receivables, net of allowance for doubtful
accounts of $2,365 ($2,625 in 1994) 152,407 137,418
Inventories (Note 1) 191,102 152,236
Prepaid expenses (Note 4) 23,586 25,857
- ---------------------------------------------------------------------------------------------------------------------
Total current assets 477,249 371,318
Land, other than timberlands 9,089 9,089
Plant and equipment, at cost less
accumulated depreciation of $1,096,984
($1,018,500 in 1994) (Note 2) 1,356,020 1,313,939
Timber, timberlands and related logging
facilities, net (Note 3) 352,321 346,199
Other assets 70,632 40,684
- ---------------------------------------------------------------------------------------------------------------------
$2,265,311 $2,081,229
=====================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable (Note 9) $ - $ 12,881
Current installments on long-term debt (Notes 5 and 9) 122,018 18,831
Accounts payable and accrued liabilities (Note 6) 227,165 196,878
- ---------------------------------------------------------------------------------------------------------------------
Total current liabilities 349,183 228,590
- ---------------------------------------------------------------------------------------------------------------------
Long-term debt (Notes 5 and 9) 616,132 633,473
- ---------------------------------------------------------------------------------------------------------------------
Other long-term obligations (Note 7) 145,022 147,877
- ---------------------------------------------------------------------------------------------------------------------
Deferred taxes (Note 4) 180,235 151,082
- ---------------------------------------------------------------------------------------------------------------------
Put options (Notes 8 and 9) 12,247 -
- ---------------------------------------------------------------------------------------------------------------------
Stockholders' equity:
Preferred stock
Authorized 4,000,000 shares - -
Common stock, $1 par value
Authorized 40,000,000 shares, issued 32,721,980 shares 32,722 32,722
Additional paid-in capital 125,650 125,564
Retained earnings 901,420 836,628
Common shares in treasury 3,760,124 (3,497,499 in 1994) (97,300) (74,707)
- ---------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 962,492 920,207
- ---------------------------------------------------------------------------------------------------------------------
$2,265,311 $2,081,229
=====================================================================================================================
<FN>
The accompanying notes and summary of principal accounting policies are an integral part of these financial statements.
</TABLE>
-19-
<PAGE>
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Statements of Cash Flows
(Dollars in thousands)
<CAPTION>
For the years ended December 31 1995 1994 1993
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net earnings $ 108,546 $ 48,995 $ 6,635
Adjustments to reconcile net earnings
to cash provided by operations:
Cumulative effect of accounting changes - - 31,704
Depreciation, amortization and cost of
fee timber harvested 137,031 138,251 123,544
Deferred taxes 29,153 12,764 18,069
Net gain on disposition of plant
and properties (1,312) (2,131) (9,254)
- ----------------------------------------------------------------------------------------------------------------------
Cash provided by operations excluding
working capital changes 273,418 197,879 170,698
- ----------------------------------------------------------------------------------------------------------------------
Increase in receivables (14,989) (18,817) (3,583)
Decrease (increase) in inventories (38,866) 3,324 (3,931)
Decrease (increase) in prepaid expenses 2,271 (99) (5,619)
Increase in accounts payable
and accrued liabilities 25,721 618 14,638
- ----------------------------------------------------------------------------------------------------------------------
Cash provided by (used for) working
capital changes (25,863) (14,974) 1,505
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by operations 247,555 182,905 172,203
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING
Change in book overdrafts 4,566 5,302 1,953
Increase (decrease) in notes payable (12,881) 12,881 -
Proceeds from long-term debt 124,785 - 79,525
Reduction of long-term debt (38,939) (61,884) (3,488)
Issuance of treasury stock 193 542 1,181
Purchase of treasury stock (11,285) - -
Dividends on common stock (47,096) (45,870) (44,214)
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing 19,343 (89,029) 34,957
- ----------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING
Decrease (increase) in short-term investments (100,411) 19,816 (7,094)
Additions to investments (46,418) (15,244) (21,472)
Reductions in investments 66,717 4,012 8,313
Additions to plant and equipment, and to
land other than timberlands (160,222) (95,254) (137,898)
Additions to timber, timberlands and
related logging facilities (10,432) (9,135) (63,757)
Disposition of plant and properties 3,293 4,561 10,349
Other, net (20,872) (427) (5,496)
- ----------------------------------------------------------------------------------------------------------------------
Net cash used for investing (268,345) (91,671) (217,055)
- ----------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash (1,447) 2,205 (9,895)
Balance at beginning of year 9,018 6,813 16,708
- ----------------------------------------------------------------------------------------------------------------------
Balance at end of year $ 7,571 $ 9,018 $ 6,813
======================================================================================================================
<FN>
Certain balances for 1994 and 1993 have been restated to conform to the 1995 presentation.
Net interest paid (net of amounts capitalized) in 1995, 1994 and 1993 was $47.7 million, $51.2 million and $44.0 million,
respectively. Net income taxes paid in 1995, 1994 and 1993 were $36.0 million, $12.4 million and $13.0 million,
respectively.
The accompanying notes and summary of principal accounting policies are an integral part of these financial statements.
</TABLE>
-20-
<PAGE>
<TABLE>
Potlatch Corporation and Consolidated Subsidiaries
Statements of Stockholders' Equity
(Dollars in thousands - except per-share amounts)
<CAPTION>
For the years ended December 31 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of year $125,564 $125,346 $124,865
Exercise of stock options 86 218 481
- ---------------------------------------------------------------------------------------------------------------------
Balance at end of year $125,650 $125,564 $125,346
=====================================================================================================================
RETAINED EARNINGS
Balance at beginning of year $836,628 $836,845 $874,424
Net earnings 108,546 48,995 6,635
Common dividends, $1.615 per share ($1.57 per
share in 1994 and $1.515 per share in 1993) (47,096) (45,870) (44,214)
Minimum pension liability adjustment 3,342 (3,342) -
- ---------------------------------------------------------------------------------------------------------------------
Balance at end of year $901,420 $836,628 $836,845
=====================================================================================================================
COMMON SHARES IN TREASURY
Balance at beginning of year 3,497,499 shares
(3,522,834 in 1994 and 3,578,159 in 1993) $ 74,707 $ 75,249 $ 76,430
Shares purchased at cost 271,600 shares 11,285 - -
Exercise of stock options 8,975 shares
(25,335 in 1994 and 55,325 in 1993) (193) (542) (1,181)
Put options 12,247 - -
Premium on issuance of put options (746) - -
- ---------------------------------------------------------------------------------------------------------------------
Balance at end of year 3,760,124 shares
(3,497,499 in 1994 and 3,522,834 in 1993) $ 97,300 $ 74,707 $ 75,249
=====================================================================================================================
<FN>
The accompanying notes and summary of principal accounting policies are an integral part of these financial statements.
</TABLE>
-21-
<PAGE>
Potlatch Corporation and Consolidated Subsidiaries
Summary of Principal Accounting Policies
Consolidation
The financial statements include the accounts of Potlatch Corporation and
its subsidiaries after elimination of significant intercompany transactions
and accounts. There are no significant unconsolidated subsidiaries.
Inventories
Inventories are stated at the lower of cost or market. The last-in, first-
out method is used to determine cost of most wood products. The average cost
method is used to determine cost of all other inventories.
Earnings Per Common Share
Earnings per common share are computed on the weighted average number of
common shares outstanding each year. Outstanding stock options are common
stock equivalents but are excluded from earnings per common share computations
due to immateriality. The weighted average number of common shares used in
earnings per common share computations for 1995, 1994 and 1993 were
29,156,681; 29,217,261; and 29,183,871, respectively.
Properties
Property, plant and equipment are valued at cost less accumulated
depreciation. Depreciation of buildings, equipment and other depreciable
assets is determined by using the straight-line method on estimated useful
lives. Estimated useful lives of plant and equipment range from 2 to 40
years.
Timber, timberlands and related logging facilities are valued at cost net
of the cost of fee timber harvested and depreciation or amortization. Logging
roads and related facilities are amortized over their useful lives or as
related timber is removed. Cost of fee timber harvested is determined
annually based on the estimated volumes of recoverable timber and related
cost.
Major improvements and replacements of property are capitalized.
Maintenance, repairs, and minor improvements and replacements are expensed.
Upon retirement or other disposition of property, applicable cost and
accumulated depreciation or amortization are removed from the accounts. Any
gains or losses are included in earnings.
Income Taxes
The provision for taxes on income is based on earnings reported in the
financial statements. Deferred income taxes are provided on the temporary
differences between reported earnings and taxable income using current tax
laws and rates.
-22-
<PAGE>
Preoperating and Startup Costs
Preoperating costs are expensed as incurred except for charges relating to
major new facilities. Deferred preoperating costs are amortized over a 60-
month period. Startup costs are expensed as incurred.
Environment
As part of its corporate policy, the company has an ongoing process to
monitor, report and comply on environmental matters. Based on this ongoing
process, reserves for environmental liabilities are established in accordance
with Statement of Financial Accounting Standards No. 5.
-23-
<PAGE>
Potlatch Corporation and Consolidated Subsidiaries
Notes to Financial Statements
<TABLE>
Note 1. Inventories
<CAPTION>
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Logs, pulpwood, chips and sawdust $ 27,710 $ 18,401
Lumber and other manufactured wood products 7,324 7,369
Pulp, paper and converted paper products 95,580 66,937
Materials and supplies 60,488 59,529
- ------------------------------------------------------------------------------------------------------
$191,102 $152,236
======================================================================================================
Valued at lower of cost or market:
Last-in, first-out basis $ 32,322 $ 21,935
Average cost basis 158,780 130,301
- ------------------------------------------------------------------------------------------------------
$191,102 $152,236
======================================================================================================
</TABLE>
If the last-in, first-out inventory had been priced at lower of current
average cost or market, the values would have been approximately $30.7 million
higher at December 31, 1995, and $32.3 million higher at December 31, 1994.
In 1995 and 1994, reductions in quantities of LIFO inventories valued at lower
costs prevailing in prior years had the effect of increasing earnings, net of
income taxes, by approximately $2.1 million ($.07 per common share) and $1.6
million ($.06 per common share), respectively.
<TABLE>
Note 2. Plant and Equipment
<CAPTION>
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land improvements $ 56,170 $ 55,012
Buildings and structures 369,800 367,630
Machinery and equipment 1,763,660 1,744,809
Other 81,701 81,296
Construction in progress 181,673 83,692
- ------------------------------------------------------------------------------------------------------
$2,453,004 $2,332,439
======================================================================================================
</TABLE>
Depreciation charged against income amounted to $116.9 million in 1995
($119.6 million in 1994 and $108.4 million in 1993).
Authorized but unexpended appropriations for capital projects totaled
$489.9 million at December 31, 1995. Of that amount, $313.2 million is
budgeted to be expended in 1996.
<TABLE>
Note 3. Timber, Timberlands and Related Logging Facilities
<CAPTION>
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Timber and timberlands $321,439 $319,482
Related logging facilities 30,882 26,717
- ------------------------------------------------------------------------------------------------------
$352,321 $346,199
======================================================================================================
</TABLE>
Timber, timberlands and related logging facilities are stated at cost less
cost of fee timber harvested and amortization. Cost of fee timber harvested
amounted to $16.2 million in 1995 ($15.1 million in 1994 and $12.0 million in
1993). Amortization of logging roads and related facilities amounted to $1.3
million in 1995 ($1.1 million in 1994 and $.7 million in 1993).
-24-
<PAGE>
The company purchases logs under cutting contracts from federal, state and
local governments and from private landowners. Such cutting contracts cover
areas of varying size and generally have terms ranging from a few months to
several years. The company enters into many such contracts each year. At
December 31, 1995, the company estimated its total commitment under such
contracts was $74.1 million. The market value of uncut timber remaining under
timber cutting contracts approximated $59.7 million at December 31, 1995.
Depending on the market value of timber at time of harvest, the difference
between the current market value and the commitment amount at December 31,
1995, may or may not result in an economic disadvantage for the company and
therefore no accrual has been made.
Note 4. Taxes on Income
Effective January 1, 1993, the company adopted the provisions of Statement
of Financial Accounting Standards No. 109, Accounting for Income Taxes. The
statement requires the liability method for recording differences in financial
and taxable income. The company recorded the cumulative effect of the
accounting change in the first quarter of 1993, which increased income by
$43.8 million or $1.50 per share.
Significant components of the provision for taxes on income:
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 27,111 $ 16,653 $ 15,311
State 5,661 2,118 1,646
- ------------------------------------------------------------------------------------------------------
Total current 32,772 18,771 16,957
- ------------------------------------------------------------------------------------------------------
Deferred:
Depreciation 21,836 25,271 26,139
Alternative minimum tax (38) (14,370) (15,222)
Pension costs 10,228 739 2,803
Postretirement benefits and
related funding (2,984) (4,527) (4,943)
Net operating loss 203 - (1,897)
Federal tax rate change - - 3,245
Other 376 1,082 (417)
- ------------------------------------------------------------------------------------------------------
Total deferred 29,621 8,195 9,708
- ------------------------------------------------------------------------------------------------------
Provision for taxes on income $ 62,393 $ 26,966 $ 26,665
======================================================================================================
</TABLE>
-25-
<PAGE>
The provision for taxes on income differs from the amount computed by
applying the statutory federal income tax rate of 35 percent to earnings
before taxes on income and cumulative effect of accounting changes due to the
following:
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computed "expected" tax expense $59,829 $26,586 $22,751
State and local taxes, net of federal
income tax benefits 6,101 2,755 2,695
Federal tax rate change - - 3,245
All other items (3,537) (2,375) (2,026)
- ------------------------------------------------------------------------------------------------------
Provision for taxes on income $62,393 $26,966 $26,665
Effective tax rate 36.5% 35.5% 41.0%
======================================================================================================
</TABLE>
Principal current and noncurrent deferred tax assets and liabilities at
December 31:
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current deferred tax assets:
Employee benefits $ 17,441 $ 15,101
Inventories 1,927 1,961
Net operating loss 1,694 1,897
Other (994) 1,713
- ------------------------------------------------------------------------------------------------------
Total current asset(1) 20,068 20,672
- ------------------------------------------------------------------------------------------------------
Noncurrent deferred tax assets (liabilities):
Postretirement benefits 45,256 42,272
Alternative minimum tax 35,889 35,851
Depreciation (250,627) (228,790)
Pensions (11,513) (1,286)
Other, net 760 871
- ------------------------------------------------------------------------------------------------------
Total net noncurrent liability (180,235) (151,082)
- ------------------------------------------------------------------------------------------------------
Net deferred tax liability $(160,167) $(130,410)
======================================================================================================
<FN>
(1) Included in Prepaid expenses in the Balance Sheets.
</TABLE>
Noncurrent deferred tax assets at December 31, 1995 and 1994, are net of
valuation allowances of $2.9 million and $8.9 million, respectively. Based
on the company's history of operating earnings and its expectations for the
future, management has determined that operating income will more likely than
not be sufficient to recognize fully all other deferred tax assets.
In the third quarter of 1993, the company adjusted its current and deferred
income tax balances to reflect an increase in the statutory federal tax rate
from 34 percent to 35 percent retroactive to January 1, 1993. The provision
for taxes on income for 1993 includes $3.2 million of expense for the effect
of the tax increase on beginning of the year deferred tax balances.
The company's federal income tax returns have been examined and settlements
have been reached for all years through 1988, except a petition which has been
filed with the U.S. Tax Court regarding the deductibility of certain expenses
on the company's 1985 federal income tax return. Assessments made for the
years 1989 and 1990 are presently being negotiated at the appellate level.
The company believes that adequate provision has been made for possible
assessments of additional taxes.
-26-
<PAGE>
<TABLE>
Note 5. Debt
<CAPTION>
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue bonds fixed rate 5.8% to 9% due 1997
through 2013 $140,952 $140,946
Revenue bonds variable rate due 2007 through 2014 59,813 34,928
Debentures 6.95% due 2015 99,786 -
Credit sensitive debentures 9.125% due 2009 100,000 100,000
Sinking fund debentures 9.625% due 2016 100,000 100,000
Medium-term notes fixed rate 7.55% to 9.46%
due 1995 through 2022 235,000 250,000
Commercial paper 6.12% to 6.425% - 20,000
Other notes 2,599 6,430
- ------------------------------------------------------------------------------------------------------
738,150 652,304
Less current installments on long-term debt 122,018 18,831
- ------------------------------------------------------------------------------------------------------
Long-term debt $616,132 $633,473
======================================================================================================
</TABLE>
In December 1995, the company issued $100.0 million of corporate
debentures at an interest rate of 6.95 percent. The company intends to use
the proceeds to redeem the $100.0 million of 9.625 percent sinking fund
debentures due 2016. The redemption is scheduled to take place on or after
April 15, 1996. The company plans to redeem $85.0 million of the debentures
in 1996, with the balance to be redeemed in early 1997. Because the company
intends to redeem $85.0 million of the sinking fund debentures in 1996, that
portion of the debt was classified as current at December 31, 1995.
The interest rate payable on the 9.125 percent credit sensitive debentures
is subject to adjustment if certain changes in the debt rating of the
debentures occur. No such change in the interest rate payable has occurred.
Certain credit agreements have restrictive covenants. At December 31,
1995, the company was in compliance with such covenants. The company does not
currently have any covenants in any of its loan agreements which limit the
payment of dividends. The company also has no significant assets which have
been pledged, mortgaged or otherwise subjected to liens.
Payments due on long-term debt during each of the five years subsequent to
December 31, 1995:
(Dollars in thousands)
- ------------------------------------------------------------------------------
1996 $122,000
- ------------------------------------------------------------------------------
1997 31,000
- ------------------------------------------------------------------------------
1998 22
- ------------------------------------------------------------------------------
1999 10,000
- ------------------------------------------------------------------------------
2000 13,000
- ------------------------------------------------------------------------------
At December 31, 1995, the company had credit lines totaling $150.0 million
for general corporate purposes. Of that amount, $50.0 million was in short-
term lines and $100.0 million was in a revolving credit and term loan
agreement. The short-term credit lines are LIBOR-based, permit the company
to borrow at any time through May 31, 1996, and may be renewed at that time.
The revolving credit and term loan agreement dated September 1, 1994, contains
a 364-day commitment period, is renewable annually and includes a two-year
term loan option. At December 31, 1995, there were no borrowings by the
company under any credit lines.
-27-
<PAGE>
<TABLE>
Note 6. Accounts Payable and Accrued Liabilities
<CAPTION>
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Trade accounts payable $ 73,650 $ 57,016
Accrued wages, salaries and employee benefits 58,208 53,678
Accrued taxes other than taxes on income 17,734 16,570
Accrued interest 14,946 13,224
Accrued taxes on income 8,124 9,926
Book overdrafts 28,761 24,195
Other 25,742 22,269
- ------------------------------------------------------------------------------------------------------
$227,165 $196,878
======================================================================================================
</TABLE>
<TABLE>
Note 7. Other Long-Term Obligations
<CAPTION>
(Dollars in thousands) 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
Postretirement benefits $116,041 $111,034
Pension and related liabilities 18,950 26,517
Other 10,031 10,326
- ------------------------------------------------------------------------------------------------------
$145,022 $147,877
======================================================================================================
</TABLE>
Note 8. Put Options
In December 1994, the company announced a stock repurchase program which
authorizes the company to purchase up to 1 million shares of its common stock
over several years. Under the program, the company can purchase shares of
common stock from time to time through open market and privately negotiated
transactions at prices deemed appropriate by management.
In conjunction with the repurchase program, the company issued put options
which gave the purchaser the right to sell shares of Potlatch stock to the
company at prices ranging from $40.38 to $41.50 per share on specific dates
in 1995, 1996 and 1997. Activity during the year is summarized as follows:
<TABLE>
<CAPTION>
Put Options Outstanding
Number of Potential
(Dollars in thousands) Options Obligation
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
December 31, 1994 - $ -
Sales 400,000 16,397
Repurchases (100,000) (4,150)
- ------------------------------------------------------------------------------------------------
December 31, 1995 300,000 $12,247
================================================================================================
</TABLE>
The company's potential obligation of $12.2 million at December 31, 1995,
is classified as Put options in the Balance Sheets and the related offset is
recorded in Common shares in treasury under Stockholders' equity.
-28-
<PAGE>
Note 9. Disclosures about Fair Value of Financial Instruments
Estimated fair values of the company's financial instruments:
<TABLE>
<CAPTION>
1995 1994
Carrying Fair Carrying Fair
(Dollars in thousands) Amount Value Amount Value
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash and short-term investments $110,154 $110,154 $ 10,494 $ 10,494
Current notes payable - - 12,881 12,880
Long-term debt 738,150 792,448 652,304 658,541
Put options 12,247 12,247 - -
======================================================================================================
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments for which it is practicable to estimate
that value.
CASH AND SHORT-TERM INVESTMENTS
For short-term investments, the carrying amount approximates fair value.
Short-term investments include bank certificates of deposit, repurchase
agreements, money market preferreds and various other investment grade
securities which can be readily purchased or sold using established markets.
Short-term investments at December 31, 1994, included $45.3 million for the
company's investment in corporate owned life insurance (COLI). COLI does not
qualify as a financial instrument and therefore is not included in the fair
values stated above.
CURRENT NOTES PAYABLE
The fair value of the company's current notes payable, which consists of
commercial paper, is estimated based upon the quoted market prices for the
same or similar issues.
LONG-TERM DEBT
The fair value of the company's long-term debt is estimated based upon the
quoted market prices for the same or similar debt issues. The amount of long-
term debt for which there is no quoted market price is immaterial and the
carrying amount approximates fair value.
PUT OPTIONS
The fair value of the company's put options is estimated based upon the
underlying contracts for the options.
Note 10. Retirement, Incentive and Savings Plans
Substantially all employees and directors of the company are covered by
noncontributory defined benefit pension plans. These include both company-
sponsored and multi-employer plans. Total pension expense was $6.3 million
in 1995, $4.5 million in 1994 and $6.3 million in 1993. The 1995 and 1994
pension expense presented above excludes $1.0 million and $4.6 million,
respectively, for early retirement programs which is included in Other income
(expense), net in the Statements of Earnings.
-29-
<PAGE>
The salaried plan provides benefits based on the participants' final
average pay and years of service. Plans covering hourly employees generally
provide benefits of stated amounts for each year of service. The directors'
plan provides a benefit equal to the retainer in effect at the time the
participant ceases to be a director if the participant has completed five
years of service as a nonemployee director. Benefits are paid for the lesser
of 10 years or the number of years of service as a nonemployee director.
Pension cost for company-sponsored plans:
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during year $ 8,312 $ 8,440 $ 7,512
Interest cost on projected benefit obligation 27,366 24,949 24,641
Actual return on assets (94,103) 3,670 (48,160)
Net amortization and deferral 62,013 (35,208) 19,649
- ------------------------------------------------------------------------------------------------------
Net periodic pension cost $ 3,588 $ 1,851 $ 3,642
======================================================================================================
</TABLE>
Funded status and related balance sheet amounts for company-sponsored
pension plans at December 31:
<TABLE>
<CAPTION>
Plans Where Plans Where
Assets Exceed Accumulated
Accumulated Benefits
Benefits Exceed Assets Total
(Dollars in thousands) 1995 1994 1995 1994 1995 1994
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of benefit
obligations:
Vested benefit obligation $ 328,964 $ 214,012 $ 23,920 $ 95,095 $ 352,884 $ 309,107
Accumulated benefit obligation 342,238 219,562 25,245 105,505 367,483 325,067
Projected benefit obligation 360,433 232,183 27,532 111,907 387,965 344,090
======================================================================================================
Plan assets at fair value,
primarily publicly traded
equity and fixed income
securities $ 401,406 $ 252,204 $ 12,439 $ 83,268 $ 413,845 $ 335,472
Projected benefit obligation (360,433) (232,183) (27,532) (111,907) (387,965) (344,090)
- ------------------------------------------------------------------------------------------------------
Plan assets above (below)
projected benefit obligation 40,973 20,021 (15,093) (28,639) 25,880 (8,618)
Unrecognized prior service cost 11,940 (3,203) 4,880 19,709 16,820 16,506
Unrecognized net (gain) loss (20,968) (184) (4,750) 5,710 (25,718) 5,526
Unrecognized net transition asset (3,812) (5,477) (578) (1,385) (4,390) (6,862)
Adjustment required to recognize
minimum liability - - (395) (20,271) (395) (20,271)
- ------------------------------------------------------------------------------------------------------
Prepaid (accrued) pension cost $ 28,133 $ 11,157 $(15,936) $ (24,876) $ 12,197 $ (13,719)
======================================================================================================
</TABLE>
The projected benefit obligation for the company's unfunded, nonqualified
plans at December 31, 1995 and 1994, was $14.2 million and $16.2 million,
respectively. These amounts are included in the total for Plans Where
Accumulated Benefits Exceed Assets.
As of December 31, 1994, $20.3 million of minimum pension liabilities for
underfunded plans was included in other long-term obligations, with
corresponding intangible assets of $14.8 million and a charge of $3.4 million
to retained earnings, which is net of deferred taxes of $2.1 million.
The projected benefit obligation at December 31, 1995, 1994 and 1993, was
determined using an assumed discount rate of 7.50 percent, 8.25 percent and
7.75 percent, respectively, and an assumed long-term rate of salaried
compensation increase of 5 percent for each year. The assumed rate of return
on plan assets was 9.5 percent for 1995, 1994 and 1993. The actual annual
-30-
<PAGE>
return on plan assets has averaged approximately 12.5 percent over the past
18 years.
Funding of company-sponsored plans is based on accepted actuarial methods
in accordance with applicable governmental regulations and is determined
separately from the net periodic cost presented above.
Hourly employees at two of the company's manufacturing facilities
participate in a multi-employer defined benefit pension plan, the Paper
Industry Union-Management Pension Fund. Company contributions were $2.7
million for 1995, $2.6 million for 1994 and $2.7 million for 1993 and equaled
the amounts charged to pension expense.
Key management employees participate in a management performance award plan
under which awards are based on certain minimum and standard performance
criteria established each year. All company employees are eligible to
participate in 401(k) savings plans.
Note 11. Postretirement Benefits Other Than Pensions
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions. The statement requires accrual basis
recognition of the projected future cost of providing postretirement benefits.
The company elected immediate recognition of the transition obligation, which
amounted to $118.0 million ($75.5 million after income tax benefits or $2.59
per share). The obligation, which is presented in Other long-term obligations
in the Balance Sheets, was partially offset by $31.2 million of plan assets.
The company provides many of its retired employees with health care and
life insurance benefits. Benefits are provided under company-sponsored
defined benefit retiree health care and life insurance plans which cover most
salaried and certain hourly employees. Employees become eligible for these
benefits as they retire from active employment. Most of the retiree health
care plans require retiree contributions and contain other cost sharing
features such as deductibles and coinsurance. The retiree life insurance
plans are primarily noncontributory. The retiree health care plans are
partially funded. The retiree life insurance plans are unfunded.
Net periodic postretirement benefit cost:
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994 1993
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost - benefits earned during year $ 3,437 $ 3,931 $ 3,450
Interest cost on accumulated
postretirement benefit obligation 12,370 11,054 11,510
Actual return on assets (7,063) 330 (2,259)
Net amortization and deferral 5,674 (2,026) 449
- -----------------------------------------------------------------------------------------------------
Net periodic postretirement benefit cost $14,418 $13,289 $13,150
=====================================================================================================
</TABLE>
The 1995 and 1994 postretirement benefit costs presented above exclude $.5
million and $1.9 million, respectively, for early retirement programs which
are included in Other income (expense), net in the Statements of Earnings.
-31-
<PAGE>
Funded status and related balance sheet amounts for postretirement health
care and life insurance plans at December 31:
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ (92,720) $ (79,359)
Fully eligible active plan participants (22,426) (25,541)
Other active plan participants (63,572) (47,427)
- -----------------------------------------------------------------------------------------------------
Total accumulated postretirement benefit obligation (178,718) (152,327)
Plan assets at fair value, primarily publicly
traded equity and fixed income securities 34,769 25,392
- -----------------------------------------------------------------------------------------------------
Accumulated postretirement benefit obligation
in excess of plan assets (143,949) (126,935)
Unrecognized prior service cost 7,147 8,242
Unrecognized net loss 20,761 7,659
- -----------------------------------------------------------------------------------------------------
Accrued postretirement benefit cost $(116,041) $(111,034)
=====================================================================================================
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation at December 31, 1995, 1994 and 1993, was 7.50 percent, 8.25
percent and 7.75 percent, respectively. The expected long-term rate of return
on plan assets for 1995, 1994 and 1993 was 9.5 percent.
The health care cost trend rate assumption used in determining the
accumulated postretirement benefit obligation at December 31, 1995, 1994 and
1993 is based on an initial rate of 10 percent, decreasing incrementally to
5 percent over an 8-year period and remaining at that level thereafter. This
assumption has a significant effect on the amounts reported. For example, a
1 percent increase in the health care cost trend rates would have increased
the accumulated postretirement benefit obligation at December 31, 1995, to
$207.3 million and increased the net periodic cost for 1995 to $17.6 million
from the $14.4 million actually recorded.
Funding of postretirement health care plans is based on accepted actuarial
methods in accordance with applicable governmental regulations and is
determined separately from the net periodic cost presented above.
Effective January 1, 1993, the company adopted Statement of Financial
Accounting Standards No. 112, Employers' Accounting for Postemployment
Benefits. The statement requires accrual basis recognition of postemployment
benefits provided to former or inactive employees after employment but before
retirement. The effect of implementing the new standard was not material.
Note 12. Stock Options
Under the company's stock option plans, options for shares of the company's
common stock have been issued to directors and certain key personnel. Options
are granted at market value and may include a stock appreciation right.
Options may also be issued in the form of restricted stock and other share-
based awards, none of which were outstanding at December 31, 1995. Options
are fully exercisable after two years and expire not later than 10 years from
the date of grant. Stock option information presented for the year ending
December 31, 1995, includes options for shares granted and shares reserved for
future grants under a plan approved by the board of directors in 1995, which
will be submitted to stockholders for approval at the 1996 annual meeting.
-32-
<PAGE>
Information with respect to the company's stock options:
<TABLE>
<CAPTION>
For the years ended December 31 1995 1994
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Option (share) price range, $26.25 $ 14.50
fair market value to to
at date of grant $46.375 $46.375
- -----------------------------------------------------------------------------------------------------
Options (shares) outstanding at January 1 1,164,800 990,085
Granted 323,000 279,050
Shares exercised (8,975) (25,335)
SARs(1) exercised (20,050) (42,075)
Canceled or expired (12,325) (36,925)
- -----------------------------------------------------------------------------------------------------
Options (shares) outstanding at December 31 1,446,450 1,164,800
=====================================================================================================
At December 31 1995 1994
- -----------------------------------------------------------------------------------------------------
Options (shares) exercisable 986,600 770,200
Options (shares) outstanding which include
a stock appreciation right 717,600 722,925
Shares reserved for future grants 1,641,075 251,750
=====================================================================================================
<FN>
(1) Stock appreciation rights (an appropriate accrual has been made).
</TABLE>
Note 13. Segment Information
Potlatch Corporation is an integrated forest products company with
substantial timber resources. It is engaged principally in the growing and
harvesting of timber and the manufacture and sale of wood products, printing
papers and other pulp-based products. Its timberlands and all of its
manufacturing facilities are located within the United States.
Following is a tabulation of business segment information for each of the
past three years:
<TABLE>
<CAPTION.
(Dollars in thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales to Unaffiliated Customers:(1)
Wood products:
Oriented strand board $ 204,250 $ 224,586 $ 194,514
Lumber 173,424 196,577 196,544
Plywood 73,954 73,413 72,815
Particleboard 15,564 17,058 14,593
Other 39,055 41,078 25,159
- ------------------------------------------------------------------------------------------------------
506,247 552,712 503,625
- ------------------------------------------------------------------------------------------------------
Printing papers 442,412 405,553 369,012
- ------------------------------------------------------------------------------------------------------
Other pulp-based products:
Pulp 21,797 10,812 12,915
Paperboard 438,196 335,803 343,419
Tissue 196,554 166,378 139,883
- ------------------------------------------------------------------------------------------------------
656,547 512,993 496,217
- ------------------------------------------------------------------------------------------------------
Total $1,605,206 $1,471,258 $1,368,854
======================================================================================================
Intersegment Sales or Transfers:(2)
Wood products $ 76,130 $ 64,111 $ 63,618
Printing papers 160 10 -
Other pulp-based products 146 159 948
- ------------------------------------------------------------------------------------------------------
Total $ 76,436 $ 64,280 $ 64,566
======================================================================================================
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Income (Loss):
Wood products $ 122,231 $ 160,345 $ 160,220
Printing papers 50,618 40,174 15,796
Other pulp-based products 70,776 (53,462) (40,944)
- ------------------------------------------------------------------------------------------------------
243,625 147,057 135,072
Corporate Items:
Administration expense (26,875) (21,389) (26,922)
Interest expense (47,976) (51,137) (46,230)
Interest and dividend income 2,019 348 1,352
Other, net 146 1,082 1,732
- ------------------------------------------------------------------------------------------------------
Earnings before taxes on income and
cumulative effect of accounting changes $ 170,939 $ 75,961 $ 65,004
======================================================================================================
Identifiable Assets:
Wood products $ 696,175 $ 697,144 $ 689,598
Printing papers 531,272 462,721 458,276
Other pulp-based products 835,378 804,267 824,015
Corporate 202,486 117,097 113,763
- ------------------------------------------------------------------------------------------------------
Total $2,265,311 $2,081,229 $2,085,652
======================================================================================================
Depreciation, Amortization and
Cost of Fee Timber Harvested:
Wood products $ 47,305 $ 49,510 $ 39,909
Printing papers 32,587 31,754 30,521
Other pulp-based products 55,870 55,962 52,142
Corporate 1,269 1,025 972
- ------------------------------------------------------------------------------------------------------
Total $ 137,031 $ 138,251 $ 123,544
======================================================================================================
Capital Expenditures:
Wood products $ 41,802 $ 37,918 $ 97,612
Printing papers 90,610 25,247 42,482
Other pulp-based products 38,036 40,771 59,559
Corporate 206 453 2,002
- ------------------------------------------------------------------------------------------------------
Total $ 170,654 $ 104,389 $ 201,655
======================================================================================================
<FN>
(1) Total export sales, including those made through brokers and agents,
amounted to $204.1 million, $133.1 million and $106.1 million in
1995, 1994 and 1993, respectively. Export paperboard sales for these
years (a majority of which were shipped to Japan, Australia and China)
amounted to 88 percent, 85 percent and 86 percent, respectively, of
total export sales.
(2) Intersegment sales for 1993-1995, the majority of which are based on
prevailing market prices, consisted primarily of chips, pulp logs and
other fiber sales to the pulp and papermaking facilities. The
company's timber, timberlands and related logging facilities generally
have been assigned to the wood products segment.
</TABLE>
-34-
<PAGE>
Note 14. Other Income (Expense), Net
The following is a summary of items included in Other income (expense),
net:
<TABLE>
<CAPTION>
(Dollars in thousands) 1995 1994 1993
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Early retirement programs $(1,979) $(8,157) $ -
Sale of timber and timberlands 1,555 1,566 8,574
Other (2,284) 4,624 4,216
- ------------------------------------------------------------------------------------------------------
$(2,708) $(1,967) $12,790
======================================================================================================
</TABLE>
-35-
<PAGE>
<TABLE>
Note 15. Financial Results by Quarter (Unaudited)
<CAPTION>
(Dollars in thousands - except per-share amounts) Three Months Ended
- -----------------------------------------------------------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
- -----------------------------------------------------------------------------------------------------------------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $394,608 $365,282 $397,243 $345,120 $411,186 $373,324 $402,169 $387,532
- -----------------------------------------------------------------------------------------------------------------------------------
Costs and expenses:
Depreciation, amortization
and cost of fee timber
harvested 32,707 35,023 32,491 34,387 35,598 35,016 36,235 33,825
Materials, labor and other
operating expenses 288,929 280,351 292,804 270,982 293,432 287,014 282,837 283,144
Selling, general and
administrative expenses 23,194 19,514 22,207 20,915 21,826 22,488 23,342 19,882
- -----------------------------------------------------------------------------------------------------------------------------------
344,830 334,888 347,502 326,284 350,856 344,518 342,414 336,851
- -----------------------------------------------------------------------------------------------------------------------------------
Earnings from operations $ 49,778 $ 30,394 $ 49,741 $ 18,836 $ 60,330 $ 28,806 $ 59,755 $ 50,681
===================================================================================================================================
Net earnings $ 23,533 $ 5,314 $ 23,904 $ 6,052 $ 31,749 $ 10,741 $ 29,360 $ 26,888
===================================================================================================================================
Net earnings per common share $.81 $.18 $.81 $.21 $1.09 $.37 $1.01 $.92
===================================================================================================================================
</TABLE>
-36-
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors:
We have audited the accompanying balance sheets of Potlatch Corporation and
consolidated subsidiaries as of December 31, 1995 and 1994 and the related
statements of earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1995. In connection with
our audits of the financial statements, we also have audited the financial
statement schedule on page 38. These financial statements and financial
statement schedule are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion the financial statements referred to above present fairly,
in all material respects, the financial position of Potlatch Corporation and
consolidated subsidiaries at December 31, 1995 and 1994 and the results of
their operations and their cash flows for each of the years in the three-year
period ended December 31, 1995, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly, in all material respects, the information set
forth therein.
As discussed in the notes to the financial statements, in 1993 the company
adopted the provisions of the Financial Accounting Standards Board's Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes," and Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits."
KPMG Peat Marwick LLP
Portland, Oregon
January 24, 1996
-37-
<PAGE>
<TABLE>
POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES Schedule II
Valuation and Qualifying Accounts
For the Years Ended December 31, 1995, 1994 and 1993
(Dollars in thousands)
<CAPTION>
Amounts
Balance at charged to
beginning costs and Balance at
Description of year expenses Deductions end of year
----------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Reserve deducted from related assets:
Doubtful accounts - Accounts receivable
Year ended December 31, 1995 $2,625 $109 $(369)(1) $2,365
============================================
Year ended December 31, 1994 $2,057 $621 $ (53)(1) $2,625
============================================
Year ended December 31, 1993 $1,781 $ 92 $ 184 (1) $2,057
============================================
<FN>
1 - Accounts written off - net of recoveries.
</TABLE>
-38-
<PAGE>
POTLATCH CORPORATION AND CONSOLIDATED SUBSIDIARIES
Exhibit Index
Exhibit
*(3)(a) Restated Certificate of Incorporation, restated and filed
with the state of Delaware on May 1, 1987, filed as
Exhibit (3)(a) to the Annual Report on Form 10-K for the
fiscal year ended December 31, 1992 ("1992 Form 10-K").
(3)(c) By-laws, as amended through March 1, 1996.
(4) See Exhibits (3)(a) and (3)(c). Registrant also
undertakes to file with the Securities and Exchange
Commission, upon request, any instrument with respect to
long-term debt.
(4)(a) Form of Indenture, dated as of November 27, 1990.
(4)(a)(i) Officers' Certificate, dated January 24, 1991.
*(4)(a)(ii) Officers' Certificate, dated December 12, 1991, filed as
Exhibit (4)(g) to the Annual Report on Form 10-K for the
fiscal year ended December 31, 1991 ("1991 Form 10-K").
(10)(a) Potlatch Corporation Management Performance Award Plan,
as amended effective March 1, 1996.
*(10)(b) Potlatch Corporation Severance Program for Executive
Employees, as amended and restated as of February 24,
1989, filed as Exhibit (10)(b)(iv) to the Annual Report
on Form 10-K for the fiscal year ended December 31, 1993
("1993 Form 10-K").
(10)(c) Letter agreement, dated May 21, 1979, between Potlatch
Corporation and George F. Jewett, Jr., regarding
consulting services and amendment thereto dated
February 19, 1986.
*(10)(d) Potlatch Corporation Salaried Employees' Supplemental
Benefit Plan (As Amended and Restated Effective
January 1, 1988), filed as Exhibit (10)(d)(i) to the 1993
Form 10-K.
*(10)(d)(i) Amendment, effective as of December 31, 1992, to Plan
described in Exhibit (10)(d), filed as Exhibit
(10)(d)(ii) to the 1992 Form 10-K.
*(10)(e) Supplemental Retirement Benefit and Life Insurance
Agreement, dated February 19, 1988, together with
Amendment to Agreement thereto, dated as of January 1,
1992, between Potlatch Corporation and Richard B. Madden,
filed as Exhibit (10)(f)(iii) to the 1992 Form 10-K.
*Incorporated by reference.
-39-
<PAGE>
*(10)(f) Potlatch Corporation 1983 Stock Option Plan (effective
September 24, 1983), together with amendments thereto,
dated December 14, 1984, February 24, 1989 and
February 22, 1990, filed as Exhibit (10)(r) to the 1993
Form 10-K.
*(10)(f)(i) Form of Stock Option Agreement for the Potlatch
Corporation 1983 Stock Option Plan together with the
Addendum thereto as used for options granted on
December 14, 1989, filed as Exhibit (10)(g)(i) to the
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994 ("1994 Form 10-K").
*(10)(f)(ii) Form of Amendment to Stock Option Agreement together with
the Addendum thereto to add stock appreciation rights to
stock option agreements issued under the Potlatch
Corporation 1983 Stock Option Plan, filed as Exhibit
(10)(g)(ii) to the 1994 Form 10-K.
(10)(f)(iii) Form of Stock Option Agreement for the Potlatch
Corporation 1983 Stock Option Plan together with the
Addendum thereto as used for options granted in each
December of 1990-1992.
*(10)(g) Potlatch Corporation Deferred Compensation Plan for
Directors, as amended and restated as of May 1991, filed
as Exhibit (10)(h) to the 1994 Form 10-K.
*(10)(h) Potlatch Corporation Directors' Retirement Plan,
effective October 1, 1989, filed as Exhibit (10)(i) to
the 1994 Form 10-K.
(10)(i) Compensation of Directors, dated May 18, 1995.
*(10)(j) Form of Indemnification Agreement with each director of
Potlatch Corporation, dated as of the dates set forth on
Schedule A and Amendments 1, 2, 3 and 4 to Schedule A,
filed as Exhibit (10)(x) to the 1991 Form 10-K.
*(10)(j)(i) Amendment No. 5 to Schedule A to Exhibit (10)(k), filed
as Exhibit (10)(x)(i) to the 1992 Form 10-K.
*(10)(j)(ii) Amendment No. 6 to Schedule A to Exhibit (10)(k), filed
as Exhibit (10)(x)(ii) to the 1993 Form 10-K.
*(10)(k) Form of Indemnification Agreement with certain officers
of Potlatch Corporation identified on Schedule A and
Amendments 1, 2, and 3 to Schedule A, filed as Exhibit
(10)(y) to the 1991 Form 10-K.
*(10)(k)(i) Amendment No. 4 to Schedule A to Exhibit (10)(l), filed
as Exhibit (10)(y) to the 1992 Form 10-K.
*Incorporated by reference.
-40-
<PAGE>
*(10)(k)(ii) Amendment No. 5 to Schedule A to Exhibit (10)(l), filed
as Exhibit (10)(y)(ii) to the 1993 Form 10-K.
*(10)(l) Potlatch Corporation 1989 Stock Incentive Plan adopted
December 8, 1988, and as amended and restated
February 24, 1989, filed as Exhibit (10)(z) to the 1993
Form 10-K.
*(10)(l)(i) Form of Stock Option Agreement for the Potlatch
Corporation 1989 Stock Incentive Plan together with the
Addendum thereto as used for options granted on
December 14, 1989, filed as Exhibit (10)(m)(i) to the
1994 Form 10-K.
(10)(l)(ii) Form of Stock Option Agreement for the Potlatch
Corporation 1989 Stock Incentive Plan together with the
Addendum thereto as used for options granted in each
December of 1990-1995.
(10)(m) Form of Amendments to Stock Options and Stock Incentive
Plans, dated March 30, 1990.
(10)(n) Potlatch Corporation 1995 Stock Incentive Plan adopted
December 7, 1995.
(10)(n)(i) Form of Stock Option Agreement for the Potlatch
Corporation 1995 Stock Incentive Plan together with the
Addendum thereto as used for options granted in December,
1995.
(22) Potlatch Corporation Subsidiaries.
(23) Consent of Independent Auditors.
(24) Powers of Attorney.
*Incorporated by reference.
-41-
POTLATCH CORPORATION
BY-LAWS
AS AMENDED THROUGH MARCH 1, 1996
Exhibit (3)(c)
<PAGE>
TABLE OF CONTENTS
ARTICLE I. Offices . . . . . . . . . . . . . . . 1
Section 1 . . . . . . . . . . . . . . . . . . . 1
Section 2 . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. Corporate Seal . . . . . . . . . . . 1
ARTICLE III. Meetings of Stockholders . . . . . . 2
Section 1 . . . . . . . . . . . . . . . . . . . 2
Section 2 . . . . . . . . . . . . . . . . . . . 2
Section 3 . . . . . . . . . . . . . . . . . . . 2
Section 4 . . . . . . . . . . . . . . . . . . . 3
Section 5 . . . . . . . . . . . . . . . . . . . 4
Section 6 . . . . . . . . . . . . . . . . . . . 4
Section 7 . . . . . . . . . . . . . . . . . . . 5
Section 8 . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV. Directors . . . . . . . . . . . . . . 6
Section 1 . . . . . . . . . . . . . . . . . . . 6
Section 2 . . . . . . . . . . . . . . . . . . . 6
Section 3 . . . . . . . . . . . . . . . . . . . 7
Section 4 . . . . . . . . . . . . . . . . . . . 7
Section 5 . . . . . . . . . . . . . . . . . . . 7
Section 6 . . . . . . . . . . . . . . . . . . . 7
Section 7 . . . . . . . . . . . . . . . . . . . 9
Section 8 . . . . . . . . . . . . . . . . . . . 9
Section 9 . . . . . . . . . . . . . . . . . . . 9
Section 10. . . . . . . . . . . . . . . . . . . 10
Section 11. . . . . . . . . . . . . . . . . . . 10
ARTICLE V. Committees . . . . . . . . . . . . . 11
ARTICLE VI. Officers . . . . . . . . . . . . . . 11
Section 1 . . . . . . . . . . . . . . . . . . . 11
Section 2 . . . . . . . . . . . . . . . . . . . 12
Section 3 . . . . . . . . . . . . . . . . . . . 12
Section 4 . . . . . . . . . . . . . . . . . . . 13
Section 5 . . . . . . . . . . . . . . . . . . . 13
Section 6 . . . . . . . . . . . . . . . . . . . 13
Section 7 . . . . . . . . . . . . . . . . . . . 14
<PAGE>
ARTICLE VII. Certificates of Stock . . . . . . . . 15
Section 1 . . . . . . . . . . . . . . . . . . . 15
Section 2 . . . . . . . . . . . . . . . . . . . 15
Section 3 . . . . . . . . . . . . . . . . . . . 15
Section 4 . . . . . . . . . . . . . . . . . . . 16
Section 5 . . . . . . . . . . . . . . . . . . . 17
Section 6 . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII. Dividends . . . . . . . . . . . . . . 18
ARTICLE IX. General Provisions . . . . . . . . . 18
Section 1 . . . . . . . . . . . . . . . . . . . 18
Section 2 . . . . . . . . . . . . . . . . . . . 18
ARTICLE X. Amendments . . . . . . . . . . . . . 19
<PAGE>
B Y - L A W S
of
POTLATCH CORPORATION
ARTICLE I
Offices
Section 1. The registered office of the
corporation shall be in the City of Wilmington, County of
New Castle, State of Delaware.
Section 2. The corporation shall have an office at
1 Maritime Plaza in the City and County of San Francisco,
State of California, and may also have offices at such other
places as the chairman of the board or the board of
directors may from time to time determine, or as the
business of the corporation may require.
ARTICLE II
Corporate Seal
The corporate seal of the corporation shall contain
thereon the name of the corporation, the year of its
organization and the words "Corporate Seal" and "Delaware."
<PAGE>
ARTICLE III
Meetings of Stockholders
Section 1. All meetings of the stockholders shall
be held in the City and County of San Francisco, State of
California, at such place as may be designated from time to
time by the board of directors, or at such other place
either within or without the State of Delaware as shall be
designated from time to time by the board of directors and
stated in the notice of the meeting.
Section 2. Annual meetings of stockholders shall
be held on the third Thursday of May each year at 11:00
A.M., if not a legal holiday, or at such other date and time
as shall be designated from time to time by the board of
directors and stated in the notice of the meeting. At such
annual meeting, the stockholders of the corporation shall
elect by majority vote a board of directors or, if the board
of directors shall then be divided into classes, the members
of that class of directors whose term of office expires at
such meeting and transact such other business as may
properly be brought before the meeting.
Section 3. Special meetings of the stockholders,
for any purpose or purposes, unless otherwise prescribed by
statute or by the certificate of incorporation, may be
called by the chairman of the board and shall be called by
the chairman of the board or secretary at the request in
<PAGE>
writing of a majority of the board of directors, or at the
request in writing of stockholders owning shares which have
a majority of the voting power of the capital stock issued
and outstanding and entitled to vote. Such request shall
state the purpose or purposes of the proposed meeting.
Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 4. At an annual meeting of the
stockholders, only such business shall be conducted as shall
have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be
(a) specified in the notice of meeting (or any supplement
thereto) given by or at the direction of the board of
directors, (b) otherwise properly brought before the meeting
by or at the direction of the board of directors, or
(c) otherwise properly brought before the meeting by a
stockholder. For business to be properly brought before an
annual meeting by a stockholder, the secretary must have
received written notice from the stockholder not less than
thirty (30) days nor more than sixty (60) days prior to the
meeting. Such written notice to the secretary shall set
forth as to each matter the stockholder proposes to bring
before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting,
<PAGE>
(b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such
business, (c) the class and number of shares of the
corporation which are beneficially owned by the stockholder
and (d) any material interest of the stockholder in such
business. Notwithstanding any other provision in the
by-laws to the contrary, no business shall be conducted at
an annual meeting except in accordance with the procedures
set forth in this Section 4.
Section 5. Written notice stating the place, date
and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is
called, shall be given to each stockholder entitled to vote
at such meeting not less than ten (10) nor more than sixty
(60) days before the date of the meeting.
Section 6. The officer who has charge of the stock
ledger of the corporation shall prepare and make, at least
ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall
be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business
hours, for a period of at least ten (10) days prior to the
<PAGE>
meeting, either at a place within the city where the meeting
is to be held, which place shall be specified in the notice
of the meeting, or, if not so specified, at the place where
the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the
whole time thereof, and may be inspected by any stockholder
who is present.
Section 7. The holders of shares which constitute
a majority of the voting power of the capital stock issued
and outstanding and entitled to vote, present in person or
represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of
business, provided, that one-third of the total number of
shares of capital stock entitled to vote at such meeting are
present or represented. If, however, such quorum shall not
be present or represented at any meeting of the
stockholders, the stockholders entitled to vote at the
meeting, present or represented, shall have power to adjourn
the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present
or represented. At such adjourned meeting at which a quorum
shall be present or represented, any business may be
transacted which might have been transacted at the meeting
as originally noticed.
<PAGE>
Section 8. When a quorum is present at any
meeting, the vote of the holders who control a majority of
the voting power of the capital stock issued and outstanding
and entitled to vote, present in person or represented by
proxy, shall decide any question brought before such
meeting, unless the question is one upon which by express
provision of statute or of the certificate of incorporation
a different vote is required, in which case such express
provision shall govern the decision of such questions.
ARTICLE IV
Directors
Section 1. The business of the corporation shall
be managed by its board of directors which may exercise all
such powers of the corporation and do all such lawful acts
and things as are not by statute, by the certificate of
incorporation, or by these by-laws directed or required to
be exercised or done by the stockholders.
Section 2. Each director elected pursuant to the
applicable provisions of the certificate of incorporation
shall hold office until the director's successor is elected
and has qualified or until the director's earlier
resignation or removal. Directors need not be stockholders.
No person shall continue to serve as a director after the
expiration of the calendar year in which the age of 72 is
attained.
<PAGE>
Section 3. The board of directors of the
corporation may hold meetings, both regular and special,
either within or without the State of Delaware.
Section 4. The annual meeting of the board of
directors shall be held immediately following each annual
meeting of the stockholders of the corporation at the place
where such meeting of stockholders is held or at such other
date, time and place as shall be designated from time to
time by the board of directors and stated in the notice of
the meeting.
Section 5. The directors at each annual meeting
shall elect a chairman of the board and chief executive
officer and also shall elect a vice chairman of the board to
hold such offices until their successors are elected and
have qualified or until their earlier resignation or
removal. In the absence or disability of the chairman of
the board, the directors designated by the board of
directors shall perform the duties and exercise the powers
of the chairman of the board.
Section 6. Special meetings of the board of
directors may be called by the chairman of the board, the
vice chairman of the board, or by any officer who is a
director. Each director shall be given not less than five
days' notice of such special meetings of the board, and such
notice shall be deemed given once it has been conveyed to a
<PAGE>
director in person or by telephone or has been sent by mail
or telegram to a director's last known address as shown in
the secretary's records; provided, however, that if a
special meeting is called by the chairman of the board, the
vice chairman of the board, or by any officer who is a
director because an attempt to acquire the corporation or
more than five percent of its shares has been threatened, or
because in the best judgment of the person calling the
meeting some other emergency exists, then each director
shall be given not less than three hours' notice of any such
meeting to be held in person or by means of conference
telephone as provided in Section 9 of this Article, and such
notice shall be deemed given once it has been conveyed to a
director in person or by telephone or an attempt has been
made to give such notice by telephoning a director at the
director's home telephone number and business office
telephone number as such numbers are shown in the
secretary's records.
Special meetings of the board of directors shall be
called by the chairman of the board or the secretary on the
written request of one third of the entire board of
directors (determined by rounding up to the next whole
number in the event the board of directors is not then
divisible by three) plus one director. Each director
shall be given not less than five days' notice of such
special meetings of the board, and such notice shall be
deemed given once it
<PAGE>
has been conveyed to a director in person or by telephone or
has been sent by mail or telegram to a director's last known
address as shown in the secretary's records.
Notice may be waived in writing by any director
entitled thereto, and attendance at a meeting shall
constitute a waiver of notice of such meeting.
Section 7. At all meetings of the board a
majority of the directors then in office shall constitute a
quorum for the transaction of business. If a quorum is not
present at any meeting of the board of directors, the
directors present may adjourn the meeting from time to time,
without notice other than announcement at the meeting, until
a quorum is present. At such adjourned meeting at which a
quorum shall be present, any business may be transacted
which might have been transacted at the meeting as
originally noticed.
Section 8. Any action required or permitted to
be taken at any meeting of the board of directors or of
any committee thereof may be taken without a meeting, if
all members of the board or committee, as the case may be,
consent thereto in writing, and the consents are filed
with the minutes of proceedings of the board or committee.
Section 9. Members of the board of directors or
any committee thereof may participate in a meeting of such
board or committee, as the case may be, by means of
conference telephone or similar communications equipment
<PAGE>
by means of which all persons participating in the meeting
can hear each other, and participating in a meeting in
such manner shall constitute presence at such meeting.
Section 10. The board of directors shall have
the authority to fix the compensation of directors.
Section 11. Nominations for the election of
directors may be made by the board of directors or by any
stockholder entitled to vote for the election of
directors. Such nominations, other than those made by or
on behalf of the existing management of the corporation,
shall be made by notice in writing, delivered or mailed by
first-class United States mail, postage prepaid, to the
secretary of the corporation not less than thirty (30)
days nor more than sixty (60) days prior to any meeting of
the stockholders called for the election of directors;
provided, however, that if less than thirty-five (35)
days' notice of the meeting is given to stockholders, such
written notice shall be delivered or mailed, as
prescribed, to the secretary of the corporation not later
than the close of the seventh (7th) day following the day
on which notice of the meeting was mailed to stockholders.
Each notice shall set forth (i) the name, age,
business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal
occupation or employment of each such nominee, (iii) the
number of shares of stock of the corporation which are
<PAGE>
beneficially owned by each such nominee and by the
nominating stockholder, and (iv) any other information
concerning the nominee that must be disclosed of nominees
in proxy solicitations pursuant to Rule 14(a) of the
Securities Exchange Act of 1934.
The chairman of the meeting may, if the facts
warrant, determine and declare to the meeting that a
nomination was not made in accordance with the foregoing
procedure, and if the chairman should so determine, the
chairman shall so declare to the meeting and the defective
nomination shall be disregarded.
ARTICLE V
Committees
The board of directors may designate such
committees with such powers and duties as it may prescribe
by resolution.
ARTICLE VI
Officers
Section 1. The board of directors of the
corporation shall elect as officers of the corporation: a
chief executive officer who shall be the chairman of the
board; a president; one or more vice presidents; a
secretary; a treasurer; a controller; and such additional
officers, including one or more assistant secretaries and
<PAGE>
assistant treasurers, as the board of directors may from
time to time determine.
Section 2. The term of office of the officers
of the corporation shall expire at the annual meeting of
the board of directors, and each officer shall hold office
until the officer's successor shall have been duly elected
and qualified or until the officer's earlier death,
resignation, retirement or removal by the board of
directors.
Section 3. The chairman of the board and chief
executive officer of the corporation shall if present
preside at all meetings of the stockholders and the board
of directors, shall have general and active management of
the business of the corporation and shall ensure that all
orders and resolutions of the board of directors are
carried into effect and shall have such other powers and
duties as may be from time to time assigned to the
chairman of the board and chief executive officer by the
board of directors or prescribed by the by-laws.
The chairman of the board and chief executive
officer shall have the power to employ and discharge
subordinates, agents and employees of the corporation and
to fix their compensation and to delegate all or part of
such power, subject to supervision by the board of
directors.
<PAGE>
Section 4. In the absence or disability of the
chairman of the board and chief executive officer, the
officers designated by the board of directors shall
perform the duties and exercise the powers of the chief
executive officer. The president and the vice presidents
shall perform such other duties as may be prescribed by
these by-laws, the board of directors or the chairman of
the board and chief executive officer.
Section 5. The controller shall be the
principal accounting officer in charge of the general
accounting books, accounting and cost records and forms.
The controller shall have such other powers and duties as
the controller may from time to time be assigned or
directed to perform by the board of directors or the
chairman of the board and chief executive officer.
Section 6. The secretary shall have the care
and custody of the records of the corporation and shall
attend all meetings of the stockholders and the directors
and shall record all votes and minutes of said meetings in
a book or books kept for that purpose. The secretary
shall sign such instruments on behalf of the corporation
as the secretary may be authorized to sign by the board of
directors or by law and shall countersign, attest and
affix the corporate seal to all certificates and
instruments where such countersigning or such sealing and
attesting are necessary to their true and proper
<PAGE>
execution. The secretary shall see that proper notice is
given to all meetings of the stockholders where notice is
required and shall have such other powers and duties as
the secretary may from time to time be assigned or
directed to perform by the board of directors or the
chairman of the board and chief executive officer.
An assistant secretary shall have all of the
powers and shall perform all of the duties of the
secretary in case of the absence of the secretary or the
secretary's inability to act, and shall have such other
powers and duties as the assistant secretary may from time
to time be assigned or directed to perform.
Section 7. The treasurer shall attend to the
collection, receipt and disbursement of all moneys
belonging to the corporation. The treasurer shall have
authority to endorse, on behalf of the corporation, all
checks, notes, drafts, warrants and orders, and shall have
custody over all securities of the corporation. The
treasurer shall have such additional powers and such other
duties as the treasurer may from time to time be assigned
or directed to perform by the board of directors or the
chairman of the board and chief executive officer.
An assistant treasurer shall have all of the
powers and shall perform the duties of the treasurer in
case of the absence of the treasurer or the treasurer's
inability to act, and shall have such other powers and
<PAGE>
duties as the treasurer may from time to time be assigned
and directed to perform.
ARTICLE VII
Certificates of Stock
Section 1. Every holder of stock in the
corporation shall be entitled to have a certificate signed
by or in the name of the corporation by the chairman of
the board, the president or a vice president and the
treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the
number of shares owned by the holder in the corporation.
Section 2. Any signature on the certificate may
be a facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be
such an officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation
with the same effect as if the person who signed or whose
facsimile signature has been placed on the certificate
were such officer, transfer agent or registrar at the date
of issue.
Section 3. The board of directors may direct a
new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen or
<PAGE>
destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate of stock to be lost,
stolen or destroyed. When authorizing such issue of a new
certificate or certificates, the board of directors may,
in its discretion and as a condition precedent to the
issuance, require the owner of such lost, stolen or
destroyed certificate or certificates, or the owner's
legal representative, to advertise the same in such manner
as it shall require and to give the corporation a bond in
such sum as it may direct as indemnity against any claim
that may be made against the corporation with respect to
the certificate alleged to have been lost, stolen or
destroyed. To eliminate the necessity of action
in each particular case, the board of directors may
authorize the issuance of new certificates in lieu of
lost, stolen or destroyed certificates on the direction of
such officers of the corporation as the board of directors
may designate upon the filing with such officers of an
affidavit or affirmation and an indemnity bond or
agreement satisfactory to such officers.
Section 4. Upon surrender to the corporation or
the transfer agent of the corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of
succession, assignation or authority to transfer, it shall
<PAGE>
be the duty of the corporation to issue a new certificate
to the person entitled, cancel the old certificate and
record the transaction upon its books.
Section 5. In order that the corporation may
determine the stockholders entitled to notice of or to
vote at any meeting of stockholders or any adjournment
thereof, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled
to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than
sixty (60) nor less than ten (10) days before the date of
such meeting, nor more than sixty (60) days prior to any
other action. A determination of stockholders of record
entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the
meeting, but the board of directors may fix a new record
date for the adjourned meeting.
Section 6. The corporation may recognize the
exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such
owner, and to hold liable for calls and assessments a
person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other
claim to or interest in such share or shares on the part
<PAGE>
of any other person, whether or not it shall have express
or other notice, except as otherwise provided by the laws
of Delaware.
ARTICLE VIII
Dividends
Dividends upon the capital stock of the
corporation, subject to applicable provisions, if any, of
the certificate of incorporation, may be declared by the
board of directors at any regular or special meeting.
Dividends may be paid in cash, in property, or in shares
of the capital stock, subject to any such provisions of
the certificate of incorporation.
ARTICLE IX
General Provisions
Section 1. The fiscal year of the corporation
shall be from the first day of January each year until the
last day of the succeeding December, both inclusive.
Section 2. Whenever notice is required under
these by-laws or by statute and such notice is given by
mail, the time of giving such notice shall be deemed to be
the time when the same is placed in the United States
mail, postage prepaid, and addressed to the party to be
notified at the party's address as it appears on the
records of the corporation.
<PAGE>
ARTICLE X
Amendments
These by-laws may be altered, amended or
repealed or new by-laws may be adopted by the stockholders
or by the board of directors pursuant to the applicable
provisions of the certificate of incorporation at any
regular meeting of the stockholders or of the board of
directors or at any special meeting of the stockholders or
of the board of directors if notice of such alteration,
amendment, repeal or adoption of new by-laws be contained
in the notice of such special meeting.
POTLATCH CORPORATION
TO
BANKERS TRUST COMPANY OF CALIFORNIA,
NATIONAL ASSOCIATION
TRUSTEE
-------------
INDENTURE
DATED AS OF NOVEMBER 27, 1990
-------------
================================================================================
Exhibit (4)(a)
<PAGE>
POTLATCH CORPORATION
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
INDENTURE, DATED AS OF NOVEMBER 27, 1990
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 608
610
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 613(b)
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)(2)
703(b)
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 701
702(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 702(c)
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(a), 703(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703(c)
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 704
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(a)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602
703(a)(6)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(b)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c)
(d)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(a)(1)
(d)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c)(2)
(d)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 601(c)(3)
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
(a)(1)(A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502
512
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 513
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 508
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104(g)
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1003
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
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NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
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<TABLE>
<CAPTION>
PAGE
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PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. Definitions:
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate; control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Attributable Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authorized Newspaper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request; Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Net Tangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Depository . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Funded Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Global Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Original Issue Discount Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
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NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
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PAGE
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Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Principal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Registered Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Repayment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Repayment Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Security Register and Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
series or series of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
timberlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
U.S. Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
U.S. Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Unregistered Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Yield to Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 104. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 105. Notices, Etc., to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 106. Notice to Holders; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 107. Conflict With Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 112. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 114. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 115. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE TWO
SECURITY FORMS
<S> <C>
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 202. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited, Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . 25
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 311. Global Securities; Exchanges; Registration and Registration of Transfer . . . . . . . . . . . 32
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 403. Satisfaction, Discharge and Defeasance of Securities of Any Series . . . . . . . . . . . . . . 36
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 502. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . 41
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<TABLE>
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PAGE
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SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or Coupons . . . . . . . . . . . . 43
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 507. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and Interest . . . . . . . . . . 45
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 513. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 514. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 603. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . 50
SECTION 605. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 606. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 608. Disqualification; Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 609. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 610. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 612. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . 63
SECTION 613. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 614. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders . . . . . . . . . . . . . . . . . . 71
SECTION 702. Preservation of Information; Communications to Holders . . . . . . . . . . . . . . . . . . . . 71
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
</TABLE>
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ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
PAGE
<S> <C>
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . . . 75
SECTION 802. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 803. Limitation on Lease of Properties as Entirety . . . . . . . . . . . . . . . . . . . . . . . . 77
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 902. Supplemental Indentures With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 904. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 905. Conformity With Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 906. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 907. Revocation and Effect of Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 1003. Money for Securities Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 1004. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 1005. Limitations on Liens and Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 1006. Limitations on Sale and Leaseback Transactions . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 1007. Defeasance of Certain Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 1008. Statement by Officers as to Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 1009. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 1102. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 1103. Selection by Trustee of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 1104. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 1105. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 1106. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
</TABLE>
<PAGE>
vi
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 1107. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
SECTION 1202. Satisfaction of Sinking Fund Payments With Securities . . . . . . . . . . . . . . . . . . . . 95
SECTION 1203. Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE THIRTEEN
REPAYMENT OF SECURITIES AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 1302. Notice of Repayment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
SECTION 1303. Deposit of Repayment Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 1304. Securities Payable on Repayment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 1305. Securities Repaid in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
SIGNATURES AND SEALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
</TABLE>
<PAGE>
101
INDENTURE, dated as of November 27, 1990, between Potlatch
Corporation, a corporation duly organized and existing under the laws of the
State of Delaware (herein called the "Company"), having its principal office at
One Maritime Plaza, San Francisco, California 94111, and Bankers Trust Company
of California, National Association (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured and
nonconvertible debentures, notes or other evidences of indebtedness (each
herein called a "Security" or collectively the "Securities"), to be issued in
one or more series as in this Indenture provided.
All things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
Now, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Securities or of
any series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the
meanings assigned to them in this Article and include the
plural as well as the singular;
(2) all other terms used herein which are defined
in the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(3) all accounting terms not otherwise defined
herein have the meanings assigned to them in accordance with
generally accepted accounting
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101
principles, and, except as otherwise herein expressly provided, the
term "generally accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such accounting
principles as are generally accepted at the date of this
instrument; and
(4) the words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to
the foregoing.
"Attributable Debt" means, as to any particular lease (other than a
crossborder or defeased lease arrangement) entered into after the date hereof
under which any Person is at the time liable and at any date as of which the
amount thereof is to be determined, the total net amount of rent required to be
paid by such Person under such lease during the remaining primary term thereof,
discounted to present values as of such time in accordance with generally
accepted accounting principles from the respective due dates thereof to such
date. The net amount of rent required to be paid under any such lease for any
such period shall be the aggregate amount of the rent payable by the lessee
with respect to such period after excluding amounts required to be paid on
account of maintenance and repairs, insurance, taxes, assessments, water and
utility rates and similar charges. In the case of any lease which is
terminable by the lessee upon the payment of a penalty, such net amount shall
also include the amount of such penalty, but no rent shall be considered as
required to be paid under such lease subsequent to the first date upon which it
may be so terminated.
"Authenticating Agent" means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Securities.
<PAGE>
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101
"Authorized Newspaper" means a newspaper of general circulation, in
an official language of the country of publication or in the English language,
customarily published on a daily basis (including newspapers published on a
daily basis except not published on Legal Holidays, as defined in Section 113)
in such country. Whenever successive weekly publications in an Authorized
Newspaper are required hereunder, they may be made (unless otherwise expressly
provided herein) on the same or different days of the week and in the
same or different Authorized Newspapers.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Business Day", when used with respect to any Place of Payment, means
each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on
which banking institutions in that Place of Payment or the city in which the
Corporate Trust Office of the Trustee is located, are authorized or
obligated by law to close.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman, its President or a Vice President, and by its Treasurer, an
<PAGE>
4
101
Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to
the Trustee.
"Consolidated Net Tangible Assets" means the total amount of assets of
the Company and its consolidated Subsidiaries (less applicable reserves) after
deducting therefrom: (a) all current liabilities of the Company and its
consolidated Subsidiaries (excluding intercompany items among the Company and
its consolidated Subsidiaries and excluding any current liabilities
constituting Funded Indebtedness by reason of being renewable or extendable and
excluding deferred income taxes), and (b) goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles, such
assets and exclusions and deductions therefrom to be in such amounts, if any,
as would appear on a consolidated balance sheet of the Company and its
consolidated Subsidiaries as of the date of computation, prepared in accordance
with generally accepted accounting principles applied on a consistent basis as
in effect on the date of such computation.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered
and, with respect to Bankers Trust Company of California, National Association,
shall be located in San Francisco, California.
"corporation" includes corporations, associations, companies and
business trusts.
"Defaulted Interest" has the meaning specified in Section 307.
"Depository" means, with respect to any series of Securities issuable
or issued in the form of a Global Security, an entity named as such in the
Indenture, or, if no entity is so named, an entity, if any, named by the
Company as such by Board Resolution, or its successor. The Depository is the
entity which holds a Global Security, if any, and operates the computerized
book-entry system through which ownership interests in the Securities are
recorded. Such entity shall at all times be a registered clearing agency under
the Securities Exchange Act of 1934, as amended, and in good standing
thereunder or, in the case of an entity which holds a Global Security issued
outside of the United States, such entity shall at all times be in compliance
with any applicable registration requirements and in good standing under
application regulations.
"Event of Default" has the meaning specified in Section 501.
<PAGE>
5
101
"Funded Indebtedness" means, with respect to any corporation, indebt
edness of such corporation if such indebtedness shall be payable more than one
year from the date of computation or shall be extendable or renewable at the
option of such corporation to a time more than one year after the date of
computation; and all guarantees (direct or indirect) of such indebtedness of
others.
"Global Security" means a Security, if any, issued to evidence all or a
part of a series of Securities in accordance with Section 301.
"Holder" means the bearer of an Unregistered Security or coupon
appertaining thereto or a Person in whose name a Registered Security is
registered in the Security Register or the Person who is the record owner of
any ownership interests in a Global Security.
"indebtedness" of a corporation means any and all obligations for money
borrowed which in accordance with generally accepted accounting principles
would be included on the liabilities side of a balance sheet of such
corporation as of the date as of which such indebtedness was incurred.
"Indenture" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof
and shall include the terms of particular series of Securities established as
contemplated by Section 301.
"interest", when used with respect to an Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity.
"Interest Payment Date", when used with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind (including any conditional sale or other title retention
agreement, and, except with respect to any lease, the filing of or agreement to
file any financing statement under the Uniform Commercial Code of any
jurisdiction).
<PAGE>
6
101
"Maturity", when used with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, exercise of repayment option
or otherwise.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, a Vice Chairman, the President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of
the Company, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an
employee of (except in the case of an opinion of counsel deliverable pursuant
to Sections 403(j) and 1007(6)), or counsel for, the Company, and who shall be
acceptable to the Trustee.
"Original Issue Discount Security" means any Security which provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 502.
"Outstanding", when used with respect to Securities, means, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities or portions thereof for whose payment or
redemption (a) money in the necessary amount has been theretofore
deposited with the Trustee or any Paying Agent (other than the
Company) in trust or set aside and segregated in trust by the Company
(if the Company shall act as its own Paying Agent) for the Holders of
such Securities or (b) U.S. Government Obligations as contemplated by
Sections 401 and 403 in the necessary amount have been theretofore
deposited with the Trustee, in trust, for the Holders of such
Securities, provided that, if such Securities are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee has been
made; and
(iii) Securities which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities
<PAGE>
7
101
in respect of which there shall have been presented to the Trustee
proof satisfactory to it that such Securities are held by a bona fide
purchaser in whose hands such Securities are valid obligations of the
Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Trustee the pledgee's right so to act with respect to such Securities
and that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or of such other obligor. In
determining whether the Holders of the requisite principal amount of Securities
of any series have concurred in any direction, waiver or consent, the principal
amount of Original Issue Discount Securities that shall be deemed to be
outstanding shall be the amount of the principal thereof that would be due and
payable as of the date of such determination upon acceleration of the maturity
thereof pursuant to Section 502.
"Paying Agent" means any Person authorized by the Company to pay the
principal of (and premium, if any) or interest on any Securities on behalf of
the Company.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any
series, means the place or places where the principal of (and premium, if any)
and interest on the Securities of that series are payable as specified as
contemplated by Section 301.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security, and, for the purposes of this definition, any Security au-
<PAGE>
8
101
thenticated and delivered under Section 306 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Property" means (a) any building, structure or other
facility used primarily for manufacturing and located in the United States, in
each case the gross book value (without deduction of any depreciation reserves)
of which on the date as of which the determination is being made shall exceed
10% of Consolidated Net Tangible Assets, other than any of the types of
facilities described in subsections (b)(4), (b)(5) and (b)(6) of Section 103 of
the Code, or as described in any provisions of the Code which may hereafter
replace such subsections, or any types of facilities which may hereafter be
added to the list of facilities described in such subsections or their
successor provisions, and (b) any timberlands in the United States owned in fee
or under contract for the purchase of the fee by the Company or any Subsidiary
other than such timberlands in the aggregate not exceeding 10% of the aggregate
timberlands acreage in the United States owned in fee or under contract for the
purchase of the fee by the Company and its Subsidiaries on the date as of which
any determination shall be made; provided, however, that the term "Principal
Property" shall not include any timberlands, buildings, structures, facilities
or any portion of any of the foregoing which, in the opinion of the Board of
Directors as expressed in a Board Resolution, shall not be of material
importance to the total business conducted by the Company and its Subsidiaries
taken as an entirety; and provided, further, that the term Principal Property
shall not include any land, including without limitation timberlands,
designated by the Board of Directors as being held primarily for development or
sale, or any land, including without limitation timberlands, held for the
exploitation of minerals or mineral rights.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Security" means any Security issued hereunder and
registered by the Security Registrar or any recorded interest in a Global
Security issued hereunder.
<PAGE>
9
101
"Regular Record Date" for the interest payable on any Interest Payment
Date on the Securities of any series means the date specified for that purpose
as contemplated by Section 301.
"Repayment Date", when used with respect to any Security of any series
to be repaid, means the date, if any, fixed for such repayment pursuant to
Section 301 of this Indenture.
"Repayment Price", when used with respect to any Security of any
series to be repaid, means the price, if any, at which it is to be repaid
pursuant to Section 301.
"Responsible Officer", when used with respect to the Trustee, means
any officer within the corporate Trust and Agency Group or any other successor
group of the Trustee, including any vice president, assistant vice president,
assistant secretary or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers.
"Security" or "Securities" has the meaning stated in the first recital
of this Indenture and more particularly means any Security or Securities
authenticated and delivered under this Indenture.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305.
"series" or "series of Securities" means a series of Securities issued
under this Indenture as determined by Board Resolution or as otherwise
determined under this Indenture, and except as otherwise provided in Section
608.
"Special Record Date" for the payment of any Defaulted Interest means
a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of principal or interest is due and payable.
"Subsidiary" means a corporation more than 50% of the outstanding
voting stock of which is owned, directly or indirectly, by the Company or by
one or more other Subsidiaries, or by the Company and one or more other
Subsidiaries. For the purposes of this definition, "voting stock" means stock
<PAGE>
10
101
which ordinarily has voting power for the election of directors, whether at all
times or only so long as no senior class of stock has such voting power by
reason of any contingency.
"timberlands" means real property that contains standing timber which
is (or upon the completion of the growth cycle then in process is expected to
become) of a commercial quantity and of merchantable quality.
"Trustee" means the Person named as the "Trustee" in the first
Paragraph of this instrument until a successor Trustee shall have been
appointed pursuant to the applicable provisions of this Indenture, and
thereafter "Trustee" shall mean or include each Person who is then a Trustee
hereunder, and if at any time there is more than one such Person, "Trustee" as
used with respect to the Securities of any series shall mean the Trustee with
respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed, except as provided
in Section 905.
"U.S. Government Obligations" means direct obligations of the United
States for the payment of which its full faith and credit is pledged, or
obligations of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States and the payment of which is
unconditionally guaranteed by the United States.
"U.S. Person" means a citizen, national or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States Federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
"Unregistered Security" means any Security issued hereunder which is
not a Registered Security.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
<PAGE>
11
101, 102, 103
"Yield to Maturity" means the yield to maturity, calculated by the
Company at the time of issuance of a series of Securities or, if applicable, at
the most recent determination of interest on such series in accordance with
accepted financial practice.
SECTION 102. Compliance Certificates and Opinions.
Upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall furnish to
the Trustee an Officers' Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
met and an Opinion of Counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been met, except that in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than certificates
provided pursuant to Section 704(4)) shall include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether
or not such covenant or condition has been met; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been met.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or
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12
103, 104
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon an Opinion of Counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
opinion with respect to the matters upon which his certificate or opinion is
based is erroneous. Any such Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Indenture, they may, but need not, be consolidated and form one
instrument.
SECTION 104. Acts of Holders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly required, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent, or of the holding by any
Person of Unregistered Securities, shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
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13
104
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner acceptable to the Trustee.
(c) The amount of Unregistered Securities held by any Person
executing any such instrument or writings as the Holder thereof, and the
numbers of such Unregistered Securities, and the date of his holding the same,
may be proved by the production of such Unregistered Securities or by a
certificate executed, as depositary, by any trust company, bank, banker or
member of a national securities exchange (wherever situated), if such
certificate is in form satisfactory to the Trustee, showing that at the date
therein mentioned such Person had on deposit with such depositary, or exhibited
to it, the Unregistered Securities therein described; or such facts may be
proved by the certificate or affidavit of the Person executing such instrument
or writing as the Holder thereof, if such certificate or affidavit is in form
satisfactory to the Trustee. The Trustee and the Company may assume that such
ownership of any Unregistered Securities continues until (1) another
certificate bearing a later date issued in respect of the same Unregistered
Securities is produced, or (2) such Unregistered Securities are produced by
some other Person, or (3) such Unregistered Securities are registered as to
principal or are surrendered in exchange for Unregistered Securities, or (4)
such Unregistered Securities are no longer Outstanding.
(d) The fact and date of execution of any such instrument or
writing and the amount and number of Unregistered Securities held by the Person
so executing such instrument or writing may also be proved in any other manner
which the Trustee deems sufficient; and the Trustee may in any instance require
further proof with respect to any of the matters referred to in this Section.
(e) The ownership of Registered Securities shall be proved by the
Security Register.
<PAGE>
14
104, 105, 106
(f) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done, omitted or suffered to be done by the Trustee or
the Company in reliance thereon, whether or not notation of such action is made
upon such Security.
(g) The Company may set a record date for purposes of determining
the identity of Holders of any Securities of any series entitled to vote or
consent to any action by vote or consent authorized or permitted by Section 512
or 513. Such record date shall be the later of 30 days prior to the first
solicitation of such consent or the date of the most recent list of Holders of
such Securities furnished to the Trustee pursuant to Section 701 prior to such
solicitation.
SECTION 105. Notices, Etc., to Trustee and Company.
Except as otherwise provided herein, any request, demand,
authorization, direction, notice, consent, waiver or Act of Holders or other
document provided or permitted by this Indenture to be made upon, given or
furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
Attention: Corporate Trust and Agency Group West, 50 Fremont Street,
10th Floor, San Francisco, California 94105, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its
principal office specified in the first paragraph of this instrument
or at any other address previously furnished in writing to the Trustee
by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice of any event or reports to
Holders, such notice or report shall be sufficiently given (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to each Holder of Registered Securities affected by such event, at his
address as it appears in the Security Register and to addresses filed with the
Trustee or
<PAGE>
15
106, 107, 108
preserved on the Trustee's list pursuant to Section 702(a) for other Holders
(and to such other addresses as may be required in the case of such notice or
report under Section 313(c) of the Trust Indenture Act), not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice or report. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiently given to Holders
of Unregistered Securities if published in an Authorized Newspaper in each of
The City of New York, London and, if such Securities are listed on any stock
exchange outside of the United States, in the city in which such stock exchange
is located (if other than London), or in such other city or cities as may be
specified in the Securities, once in each of two different calendar weeks, the
first publication to be not earlier than the earliest date, and not later than
the last date, if any, prescribed for the giving of such notice. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
If it shall be impractical in the opinion of the Trustee or the
Company to make any publication of any notice required hereby in an Authorized
Newspaper, any publication or other notice in lieu thereof which is made or
given with the approval of the Trustee shall constitute a sufficient
publication of such notice.
SECTION 107. Conflict With Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with the duties
imposed by operation of subsection (c) of Section 318 of the Trust Indenture
Act, the imposed duties shall control.
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
<PAGE>
16
109, 110, 111, 112, 113
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall
binds its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied,
shall give to any Person, other than the parties hereto (including any Paying
Agent appointed pursuant to Section 1002 and Authenticating Agent appointed
pursuant to Section 614 to the extent provided herein) and their successors
hereunder and the Holders, any benefit or any legal or equitable right, remedy
or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and construed
in accordance with the laws of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Repayment Date or Stated Maturity of any Security shall not be a Business Day
at any Place of Payment or the city in which the Corporate Trust Office of the
Trustee is located, then (notwithstanding any other provision of this Indenture
or of the Securities) payment of interest or principal (and premium, if any)
need not be made at such Place of Payment on such date, but may be made on the
next succeeding Business Day at such Place of Payment with the same force and
effect as if made on the Interest Payment Date or Redemption Date, Repayment
Date, or at the Stated Maturity, provided that no interest shall accrue with
respect to such payment for the period from and after such Interest Payment
Date, Redemption Date, Repayment Date or Stated Maturity, as the case may be.
<PAGE>
17
114, 115, 201
SECTION 114. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders of one or more series. The Paying Agent or Security Registrar may make
reasonable rules and set reasonable requirements for its functions.
SECTION 115. No Recourse Against Others.
No director, officer, employee, stockholder or Affiliate, as such, of
the Company shall have any liability for any obligation of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. Each Holder by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities of each series and related coupons, if any, shall be in
substantially the form as shall be established by or pursuant to a Board
Resolution or in one or more indentures supplemental hereto, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture and as reasonably acceptable to the
Trustee, and may have such letters, numbers or other marks of identification
and such legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as evidenced by their
execution of the Securities. When the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.
If required or appropriate under applicable law, Unregistered
Securities and their coupons must have the following statement on their face:
"Any United States person who holds this obligation will be subject to
limitations
<PAGE>
18
201, 202, 301
under the United States income tax laws, including the limitations provided in
Sections 165(j) and 1287(a) of the Internal Revenue Code". If required or
appropriate under applicable law, Unregistered Securities and their coupons
must have the following statement on their face: "By accepting this obligation,
the Holder represents and warrants that it is not a United States person (other
than an exempt recipient described in section 6049(b)(4) of the Internal
Revenue Code and the regulations thereunder) and that it is not acting for or
on behalf of a United States person (other than an exempt recipient described
in section 6049(b)(4) of the Internal Revenue Code and the regulations
thereunder)."
The definitive Securities shall be printed, lithographed or engraved
on steel engraved borders or may be produced in any other manner or combination
of manners, all as determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
SECTION 202. Form of Trustee's Certificate of Authentication.
The Trustee's certificate of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated herein,
referred to in the within-mentioned Indenture.
BANKERS TRUST COMPANY OF
CALIFORNIA, NATIONAL
ASSOCIATION
as Trustee
By ...............................
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited, Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
<PAGE>
19
301
The Securities may be issued in one or more series. There may be
Registered Securities and Unregistered Securities within a series. Registered
and Unregistered Securities may be in temporary or permanent global form.
Unregistered Securities may be issued with or without coupons attached.
Unregistered Securities may be subject to such restrictions, and contain such
legends, as may be required by United States laws and regulations. There shall
be established in or pursuant to a Board Resolution, and set forth in an
Officers' Certificate, or established in one or more indentures supplemental
hereto, prior to the issuance of Securities of any series,
(1) the title of the Securities of the series (which
shall distinguish the Securities of the series from all other
Securities);
(2) any limit upon the aggregate principal amount of the
Securities of the series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Section 304, 305,
306, 906, 1107 or 1305);
(3) the price or prices (expressed as a percentage of the
principal amount thereof) at which the securities will be issued and
the date or dates on which the principal (and premium, if any) of the
Securities of the series is payable;
(4) the rate or rates (including the method of
determining any variable rates) at which the Securities of the series
shall bear interest, if any, the date or dates from which such
interest shall accrue, the Interest Payment Dates on which such
interest shall be payable and, with respect to Registered Securities,
the Regular Record Date for the interest payable on any Interest
Payment Date;
(5) the place or places where the principal of (and
premium, if any) and interest on Securities of the series shall be
payable, any Registered Securities of the series may be surrendered
for registration of transfer, Securities of the series may be
surrendered for exchange, and where notices and demands to or upon the
Company in respect of the Securities of the series and this Indenture
may be served and notices to Holders pursuant to Section 106 will be
published;
(6) if applicable, the period or periods within which,
the price or prices at which and the terms and conditions upon which
Securities of the series may be redeemed, in whole or in part, at the
option of the Company;
<PAGE>
20
301
(7) the obligation, if any, of the Company to redeem or
purchase Securities of the series pursuant to any sinking fund or
analogous provisions and the period or periods within which, the price
or prices at which and the terms and conditions upon which Securities
of the series shall be redeemed or purchased, in whole or in part,
pursuant to such obligation;
(8) the period or periods within which, the price or
prices at which and the terms and conditions upon which Securities of
the series may be repaid, in whole or in part, at the option of the
Holders;
(9) the right, if any, of the Company to execute and
deliver to the Trustee, and to direct the Trustee to authenticate and
deliver in accordance with a Company Order, a Security of any series
in lieu of or in exchange for any Securities of such series cancelled
upon redemption or repayment;
(10) the denominations in which any Registered Securities
of the series shall be issuable, if other than denominations of $1,000
and any integral multiple thereof, and the denomination or
denominations in which any Unregistered Securities of the series shall
be issuable, if other than the denomination of $5,000;
(11) if other than the principal amount thereof, the
portion of the principal amount of Securities of the series which
shall be payable upon declaration of acceleration of the Maturity
thereof pursuant to Section 502;
(12) whether Securities of the series are to be issuable
as Registered Securities, Unregistered Securities, or both, whether
Securities of the series are to be issuable with or without coupons,
whether any Securities of the series are to be issuable initially in
temporary global form and the circumstances under which such
Securities in temporary global form may be exchanged for definitive
Securities, and whether any Securities of the series are to be
issuable in permanent global form with or without coupons and, if so,
whether beneficial owners of interests in any such permanent Global
Security may exchange such interests for Securities of such series and
of like tenor of any authorized form and denomination and the
circumstances under which any such exchanges may occur, if other than
in the manner provided in Section 311;
(13) whether and under what circumstances the Company will
pay additional amounts on the Securities of that series held by a
person who is not a U.S. Person in respect of taxes or similar charges
withheld or deducted and, if so, whether the Company will have the
option to redeem such Securities rather than pay such additional
amounts;
<PAGE>
21
301
(14) the currency or currencies, including composite
currencies, in which payment of the principal of (and premium, if any)
and interest on the Securities of the series shall be payable (if
other than the currency of the United States of America);
(15) if the amount of payments of principal of (and
premium, if any) or interest on the Securities of the series may be
determined with reference to an index, the manner in which such
amounts shall be determined;
(16) the form or forms of the Securities, including such
legends as may be required by United States laws or regulations, the
form of any coupons or temporary Global Security, if any, which may be
issued and the forms of any certificates which may be required
hereunder or under United States laws or regulations in connection
with the offering, sale, delivery or exchange of Unregistered
Securities, if any;
(17) the Person to whom any interest on any Registered
Security of the series shall be payable, if other than the Person in
whose name that Security is registered at the close of business on the
regular record date for such interest, and the manner in which, or the
Person to whom, any interest on any Unregistered Security of the
series shall be payable, if otherwise than upon presentation and
surrender of the coupons appertaining thereto as they severally
mature, and the extent to which, or the manner in which, any interest
payable on a temporary or permanent Global Security on an interest
payment date will be paid; and
(18) any other terms, conditions and rights of the series
(which terms, conditions and rights shall not be inconsistent with the
provisions of this Indenture).
All Securities of any one series and the coupons appertaining to any
Unregistered Securities of such series shall be substantially identical except
in the case of Registered Securities as to denomination and except as may
otherwise be provided in or pursuant to such Board Resolution and set forth in
such Officers' Certificate or in any such indenture supplemental hereto and as
reasonably acceptable to the Trustee. Securities of different series may
differ in any respect, provided that all series of Securities shall be equally
and ratably entitled to the benefits of this Indenture.
If the terms and form or forms of any series of Securities are
established by or pursuant to a Board Resolution, the Company shall deliver a
copy of such Board Resolution to the Trustee at or prior to the issuance of
such series with (1) the form or forms of Security which have been approved
attached thereto, or (2) if such Board Resolution authorizes a specific officer
or officers
<PAGE>
22
301, 302, 303
to approve the terms and form or forms of the Securities, a certificate of such
officer or officers approving the terms and form or forms of Security with such
form or forms of Securities attached thereto. Such Board Resolution or
certificate may provide general terms or parameters for Securities of any
series and may provide that the specific terms of particular Securities of a
series may be determined in accordance with or pursuant to the Company Order
referred to in Section 303 hereof.
SECTION 302. Denominations.
The Securities of each series shall be issuable in registered or
unregistered form with or without coupons in such denominations as shall be
specified as contemplated by Section 301. In the absence of any such
provisions with respect to the Securities of any series, the Registered
Securities of such series shall be issuable in denominations of $1,000 and any
integral multiple thereof and the Unregistered Securities of the series shall
be issuable in denominations of $5,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its
Chairman of the Board and Chief Executive Officer, its President, the Senior
Vice President, Finance, and the Treasurer, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any of these officers on the Securities may be manual or
facsimile. The coupons, if any, of Unregistered Securities shall bear the
manual or facsimile signature of any one of the officers or assistant officers
referred to in the first sentence of this Section 303.
Securities bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of
this Indenture, the Company may deliver Securities of any series executed by
the Company to the Trustee for authentication, together with a Company Order
for the authentication and delivery of such Securities, and the Trustee
<PAGE>
23
303
in accordance with the Company Order shall authenticate and deliver such
Securities. In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(a) that such form of Securities has been established in
conformity with the provisions of this Indenture;
(b) that such terms have been established in conformity
with the provisions of this Indenture; and
(c) that such Securities, when authenticated and
delivered by the Trustee and issued by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their terms, subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting the enforcement of creditors' rights and to
general equity principles.
Notwithstanding the provisions of Section 301 and of the preceding
paragraphs, if all Securities of a series are not to be originally issued at
one time, it shall not be necessary to deliver the Officers' Certificate
otherwise required pursuant to Section 301 or the Company Order and Opinion of
Counsel otherwise required pursuant to such preceding paragraphs at or prior to
the time of authentication of each Security of such series if such documents
are delivered at or prior to the authentication upon original issuance of the
first Security of such series to be issued. If such form or terms have been so
established, the Trustee shall not be required to authenticate such Securities
if the issuance of such Securities pursuant to this Indenture will affect the
Trustee's own rights, duties or immunities under the Securities and this
Indenture or otherwise in a manner which is not reasonably acceptable to the
Trustee.
Each Registered Security shall be dated the date of its authentication
and each Unregistered Security shall be dated the date of its original
issuance.
No Security shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
exe-
<PAGE>
24
303, 304
cuted by the Trustee by manual signature and no coupon shall be valid until the
Security to which it appertains has been so authenticated, and such certificate
upon any Security shall be conclusive evidence, and the only evidence, that
such Security has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
Notwithstanding the foregoing, until the Company has delivered an
Officers' Certificate to the Trustee and the Security Registrar stating that,
as a result of the action described, the Company would not suffer adverse
consequences under the provisions of United States law or regulations in effect
at the time of the delivery of Unregistered Securities, the Trustee or the
Security Registrar will (i) deliver Unregistered Securities only outside the
United States and its possessions and (ii) release Unregistered Securities in
definitive form to the person entitled to physical delivery thereof only upon
presentation of a certificate in the form prescribed by the Company.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Registered Securities of any
series (including Global Securities), the Company may execute, and upon Company
Order the Trustee shall authenticate and deliver, temporary Registered
Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Registered Securities in lieu of which they are issued and
with such appropriate insertions, omissions, substitutions and other variations
as the officers executing such Securities may determine, as evidenced by their
execution of such Securities. Every temporary Registered Security shall be
executed by the Company and authenticated by the Trustee, and registered by the
Security Registrar, upon the same conditions, and with like effect, as a
definitive Registered Security.
If temporary Securities of any series are issued, the Company will
cause definitive Registered Securities of that series to be prepared without
unreasonable delay. After the preparation of definitive Registered Securities
of such series, the temporary Registered Securities of such series shall be
exchangeable for definitive Registered Securities of such series upon surrender
of the temporary Registered Securities of such series at the office or agency
of the Company in a Place of Payment for that series, without charge to the
Holder. Upon
<PAGE>
25
304, 305
surrender for cancellation of any one or more temporary Registered Securities
of any series the Company shall execute and the Trustee shall authenticate and
deliver in exchange therefor a like principal amount of definitive Registered
Securities of the same series of authorized denominations. Until so exchanged
the temporary Registered Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Registered
Securities of such series.
Until definitive Unregistered Securities of any series (including
Global Securities) are ready for delivery, the Company may prepare and execute
and the Trustee shall authenticate one or more temporary Unregistered
Securities, which may have coupons attached or which may be in the form of one
or more temporary Global Unregistered Securities of that series without
coupons. The temporary Unregistered Security or Securities of any series shall
be substantially in the form approved by or pursuant to a Board Resolution and
shall be delivered to one of the Paying Agents located outside the United
States and its possessions or to such other person or persons as the Company
shall direct against such certification as the Company may from time to time
prescribe by or pursuant to a Board Resolution. The temporary Unregistered
Security or Securities of a series shall be executed by the Company and
authenticated by the Trustee upon the same conditions, and with like effect, as
a definitive Unregistered Security of such series, except as provided herein or
in the Board Resolution or supplemental Indenture relating thereto. A
temporary Unregistered Security or Securities shall be exchangeable for
definitive Unregistered Securities at the time and on the conditions, if any,
specified in the temporary Security.
Upon any exchange of a part of a temporary Unregistered Security of a
series for definitive Unregistered Securities of such series, the temporary
Unregistered Security shall be endorsed by the Trustee or Paying Agent to
reflect the reduction of its principal amount by an amount equal to the
aggregate principal amount of the definitive Unregistered Securities of such
series so exchanged and endorsed.
SECTION 305. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register (the register maintained in such office and in any other
office or agency of the Company in a Place of Payment being herein sometimes
<PAGE>
26
305
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers of Securities. The Trustee is
hereby appointed "Security Registrar" for the purpose of registering Securities
and transfers of Securities as herein provided.
Except in the case of Securities issued in the form of a Global
Security, upon surrender for registration of transfer of any Registered
Security of any series at the office or agency of the Company in a Place of
Payment for that series, the Company shall execute, and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Registered Securities of the same series, of any
authorized denominations and of a like aggregate principal amount.
If both Registered and Unregistered Securities are authorized for a
series of Securities and the terms of such Securities permit, (i) Unregistered
Securities may be exchanged for an equal principal amount of Registered or
Unregistered Securities of the same series and date of maturity in any
authorized denominations upon delivery to the Security Registrar (or a Paying
Agent (as herein defined), if the exchange is for Unregistered Securities) of
the Unregistered Security with all unmatured coupons and all matured coupons in
default appertaining thereto and if all other requirements of the Security
Registrar (or such Paying Agent) and such Securities for such exchange are met,
and (ii) Registered Securities, other than Securities issued in the form of a
Global Security (except as provided in Section 311), may be exchanged for an
equal principal amount of Unregistered Securities of the same series and date
of maturity in any authorized denominations (except that any coupons
appertaining to such Unregistered Securities which have matured and have been
paid shall be detached) upon delivery to the Security Registrar of the
Registered Securities and if all other requirements of the Security Registrar
and such Securities for such exchange are met.
Notwithstanding the foregoing, the exchange of Unregistered Securities
for Registered Securities or Registered Securities for Unregistered Securities
will be subject to the satisfaction of the provisions of United States law and
regulations in effect at the time of such exchange, and no exchange of
Registered Securities for Unregistered Securities will be made until the
Company
<PAGE>
27
305, 306
has notified the Trustee in an Officers' Certificate and the Security Registrar
that, as a result of such exchange, the Company would not suffer adverse
consequences under such law or regulations.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the Securities
surrendered upon such registration of transfer or exchange.
Every Security presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Trustee) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company, the Trustee and the Security Registrar duly
executed, by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made to the Holder for any registration of
transfer or exchange of Securities, but the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 306 or 1107 not
involving any transfer.
The Company shall not be required (i) to issue, register the transfer
of or exchange Securities of any series during a period beginning at the
opening of business 15 days before the day of the mailing of a notice of
redemption of Securities of that series selected for redemption under Section
1103 and ending at the close of business on the day of such mailing, or (ii) to
register the transfer of or exchange any Security so selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part. Unregistered Securities or any coupons appertaining thereto shall be
transferable by delivery thereof.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security or a Security with a mutilated coupon or
coupons appertaining to it is surrendered to the Trustee, the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
replacement Registered Security, if such surrendered security was a Registered
Security, or a replacement Unregistered Security with coupons corresponding
<PAGE>
28
306
to the coupons appertaining to the surrendered Security, if such surrendered
Security was an Unregistered Security, of the same series and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security or any coupon or coupons appertaining thereto, and (ii) such bond,
security or indemnity as may be required by them to save each of them and any
agent of either of them harmless, then, in the absence of actual notice to the
Company or the Trustee that such Security or any coupon or coupons appertaining
thereto has been acquired by a bona fide purchaser, the Company shall execute
and upon its request the Trustee shall authenticate and deliver, a replacement
Registered Security, if such Holder's claim pertains to a Registered Security,
or a replacement Unregistered Security with coupons corresponding to the
coupons appertaining to the destroyed, lost or stolen Unregistered Security or
the Unregistered Security to which such destroyed, lost or stolen coupon or
coupons appertains, if such Holder's claim pertains to an Unregistered
Security, of the same series and of like tenor and principal amount and bearing
a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security or any
coupon or coupons appertaining thereto has become or is about to become due and
payable, the Company in its discretion may, instead of issuing a new Security,
pay such Security or any coupon or coupons appertaining thereto.
Upon the issuance of any new Security under this Section or any coupon
or coupons appertaining thereto, the Company may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee) connected therewith.
Every new Security or any coupon or coupons appertaining thereto of
any series issued pursuant to this Section in lieu of any destroyed, lost or
stolen Security or any coupon or coupons appertaining thereto shall constitute
an original additional contractual obligation of the Company, whether or not
the destroyed, lost or stolen Security or any coupon or coupons appertaining
thereto shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Securities or any coupon or coupons appertaining thereto of that series
duly issued hereunder.
<PAGE>
29
306, 307
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities or
any coupon or coupons appertaining thereto.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Registered Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be
paid to the Person in whose name that Registered Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest. In case an Unregistered Security of any series
is surrendered in exchange for a Registered Security of such series after the
close of business (at an office or agency of the Company in a Place of Payment
for such series) on any Regular Record Date and before the opening of business
(at such office or agency) on the next succeeding Interest Payment Date, such
Unregistered Security shall be surrendered without the coupon relating to such
Interest Payment Date and interest will not be payable on such Interest Payment
Date in respect of the Registered Security issued in exchange for such
Unregistered Security, but will be payable only to the Holder of such coupon
when due in accordance with provisions of this Indenture.
Any interest on any Registered Security of any series which is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the Holder on the relevant Regular Record Date by virtue of having
been such Holder, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Registered
Securities of such series (or their respective Predecessor Securities)
are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each
Registered Security of such series and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to
be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to
<PAGE>
30
307
the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted
Interest as in this Clause provided. Thereupon the Trustee shall fix
a Special Record Date for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall cause notice
of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage prepaid, to
each Holder of Registered Securities of such series at his address as
it appears in the Security Register, not less than 10 days prior to
such Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose
names the Registered Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on
such Special Record Date and shall no longer be payable pursuant to the
following Clause (2). In case an Unregistered Security of any series
is surrendered at the office or agency of the Company in a Place of
Payment for such series in exchange for a Registered Security of such
series after the close of business at such office or agency on any
Special Record Date and before the opening of business at such office
or agency on the related proposed date for payment of Defaulted
Interest, such Unregistered Security shall be surrendered without the
coupon relating to such proposed date of payment and Defaulted
Interest will not be payable on such proposed date of payment in
respect of the Registered Security issued in exchange for such
Unregistered Security, but will be payable only to the Holder of such
coupon when due in accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted
Interest on the Registered Securities of any series in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Registered
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Registered Security shall carry the rights
to interest accrued and unpaid, and to accrue, which were carried by such other
Registered Security.
<PAGE>
31
307, 308, 309
Subject to the limitations set forth in Section 1002, the Holder of
any coupon appertaining to in Unregistered Security shall be entitled to
receive the interest payable on such coupon upon presentation and surrender of
such coupon on or after the Interest Payment Date of such coupon at an office
or agency maintained for such purpose pursuant to Section 1002.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Registered Security is registered as
the owner of such Registered Security for the purpose of receiving payment of
principal of (and premium, if any) and (subject to Section 307) interest on
such Registered Security and for all other purposes whatsoever, whether or not
such Registered Security be overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
Ownership of Registered Securities of a series shall be proved by the
computerized book-entry system of the Depository in the case of Registered
Securities issued in the form of a Global Security. Ownership of Unregistered
Securities may be proved by the production of such Unregistered Securities or
by a certificate or affidavit executed by the person holding such Unregistered
Securities or by a depository with whom such Unregistered Securities were
deposited, if the certificate or affidavit is satisfactory to the Trustee and
the Company. The Company, the Trustee and any agent of the Company may treat
the bearer of any Unregistered Security or coupon and the person in whose name
a Registered Security is registered as the absolute owner thereof for all
purposes.
None of the Company, the Trustee, any Paying Agent or the Security
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
SECTION 309. Cancellation.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, all Securities and coupons surrendered for payment,
redemption, registration of transfer or exchange or for credit against any
sinking fund
<PAGE>
32
309, 310, 311
payment shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. Except as
otherwise specified as contemplated by Section 301 for Securities of any
series, the Company may at any time deliver to the Trustee for cancellation any
Securities or coupons previously authenticated and delivered hereunder which
the Company may have acquired in any manner whatsoever, and all Securities or
coupons so delivered shall be promptly cancelled by the Trustee. No Securities
shall be authenticated in lieu of or in exchange for any Securities or coupons
cancelled as provided in this Section, except as expressly permitted by this
Indenture (including, without limitation, as contemplated by Section 301(9)).
All cancelled Securities or coupons held by the Trustee shall be destroyed and
the Trustee shall furnish an affidavit to the Company (setting forth the serial
numbers of such Securities) attesting to such destruction unless by a Company
Order the Company shall direct that the cancelled Securities or coupons be
returned to it.
SECTION 310. Computation of Interest.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, interest on the Securities of each series shall be
computed on the basis of a year of twelve 30-day months.
SECTION 311. Global Securities; Exchanges; Registration and Registration of
Transfer.
If specified as contemplated by Section 301, the Securities may be
issued in the form of one or more Global Securities, which shall be deposited
with the Depository, and, unless otherwise specified in the form of Global
Security adopted pursuant to Section 301. be registered in the name of the
Depository's nominee.
Except as otherwise specified as contemplated by Section 301, any
permanent Global Security shall be exchangeable only as provided in this
paragraph. If the beneficial owners of interests in a permanent Global
Security are entitled to exchange such interests for Securities of such series
of like tenor and principal amount of another authorized form, as specified as
contemplated by Section 301, then without unnecessary delay but in any event
not later than the earliest date on which such interests may be so exchanged,
the Company shall deliver to the Trustee definitive Securities of that series
in aggregate
<PAGE>
33
311
principal amount equal to the principal amount of such permanent Global
Security, executed by the Company. On or after the earliest date on which such
interests may be so exchanged, such permanent Global Security shall be
surrendered from time to time in accordance with instructions given to the
Trustee and the Depository (which instructions shall be in writing but need not
comply with Section 102 or be accompanied by an Opinion of Counsel) by the
Depository or such other depository as shall be specified in the Company Order
with respect thereto to the Trustee, as the Company's agent for such purpose,
to be exchanged, in whole or in part, for definitive Securities of the same
series without charge and the Trustee shall authenticate and deliver, in
exchange for each portion of such permanent Global Security, a like aggregate
principal amount of definitive Securities of the same series of authorized
denominations and of like tenor as the portion of such permanent Global Security
to be exchanged which, unless the Securities of the series are not issuable
both as Unregistered Securities and as Registered Securities, as specified as
contemplated by Section 301, shall be in the form of Unregistered Securities or
Registered Securities, or any combination thereof, as shall be specified by the
beneficial owner thereof, provided, however, that no such exchanges may occur
during the periods specified by Section 305; and provided, further, that no
Unregistered Security delivered in exchange for a portion of a permanent Global
Security shall be mailed or otherwise delivered to any location in the United
States unless the Company has complied with the fourth paragraph of Section
305. Promptly following any such exchange in part, such permanent Global
Security shall be returned by the Trustee, to the Depository or such other
depository referred to above, in accordance with the instructions of the
Company referred to above.
The Global Security may be transferred to another nominee of the
Depository, or to a successor Depository selected by the Company, and upon
surrender for registration of transfer of the Global Security to the Trustee,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee, a new Global Security in the same
aggregate principal amount. If at any time the Depository notifies the Company
that it is unwilling or unable to continue as Depository and a successor
Depository satisfactory to the Company is not appointed within 90 days after
the Company receives such notice, the Company will execute, and the Trustee
will authenticate and deliver, Securities in definitive form to the Depository
in exchange for the Global Security. In addition, if at any time the Company
<PAGE>
34
311, 401
determines that it is not in the best interest of the Company or the beneficial
owners of Securities to continue to have a Global Security representing all of
the Securities held by a Depository, the Company may, at its option, execute,
and the Trustee will authenticate and deliver, Securities in definitive form to
the Depository in exchange for all or a portion of the Global Security.
Promptly after any such exchange of Securities in definitive form for all or a
portion of the Global Security pursuant to this paragraph, the Company shall
promulgate regulations governing registration of transfers and exchanges of
Securities in definitive form, which regulations shall be reasonably
satisfactory to the Trustee and shall thereafter bind every Holder of such
Securities.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(1) either
(A) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section
306 and (ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the
giving of notice of redemption by the Trustee in the name, and
at the expense, of the Company, or
<PAGE>
35
401, 402
(iv) are deemed paid and discharged Pursuant to
Section 403, as applicable,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust
funds in trust for the purpose an amount of (a) money, or (b)
in the case of (ii) or (iii) above and if no Securities of any
series Outstanding are subject to repayment at the option of
Holders, (I) U.S. Government Obligations which through the
payment of interest and principal in respect thereof in
accordance with their terms will provide not later than one
day before the Stated Maturity or Redemption Date, as the case
may be, money in an amount, or (II) a combination of money or
U.S. Government Obligations as provided in (I) above, in each
case sufficient, in the opinion of a nationally recognized
firm of independent certified public accountants expressed in
a written certification thereof delivered to the Trustee, to
pay and discharge the entire indebtedness on such Securities
not theretofore delivered to the Trustee for cancellation, for
principal (and premium, if any) and interest to the date of
such deposit (in the case of Securities which have become due
and payable) or to the Stated Maturity or Redemption Date, as
the case may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been met.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 607, the obligations of
the Trustee to any Authenticating Agent under Section 614 and, if money or U.S.
Government Obligations shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section or if money or U.S. Government
Obligations shall have been deposited with or received by the Trustee pursuant
to Section 403, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. Application of Trust Money.
(a) Subject to the provisions of the last paragraph of Section
1003, all money or U.S. Government Obligations deposited with the Trustee
pursuant to Section 401, 403 or 1007 and all money received by the Trustee in
respect
<PAGE>
36
402, 403
of U.S. Government Obligations deposited with the Trustee pursuant to Section
401, 403 or 1007, shall be held in trust and applied by it, in accordance with
the provisions of the Securities and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of
the principal (and premium, if any) and interest for whose payment such money
has been deposited with or received by the Trustee or to make mandatory sinking
fund payments or analogous payments as contemplated by Section 401, 403 or
1007.
(b) The Company shall pay and shall indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against U.S. Government
Obligations deposited pursuant to Section 401, 403 or 1007 or the interest and
principal received in respect of such obligations other than any payable by or
on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company from time to
time upon Company Request any U.S. Government Obligations or money held by it
as provided in Section 401, 403 or 1007 which, in the opinion of a nationally
recognized firm of independent certified public accountants expressed in a
written certification thereof delivered to the Trustee, are then in excess of
the amount thereof which then would have been required to be deposited for the
purpose for which such U.S. Government Obligations or money was deposited or
received. This provision shall not authorize the sale by the Trustee of any
U.S. Government Obligations held under this Indenture.
SECTION 403. Satisfaction, Discharge and Defeasance of Securities of Any
Series.
The Company shall be deemed to have paid and discharged the entire
indebtedness on all the Outstanding Securities of any series on the 91st day
after the date of the deposit referred to in subparagraph (e) hereof, and the
provisions of this Indenture, as it relates to such Outstanding Securities of
such series, shall no longer be in effect (and the Trustee, at the expense of
the Company, shall at Company Request execute proper instruments acknowledging
the same), except as to:
(a) the rights of Holders of Securities of such series to
receive, from the trust funds described in subparagraph (e) hereof,
(i) payment of the principal of (and premium, if any) and each
installment of principal of
<PAGE>
37
403
(and premium, if any) or interest on the Outstanding Securities of
such series on the Stated Maturity of such principal or installment of
principal or interest or to and including the Redemption Date
irrevocably designated by the Company pursuant to subparagraph (k)
hereof and (ii) the benefit of any mandatory sinking fund payments
applicable to the Securities of such series on the day on which such
payments are due and payable in accordance with the terms of this
Indenture and the Securities of such series;
(b) the Company's obligations with respect to such
Securities of such series under Sections 305, 306, 1002 and 1003 and,
if the Company shall have irrevocably designated a Redemption Date
pursuant to subparagraph (k) hereof, Sections 1101, 1104 and 1106;
(c) the Company's obligations with respect to the Trustee
under Section 607; and
(d) the rights, powers, trust and immunities of the
Trustee hereunder and the duties of the Trustee under Section 402 and,
if the Company shall have irrevocably designated a Redemption Date
pursuant to subparagraph (k) hereof, Article Eleven and the duty of
the Trustee to authenticate Securities of such series issued on
registration of transfer or exchange;
provided that, the following conditions shall have been satisfied:
(e) the Company has deposited or caused to be irrevocably
deposited (except as provided in Section 402) with the Trustee as
trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the Securities of
such series, (i) money in an amount, or (ii) if Securities of such
series are not subject to repayment at the option of Holders, (A) U.S.
Government Obligations which through the payment of interest and
principal in respect thereof in accordance with their terms will
provide not later than one day before the due date of any payment
referred to in clause (x) or (y) of this subparagraph (e) money in an
amount or (B) a combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent certified public accountants
expressed in a written certification thereof delivered to the Trustee,
to pay and discharge (x) the principal of (and premium, if any) and
each installment of principal (and premium, if any) and interest on
the Outstanding Securities of such series on the Stated Maturity of
such principal or installment of principal or interest or to and
including the Redemption Date irrevocably designated by the Company
pursuant to subparagraph (k) hereof and (y) any mandatory sinking fund
payments applicable to the Securities of such series on the day on
which such payments are due and payable in accordance with the terms
of this Indenture and of the Securities of such series;
<PAGE>
38
403, 501
(f) such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it
is bound;
(g) such provision would not cause any Outstanding
Securities of such series then listed on the New York Stock Exchange
or other securities exchange to be delisted as a result thereof;
(h) no Event of Default or event which with notice or
lapse of time would become an Event of Default with respect to the
Securities of such series shall have occurred and be continuing on the
date of such deposit or during the period ending on the 91st day after
such date;
(i) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel to the effect that the Company
has received from, or there has been published by, the Internal
Revenue Service a ruling to the effect that Holders of the Securities
of such series will not recognize income, gain or loss for Federal
income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to Federal income tax on the same amount
and in the same manner and at the same times, as would have been the
case if such deposit, defeasance and discharge had not occurred;
(j) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance
contemplated by this Section have been complied with; and
(k) if the Company has deposited or caused to be
deposited money or U.S. Government Obligations to pay or discharge the
principal of (and premium, if any) and interest on the Outstanding
Securities of a series to and including a Redemption Date pursuant to
subparagraph (e) hereof, such Redemption Date shall be irrevocably
designated by a Board Resolution delivered to the Trustee on or prior
to the date of deposit of such money or U.S. Government Obligations,
and such Board Resolution shall be accompanied by an irrevocable
Company Request that the Trustee give notice of such redemption in the
name and at the expense of the Company not less than 30 nor more than
60 days prior to such Redemption Date in accordance with Section 1104.
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein with respect to Securities of
any series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be
effected
<PAGE>
39
501
by operation of law or pursuant to any judgment, decree or order of any Court
or any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any
Security of that series when it becomes due and payable, and
continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of (or
premium, if any, on) any Security of that series at its Maturity; or
(3) default in the deposit of any sinking fund payment,
when and as due by the terms of a Security of that series; or
(4) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture (other than a
covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit of
series of Securities other than that series), and continuance of such
default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that
series a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(5) the entry by a court having jurisdiction in the
premises of (A) a decree or order for relief in respect of the Company
in an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency, reorganization or other similar law or
(B) a decree or order adjudging the Company a bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of the Company
under any applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(6) the commencement by the Company of a voluntary case
or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other case
or proceeding to be adjudicated a bankrupt or insolvent, or the
consent by it to the entry of a decree or order for relief in respect
of the Company in an involuntary case or proceeding under any
applicable Federal or State bankruptcy,
<PAGE>
40
501, 502
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable Federal or State law, or the consent by
it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or of any substantial
part of its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of its
inability to pay its debts generally as they become due, or the taking
of corporate action by the Company in furtherance of any such action;
or
(7) any other Event of Default provided with respect to
Securities of that series.
SECTION 502. Acceleration of Maturity Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the
time Outstanding occurs and is continuing, then in every such case the Trustee
or the Holders of not less than 25% in aggregate principal amount of the
Outstanding Securities of that series may declare the principal amount of all
of the Securities of that series to be due and payable immediately, by a notice
in writing to the Company (and to the Trustee if given by Holders), and upon
any such declaration such principal amount shall become immediately due and
payable.
In the case of any declaration of acceleration of the Stated Maturity
of any Original Issue Discount Securities of a series, the Company shall
furnish the Trustee with an Officers' Certificate stating the amount of
principal to be paid to a Holder of $1,000 principal amount of such Securities.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in aggregate principal amount
of the Outstanding Securities of that series, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a
sum sufficient to pay
(A) all overdue interest on all Securities of
that series,
<PAGE>
41
502, 503
(B) the principal of (and premium, if any, on)
any Securities of that series which have become due otherwise
than by such declaration of acceleration and interest thereon
at the rate or rates prescribed therefor in such Securities,
(C) to the extent that payment of such interest
is lawful, interest upon overdue interest at the rate or rates
prescribed therefor in such Securities, and
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel;
and
(2) all Events of Default with respect to Securities of
that series, other than the non-payment of the principal of Securities
of that series which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the
rate or rates prescribed therefor in such Securities, and, in addition thereto,
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
<PAGE>
42
503, 504
If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, may institute
a judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon such Securities and collect the
moneys adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon such Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs
and is continuing, the Trustee may in its discretion proceed to protect and
enforce its rights and the rights of the Holders of Securities of such series
by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid in
respect of the Securities and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the same;
<PAGE>
43
504, 505, 506
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 607.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 505. Trustee May Enforce Claims Without Possession of Securities or
Coupons.
All rights of action and claims under this Indenture or the Securities
or coupons may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or coupons or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Securities and coupons in respect
of which such judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall be
applied in the following order, at the date or dates fixed by the Trustee, and,
in case of the distribution of such money on account of principal (or premium,
if any) or interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607;
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected,
<PAGE>
44
506, 507
ratably, without preference or priority of any kind, according to the
amounts due and payable on such Securities for principal (and premium,
if any) and interest, respectively; and
THIRD: The balance, if any, to the Company.
The Trustee may fix a record date (with respect to Registered
Securities) and payment date for any such payment to Holders of Securities.
SECTION 507. Limitation on Suits.
No Holder of any Security of any series shall have any right to
institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Securities of that series;
(2) the Holders of not less than 25% in aggregate
principal amount of the Outstanding Securities of that series shall
have made written request to the Trustee to institute proceedings in
respect of such Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
indemnity against the reasonable costs, expenses and liabilities to be
incurred in compliance with such request in such amount and for such
person or persons as shall be reasonably acceptable to the Trustee;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders
of a majority in aggregate principal amount of the Outstanding
Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
<PAGE>
45
508, 509, 510, 511
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of
any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the Stated Maturity or Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date, or, in the case of repayment at the option of the Holder, on the
Repayment Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder.
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last
paragraph of Section 306, no right or remedy herein conferred upon or reserved
to the Trustee or to the Holders is intended to be exclusive of any other right
or remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any Securities
to exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default
<PAGE>
46
511, 512, 513, 514
or an acquiescence therein. Every right and remedy given by this Article or by
law to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.
SECTION 512. Control by Holders.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series, provided that
(1) such direction shall not be in conflict with any rule
of law or with this Indenture, and
(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount
of the Outstanding Securities of any series may on behalf of the Holders of all
the Securities of such series waive any past default hereunder with respect to
such series and its consequences, except a default
(1) in the payment of the principal of (or premium, if
any) or interest on any Security of such series, or
(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the consent
of the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
SECTION 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
<PAGE>
47
514, 515, 601
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in
principal amount of the Outstanding Securities of any series, or to any suit
instituted by any Holder for the enforcement of the payment of the principal of
(or premium, if any) or interest on any Security on or after the Stated
Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date, or, in the case of repayment at
the option of the Holder, on or after the Repayment Date).
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture, and
no implied covenants or obligations shall be read into this Indenture
against the Trustee; and
<PAGE>
48
601
(2) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture.
(b) In case an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that
(1) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent
facts;
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of any
series, relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Indenture with
respect to the Securities of such series; and
(4) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(d) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
<PAGE>
49
602, 603
SECTION 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder with
respect to the Securities of any series, the Trustee shall transmit by mail to
all Holders of Securities of such series entitled to receive reports pursuant to
Section 704(3) (and, if Unregistered Securities of that series are outstanding,
shall cause to be published at least once in an Authorized Newspaper in each of
The City of New York, London and, if Securities of that series are listed on
any stock exchange outside of the United States, in the city in which such
stock exchange is located (if other than London)) notice of such default
hereunder known to the Trustee, unless such default shall have been cured or
waived; provided, however, that, except in the case of a default in the payment
of the principal of (or premium, if any) or interest on any Security of such
series or in the payment of any sinking fund installment with respect to
Securities of such series, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interest of the
Holders of Securities of such series; and provided, further, that in the case
of any default of the character specified in Section 501(4) with respect to
Securities of such series, no such notice to Holders shall be given until at
least 30 days after the occurrence thereof. For the purpose of this Section,
the term "default" means any event which is, or after notice or lapse of time
or both would become, an Event of Default with respect to Securities of such
series.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
<PAGE>
50
603, 604
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence be herein specifically prescribed) may,
in the absence of bad faith on its part, rely upon an Officers'
Certificate or a certificate of an officer or officers delivered
pursuant to Section 301 and such Officers' Certificate or certificate
of an officer or officers, in the absence or negligence or bad faith
on the part of the Trustee, shall be full warrant to the Trustee for
any action taken, suffered or omitted by it under the provisions of
this Indenture upon the faith thereof;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any of the Holders pursuant to this Indenture,
unless such Holders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; no Depository or Paying
Agent shall be deemed an agent of the Trustee and the Trustee shall
not be responsible for any act or omission by any of them.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificate of authentication, shall be taken as the statements of
the Company, and the Trustee or any Authenticating Agent assumes no
responsibility for
<PAGE>
51
604, 605, 606, 607
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Securities of any series or any
coupons. The Trustee or any Authenticating Agent shall not be accountable for
the use or application by the Company of Securities or the proceeds thereof.
The Trustee shall not be responsible for and makes no representations as to the
Company's ability or authority to issue the Unregistered Securities or the
lawfulness thereof.
SECTION 605. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company or the Trustee, in its individual
or any other capacity, may become the owner or pledgee of Securities and,
subject to Sections 608 and 613, may otherwise deal with the Company with the
same rights it would have if it were not Trustee, Authenticating Agent, Paying
Agent, Security Registrar or such other agent.
SECTION 606. Money Held in Trust.
Money held by the Trustee or by any Paying Agent (other than the
Company if the Company shall act as Paying Agent) in trust hereunder need not
be segregated from other funds except to the extent required by law. Neither
the Trustee nor any Paying Agent shall be liable for interest on any money
received by it hereunder except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence or bad faith; and
<PAGE>
52
607, 608
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense incurred without negligence or
bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder or
performance of its duties hereunder, including the costs and expenses
of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company
under this Section the Trustee shall have a claim prior to the Securities and
any coupons upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the payment of principal of (and premium,
if any) or interest on particular Securities or any coupons.
SECTION 608. Disqualification; Conflicting Interests.
(a) If the Trustee has or shall acquire any conflicting interest,
as defined in this Section, with respect to the Securities of any series, then,
within 90 days after ascertaining that it has such conflicting interest and if
the default (as provided in subsection (d)) to which such conflicting interest
relates has not been cured or duly waived or otherwise eliminated before the
end of such 90-day period, the Trustee shall either eliminate such conflicting
interest or, except as otherwise provided below in this Section, resign with
respect to the Securities of that series in the manner and with the effect
hereinafter specified in this Article and the Company shall take prompt steps
to have a successor appointed in the manner provided herein.
(b) In the event that the Trustee shall fail to comply with the
provisions of subsection (a) of this Section with respect to the Securities of
any series, the Trustee shall, within 10 days after the expiration of such
90-day period, transmit by mail to all Holders of Securities of that series
entitled to receive reports pursuant to Section 704(3) (and, if Unregistered
Securities of that series are outstanding, shall cause to be published at least
once in an Authorized Newspaper in each of The City of New York, London and, if
Securities of that series are listed on any stock exchange outside of the
United States, in the city in which such stock exchange is located (if other
than London)), notice of such failure.
(c) Subject to Section 514, unless the Trustee's duty to resign is
stayed, as provided below in this Section, any Holder of Securities of that
series who has been a bona fide Holder of Securities of any series referred to
in subsection (a)
<PAGE>
53
608
of this Section for at least six months may, on behalf of himself and all other
Holders of Securities of that series similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee, and the appointment of a
successor, if the Trustee fails, after written request by such Holder to comply
with the provisions of subsection (a) of this Section.
(d) For the purposes of this Section, the Trustee shall be deemed
to have a conflicting interest with respect to the Securities of any series if
the Securities of such series are in default (exclusive of any period of grace
or requirement of notice) as provided in Section 501 and
(1) the Trustee is trustee under this Indenture with
respect to the Outstanding Securities of any series other than that
series or is trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the Company are outstanding, unless such other
indenture is a collateral trust indenture under which the only
collateral consists of Securities issued under this Indenture,
provided that there shall be excluded from the operation of this
paragraph this Indenture with respect to the Securities of any series
other than that series, that certain indenture dated as of April 1,
1986 between the Company and the Trustee and any indenture or
indentures under which other securities, or certificates of interest
or participation in other securities, of the Company are outstanding,
if
(i) this Indenture and such other indenture or
indentures (and all series of Securities issuable thereunder)
are wholly unsecured and rank equally, and such other
indenture or indentures (and such series) are hereafter
qualified under the Trust Indenture Act, unless the Commission
shall have found and declared by order pursuant to Section
305(b) or Section 307(c) of the Trust Indenture Act that
differences exist between the provisions of this Indenture
with respect to Securities of that series and one or more
other series or the provisions of such other indenture or
indentures (or such series) which are so likely to involve a
material conflict of interest as to make it necessary in the
public interest or for the protection of investors to
disqualify the Trustee from acting as such under this
Indenture with respect to the Securities of that series and
such other series or under such other indenture or indentures,
or
(ii) the Company shall have sustained the burden
of proving, on application to the Commission and after
opportunity for hearing thereon, that trusteeship under this
Indenture with respect to the Securities of that series and
such other series or such other indenture or indentures is not
so likely to involve a material conflict of interest as to
make it necessary in the public interest or for the protection
of investors to disqualify the Trustee from acting as such
under this Indenture with
<PAGE>
54
608
respect to the Securities of that series and such other series
or under such other indenture or indentures;
(2) the Trustee or any of its directors or executives
officers is an underwriter for the Company;
(3) the Trustee directly or indirectly controls or is
directly or indirectly controlled by or is under direct or indirect
common control with an underwriter for the Company;
(4) the Trustee or any of its directors or executive
officers is a director, officer, partner, employee, appointee or
representative of the Company, or of an underwriter (other than the
Trustee itself) for the Company who is currently engaged in the
business of underwriting, except that (i) one individual may be a
director or an executive officer, or both, of the Trustee and a
director or an executive officer, or both, of the Company but may not
be at the same time an executive officer of both the Trustee and the
Company; (ii) if and so long as the number of directors of the Trustee
in office is more than nine, one additional individual may be a
director or an executive officer, or both, of the Trustee and a
director of the Company; and (iii) the Trustee may be designated by
the Company or by any underwriter for the Company to act in the
capacity of transfer agent, registrar, custodian, paying agent, fiscal
agent, escrow agent or depositary, or in any other similar capacity,
or, subject to the provisions of paragraph (1) of this subsection, to
act as trustee, whether under an indenture or otherwise;
(5) 10% or more of the voting securities of the Trustee
is beneficially owned either by the Company or by any director,
partner or executive officer thereof, or 20% or more of such voting
securities is beneficially owned, collectively by any two or more of
such persons; or 10% or more of the voting securities of the Trustee
is beneficially owned either by an underwriter for the Company or by
any director, partner or executive officer thereof, or is beneficially
owned, collectively, by any two or more such persons;
(6) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection defined), (i) 5% or more of the voting
securities, or 10% or more of any other class of security, of the
Company, not including the Securities issued under this Indenture and
securities issued under any other indenture under which the Trustee is
also trustee, or (ii) 10% or more of any class of security of an
underwriter for the Company;
(7) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection defined), 5% or more of the voting
securities of any person who, to the
<PAGE>
55
608
knowledge of the Trustee, owns 10% or more of the voting securities
of, or controls directly or indirectly or is under direct or indirect
common control with, the Company;
(8) the Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as
hereinafter in this subsection defined), 10% or more of any class of
security of any person who, to the knowledge of the Trustee, owns 50%
or more of the voting securities of the Company;
(9) the Trustee owns, on the date of default upon the
Securities of such series (exclusive of any period of grace or
requirement of notice) as provided in Section 501 or any anniversary
of such default while such default remains outstanding, in the
capacity of executor, administrator, testamentary or inter vivos
trustee, guardian, committee or conservator, or in any other similar
capacity, an aggregate of 25% or more of the voting securities, or of
any class of security, of any person, the beneficial ownership of a
specified percentage of which would have constituted a conflicting
interest under paragraph (6), (7) or (8) of this subsection. As to
any such securities of which the Trustee acquired ownership through
becoming executor, administrator or testamentary trustee of an estate
which included them, the provisions of the preceding sentence shall
not apply for a period of not more than two years from the date of
such acquisition, to the extent that such securities included in such
estate do not exceed 25% of such voting securities or 25% of any such
class of security. Promptly after the dates of any such default and
annually in each succeeding year that the Securities of that series
remain in default, the Trustee shall make a check of its holdings of
such securities in any of the above-mentioned capacities as of such
dates. If the Company fails to make payment in full of the principal
of (or premium, if any) or interest on any of the Securities when and
as the same becomes due and payable, and such failure continues for 30
days thereafter, the Trustee shall make a prompt check of its holdings
of such securities in any of the above-mentioned capacities as of the
date of the expiration of such 30-day period, and after such date,
notwithstanding the foregoing provisions of this paragraph, all such
securities so held by the Trustee, with sole or joint control over
such securities vested in it, shall, but only so long as such failure
shall continue, be considered as though beneficially owned by the
Trustee for the purposes of paragraphs (6), (7) and (8) of this
subsection; or
(10) except under the circumstances described in
paragraphs (1), (3), (4), (5) or (6) of subsection (b) of Section 613,
the Trustee shall be or shall become a creditor of the Company.
<PAGE>
56
608
For the purposes of paragraph (1) of this subsection, and of Sections
512 and 513, the term "series of securities" or "series" means a series, class
or group of securities issuable under an indenture pursuant to whose terms
holders of one such series may vote to direct the indenture trustee, or
otherwise take action pursuant to a vote of such holders separately from
holders of another such series; provided, that "series of securities" or
"series" shall not include any series of securities issuable under an indenture
if all such series rank equally and are wholly unsecured.
The specification of percentages in paragraphs (5) to (9), inclusive,
of this subsection shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection.
For the purposes of paragraphs (6), (7), (8) and (9) of this
subsection only, (i) the terms "security" and "securities" shall include only
such securities as are generally known as corporate securities, but shall not
include any note or other evidence of indebtedness issued to evidence an
obligation to repay moneys lent to a person by one or more banks, trust
companies or banking firms, or any certificate of interest or participation in
any such note or evidence of indebtedness; (ii) an obligation shall be deemed
to be "in default" when a default in payment of principal shall have continued
for 30 days or more and shall not have been cured; and (iii) the Trustee shall
not be deemed to be the owner or holder of (A) any security which it holds as
collateral security, as trustee or otherwise, for an obligation which is not in
default as defined in clause (ii) above, or (B) any security which it holds as
collateral security under this Indenture, irrespective of any default
hereunder, or (C) any security which it holds as agent for collection, or as
custodian, escrow agent or depositary, or in any similar representative
capacity.
(e) For the purposes of this Section:
(1) The term "underwriter", when used with reference to
the Company, means every person who, within one year prior to the time
as of which the determination is made, has purchased from the Company
with a view to, or has offered or sold for the Company in connection
with, the distribution of any security of the Company outstanding at
such time, or has participated or has had a direct or indirect
participation in any such undertaking, or has participated or has had
a participation in the direct
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57
or indirect underwriting of any such undertaking, but such term shall
not include a person whose interest was limited to a commission from
an underwriter or dealer not in excess of the usual and customary
distributors' or sellers' commission.
(2) The term "director" means any director of a
corporation or any individual performing similar functions with
respect to any organization, whether incorporated or unincorporated.
(3) The term "person" means an individual, a corporation,
a partnership, an association, a joint-stock company, a trust, an
unincorporated organization or a government or political subdivision
thereof. As used in this paragraph, the term "trust" shall include
only a trust where the interest or interests of the beneficiary or
beneficiaries are evidenced by a security.
(4) The term "voting security" means any security
presently entitling the owner or holder thereof to vote in the
direction or management of the affairs of a person, or any security
issued under or pursuant to any trust, agreement or arrangement
whereby a trustee or trustees or agent or agents for the owner or
holder of such security are presently entitled to vote in the
direction or management of the affairs of a person.
(5) The term "Company" means any obligor upon the
Securities.
(6) The term "executive officer, means the president,
every vice president, every trust officer, the cashier, the secretary
and the treasurer of a corporation, and any individual customarily
performing similar functions with respect to any organization whether
incorporated or unincorporated, but shall not include the chairman of
the board of directors.
(f) The percentages of voting securities and other securities
specified in this Section shall be calculated in accordance with the following
provisions:
(1) A specified percentage of the voting securities of
the Trustee, the Company or any other person referred to in this
Section (each of whom is referred to as a "person" in this paragraph)
means such amount of the outstanding voting securities of such person
as entities the holder or holders thereof to cast such specified
percentage of the aggregate votes which the holders of all the
outstanding voting securities of such person are entitled to cast in
the direction or management of the affairs of such person.
(2) A specified percentage of a class of securities of a
person means such percentage of the aggregate amount of securities of
the class outstanding.
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58
608
(3) The term "amount", when used in regard to securities,
means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to capital shares and the number of
units if relating to any other kind of security.
(4) The term "outstanding" means issued and not held by
or for the account of the issuer. The following securities shall not
be deemed outstanding within the meaning of this definition:
(i) securities of an issuer held in a sinking
fund relating to securities of the issuer of the same class;
(ii) securities of an issuer held in a sinking
fund relating to another class of securities of the issuer, if
the obligation evidenced by such other class of securities is
not in default as to principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as
security for an obligation of the issuer not in default as to
principal or interest or otherwise; and
(iv) securities held in escrow if placed in escrow
by the issuer thereof;
provided, however, that any voting securities of an issuer shall be
deemed outstanding if any person other than the issuer is entitled to
exercise the voting rights thereof.
(5) A security shall be deemed to be of the same class as
another security if both securities confer upon the holder or holders
thereof substantially the same rights and privileges; provided,
however, that, in the case of secured evidences of indebtedness, all
of which are issued under a single indenture, differences in the
interest rates or maturity dates of various series thereof shall not
be deemed sufficient to constitute such series different classes and
provided. further, that, in the case of unsecured evidences of
indebtedness, differences in the interest rates or maturity dates
thereof shall not be deemed sufficient to constitute them securities
of different classes, whether or not they are issued under a single
indenture.
(g) Except in the case of a default in the payment of the
principal (or premium, if any) or interest on the Securities of any series, or
in the payment of any sinking or purchase fund installment, the Trustee shall
not be required to resign as provided in this Section if the Trustee has
sustained the burden of
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59
608, 609
proving, on application to the Commission and after opportunity for hearing
thereon, that
(1) the default under this Indenture may be cured
or waived during a reasonable period and under the procedures
described in such application, and
(2) a stay of the Trustee's duty to resign will
not be inconsistent with the interests of the Holders of
Securities of the series.
The filing of such an application will automatically stay the
performance of the duty to resign until the Commission orders otherwise.
(h) The resignation of the Trustee shall become effective only
upon the appointment of a successor trustee and the acceptance by the successor
trustee of such appointment.
(i) If Section 310(b) of the Trust Indenture Act is amended at any
time after the date of this Indenture to change the circumstances under which a
Trustee shall be deemed to have a conflicting interest with respect to the
Securities of any series or to change any of the definitions in connection
therewith, this Section 608 shall be automatically amended to incorporate such
changes, unless such changes would cause any Trustee then acting as Trustee
hereunder with respect to any Outstanding Securities to be deemed to have a
conflicting interest, in which case such changes shall be incorporated herein
only to the extent that such changes (i) would not cause the Trustee to be
deemed to have a conflicting interest or (ii) are required by law.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia (or such other Person as
may be permitted to act as Trustee by the Commission), authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
of at least $50,000,000, and subject to supervision or examination by Federal
or State authority, provided that, neither the Company nor any Affiliate of the
Company may serve as Trustee of any Securities. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of said supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent
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60
609, 610
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 610. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of
a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 611.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 611 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in aggregate
principal amount of the Outstanding Securities of such series, delivered to the
Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608(a)
with respect to the Securities of any series, after written request
therefor by the Company or by any Holder who has been a bona fide
Holder of a Security of such series for at least six months, unless
the Trustee's duty to resign has been stayed as provided in Section
608(g), or
(2) the Trustee shall cease to be eligible under Section
609 and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
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61
610
then, in any such case, (i) the Company by a Board Resolution may remove the
Trustee with respect to all Securities, or (ii) subject to Section 514, any
Holder who has been a bona fide Holder of a Security for at least six months
may, on behalf of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with respect to all
Securities and the appointment of a successor Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause,
with respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or Trustees with respect
to the Securities of that or those series (it being understood that any such
successor Trustee may be appointed with respect to the Securities of one or
more or all of such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and shall comply with
the applicable requirements of Section 611. If, within one year after such
resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with the applicable requirements
of Section 611, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee appointed by the
Company. If no successor Trustee with respect to the Securities of any series
shall have been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 611, any Holder who has been a
bona fide Holder of a Security of such series for at least six months may, on
behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
by mailing written notice of such event by first-class mad, postage prepaid, to
all Holders of Securities of such series entitled to receive reports pursuant
to Section 704(3) and, if any Unregistered Securities are outstanding, by
publishing notice of such event once in an Authorized Newspaper in each of The
City of New
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62
610, 611
York, London, and, if any Unregistered Securities are listed on any stock
exchange outside of the United States, in the city in which such stock exchange
is located (if other than London). Each notice shall include the name of the
successor Trustee with respect to the Securities of such series and the address
of its Corporate Trust Office.
(g) All provisions of this Section 610 except subparagraph (c) and
Section 611(b) (except for the last clause, after omitting the words "after
deducting all amounts owed to the retiring Trustee pursuant to Section 607,"
which shall apply) shall apply also to any Paying Agent located outside the
United States and its possessions.
SECTION 611. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee
with respect to a Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee a the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder, subject nevertheless to its
lien provided for in Section 607.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and each successor Trustee with respect to the
Securities of one or more series shall execute and deliver an indenture
supplemental hereto wherein each successor Trustee shall accept such
appointment and which (1) shall contain such provisions as shall be necessary
or desirable to transfer and confirm to, and to vest in, each successor Trustee
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates, (2) if the retiring Trustee is not retiring with
respect to all Securities, shall contain such
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63
611, 612
provisions as shall be deemed necessary or desirable to confirm that all the
rights, powers, trusts and duties of the retiring Trustee with respect to the
Securities of that or those series as to which the retiring Trustee is not
retiring shall continue to be vested in the retiring Trustee, and (3) shall add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder administered by
any other such Trustee; and upon the execution and delivery of such
supplemental indenture the resignation or removal of the retiring Trustee shall
become effective to the extent provided therein and each such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series to which the appointment of such
successor Trustee relates; but, on request of the Company or any successor
Trustee, such retiring Trustee shall duly assign, transfer and deliver to such
successor Trustee, after deducting all amounts owed to the retiring Trustee
pursuant to Section 607, all property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in paragraph (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided
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612, 613
such corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
In case any Securities shall not have been authenticated by such predecessor
Trustee, any such successor Trustee may authenticate and deliver such
Securities, in either its own name or that of its predecessor Trustee, with the
full force and effect which this Indenture provides for the certificate of
authentication of the Trustee.
SECTION 613. Preferential Collection of Claims Against Company.
(a) Subject to subsection (b) of this Section, if the Trustee
shall be or shall become a creditor, directly or indirectly, secured or
unsecured, of the Company within three months prior to a default, as defined in
subsection (c) of this Section, or subsequent to such a default, then, unless
and until such default shall be cured, the Trustee shall set apart and hold in
a special account for the benefit of the Trustee individually, the Holders of
the Securities and the holders of other indenture securities, as defined in
subsection (c) of this Section:
(1) an amount equal to any and all reductions in the
amount due and owing upon any claim as such creditor in respect of
principal or interest, effected after the beginning of such three
months' period and valid as against the Company and its other
creditors, except any such reduction resulting from the receipt or
disposition of any property described in paragraph (2) of this
subsection, or from the exercise of any right of set-off which the
Trustee could have exercised if a petition in bankruptcy had been
filed by or against the Company upon the date of such default; and
(2) all property received by the Trustee in respect of
any claims as such creditor, either as security therefor, or in
satisfaction or composition thereof, or otherwise, after the beginning
of such three months' period, or an amount equal to the proceeds of
any such property, if disposed of, subject, however, to the rights, if
any, of the Company and its other creditors in such property or such
proceeds.
Nothing herein contained, however, shall affect the right of the Trustee:
(A) to retain for its own account (i) payments made on
account of any such claim by any Person (other than the Company) who
is liable thereon, and (ii) the proceeds of the bona fide sale of any
such claim by
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65
613
the Trustee to a third Person, and (iii) distributions made in cash,
securities or other property in respect of claims filed against the
Company in bankruptcy or receivership or in proceedings for
reorganization pursuant to the Federal Bankruptcy Act or applicable
State law;
(B) to realize, for its own account, upon any property
held by it as security for any such claim, if such property was so
held prior to the beginning of such three months' period;
(C) to realize, for its own account, but only to the
extent of the claim, hereinafter mentioned, upon any property held by
it as security for any such claim, if such claim was created after the
beginning of such three months' period and such property was received
as security therefor simultaneously with the creation thereof, and if
the Trustee shall sustain the burden of proving that at the time such
property was so received the Trustee had no reasonable cause to
believe that a default, as defined in subsection (c) of this Section,
would occur within three months; or
(D) to receive payment on any claim referred to in
paragraph (B) or (C), against the release of any property held as
security for such claim as provided in paragraph (B) or (C), as the
case may be, to the extent of the fair value of such property.
For the purposes of paragraphs (B), (C) and (D), property substituted
after the beginning of such three months' period for property held as security
at the time of such substitution shall, to the extent of the fair value of the
property released, have the same status as the property released, and, to the
extent that any claim referred to in any of such paragraphs is created in
renewal of or in substitution for or for the purpose of repaying or refunding
any pre-existing claim of the Trustee as such creditor, such claim shall have
the same status as such pre-existing claim.
If the Trustee shall be required to account, the funds and property
held in such special account and the proceeds thereof shall be apportioned
among the Trustee, the Holders and the holders of other indenture securities in
such manner that the Trustee, the Holders and the holders of other indenture
securities realize, as a result of payments from such special account and
payments of dividends on claims filed against the Company in bankruptcy or
receivership or in proceedings for reorganization pursuant to the Federal
Bankruptcy Act or applicable State law, the same percentage of their respective
claims, figured before crediting to the claim of the Trustee anything on
account of the receipt by it from the Company of the funds and property in such
special account and before crediting to the respective claims of the
<PAGE>
66
613
Trustee and the Holders and the holders of other indenture securities dividends
on claims filed against the Company in bankruptcy or receivership or in
proceedings for reorganization pursuant to the Federal Bankruptcy Act or
applicable State law, but after crediting thereon receipts on account of the
indebtedness represented by their respective claims from all sources other than
from such dividends and from the funds and property so held in such special
account. As used in this paragraph, with respect to any claim, the term
"dividends" shall include any distribution with respect to such claim, in
bankruptcy or receivership or proceedings for reorganization pursuant to the
Federal Bankruptcy Act or applicable State law, whether such distribution is
made in cash, securities or other property, but shall not include any such
distribution with respect to the secured portion, if any, of such claim. The
court in which such bankruptcy, receivership or proceedings for reorganization
is pending shall have jurisdiction (i) to apportion between the Trustee, the
Holders and the holders of other indenture securities, in accordance with the
provisions of this paragraph, the funds and property held in such special
account and proceeds thereof, or (ii) in lieu of such apportionment, in whole
or in part, to give to the provisions of this paragraph due consideration in
determining the fairness of the distributions to be made to the Trustee and the
Holders and the holders of other indenture securities with respect to their
respective claims, in which event it shall not be necessary to liquidate or to
appraise the value of any securities or other property held in such special
account or as security for any such claim, or to make a specific allocation of
such distributions as between the secured and unsecured portions of such
claims, or otherwise to apply the provisions of this paragraph as a
mathematical formula.
Any Trustee that has resigned or been removed after the beginning of
such three months' period shall be subject to the provisions of this subsection
as though such resignation or removal had not occurred. If any Trustee has
resigned or been removed prior to the beginning of such three months' period,
it shall be subject to the provisions of this subsection if and only if the
following conditions exist:
(i) the receipt of property or reduction of claim, which
would have given rise to the obligation to account, if such Trustee
had continued as Trustee, occurred after the beginning of such three
months' period; and
(ii) such receipt of property or reduction of claim
occurred within three months after such resignation or removal.
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613
(b) There shall be excluded from the operation of subsection (a)
of this Section a creditor relationship arising from:
(1) the ownership or acquisition of securities issued
under any indenture, or any security or securities having a maturity
of one year or more at the time of acquisition by the Trustee;
(2) advances authorized by a receivership or bankruptcy
court of competent jurisdiction or by this Indenture, for the purpose
of preserving any property which shall at any time be subject to the
Hen of this Indenture or of discharging tax hens or other prior liens
or encumbrances thereon, if notice of such advances and of the
circumstances surrounding the making thereof is given to the Holders
at the time and in the manner provided in this Indenture;
(3) disbursements made in the ordinary course of business
in the capacity of trustee under an indenture, transfer agent,
registrar, custodian, paying agent, fiscal agent or depositary, or
other similar capacity;
(4) an indebtedness created as a result of services
rendered or premises rented; or an indebtedness created as a result of
goods or securities sold in a cash transaction, as defined in
subsection (c) of this Section;
(5) the ownership of stock or of other securities of a
corporation organized under the provisions of Section 25(a) of the
Federal Reserve Act, as amended, which is directly or indirectly a
creditor of the Company; and
(6) the acquisition, ownership, acceptance or negotiation
of any drafts, bills of exchange, acceptances or obligations which
fall within the classification of self-liquidating paper, as defined
in subsection (c) of this Section.
(c) For the purposes of this Section only:
(1) the term "default" means any failure to make payment
in full of the principal of or interest on any of the Securities or
upon the other indenture securities when and as such principal or
interest becomes due and payable;
(2) the term "other indenture securities" means
securities upon which the Company is an obligor outstanding under any
other indenture (i) under which the Trustee is also trustee, (ii)
which contains provisions substantially similar to the provisions of
this Section, and (iii) under which a default exists at the time of
the apportionment of the funds and property held in such special
account;
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68
613, 614
(3) the term "cash transaction" means any transaction in
which full payment for goods or securities sold is made within seven
days after delivery of the goods or securities in currency or in
checks or other orders drawn upon banks or bankers and payable upon
demand;
(4) the term "self-liquidating paper" means any draft,
bill of exchange, acceptance or obligation which is made, drawn,
negotiated or incurred by the Company for the purpose of financing the
purchase, processing, manufacturing, shipment, storage or sale of
goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods, wares
or merchandise or the receivables or proceeds arising from the sale of
the goods, wares or merchandise previously constituting the security,
provided the security is received by the Trustee simultaneously with
the creation of the creditor relationship with the Company arising
from the making, drawing, negotiating or incurring of the draft, bill
of exchange, acceptance or obligation;
(5) the term "Company" means any obligor upon the
Securities; and
(6) the term "Federal Bankruptcy Act" means the
Bankruptcy Act or Title 11 of the United States Code.
SECTION 614. Appointment of Authenticating Agent
At any time when any of the Securities remain Outstanding the Trustee
may appoint an Authenticating Agent or Agents (which may include the parent of
the Trustee or a corporation that is a wholly-owned subsidiary of the Trustee
or of the parent of the Trustee) with respect to one or more series of
Securities which shall be authorized to act on behalf of the Trustee to
authenticate Securities of such series issued upon exchange, registration of
transfer or partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. The Trustee shall mail written notice of such appointment
by first-class mail, postage prepaid, to all Holders of Securities of the series
with respect to which such Authenticating Agent will serve, and which are
entitled to receive reports pursuant to Section 704(3) and, if any Unregistered
Securities are outstanding, by publishing notice of such event once in an
Authorized Newspaper in each of The City of New York, London, and, if any
Unregistered Securities are listed on any stock exchange outside of the United
States, in the city in which such stock exchange is located (if other than
London). Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication,
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69
614
such reference shall be deemed to include authentication and delivery on behalf
of the Trustee by an Authenticating Agent and a certificate of authentication
executed on behalf of the Trustee by an Authenticating Agent. Each
Authenticating Agent shall be acceptable to the Company and shall at a times be
a corporation organized and doing business under the laws of the United States
of America, any State thereof or the District of Columbia, authorized under
such laws to act as Authenticating Agent, having a combined capital and surplus
of not less than $1,000,000 and subject to supervision or examination by
Federal or State authority. If such Authenticating Agent publishes reports of
condition at least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Authenticating Agent shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign with respect to one or more series
of Securities at any time by giving written notice thereof to the Trustee and
to the Company. The Trustee may at any time terminate the agency of an
Authenticating Agent with respect to one or more series of Securities by giving
written notice thereof to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in case
at any time such Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid,
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614
to all Holders of Securities of the series with respect to which such
Authenticating Agent will serve, as their names and addresses appear in the
Security Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent. No successor Authenticating Agent shall be appointed
unless eligible under the provisions of this Section. An Authenticating Agent
appointed pursuant to this Section shall be entitled to rely on Sections 104,
111, 308, 603, 604 and 605 hereunder.
The Trustee agrees to pay to each Authenticating Agent from time to
time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
If an appointment with respect to one or more series is made pursuant
to this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Securities of the series designated pursuant to and
issued under the within-mentioned Indenture.
BANKERS TRUST COMPANY OF
CALIFORNIA,
NATIONAL ASSOCIATION
As Trustee
By ___________________________________
As Authenticating Agent on
behalf of the Trustee
By ___________________________________
Authorized Officer of
Authenticating Agent
Dated: _______________________________
<PAGE>
71
701, 702
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not later than the 15th day after each
Regular Record Date for each series of Registered Securities at the
time Outstanding or on June 30 and December 31 of each year with
respect to each series of Securities for which there are no Regular
Record Dates, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders of Registered
Securities of such series, including Holders of interests in Global
Securities, as of such preceding Regular Record Date or on June 15 or
December 15, as the case may be, or, in the case of a series of
non-interest bearing Securities, on a date to be determined as
contemplated pursuant to Section 301, and
(b) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar for Registered Securities other than Global
Securities.
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of Registered
Securities contained in the most recent list furnished to the Trustee as
provided in Section 701 and the names and addresses of Holders of Registered
Securities received by the Trustee in its capacity as Security Registrar or
Paying Agent. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) If three or more Holders (herein referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable proof
that each such applicant has owned a Security for a period of at least six
months preceding the date of such application, and such application states that
the appli-
<PAGE>
72
702
cants desire to communicate with other Holders with respect to their rights
under this Indenture or under the Securities and is accompanied by a copy of
the form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall, within five business days after the receipt
of such application, at its election, either
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with Section
702(a), or
(ii) inform such applicants as to the approximate number
of Holders whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with Section
702(a), and as to the approximate cost of mailing to such Holders the
form of proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Holder whose name and address appear in the
information preserved at the time by the Trustee in accordance with Section
702(a) a copy of the form of proxy or other communication which is specified in
such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender the
Trustee shall mail to such applicants and file with the Commission, together
with a copy of the material to be mailed, a written statement to the effect
that, in the opinion of the Trustee, such mailing would be contrary to the best
interest of the Holders or would be in violation of applicable law. Such
written statement shall specify the basis of such opinion. If the Commission,
after opportunity for a hearing upon the objections specified in the written
statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Holders with reasonable promptness after the entry of such order and the
renewal of such tender, otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Every Holder of Securities or coupons, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor
<PAGE>
73
702, 703
the Trustee nor any agent of either of them shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
Holders in accordance with Section 702(b), regardless of the source from which
such information was derived, and that the Trustee shall not be held
accountable by reason of mailing any material pursuant to a request made under
Section 702(b).
SECTION 703. Reports by Trustee.
(a) Within 60 days after May 15 of each year commencing with the
year 1991, the Trustee shall transmit by mail to all Holders of Registered
Securities of any series, as their names and addresses appear in the Security
Register and to all other Holders who are entitled to receive reports pursuant
to Section 704(3), a brief report dated as of such May 15 with respect to any
of the following events which may have occurred within the previous 12 months
(but if no such event has occurred within such period no report need be
transmitted):
(1) any change to its eligibility under Section 609 and
its qualifications under Section 608;
(2) the creation of or any material change to a
relationship specified in paragraphs (1) through (10) of Section
608(d);
(3) the character and amount of any advances (and if the
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Trustee (as such) which remain unpaid on the date
of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Securities of such series
or any related coupons, on any property or funds held or collected by
it as Trustee, except that the Trustee shall not be required (but may
elect) to report such advances if such advances so remaining unpaid
aggregate not more than 1/2 of 1% of the principal amount of the
Securities of such series Outstanding on the date of such report;
(4) the amount, interest rate and maturity date of all
other indebtedness owing by the Company (or by any other obligor on
the Securities of such series) to the Trustee in its individual
capacity, on the date of such report, with a brief description of any
property held as collateral security therefor, except an indebtedness
based upon a creditor relationship arising in any manner described in
Section 613(b)(2), (3), (4) or (6);
(5) any change to the property and funds, if any,
physically in the possession of the Trustee as such on the date of
such report;
<PAGE>
74
703, 704
(6) any additional issue of Securities which the Trustee
has not previously reported; and
(7) any action taken by the Trustee in the performance of
its duties hereunder which it has not previously reported and which in
its opinion materially affects the Securities of such series, except
action in respect of a default, notice of which has been or is to be
withheld by the Trustee in accordance with Section 602.
(b) The Trustee shall transmit by mail to all Holders of
Securities of any series, as their names and addresses appear in the Security
Register and to all Holders who are entitled to receive reports pursuant to
Section 704(3), a brief report with respect to the character and amount of any
advances (and if the Trustee elects so to state, the circumstances surrounding
the making thereof) made by the Trustee (as such) since the date of the last
report transmitted pursuant to Subsection (a) of this Section (or if no such
report has yet been so transmitted, since the date of execution of this
instrument) for the reimbursement of which it claims or may claim a lien or
charge, prior to that of the Securities of such series, on property or funds
held or collected by it as Trustee and which it has not previously reported
pursuant to this subsection, except that the Trustee shall not be required (but
may elect) to report such advances if such advances remaining unpaid at any
time aggregate 10% or less of the principal amount of the Securities of such
series Outstanding at such time, such report to be transmitted within 90 days
after such time.
(c) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which any Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee in writing when any Securities are listed on
any stock exchange.
SECTION 704. Reports by Company.
The Company shall:
(1) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission, copies of
the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission
may from time to time
<PAGE>
75
704, 801
by rules and regulations prescribe) which the Company may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934; or, if the Company is not
required to file information, documents or reports pursuant to either
of said Sections, then it shall file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from
time to time by the Commission, such of the supplementary and periodic
information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a
security listed and registered on a national securities exchange as
may be prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed by the Commission,
such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations;
(3) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, to such Holders of
Unregistered Securities as have, within the two years preceding such
transmission, filed their names and addresses with the Trustee for
that purpose and to each Holder whose name and address is then
preserved on the Trustee's list pursuant to the first sentence of
Section 702(a), within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2)
of this Section as may be required by rules and regulations prescribed
from time to time by the Commission; and
(4) furnish to the Trustee, not less often than annually,
a brief certificate from the Company's principal executive officer,
principal financial officer or principal accounting officer as to his
or her knowledge of the Company's compliance with all conditions and
covenants hereunder; such compliance shall be determined without
regard to any period of grace or requirement of notice provided
hereunder. Such certificate shall be provided concurrently with, but
may be separate from, the certificate provided pursuant to Section
1008.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE OR TRANSFER
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:
<PAGE>
76
801, 802
(1) the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Company substantially as
an entirety shall be a corporation organized and existing under the
laws of the United States of America, any State thereof or the
District of Columbia and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the
principal of (and premium, if any) and interest on all the Securities
and the performance of every covenant of this Indenture on the part of
the Company to be performed or observed;
(2) immediately after giving effect to such transaction,
no Event of Default and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have occurred and be
continuing;
(3) if, as a result of any such consolidation or merger
or such conveyance or transfer, properties or assets of the Company
would become subject to a mortgage, pledge, lien, security interest or
other encumbrance which would not be permitted by this Indenture, the
Company or such successor corporation or Person, as the case may be,
shall take such steps as shall be necessary effectively to secure the
Securities equally and ratably with (or, at the option of the Company,
prior to) all indebtedness secured thereby; and
(4) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer and such supplemental
indenture comply with this Article and that all conditions precedent
herein provided for relating to such transaction have been met.
SECTION 802. Successor Corporation Substituted.
Upon any consolidation or merger or any conveyance or transfer of the
properties and assets of the Company substantially as an entirety in accordance
with Section 801, the successor corporation formed by such consolidation or
into which the Company is merged or to which such conveyance or transfer is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein; provided, however,
that no such conveyance or transfer shall have the effect of releasing the
Person named as the "Company" in the first paragraph of this instrument or any
successor corporation which shall theretofore have become such in the manner
prescribed in this Article from its liability as obligor and maker on any of
the Securities.
<PAGE>
77
803, 901
SECTION 803. Limitation on Lease of Properties as Entirety.
The Company shall not lease its properties and assets substantially as
an entirety to any Person.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another corporation to
the Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities; or
(2) to add to the covenants of the Company for the
benefit of the Holders of all or any series of Securities (and if such
covenants are to be for the benefit of less than all series of
Securities, stating that such covenants are expressly being included
solely for the benefit of such series) or to surrender any right or
power herein conferred upon the Company; or
(3) to add any additional Events of Default; or
(4) to add to or change any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate
the issuance of Securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons; or
(5) to change or eliminate any of the provisions of this
Indenture, provided that any such change or elimination shall become
effective only when there is no Security Outstanding of any series
created prior to the execution of such supplemental indenture which is
entitled to the benefit of such provision; or
(6) to secure the Securities pursuant to the requirements
of Section 1005 or otherwise; or
(7) to establish for the issuance of and establish the
form or terms and conditions of Securities of any series as permitted
by Section 301, and to establish the form of any certificates required
to be furnished pursuant to the terms of this Indenture or any series
of Securities; or
<PAGE>
78
901, 902
(8) to provide for uncertificated Securities in addition
to or in place of certificated Securities; or
(9) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of the
provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one
Trustee, pursuant to the requirements of Section 611(b); or
(10) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, to make any amendment required by Section 608(i) or to make
any other provisions with respect to matters or questions arising
under this Indenture, provided such action shall not adversely affect
the interests of the Holders of Securities of any series in any
material respect.
The Trustee shall give notice to the Holders of Securities of all
series affected by any such supplemental indenture as provided in Section 106.
Such notice shall describe the changes effected by such supplemental indenture.
SECTION 902. Supplemental Indentures With Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of each series
affected by such supplemental indenture, by Act of said Holders delivered to
the Company and the Trustee, the Company, when authorized by a Board
Resolution, and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture. The Holders of not less than a majority in principal
amount of the outstanding Securities of each series affected by such waiver
(with each series voting as a class), by notice to the Trustee, may waive
compliance by the Company with any provision of this Indenture, any
supplemental indenture or the Securities of any such series except a Default in
the payment of the principal of or interest on any Security. However, no such
supplemental indenture or waiver shall, without the consent of the Holder of
each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or
any installment of principal of or interest on, any Security, or
reduce the principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof, or reduce the amount
of the principal of an Original
<PAGE>
79
902, 903
Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to
Section 502, or change any Place of Payment where, or the coin or
currency in which, any Security or any premium or the interest thereon
is payable, or impair the right to institute suit for the enforcement
of any such payment on or after the Stated Maturity thereof (or, in
the case of redemption, on or after the Redemption Date, or, in the
case of repayment at the option of the Holders, on or after the
Repayment Date), or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences) provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section
513 or Section 1009, except to increase any such percentage or to
provide that certain other provisions of this Indenture cannot be
modified or waived without the consent of the Holder of each
Outstanding Security affected thereby, provided, however, that this
clause shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and concomitant
changes in this Section and Section 1009, or the deletion of this
proviso, in accordance with the requirements of Sections 611(b) and
901(9).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under
this Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 601) shall be fully protected in relying upon,
an Opinion of
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80
903, 904, 905, 906, 907
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture and that such supplemental indenture will
constitute a valid and legally binding obligation of the Company, enforceable
in accordance with its terms, subject to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting the
enforcement of creditors' rights and to general equity principles. The Trustee
may, but shall not be obligated to, enter into any such supplemental indenture
which affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for a purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
SECTION 905. Conformity With Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities of any series and any appertaining coupons
so modified as to conform, in the opinion of the Trustee and the Company, to
any such supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series and any appertaining coupons.
SECTION 907. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to it by a
Holder of a Security is a continuing consent by the Holder and every subse-
<PAGE>
81
907, 1001
quent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is
not made on any Security. However, any such Holder or subsequent Holder may
revoke the consent as to his Security or portion of a Security if the Trustee
receives the notice of revocation before the date on which the Trustee receives
an Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented to the amendment or waiver. After an
amendment or waiver becomes effective, it shall bind every Holder of each
series of Securities affected by such amendment or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment or
waiver. If a record date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those persons who were Holders at such record
date (or their duly designated proxies), and only those persons, shall be
entitled to consent to such amendment or waiver or to revoke any consent
previously given, whether or not such persons continue to be Holders after such
record date.
After an amendment or waiver becomes effective it shall bind every
Holder, unless it is of the type described in any of clauses (1) through (3) of
Section 902. In such case the amendment or waiver shall bind each Holder of a
Security who has consented to it and every subsequent Holder of a Security that
evidences the same debt as the consenting Holder's Security.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium and Interest.
Subject to the following provisions, the Company will pay to the
Trustee the amounts, in such coin or currency as is at the time legal tender
for the payment of public or private debt, in the manner, at the times and for
the purposes set forth herein and in the text of the Securities for each
series, and the Company hereby authorizes and directs the Trustee from funds so
paid to it to make or cause to be made payment of the principal of and
interest, if any, on the Securities and coupons of each series as set forth
herein and in the text of such Securities and coupons. Unless otherwise
provided in the Securities of
<PAGE>
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1001
a series, the Trustee will arrange directly with any Paying Agents for the
payment, or the Trustee will make payment, from funds furnished by the Company,
of the principal of and interest, if any, on the Securities and coupons of each
series by check or draft.
Unless otherwise provided in the Securities of a series, interest, if
any, on Registered Securities of a series shall be paid by check or draft on
each Interest Payment Date for such series to the Holder thereof at the close
of business on the relevant record dates specified in the Securities of such
series. The Company may pay such interest by check or draft mailed to such
Holder's address as it appears on the register for Securities of such series.
Unless otherwise provided in the Securities of a series, principal of
Registered Securities shall be payable by check or draft and only against
presentation and surrender of such Registered Securities at the office of the
Paying Agent, unless the Company shall have otherwise instructed the Trustee in
writing.
Unless otherwise provided in the Securities of a series, (i) interest,
if any, on Unregistered Securities shall be paid by check or draft and only
against presentation and surrender of the coupons for such interest
installments as are evidenced thereby as they mature and (ii) original issue
discount (as defined in Section 1273 of the Code), if any, on Unregistered
Securities shall be paid by check or draft and only against presentation and
surrender of such Securities, in either case at the office of a Paying Agent
located outside of the United States and its possessions, unless the Company
shall have otherwise instructed the Trustee in an Officers' Certificate.
Unless otherwise provided in the Securities of a series, principal of
Unregistered Securities shall be paid by check or draft and only against
presentation and surrender of such Securities as provided in the Securities of
a series. If at the time a payment of principal of or interest, if any, or
original issue discount, if any, on an Unregistered Security or coupon shall
become due and the payment of the full amount so payable at the office or
offices of all the Paying Agents outside the United States and its possessions
is illegal or effectively precluded because of the imposition of exchange
controls or other similar restrictions on the payment of such amount in United
States currency, then the Company may instruct the Trustee in an Officers'
Certificate to make such payments at the office of a Paying Agent located in
the United States. The Company hereby covenants and agrees that it shall not
so instruct the Trustee with respect to payment in the United States
<PAGE>
83
1001, 1002
if such payment would cause such Unregistered Security to be treated as a
"registration-required obligation" under United States law and regulations.
At the election of the Company, any payments by the Company provided
for in this Indenture or in any of the Securities may be made by electronic
funds transfer.
SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Registered Securities of that series may
be surrendered for registration of transfer or exchange and a Place of Payment
where (subject to Sections 305 and 307) Securities may be presented for payment
or exchange and where notices and demands to or upon the Company in respect of
the Securities of that series and this Indenture may be served. If required by
the rules of any securities exchange upon which a series of Registered
Securities may, from time to time, be listed, the Company shall maintain such
offices and/or agencies in connection with such series in the Borough of
Manhattan, The City of New York, State of New York. With respect to any series
of Securities issued in whole or in part as Unregistered Securities, the
Company shall maintain one or more Paying Agents located outside the United
States and its possessions and shall maintain such Paying Agents for a period
of one year after the principal of such Unregistered Securities has become due
and payable. During any period thereafter for which it is necessary in order
to conform, to United States tax law or regulations, the Company will maintain
a Paying Agent outside the United States and its possessions to which the
Unregistered Securities or coupons appertaining thereto may be presented for
payment and will provide the necessary funds therefor to such Paying Agent upon
reasonable notice The Security Registrar shall keep a register with respect to
each series of Securities issued in whole or in part as Registered Securities
and to their transfer and exchange. The Company may appoint one or more
co-Security Registrars acceptable to the Trustee and one or more additional
Paying Agents for each series of Securities, and the Company may terminate the
appointment of any co-Security Registrar or Paying Agent at any time upon
written notice. The term "Security Registrar" includes any co-Security
Registrar. The term "Paying Agent" includes any additional Paying Agent. The
Company shall notify the Trustee of the name and address of any Agent not a
party to this Indenture. Subject to Section 305, if the Company
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84
1002, 1003
fails to maintain a Security Registrar or Paying Agent, the Trustee shall act
as such. The Company will give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fad to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations. surrenders notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where the Securities of one or more series may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company of its obligation to maintain an office
or agency in each Place of Payment for Securities of any series for such
purposes. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
In the case of Original Issue Discount Securities of a series, the
Company shall, prior to any Redemption Date or any Repayment Date applicable
thereto, furnish the Trustee with an Officers' Certificate stating the amount
of principal to be paid to a Holder of $1,000 principal amount of such
Securities.
SECTION 1003. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent with
respect to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal (and premium, if any) or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and will promptly notify the Trustee of its
action or failure so to act.
Whenever the Company shall have one or more Paying Agents for any
series of Securities, it will, on or prior to (and if on, then before 11:00
a.m. (New York City time)) each due date of the principal of (and premium, if
any)
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85
1003
or interest on any Securities of that series, deposit with a Paying Agent a sum
sufficient (in immediately available funds, if payment is made on the due date)
to pay the principal (and premium, if any) or interest so becoming due, such
sum to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest, and (unless such Paying Agent is the Trustee)
the Company will promptly notify the Trustee of its action or failure so to
act.
The Company will cause each Paying Agent for any series of Securities
other than the Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to the provisions
of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities of that
series in trust for the benefit of the Persons entitled thereto until
such sums shall be paid to such Persons or otherwise disposed of as
herein provided;
(2) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities of that series) in the
making of any payment of principal (and premium, if any) or interest
on the Securities of that series; and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or received
by the Trustee in respect of U.S. Government Obligations deposited with the
Trustee pursuant to Section 401, 403 or 1007, or then held by the Company, in
trust for the payment of the principal of (and premium, if any) or interest on
any Security of any series and remaining unclaimed for two years (less a day)
after such principal (and premium, if any) or interest has become due and
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86
1003, 1004, 1005
payable shall be paid to the Company on Company Request, or (if then held by
the Company) shall be discharged from such trust; and the Holder of such
Security shall thereafter, as an unsecured general creditor, look only to the
Company for payment thereof, and a liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, notice that such
money remains unclaimed and that, after a date specified therein, which shall
not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 1004. Corporate Existence.
Subject to Article Eight, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the
loss thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. Limitations on Liens and Encumbrances.
So long as there are Securities of any series Outstanding:
(a) The Company will not itself, nor will it permit any Subsidiary
to, create, assume or incur any Lien (except any existing on the date hereof)
upon any of its or their Principal Properties, or any interest it or they may
have therein, whether owned at the date hereof or hereafter acquired (unless,
in the case of any Lien upon any Principal Property of any Subsidiary, all
obligations and indebtedness thereby secured are held by the Company or a
wholly-owned Subsidiary) as security for any indebtedness without making
effective provision, and the Company covenants that in any such case effective
provision will be made, whereby the Securities (either alone or together with
all or any part of any other indebtedness of the Company) shall be secured by
such Lien
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87
1005
equally and ratably (or, at the option of the Company, prior to) with any and
all other obligations and indebtedness thereby secured; provided, however, that
the foregoing restriction shall not apply to:
(1) Liens upon any property or assets owned by any
Subsidiary existing on the date on which such Subsidiary became a
Subsidiary;
(2) Liens on any property or assets existing at the time
of their acquisition and Liens on any property or assets acquired,
constructed or improved which are created contemporaneously with or
within 180 days after (or created pursuant to financing arrangements,
a firm commitment for which is obtained within 180 days after) the
completion of such acquisition, improvement or construction to secure
or provide for payment of the purchase price of property or &&sets
acquired or the cost of such construction or improvement, including
Liens arising in connection with cross-border or defeased lease
arrangements; if (i) such Lien shall be limited to the property so
acquired or constructed or to the improvements so made, (ii) the
amount of the obligations or indebtedness secured by such Lien shall
not be increased after the date of the acquisition of such property or
the completion of such improvements or construction except to the
extent additional construction or improvements shall be made to such
property after the date of such acquisition or the making of such
improvements or construction, and (iii) in each instance where the
obligation or indebtedness secured by such Lien shall constitute an
obligation or indebtedness of, or is assumed by, the Company or such
Subsidiary, the principal amount of the obligation or indebtedness
secured by such Lien shall not exceed 100% of the cost or fair value
(as determined in good faith by the Board of Directors), whichever
shall be lower, of the property, construction or improvements at the
time of the acquisition or completion thereof;
(3) Liens for taxes or assessments or governmental
charges or levies not then due and delinquent or the validity of which
shall be contested in good faith; and materialmen's, mechanics',
carriers', workmen's, repairmen's, landlords' or other like Liens
securing obligations not overdue or which shall be contested in good
faith, or deposits to obtain the release of such Liens;
(4) pledges or deposits to secure public or statutory
obligations or to secure payment of workmen's compensation or to
secure performance in connection with tenders, leases of real
property, bids or contracts or to secure (or in Bell of) surety or
appeal bonds and pledges or deposits made in the ordinary course of
business for similar purposes;
(5) any lease, regardless of the manner in which such
lease shall be treated for accounting or tax purposes or any other
purpose or any filing
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88
1005
of or agreement to file any financing statement under the Uniform
Commercial Code of any jurisdiction in respect of such lease;
(6) Liens in favor of a governmental unit to secure
payments under any contract or statute, or to secure any indebtedness
incurred in financing the acquisition, construction or improvement of
property subject thereto, including Liens on, and created or arising
in connection with the financing of the acquisition, construction or
improvement of, any facility used or to be used in the business of the
Company or any Subsidiary through the issuance of obligations defined
in Section 103(b)(2) of the Internal Revenue Code of 1954, as amended,
(or any subsequently adopted provisions thereof defining similar
obligations) the income from which shall be excludable from gross
income by virtue of Sections 103(a) and (b)(4), (b)(5) and (b)(6) of
such Code (or any subsequently adopted provisions thereof providing
for a specific exclusion from gross income);
(7) easements or similar encumbrances, the existence of
which do not materially impair the use of the Principal Property
subject thereto for the purposes for which it is held or was acquired,
(8) Liens arising out of any final judgment for the
payment of money aggregating not in excess of $10,000,000; or Liens
arising out of any final judgment for the payment of money provided
such judgment is being contested in good faith;
(9) Liens on timberlands in connection with an
arrangement under which the Company or a Subsidiary is obligated to
cut or pay for timber in order to provide the Lienholder with a
specified amount of money, however determined;
(10) Liens created or assumed in the ordinary course of
the business of exploring for, developing or producing oil, gas or
other minerals (including borrowings in connection therewith) on, or
any interest in, or on any proceeds from the sale of, property
acquired for such purposes, production therefrom (including the
proceeds thereof), or material or equipment located thereon; and
(11) Liens to extend, renew or replace any Liens referred
to in clauses (1) through (10) or this clause (11) of this Subsection
1005(a) or any Lien existing on the date hereof.
(b) Notwithstanding the provisions of Subsection (a) above, the
Company or any Subsidiary may create, assume or incur, or suffer to be created,
assumed or incurred any Lien which would otherwise be subject to the foregoing
restriction, provided that at no time shall the aggregate amount of all
outstanding obligations and indebtedness secured by Liens which, but for this
subsection (b), would be prohibited by this Section 1005, plus the aggregate
amount of
<PAGE>
89
1005, 1006, 1007
Attributable Debt in respect of any then existing leases described in Section
1006 (other than any such leases of property to the extent that the cash
portion of the net proceeds of the sale of such property shall have been
applied in compliance with Section 1006(b)), exceed 10% of Consolidated Net
Tangible Assets at the end of the next preceding fiscal year of the Company.
SECTION 1006. Limitations on Sale and Leaseback Transactions.
So long as there are Securities of any series Outstanding, the Company
will not, and will not permit any Subsidiary to, directly or indirectly, sell
or transfer (other than to the Company or a Subsidiary) any Principal Property
(other than a Principal Property sold or transferred to an industrial
development corporation or governmental instrumentality in connection with a
revenue or pollution control financing) now owned or hereafter acquired with
the intention that the Company or any Subsidiary shall take back a lease
thereof (other than a lease for a term of not more than three years, a lease
entered into solely for tax purposes or a cross-border or defeased lease
arrangement) (herein referred to as a sale and leaseback transaction) unless
(a) the proceeds of such sale shall at least be equal to the fair value (as
determined in good faith by the Board of Directors) of such Principal Property,
and either (b) an amount equal to the cash portion of the net proceeds of such
sale shall be applied within 180 days either before or after the effective date
of any such transaction (i) to the retirement of Funded Indebtedness (other
than any thereof owed to the Company or any Subsidiary) or (ii) to the
retirement of Securities or (iii) to the purchase of property, facilities or
equipment (other than the property, facilities or equipment involved in such
sale) having a value at least equal to the cash portion of the net proceeds of
such sale, or (c) the property, facilities or equipment involved in such sale
could have been subjected to a Lien to secure indebtedness in a principal
amount equal to the aggregate amount of Attributable Debt in respect of such
sale without equally and ratably securing the Securities pursuant to Section
1005.
SECTION 1007. Defeasance of Certain Obligations.
The Company may omit to comply with any term, provision or condition
set forth in Section 1005 or 1006 with respect to the Securities of any series,
provided that the following conditions shall have been satisfied:
(1) With reference to this Section 1007, the Company has
deposited or caused to be irrevocably deposited (except as provided in
Section 402)
<PAGE>
90
1007
with the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders of
the Securities of such series, (i) money in an amount, or (ii) if
Securities of such series are not subject to repayment at the option
of Holders, (A) U.S. Government Obligations which through the payment
of interest and principal in respect thereof in accordance with their
terms will provide not later than one day before the due date of any
payment referred to in clause (x) or (y) of this subparagraph (1)
money in an amount, or (B) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent certified
public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge (x) the principal of
(and premium, if any) and each installment of principal (and premium,
if any) and interest on the Outstanding Securities of such series on
the Stated Maturity of such principal or installment of principal or
interest or to and including the Redemption Date irrevocably
designated by the Company pursuant to subparagraph (7) of this Section
and (y) any mandatory sinking fund payments applicable to the
Securities of such series on the day on which such payments are due
and payable in accordance with the terms of the Indenture and of the
Securities of such series;
(2) Such deposit shall not, as specified in an Opinion of
Counsel, cause the Trustee with respect to the Securities of such
series to have a conflicting interest as defined in Section 608 and
for purposes of the Trust Indenture Act with respect to the Securities
of such series;
(3) Such deposit will not result in a breach or violation
of, or constitute a default under, this Indenture or any other
agreement or instrument to which the Company is a party or by which it
is bound;
(4) No Event of Default or event which with notice or
lapse of time would become an Event of Default with respect to the
Securities of such series shall have occurred and be continuing on the
date of such deposit;
(5) The Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that Holders of the Securities of
such series will not recognize income, gain or loss for Federal income
tax purposes as a result of such deposit and defeasance of certain
obligations and will be subject to Federal income tax on the same
amount and in the same manner and at the same times, as would have
been the case if such deposit and defeasance had not occurred;
(6) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the defeasance
contemplated by this Section have been met; and
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91
1007, 1008, 1009
(7) If the Company has deposited or caused to be
deposited money or U.S. Government Obligations to pay or discharge the
principal of (and premium, if any) and interest on the Outstanding
Securities of a series to and including a Redemption Date pursuant to
subparagraph (1) of this Section, such Redemption Date shall be
irrevocably designated by a Board Resolution delivered to the Trustee
on or prior to the date of deposit of such money or U.S. Government
Obligations, and such Board Resolution shall be accompanied by an
irrevocable Company Request that the Trustee give notice of such
redemption in the name and at the expense of the Company not less than
30 nor more than 60 days prior to such Redemption Date in accordance
with Section 1104.
SECTION 1008. Statement by Officers as to Default.
The Company will deliver to the Trustee, within 120 days after each
December 31 following the date hereof, a written statement signed by the
Chairman of the Board, a Vice Chairman, the President or a Vice President and
by the Treasurer, an Assistant Treasurer, the Controller or an Assistant
Controller of the Company stating, as to each signer thereof, that
(1) a review of the activities of the Company during such
year and of performance under this Indenture has been made under his
supervision, and
(2) to the best of his knowledge, based on such review,
the Company has fulfilled all its obligations under this Indenture
throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known
to him and the nature and status thereof.
SECTION 1009. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in Sections 1005 and 1006, with respect
to the Securities of any series if before the time for such compliance the
Holders of not less than a majority in aggregate principal amount of the
Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
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92
1101, 1102, 1103
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Applicability of Article.
Securities of any series which are redeemable before their Stated
Maturity shall be redeemable in accordance with their terms and (except as
otherwise specified as contemplated by Section 301 for Securities of any
series) in accordance with this Article.
SECTION 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution. In case of any redemption at the election of
the Company of less than all the Securities of any series, the Company shall,
at least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date and of the principal amount of Securities of such series
to be redeemed. In the case of any redemption of Securities prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate and, where reasonably required by the
Trustee, an Opinion of Counsel evidencing compliance with such restriction.
SECTION 1103. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of that series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company and the Security
Registrar in writing of the Securities selected for redemption and, in the case
of any Securities selected for partial redemption, the principal amount thereof
to be redeemed.
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93
1103, 1104
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 1104. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at his address appearing in
the Security Register.
If Unregistered Securities are to be redeemed, notice of redemption
shall be published in an Authorized Newspaper in each of The City of New York,
London and, if such Securities to be redeemed are listed on any stock exchange
outside of the United States, in the city in which such stock exchange is
located (if other than London), or in such other city or cities as may be
specified in the Securities, once in each of two different calendar weeks, the
first publication to be not less than 30 nor more than 90 days before the
redemption date.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all the Outstanding Securities of any
series are to be redeemed, the identification (and, in the case of
partial redemption, the principal amounts) of the particular
Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will
become due and payable upon each such Security to be redeemed and, if
applicable, that interest thereon will cease to accrue on and after
said date,
(5) the place or places where such Securities and all
unmatured coupons are to be surrendered for payment of the Redemption
Price, and
(6) that the redemption is for a sinking fund, if such is
the case.
Notice of redemption of Securities to be redeemed at the election of
the Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
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94
1105, 1106 1107
SECTION 1105. Deposit of Redemption Price.
On or prior to the Redemption Date (and if on, then before 11:00 a.m.
(New York City time)), the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money sufficient
(in immediately available funds if payment is made on the Redemption Date) to
pay the Redemption Price of, and (except if the Redemption Date shall be an
Interest Payment Date) accrued interest on, all the Securities which are to be
redeemed on that date.
SECTION 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so
to be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security
together with all unmatured coupons, if any, shall be paid by the Company at
the Redemption Price, together with accrued interest to the Redemption Date but
in the case of Unregistered Securities installments of interest due on or prior
to the Redemption Date will be payable to the bearers of the coupons for such
interest by check or draft upon surrender of such coupons; provided, however,
that installments of interest whose Stated Maturity is on or prior to the
Redemption Date shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
SECTION 1107. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered
at a Place of Payment therefor (with, if the Company or the Trustee so re-
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95
1107, 1201, 1202
quires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or his attorney duly authorized in writing), and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities of the same
series, of any authorized denomination as requested by such Holder, in
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal of the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
SECTION 1201. Applicability of Article.
The provisions of this Article shall be applicable to any sinking fund
for the retirement of Securities of a series except as otherwise specified as
contemplated by Section 301 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the
terms of Securities of any series is herein referred to as a "mandatory sinking
fund payment", and any payment in excess of such minimum amount provided for by
the terms of Securities of any series is herein referred to as an "optional
sinking fund payment". If provided for by the terms of Securities of any
series, the cash amount of any sinking fund payment may be subject to reduction
as provided in Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities of any series as provided for by the terms of
Securities of such series.
SECTION 1202. Satisfaction of Sinking Fund Payments With Securities.
The Company (1) may deliver Outstanding Securities of a series (other
than any previously called for redemption) together, in the case of
Unregistered Securities, with all unmatured coupons appertaining thereto, and
(2) may apply as a credit Securities of a series which have been redeemed
either at the election of the Company pursuant to the terms of such Securities
or through the application of permitted optional sinking fund payments pursuant
to the terms of such Securities, in each case in satisfaction of all or any
part of any sinking fund payment with respect to the Securities of such series
required to
<PAGE>
96
1202, 1203, 1301, 1302
be made pursuant to the terms of such Securities as provided for by the terms
of such series; provided that such Securities have not been previously so
credited. Such Securities shall be received and credited for such purpose by
the Trustee at the Redemption Price specified in such Securities for redemption
through operation of the sinking fund and the amount of such sinking fund
payment shall be reduced accordingly.
SECTION 1203. Redemption of Securities for Sinking Fund,
Not less than 60 days prior to each sinking fund payment date for any
series of Securities, the Company will deliver to the Trustee an Officers'
Certificate specifying the amount of the next ensuing sinking fund payment for
that series pursuant to the terms of that series, the portion thereof, if any,
which is to be satisfied by payment of cash and the portion thereof, if any,
which is to be satisfied by delivering and crediting Securities of that series
pursuant to Section 1202 and will also deliver to the Trustee any Securities to
be so delivered. Not less than 30 days before each such sinking fund payment
date the Trustee shall select the Securities to be redeemed upon such sinking
fund payment date in the manner specified in Section 1103 and cause notice of
the redemption thereof to be given in the name of and at the expense of the
Company in the manner provided in Section 1104. Such notice having been duly
given, the redemption of such Securities shall be made upon the terms and in
the manner stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT OF SECURITIES AT OPTION OF HOLDERS
SECTION 1301. Applicability of Article.
Securities of any series which are repayable before their Stated
Maturity at the option of the Holders shall be repayable in accordance with
their terms and (except as otherwise specified as contemplated by Section 301
for Securities of any series) in accordance with this Article.
SECTION 1302. Notice of Repayment Date.
Notice of any Repayment Date with respect to Securities of any series
shall be given by the Company not less than 45 nor more than 60 days prior
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97
1302, 1303, 1304
to such Repayment Date to each Holder of Securities of such series in
accordance with Section 106.
The notice as to the Repayment Date shall state:
(1) the Repayment Date;
(2) the Repayment Price;
(3) the place or places where such Securities are to be
surrendered for payment of the Repayment Price and the date by which
Securities must be so surrendered in order to be repaid;
(4) that exercise of the option to elect repayment is
irrevocable; and
(5) any change or modification to the Securities of such
series remaining outstanding following the Repayment Date.
SECTION 1303. Deposit of Repayment Price.
On or prior to the Repayment Date (and if on, then before 11:00 a.m.
(New York City time)), the Company shall deposit with the Trustee or with a
Paying Agent (or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money sufficient
(in immediately available funds if payment is made on the Repayment Date) to
pay the Repayment Price of and (unless the Repayment Date shall be an Interest
Payment Date) accrued interest, if any, on all of the Securities of such series
which are to be repaid on that date.
SECTION 1304. Securities Payable on Repayment Date.
The form of option to elect repayment having been delivered as
specified in the form of Security for such series, the Securities of such
series so to be repaid shall, on the Repayment Date, become due and payable at
the Repayment Price applicable thereto and from and after such date (unless the
Company shall default in the payment of the Repayment Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for repayment in accordance with said notice, such Security shall
be paid by the Company at the Repayment Price together with accrued interest to
the Repayment Date; provided, however, that installments of interest whose
Stated Maturity is on or prior to such Repayment Date shall be payable to the
Holders of such Securities, or one or more Predecessor Securities, registered
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98
1304, 1305
as such at the close of business on the relevant Record Dates according to
their terms and the provisions of Section 307.
If any Security shall not be paid upon surrender thereof for
repayment, the principal (and premium, if any) shall, until paid, bear interest
from the Repayment Date at the rate prescribed therefor in such Security.
SECTION 1305. Securities Repaid in Part.
Any Security which by its terms may be repaid in part at the option of
the Holder and which is to be repaid only in part shall be surrendered at any
office or agency of the Company designated for that purpose pursuant to Section
1002 (with, if the Company or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form satisfactory to the Company and the
Trustee duly executed by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall authenticate and
deliver to the Holder of such Security without service charge, a new Security
or Securities of the same series, as provided in Section 305, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal
to and in exchange for the unrepaid portion of the principal of the Security so
surrendered.
------------------------
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
<PAGE>
99
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the date first above written.
POTLATCH CORPORATION
[CORPORATE SEAL]
By /s/ GEORGE PFAUTSCH
-----------------------------------
George Pfautsch
Senior Vice President,
Finance
Attest:
/s/ BRIAN W. DAVIS
- -----------------------------------
Brian W. Davis
Secretary
BANKERS TRUST COMPANY
OF CALIFORNIA,
NATIONAL ASSOCIATION
[CORPORATE SEAL]
By /s/ LAWRENCE J. BELL
-----------------------------------
Assistant Vice President
Attest
/s/ L.L. LOPEZ
- -----------------------------------
Assistant Secretary
<PAGE>
100
STATE OF CALIFORNIA )
) ss:
CITY AND COUNTY OF SAN FRANCISCO)
On the 24th day of January 1991, before me personally came Brian W.
Davis, to me known, who, being by me duly sworn, did depose and say that he is
Secretary of POTLATCH CORPORATION, one of the corporations described in and
which executed the foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instruments is such corporate seal;
that it was so affixed by authority of the By-Laws of said corporation, and
that he signed his name thereto by authority of the Board of actors of said
corporation.
[NOTARY SEAL] /s/ GEORGE GUISTI
--------------------------------------
STATE OF CALIFORNIA )
) ss:
CITY AND COUNTY OF SAN FRANCISCO)
On the 24th day of January before me personally came LAWRENCE J. BELL,
to me known who, being by me duly sworn, did depose and say that he is an
Assistant Vice President of BANKERS TRUST COMPANY OF; CALIFORNIA, NATIONAL
ASSOCIATION described in and which executed the foregoing instrument; that he
knows the seal of said association; that the seal affixed to said instrument is
such corporate SW; that it was so affixed by authority of the Board of
Directors of said association, and that he signed his name thereto by like
authority.
/s/ JAMES MC GRAW
--------------------------------------
[NOTARY SEAL]
<PAGE>
POTLATCH CORPORATION
OFFICERS' CERTIFICATE
We, GEORGE E. PFAUTSCH, Senior Vice President,
Finance, and SANDRA T. POWELL, Treasurer, of Potlatch
Corporation, a Delaware corporation (the "Company"), do
hereby certify in accordance with Section 301 of the
Indenture, dated as of November 27, 1990 (the "Indenture"),
between the Company and Bankers Trust Company of California,
National Association, as trustee (the "Trustee"), that,
pursuant to resolutions adopted by the Finance Committee of
the Board of Directors of the Company on January 17, 1991,
the terms of a series of debt securities of the Company
under the Indenture are as follows:
1. The title of the series of securities
shall be "Medium-Term Notes Due from 9 Months to
30 Years from Date of Issue" (the "Notes");
2. The limit on the aggregate principal
amount of the Notes which may be authenticated and
delivered under the Indenture shall be U.S.
$150,000,000 (except for Notes authenticated and
delivered upon registration of, transfer of, or in
exchange of, or in lieu of, other Notes pursuant
to Section 304, 305, 306, 906, 1107 and 1305 of
the Indenture);
3. The price of the Notes will be set forth
in the applicable Pricing Supplement in the form
attached hereto as Exhibit A (the "Pricing
Supplement") and the date on which the principal
(and premium, if any) of each of the Notes is
payable shall be any Business Day (as defined in
the Indenture) from nine months to thirty years
from its date of issue, as selected by the initial
purchaser of the Notes and agreed to and estab-
lished on behalf of the Corporation by any of the
Chairman of the Board and Chief Executive Officer,
the President, the Senior Vice President, Finance,
or the Treasurer (the "Authorized Officers"), from
time to time, as evidenced by the settlement
instructions in the form attached hereto as
Exhibit B which shall be provided to the Trustee
in connection with a request to authenticate such
securities pursuant to a Company Order, as such
term is defined in the Indenture (the Settlement
Instructions and the Company Order being herein
referred to collectively as "Settlement
Instructions"); provided, however, that the first
$50,000,000 in aggregate principal amount of the
-1-
Exhibit (4)(a)(i)
<PAGE>
Notes shall be issued for a term of four or more
years;
4. The interest on the Notes shall be
payable only at a fixed coupon rate, such rate to
be selected by the initial purchasers of the Notes
and agreed to and established on behalf of the
Corporation by an Authorized Officer, from time to
time, as evidenced by the Settlement Instructions;
provided, however, that the interest rate on the
first $50,000,000 in aggregate principal amount of
Notes issued shall not exceed a fixed coupon rate
of nine percent per annum and the interest rate on
the remaining $100,000,000 in aggregate principal
amount of Notes issued shall not exceed a fixed
coupon rate of nine percent per annum for Notes
issued with maturities of up to and including
10 years and shall not exceed a fixed coupon rate
of nine and one-half percent per annum for Notes
issued with maturities longer than 10 years. The
Interest Payment Dates and the Regular Record
Dates for the interest payable on any Interest
Payment Date shall be set forth in the Prospectus
Supplement relating to the Notes dated January 24,
1991 (the "Prospectus Supplement");
5. The principal of (and premium, if any)
and interest on the Notes shall be payable, Notes
may be surrendered for registration of transfer,
Notes may be surrendered for exchange, and notices
and demands to or upon the Company in respect of
the Notes and the Indenture may be served, at the
office or agency of the Company which will
initially be the office of the agent of the
Trustee at Bankers Trust Company, 4 Albany Street,
New York, New York 10015, or at such other places
as the Company may designate;
6. The obligation, if any, of the Company to
redeem or purchase the Notes pursuant to any
sinking fund or analogous provisions and the
period or periods within which, the price or
prices at which and the terms and conditions upon
which the Notes shall be redeemed or purchased, in
whole or in part, pursuant to such obligation will
be set forth in the Settlement Instructions;
7. The period or periods within which, the
price or prices at which and the terms and
conditions upon which the Notes may be repaid, in
whole or in part, at the option of the Holders
will be set forth in the Settlement Instructions;
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<PAGE>
8. The right, if any, of the Company to
execute and deliver to the Trustee, and to direct
the Trustee to authenticate and deliver in
accordance with a Company Order, a security of any
series in lieu of or in exchange for the Notes
cancelled upon redemption or repayment will be set
forth in the Settlement Instructions;
9. The Notes will be issuable only in
denominations of U.S. $100,000 and integral
multiples of U.S. $1,000 in excess thereof unless
otherwise set forth in the Settlement
Instructions;
10. The portion of the principal amount of
the Notes, if other than the principal amount
thereof, which shall be payable upon declaration
of acceleration of the Maturity thereof pursuant
to Section 502 of the Indenture will be set forth in
the Settlement Instructions;
11. The Notes are to be issuable as
Registered Securities, without coupons in
permanent global form. Beneficial owners of
interests in any such permanent Global Security
may exchange such interests for securities of such
series and of like tenor under the circumstances
set forth in the Prospectus Supplement;
12. Whether and under what circumstances the
Company will pay additional amounts on Notes held
by a person who is not a U.S. Person, as defined
in the Indenture, in respect of taxes or similar
charges withheld or deducted and, whether the
Company will have the option to redeem such Notes
rather than pay such additional amounts will be
set forth in the Settlement Instructions;
13. If the amount of payments of principal
of (and premium, if any) or interest on the Notes
may be determined with reference to an index, the
manner in which such amounts shall be determined
shall be set forth in the Settlement Instructions;
14. The Notes shall be in substantially the
form attached hereto as Exhibit C.
15. The extent to which, or the manner in
which, any interest payable on a temporary or
permanent Global Security on an Interest Payment
Date will be paid will be set forth in the
Prospectus Supplement;
16. Any other terms, conditions and rights
of the Notes will be set forth in the Settlement
Instructions.
-3-
<PAGE>
IN WITNESS WHEREOF, we have hereunto signed our
names this 24th day of January, 1991.
/s/George E. Pfautsch
----------------------
George E. Pfautsch
Senior Vice President,
Finance
/s/Sandra T. Powell
----------------------
Sandra T. Powell
Treasurer
-4-
<PAGE>
EXHIBIT A
Pricing Supplement No. Filing under Rule 424(b)(3)
Dated Registration File No. 33-379lO
(To Prospectus dated December 11,
1990 and Prospectus Supplement
dated January 24, 1991)
$150,000,000
POTLATCH CORPORATION
Medium-Term Notes
Due From 9 Months to 30 Years From Date of Issue
Principal Amount: Floating Rate Notes:
Interest Rate (if fixed rate): Interest rate basis:
Stated Maturity: _ Commercial Paper Rate
Specified Currency: _ Prime Rate
Applicable Exchange Rate (if any): _ LIBOR
U.S. $1.00 = _ Treasury Rate
Issue price (as a percentage of principal amount): _ CD Rate
Selling Agent's commission (%): _ Federal Funds Rate
Purchasing Agent's discount or commission(%): _ Other
Net proceeds to the Company (%): Index Maturity:
Settlement date (original issue date): Spread:
Redemption Commencement Date (if any): Spread Multiplier:
Maximum Rate:
Minimum Rate:
Initial Interest Rate:
Interest Reset Date(s):
Interest Determination
Dates(s):
Calculation Date(s):
Interest Payment Date(s):
Regular Record Date(s):
Redemption prices (if any): The Redemption Price shall initially be % of
the principal amount of such Notes to be redeemed and shall decline (but not
below par) on each anniversary of the date of original issuance by % of the
principal amount to be redeemed until the Redemption Price is 100% of such
principal amount.
If such Notes are denominated in other than U.S. dollars, the applicable
Foreign Currency Supplement is attached hereto.
Additional terms:
As of the date of this Pricing Supplement, the aggregate initial public
offering price (or its equivalent in other currencies) of the Debt Securities
(as defined in the Prospectus) which have been sold (including the Notes to
which this Pricing Supplement relates) is $ .
"N/A" as used herein means "Not Applicable." "A/S" as used herein means
"As stated in the Prospectus Supplement referred to above."
Goldman, Sachs & Co. Salomon Brothers Inc
<PAGE>
Exhibit B
(To be delivered to Bankers Trust Company
as Authenticating Agent for the Trustee)
POTLATCH CORPORATION
Medium-Term Notes
Due From 9 Months to 30 Years From Date of Issue
Settlement Instructions
1. Exact name in which the Note is to be registered
("registered owner"):
2. Exact address of registered owner and, if different,
the address for delivery, notices and payment of prin-
cipal and interest:
3. TIN of registered owner:
4. Principal amount of Note in authorized denominations to
be delivered to the registered owner:
5. Interest rate of Note:
A. In the case of a Fixed Rate Note, the Interest
Rate and the initial Interest Payment Date:
B. In the case of a Floating Rate Note:
1. Base Rate:
2. Initial Interest Rate (if available):
3. Interest Reset Dates:
4. Interest Payment Dates:
5. Regular Record Dates:
6. Interest Determination Dates:
7. Index Maturity:
8. Maturity:
9. Maximum Interest Rate (if any):
10. Minimum Interest Rate (if any):
11. Spread or Spread Multiplier (if any):
12. Calculation Agent:
6. Stated Maturity:
7. Redemption provisions, if any, including, as
applicable:
A. Redemption Commencement Date:
B. Initial Redemption Price (% of par):
C. Amount (% of par) that the Redemption Price shall
decline (but not below par) on each anniversary of
the Redemption Commencement Date:
D. Other:
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<PAGE>
8. If an Original Issue Discount Note, the total amount of
Original Issue Discount, the yield to Maturity and the
initial accrual period of original issue discount:
9. Settlement Date (Issue Date):
10. Specified Currency and, if the Specified Currency is
other than U.S. dollars, the applicable Exchange Rate
for such Specified Currency:
ll. Indexed Currency, the Base Rate and the Exchange Rate
Determination Date, if applicable:
12. Presenting Agent's Commission (to be paid in the form
of a discount from the proceeds remitted to the Issuer
upon settlement):
13. Presenting Agent:
14. Issue Price:
15. Net Proceeds to the Company:
16. Trade Date:
17. Wire transfer information:
18. Additional terms:
Potlatch Corporation (the "Company") represents
and warrants that (i) the above-mentioned terms of the Notes
have been determined in accordance with the resolutions of the
Board of Directors of the Company dated September 21,
1990, and the resolutions of the Finance Committee of the
Company dated as of January 17, 1991 and the Officers'
Certificate dated , ; and (ii) the aggregate
principal amount of all Notes heretofore authenticated
(prior to giving effect to any authentication of the Notes
herein requested to be authenticated) is $ .
POTLATCH CORPORATION
By______________________
Its___________________
cc: Bankers Trust Company of California,
National Association
-2-
<PAGE>
EXHIBIT C
(Form of Fixed-Rate Note)
(Form of Face)
"UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY ("DEPOSITARY') (55 WATER STREET, NEW YORK, NEW YORK)
TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND
ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF
THE DEPOSITARY OR A SUCCESSOR OF THE DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR."
REGISTERED REGISTERED
POTLATCH CORPORATION
MEDIUM-TERM NOTES DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE
CUSIP:_______________
Registered No:______________ Principal Amount: U.S. $_____________
Interest
Payment Dates:______________ Regular Record Dates:________________
Issue Date:_________________ Interest Rate:_______________________
Stated Maturity:____________
Repayment Terms: Redemption Terms:
Repayment Dates:__________ Redemption Commencement Date:______
Repayment Prices:_________ Initial Redemption Price:_________%
Reduction Percentages:____________%
Other Terms:
POTLATCH CORPORATION, a Delaware corporation (the "Company"), which
term includes any successor corporation under the Indenture hereinafter
referred to, for value received, hereby promises to pay to
________________________, or its registered assigns, the Principal Amount
specified above on the Stated Maturity date specified above (unless earlier
redeemed or repaid), and to pay interest on such Principal Amount at the per
annum Interest Rate specified above on each succeeding Interest Payment Date
(as defined below) until payment of said principal sum has been made or made
available for payment; provided, however if the Issue Date is after the
-1-
<PAGE>
Regular Record Date (as defined below) and before the next succeeding
Interest Payment Date, then interest hereon shall be paid on the Interest
Payment Date following the next succeeding Regular Record Date. Interest
hereon shall accrue from the Issue Date or from the most recent Interest
Payment Date to which interest has been paid or duly provided for. The term
"Interest Payment Date" for any regular payment of interest shall mean
June l, December l and any date fixed for redemption or repayment pursuant
to the Indenture (as defined below) and this Security (the "Redemption Date")
and the stated Maturity. The term "Regular Record Date" for any regular
payment of interest, other than any Redemption Date or the Stated Maturity,
shall mean the May 15 or November l5 next preceding such June 1 or December 1
(whether or not a Business Day), as the case may be. The interest so
payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in the Indenture, be paid to the Person in whose name
this Security (or a predecessor security in exchange for or transfer of which
this Security was issued between the Regular Record Date for such interest
and the Interest Payment Date) is registered at the close of business on the
Regular Record Date for such interest. Interest payable at the Stated
Maturity or Redemption Date shall be paid to the Person to whom the Principal
Amount is paid. Interest shall be calculated on the basis of a 360-day year
of twelve 30-day months. Any such interest not so punctually paid or duly
provided for shall be payable as provided in the Indenture.
Payment of the principal of, and premium, if any, and interest
payable upon Maturity or redemption of, this Security shall be made in
immediately available funds at the offices of Bankers Trust Company, in the
Borough of Manhattan, The City of New York (the "Paying Agent ), upon
presentation of this Security. Alternatively, such payments shall be made
at such other offices or agencies of the Company maintained for that purpose
in the Borough of Manhattan, The City of New York, in such coin or currency
of the United States as at the time of payment is legal tender for payment
of public and private debts. Payment of interest, other than interest
payable upon Maturity or redemption, will be made by United States dollar
check mailed on the applicable interest payment date to the address of the
Person entitled thereto as such address shall appear in the Security
Register. The Company may also appoint additional paying agents.
Notwithstanding the foregoing, (a) a Holder of U.S. $5,000,000 or more in
aggregate principal amount of Notes of like tenor and terms may elect at any
time to have payment of interest made by wire transfer in immediately
available funds, but only if appropriate instructions have been received in
writing by Bankers Trust Company (or other paying agent) on or prior to the
applicable Regular Record Date for such payment of interest, and (b) payment
of interest on a Note registered in the name of The Depository Trust Company
or its nominee shall be made by wire transfer in immediately available funds.
This Security is one of a duly authorized issuance of Medium-Term Notes
Due from 9 Months to 30 Years from Date of Issue of the Company (the
"Securities"), which have been issued under and are governed by the terms of
an Indenture dated as of November 27, 1990 (the "Indenture") between the
Company and Bankers Trust Company of California, National Association, as
Trustee (the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the respective rights
thereunder of the Company, the Trustee and the Holders of the Securities, and
the terms upon which the Securities are, and are to be, authenticated and
delivered.
-2-
<PAGE>
Reference is made to the further provisions of this Security set
forth on the reverse hereof, which shall have the same effect as though duly
set forth at this place.
This Security shall not be valid or obligatory for any purpose
until the certificate of authentication hereon shall have been manually
signed by the Trustee.
IN WITNESS WHEREOF, POTLATCH CORPORATION has caused this instrument
to be signed in its name by the manual or facsimile signature of its Chairman
of the Board and Chief Executive Officer, the President, the Senior Vice
President, Finance or its Treasurer and impressed or imprinted with its
corporate seal or facsimile thereof, attested by the manual or facsimile
signature of its Secretary or one of its Assistant Secretaries.
Dated:___________________, ________________.
POTLATCH CORPORATION
By________________________
Title___________________
(Corporate Seal)
Attest:
________________________
(Assistant) Secretary
This is one of the Securities of the series designated herein,
referred to in the within-mentioned Indenture.
BANKERS TRUST COMPANY OF CALIFORNIA,
NATIONAL ASSOCIATION, as Trustee
By: Bankers Trust Company
as Authenticating Agent
By____________________________
Authorized Signature
-3-
<PAGE>
(REVERSE SIDE OF FIXED-RATE NOTE)
POTLATCH CORPORATION
MEDIUM-TERM NOTES DUE FROM 9 MONTHS TO 30 YEARS FROM DATE OF ISSUE
This Security is one of a duly authorized issuance of Securities
of the Company designated as its Medium-Term Notes Due from 9 Months to 30
Years from Date of Issue (the "Securities"), limited in aggregate principal
amount to $150,000,000, subject to reduction or increase upon the
determination of the Company, all issued or to be issued under and pursuant
to an Indenture dated as of November 27, 1990 between the Company and Bankers
Trust Company of California, National Association, as Trustee (the
"Trustee"), to which Indenture and all indentures supplemental thereto (the
"Indenture") reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of the Securities. The Securities will
be issued only in fully registered form in denominations of $100,000
principal amount and integral multiples of $1,000 in excess thereof.
This Security may not be redeemed before the Redemption
Commencement Date, if any, stated on the face hereof. If no Redemption
Commencement Date is indicated hereon, this Security is not redeemable prior
to the Stated Maturity hereof. On or after the Redemption Commencement Date,
this Security may be redeemed in accordance with its terms and the Indenture.
In the event of redemption of this Security in part only, a new Security or
Securities of this series for the unredeemed portion hereof will be issued
in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, with
respect to the Securities shall have occurred and be continuing, the
principal hereof (unless otherwise indicated on the face hereof) may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture. In addition to the Events of Default in the Indenture that are
applicable to the Securities, the Company covenants that an Event of Default
with respect to the Securities will include the following: a default under
any bond, debenture, note or other evidence of indebtedness for money
borrowed in excess of $10,000,000 by the Company (including a default with
respect to any series of debt securities issued under the Indenture other
than the Securities of this series) or under any mortgage, indenture or other
instrument under which there may be issued or by which there may be secured
or evidenced any indebtedness for money borrowed in excess of $10,000,000 by
the Company (including the Indenture), whether such indebtedness now exists
or shall hereafter be created, which default (i) shall consist of a failure
to pay such indebtedness at final maturity and after the expiration of the
applicable grace period or (ii) shall have resulted in such indebtedness
becoming or being declared due and payable prior to the date on which it
would otherwise have become due and payable, without such acceleration having
been rescinded or annulled or such indebtedness having been discharged, in
all cases within a period of 10 days after there shall have been given, by
registered or certified mail, to the Company by the Trustee, or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Securities, a written notice specifying such default and
-4-
<PAGE>
requiring the Company to cause such indebtedness to be discharged or cause
such acceleration to be rescinded or annulled and stating that such notice
is a "Notice of Default" under the Indenture. The Trustee shall not be
deemed to have knowledge of such default unless either (a) a Responsible
Officer of the Trustee shall have actual knowledge of such default or (b) the
Trustee shall receive written notice thereof from the Company, from any
Holder, from the holder of any such indebtedness or from the trustee under
any such mortgage, indenture or other instrument.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of
the Company and the rights of the Holders of the Securities of each series
to be affected under the Indenture at any time by the Company and the Trustee
with the consent of the Holders of a majority in aggregate principal amount
of the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of a majority in
principal amount of the Securities of each series at the time Outstanding,
on behalf of the Holders of all Securities of such series, to waive
compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and
binding upon such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or in exchange
hereof or in lieu hereof, whether or not a notation of such waiver is made
upon this Security. Any Holder may revoke the consent or waiver as to this
Security if the Trustee receives notice of revocation within the time
specified in Section 907 of the Indenture.
The Indenture contains provisions for defeasance at any time of
(a) the entire indebtedness on this Security and (b) certain restrictive
covenants upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Security.
Unless otherwise indicated on the face hereof, the transfer of this
Security is registrable by the registered owner hereof in person or by his
attorney duly authorized in writing at the office of the Security Registrar
or at the office of any transfer agent designated by the Company for such
purpose. Subject to the terms of the Indenture, upon payment of a sum
sufficient to reimburse the Company for any tax or other governmental charge
incident to transfer to the extent required by the Indentures and upon
surrender and cancellation of this Security upon any such registration of
transfer, a new Security or Securities of authorized denomination or
denominations, for the same aggregate principal amount, will be issued to
the transferee in exchange herefor.
Prior to due presentation of this Security for registration of
transfer, the Company, the Trustee, the Authenticating Agent, if any, any
agent of the Company or the Trustee, the paying agent and the Security
Registrar may deem and treat the Person in whose name this Security shall be
registered upon the Security Register as the absolute owner of this Security
for all purposes.
No recourse shall be had for the payment of the principal of and
premium, if any, or the interest on this Security, or for any claim based
hereon, or otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any incorporator,
stockholder, officer, director or Affiliate, as such, past, present or
-5-
<PAGE>
future, of the Company or of any respective successor corporation, whether
by virtue of any constitution, statute or rule of law, or by the enforcement
of any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
All terms used in this Security which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
The laws of the State of New York shall govern the Indenture and
this Security.
Except as provided in the Indenture, this Security will rank on a
parity with all other unsecured and unsubordinated indebtedness of the
Company.
-6-
<PAGE>
FOR VALUE RECEIVED the undersigned hereby sell(s), asslgn(s) and
transfer(s) unto
_____________________________________________________________________
Please insert Social Security or other identifying number of assignee
_____________________________________________________________________
Please print or typewrite name and address
including postal zip code of assignee
the within Security and all rights thereunder, hereby irrevocably
constituting and appointing _______________________________________
attorney to transfer said Security on the books of the Company, with full
power of substitution in the premises.
Dated:_____________________, _____
Signature: ________________________________
NOTICE: The signature to this
assignment must correspond with
the name as written upon the
face of the within instrument
in every particular, without
alteration or enlargement or
any change whatever and must be
guaranteed by a commercial bank
or trust company having its
principal office or a
correspondent in The City
of New York or by a member firm
of the New York Stock Exchange.
-7-
POTLATCH CORPORATION
MANAGEMENT PERFORMANCE AWARD PLAN
Adopted: July 20, 1973
Last Amended: March 1, 1996
Exhibit (10)(a)
<PAGE>
Potlatch Corporation
MANAGEMENT PERFORMANCE AWARD PLAN
1. ESTABLISHMENT AND PURPOSE
The Potlatch Corporation Management Performance Award Plan (the "Plan") was
adopted on July 20, 1973, by the Board of Directors of Potlatch Corporation to
provide meaningful financial rewards to those employees of Potlatch Corporation
and its subsidiaries who are in a position to contribute to the achievement by
Potlatch Corporation and its subsidiaries of significant improvements in profit
performance and growth. Awards may first be made under the Plan in 1975 with
respect to participation in the calendar year ending December 31, 1974.
2. DEFINITIONS
(a) "Potlatch" means Potlatch Corporation, a Delaware corporation.
(b) "Subsidiary" means any corporation fifty percent (50%) or more of the
voting stock of which is owned by Potlatch or by one or more of such
corporations.
(c) "Company" means Potlatch and its Subsidiaries
(d) "Board of Directors" means the Board of Directors of Potlatch.
(e) "Chairman" means the Chairman of the Board of Potlatch.
(f) "Committee" means the committee which shall administer the Plan in
accordance with Section 3.
(g) "Employee" means a full-time salaried employee (including any Officer)
of the Company.
(h) "Organization Unit" means a major organizational component or profit
center of the Company as determined pursuant to rules and regulations adopted
by the Committee from time to time whose Employees are eligible to participate
in the Plan.
(i) "Officer" means any Employee who is an elected officer of the Company
and who is the chief manager of an Organizational Unit.
(j) "Award" means an award under the Plan.
(k) "Participant" means any Employee actively employed by the Company
during an Award Year in an Organizational Unit in a position designated as a
participating position pursuant to rules and regulations adopted by the
Committee from time to time.
(i) "Year" means the calendar year.
(m) "Award Year" means a Year subsequent to 1973 with respect to which
Awards are made.
1
<PAGE>
3. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Executive Compensation and Personnel
Policies Committee of the Board of Directors, or such other committee as may
be designated and appointed by the Board of Directors, which shall consist of
at least three (3) members of the Board of Directors. No member of the Committee
shall be eligible to participate and receive Awards under the Plan while serving
as a member of the Committee.
In addition to the powers and duties otherwise set forth in the Plan, the
Committee shall have full power and authority to administer and interpret the
Plan, to establish procedures for administering the Plan, to adopt and
periodically review such rules and regulations consistent with the terms of the
Plan as the Committee deems necessary or advisable in order to properly carry
out the provisions of the Plan, to receive and review an annual report to be
submitted by the Chairman which shall describe and evaluate the operation of the
Plan, and to take any and all necessary action in connection therewith. The
Committee's interpretation and construction of the Plan and its determination of
the amount of any Award thereunder shall be conclusive and binding on all
persons. In making such determinations, the Committee is entitled to rely on
information and reports provided by the Chairman.
4. ELIGIBILITY AND PARTICIPATION
Pursuant to rules and regulations adopted by the Committee, the Committee
shall designate the Organization Units and the positions which are eligible to
participate in the Plan.
5. AWARDS
Awards shall be determined in accordance with Sections 6, 7 and 8 and
announced to Participants by April 15 following the close of the Award Year.
6. DETERMINING THE ACTUAL CORPORATE FUND
The total amount of Awards made to all Participants with respect to any
award Year shall be determined pursuant to this section.
(a) Standard Bonus Fund. There shall first be determined the Standard
Bonus Fund for such Award Year. The Standard Bonus Fund shall be computed as
follows:
(i) The Standard Bonus for each Participant shall first be
determined. A Participant's Standard Bonus shall be an amount equal to a
percentage of the Participant's salary, based on the position to which the
Participant is assigned, as determined in accordance with rules and regulations
adopted by the Committee. If a Participant does not qualify as a Participant
for the entire period of the applicable
2
<PAGE>
Award Year, the Standard Bonus will be prorated to reflect the number of full
calendar months that the Employee was a participant.
(ii) The sum of the Standard Bonuses for all Participants as
determined under subparagraph (i) above shall constitute the amount of the
Standard Bonus Fund.
(iii) The Standard Bonus Fund for each Organization Unit shall be the
sum of all Standard Bonuses for all Participants in such Organization Unit.
(b) Performance Modifier. The Performance Modifier for each Award Year
shall be a percentage determined pursuant to rules and regulations adopted by
the Committee, based upon a comparison of the Company's profit performance with
the profit performance of other major competitors. In its rules and
regulations concerning the determination of the Performance Modifier, the
Committee may take into consideration such financial measures of profit
performance (including, without limitation, consolidated earnings per share and
return on shareholder equity.)
(c) Actual Corporate Fund. The Actual Corporate Fund for each Award Year
shall be determined by multiplying the amount of the Standard Bonus Fund by the
Performance Modifier, in accordance with rules and regulations adopted by the
Committee. Such Modifier may range from a minimum of zero to a maximum of two
hundred percent (200%). The Actual Corporate Fund shall be represented by a
bookkeeping entry only and no employee of the Company shall have any vested
right therein.
(d) Limits on Award Payments. Notwithstanding any other provision of the
Plan, the Board of Directors may, in its sole discretion, determine limits on
the amount and alter the time and form of payment of Awards with respect to an
Award Year if any of the following conditions occurs: (i) Potlatch does not
declare cash dividend with respect to its common stock during such Award Year,
or (ii) the Actual Corporate Fund determined pursuant to Section 6 (c) for such
Award Year exceeds four percent (4%) of Potlatch's consolidated net earnings,
before taxes, for such Award Year.
7. ALLOCATING THE ACTUAL CORPORATE FUND AMONG ORGANIZATION
UNITS
The Chairman shall determine the basis for allocating the Actual Corporate
Fund for each Award Year among the Organization Units, taking into account the
relative size of each Organization Unit (determined with reference to the
Standard Bonus Fund for such Organization Unit) and the performance of the
Organization Unit in relation to its budgets; its progress toward long-term
goals; its attainment of social, employee relations and other objectives; and
recognizing the influence of any important unforeseen and uncontrollable
circumstances.
3
<PAGE>
8. DETERMINING INDIVIDUAL AWARDS
Each Officer shall determine the amount of the Award to each Participant
who is assigned to such Officer's Organization Unit (except the Officer's own
Award) by prescribing the basis for allocating such Organization Unit's portion
of the Actual Corporate Fund among the Participants employed in such
Organization Unit, taking into account the amount of the Participant's Standard
Bonus and the Participant's individual performance. Each Participant's Award
shall be subject to review by and approval of the Chairman.
9. FORM AND TIME OF PAYMENT OF AWARDS
(a) All Awards under the Plan earned on and after January 1, 1996, shall
be paid in a combination of cash and whole shares of the Company's common stock
in a ratio determined by the Committee at the time Awards are announced in
accordance with Section 5, or as soon thereafter as reasonably practicable. The
number of shares of common stock shall be determined by dividing the dollar
value of the portion of the Award allocated as stock by the closing price of
the Company's common stock on the date of the Committee meeting at which the
Award payments are approved; Award amounts shall be prorated for the portion of
the Award Year the employee was an eligible Participant pursuant to the rules
and regulations adopted by the Committee from time to time. A Participant who is
dismissed shall be entitled to receive an Award only to the extent permitted
pursuant to the rules adopted by the Committee.
(b) Notwithstanding the foregoing, a Participant may elect to defer
receipt of payment of all or significant portions of future Awards until after
termination of employment pursuant to rules and regulations adopted by the
Committee. However, if the payment of the Award would cause the Participant's
annual compensation to exceed the amount deductible under the Internal Revenue
Code, the Participant will be required to defer receipt of the portion of the
Award that would be non-deductible in the Award year until after termination of
employment. Such rules and regulations shall establish procedures for the
Committee, at its discretion, to accelerate the schedule of payments for
deferred Awards.
(c) The cash portion of an Award, the payment of which is deferred under
(b) above, shall be credited with additional amounts during the period of
deferral commencing on the first day of the month coinciding with or next
following the date Awards are normally paid pursuant to Paragraph (a) above,
and continuing during the period of deferral up to the last day of the month
in which the amounts deferred hereunder are paid, and payable at the time that
the deferred Awards are paid. Such additional amounts shall be computed at
seventy percent (70%) of the higher of the following
4
<PAGE>
averages during the period of deferral: (i) the prime rate charged by the major
commercial banks as of the first business day of each calendar month (as
reported in an official publication of the Federal Reserve System), or (ii) the
average monthly long-term rate of A rated corporate bonds (as published in
Moody's Bond Record), and shall be compounded annually. Notwithstanding the
foregoing, in no event shall such additional amount exceed the maximum interest
rate allowable by law.
(d) The stock portion of an Award, the payment of which is deferred under
(b) above, shall be converted into full and fractional stock units equal to the
number of shares the Participant would have received if the Award had not been
deferred.
On each dividend payment date, dividend equivalents shall be credited
to each full and fractional stock unit to the extent such stock unit was in the
Participant's deferred account on the dividend record date immediately preceding
the applicable dividend payment date. Such dividend equivalents shall be
converted into stock units as of the dividend payment date by dividing the
amount of the dividend equivalents by the closing price of the Company's common
stock on the dividend payment date.
In the event of a change in the number of outstanding shares of the
Company's common stock by reason of a stock split, stock dividend,
reclassification or other distribution of shares or other similar changes in
the capitalization of the Company, an appropriate adjustment shall be made in
the number of each participant's stock units determined as of the date of such
occurrence.
10. SPECIAL AWARDS FUND
(a) Creation of the Fund. A Special Awards Fund shall be established with
respect to each Award Year in an amount determined by the Committee but not to
exceed ten percent (10%) of the Standard Bonus Fund for such Award Year. The
Special Awards Fund shall be represented by a bookkeeping entry only and no
employee of the Company shall have any vested right therein.
(b) Eligibility. Awards may be made in a total amount equal to the Special
Awards Fund to those Employees of the Company who are not Participants with
respect to such Award Year, but who in the judgment of an Officer have made
outstanding contributions to the success of the Company.
(c) Selection. After the close of the Award Year, recipients of Awards
under the Special Awards Fund shall be selected by the Chairman upon the
recommendation of an Officer. The amount of each individual's Award under the
Special Awards Fund shall be determined by the Chairman upon the recommendation
of an Officer and shall fall within a range set forth in rules and regulations
adopted by the Committee, expressed as minimum and maximum percentages of base
annual salary paid. Awards
5
<PAGE>
under the Special Awards Fund shall be announced by April 15 following the
Award Year.
(d) Payment. Awards under the Special Awards Fund shall be paid in full
in cash at the time the Award is announced or as soon as reasonably practicable
thereafter.
(e) Unused Funds. Any part of the Special Awards Fund created with
respect to any Award Year which is not used to make Awards with respect to such
Award Year may be transferred to the Actual Corporate Fund in accordance with
the rules and regulations established by the Committee, but any unused funds
shall not be carried forward to any future Award Year.
11. NO ASSIGNMENT OF INTEREST
The interest of any person in the Plan or in payments to be received
pursuant to it shall not be subject to option or assignable either by voluntary
or involuntary assignment or by operation of law, and any act in violation of
this section shall be void.
12. EMPLOYMENT RIGHTS
The selection of an Employee as a Participant shall not confer any right on
such Employee to receive an Award under the Plan or to continue in the employ of
the Company or limit in any way the right of the Company to terminate such
Participant's employment at any time.
13. AMENDMENT OR TERMINATION OF THE PLAN
The Board of Directors may amend, suspend or terminate the Plan at any
time; provided, however, that any amendment adopted or effective on or after
July 1, in any Award Year which would adversely affect the calculation of a
Participant's Award or the Participant's eligibility for an Award for such Award
Year shall be applied prospectively from the date the amendment was adopted or
effective, whichever is later; provided, further that if the Plan is terminated
effective on or after July 1 in any Award Year such termination shall not
adversely affect any Participant's eligibility for a pro rata share of an Award
for the period of such Award Year prior to the date the termination was adopted
or effective, whichever is later, subject to all other applicable terms and
conditions of the Plan. In the event of termination of the Plan, Awards deferred
under Section 9(b) shall be paid at such times and in such amounts as provided
in Section 9(b) and the rules and regulations adopted by the Committee.
6
Potlatch
Irwin W. Krantz Potlatch Corporation
Vice President Employee Relations
One Maritime Plaza
P.O. Box 3591
San Francisco,California 94119
Telephone (415) 98l-598O
Mr. George F. Jewett, Jr. May 21, 1979
Skyland Way
Ross, CA 94957
Dear Fritz:
This letter will set forth all the terms and conditions of our
agreement regarding certain limited consulting services to be
rendered by you to Potlatch Corporation.
In view of your specialized knowledge with respect to the
Company's policies and programs, its management activities
and ongoing operations, the Company wishes to retain you as a
consultant to attend meetings regarding these areas from time
to time on an irregular basis, and to provide such other consulting
services as the Company may request. There will be no formal
schedule during which you are to perform your duties. Your
services are to be performed at your convenience and according
to your own schedule, and you are not expected to subordinate
your other activities to those of the Company. If your other
commitments may cause a delay in any action which you are
requested to take with respect to Potlatch Corporation, you and
the Company will mutually agree on a convenient time for
completion. During the time you are performing duties under
this agreement, you are not obligated to advise the Company of
your progress, but the Company would like to be kept advised
of your availability and general whereabouts on a current basis.
The Company will reimburse you for all reasonable expenses
incurred by you in the performance of all consulting services
pursuant to this agreement. You will be expected to submit
itemized statements in support of such expenses. The Company
will pay you a fee for your services of $700 for each day or
substantial part thereof which you spend in attendance at meetings
or providing other services contemplated by this agreement.
In connection with your attendance at meetings, e. g. of the
Management Committee, it is understood that such fee shall
encompass any time spent in preparing for such meetings.
Exhibit (1O)(c)
<PAGE>
Mr. George F. Jewett, Jr.
May 21, 1979
Page Two
During the term of this agreement you will not be considered an
employee of the Company and will not be eligible to participate in
any of the benefit plans available to the Company's employees.
During the term of this agreement you agree that you will not engage
in any business which is competitive with that of the Company.
The term of this agreement shall commence May 5, 1979, and shall
continue indefinitely. However, either party may terminate this
agreement on seven days advance written notice to the other party.
If the terms of your engagement as an expert consultant as set
forth above are satisfactory, please execute the enclosed copy
of this letter and return it to me.
Yours very truly,
/s/Richard B. Madden
Richard B. Madden
I agree to the terms and conditions set forth above.
/s/George F. Jewett, Jr.
George F.Jewett, Jr.
<PAGE>
Potlatch
Richard B. Madden Potlatch Corporation
Chairman and Chief Executive Officer P.O. Box 3591
San Francisco, California
94119-3591
Telephone (415) 576-8801
February 19, 1986
Mr. George F. Jewett, Jr.
Skyland Way
Ross, CA 94957
Dear Fritz:
This will amend our letter agreement of May 21, 1979,
setting forth the terms and conditions of certain
limited consulting services to be rendered by you to
Potlatch Corporation.
Effective March 1, 1986, the fee for your services
shall be increased from $700 to $1000 for each day or
substantial part thereof which you spend in attendance
at meetings or providing other services contemplated
by the agreement.
All other provisions of the agreement of May 21, 1979,
shall remain unchanged.
Very truly yours,
/s/Richard B. Madden
Richard B. Madden
Accepted by: /s/George F. Jewett, Jr.
George F. Jewett, Jr.
RBM/cbj
One Maritime Plaza, San Francisco, CA 94111-3576
STOCK OPTION AGREEMENT
POTLATCH CORPORATION 1983 STOCK OPTION PLAN
THIS AGREEMENT made and entered into the day
specified in the attached addendum to this Agreement by and
between POTLATCH CORPORATION, a Delaware corporation (the
"Corporation") and the employee of the Corporation named in
the attached ("Employee"),
W I T N E S S E T H:
That to encourage stock ownership by employees of
the Corporation and for other valuable consideration, the
parties agree as follows:
1. Definitions.
(a) "Agreement" shall mean this stock option
agreement.
(b) "Board" shall mean the Board of Directors of
the Corporation.
(c) "Change in Control" shall mean an event or
transaction described in Subparagraph (a), (b), (c) or (d) of
Paragraph 3 (without regard to the thirty (30) and three
hundred sixty-five (365) day periods also described in those
Subparagraphs).
(d) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) "Common Stock" shall mean the $1 par value
Common Stock of the Corporation.
(f) "Committee" shall mean the Committee appointed
by the Board to administer the Plan.
(g) "Corporation" shall mean Potlatch Corporation,
a Delaware corporation.
(h) "Date of Grant" shall mean the date on which
the Committee determined to grant this Option, as specified
in Section 1 of the addendum to this Agreement.
-1-
Exhibit (10)(f)(iii)
<PAGE>
(i) "Disability" shall mean the Employee is unable
to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not
less than twelve (12) months.
(j) "Exercise Price" shall mean the price per
Share designated in Section 2 of the addendum to this
Agreement at which this Option may be exercised.
(k) "Fair Market Value" of a Share as of a speci-
fied date shall mean the closing price at which such Shares
are traded as of the close of business on such date as
reported on the composite tape, or if no trading of the
Common Stock is reported for that day, on the next preceding
day on which trading was reported.
(l) "Incentive Stock Option" shall mean an Option
described in Code section 422A(b).
(m) "Nonqualified Stock Option" shall mean an
Option other than an Incentive Stock Option.
(n) "Option" shall mean a stock option granted
pursuant to the Plan.
(o) "Option Period" shall mean the term of this
Option as provided in Paragraph 3 of this Agreement.
(p) "Partial Exercise" shall mean an exercise with
respect to less than all of the accrued but unexercised
Shares subject to Option held by the person exercising the
Option.
(q) "Plan" shall mean the Potlatch Corporation
1983 Stock Option Plan, as adopted by the Board on
September 24, 1983, and as amended by the Board on
December 14, 1984 and February 24, 1989, and pursuant to
which the parties have entered into this Agreement.
(r) "Purchase Price" shall mean the Exercise
Price times the number of whole shares with respect to which
this Option is exercised.
(s) "Rules" shall mean the regulations and rules
adopted from time to time by the Committee.
(t) "Securities Act" shall mean the Securities Act
of 1933, as amended.
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<PAGE>
(u) "Share" shall mean one share of Common Stock,
adjusted in accordance with Section 10 of the Plan.
(v) "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Corporation
if each of the corporations other than the last corporation
in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
2. The Corporation hereby grants to Employee the
option to purchase that number of shares of Common Stock
specified in Section 3 of the addendum to this Agreement for
the Exercise Price specified in Section 2 of the addendum to
this Agreement, on the terms and conditions hereinafter
stated, and in consideration for which Employee hereby agrees
to continue in the employment of the Corporation or its
Subsidiaries for a period of at least one (1) year from the
date of this Agreement .
This Option has been granted pursuant to the Plan,
a copy of the text of which Employee may obtain upon request
to the Corporation.
3. Subject to the conditions stated herein,
unless a different period is specified in Section 5 of the
addendum to this Agreement, the period during which the
option may be exercised (the "Vesting Schedule") and the Call
Periods applicable to such Vesting Schedule pursuant to
Paragraph 4 shall be as follows:
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<PAGE>
Number of Shares Vesting Schedule* Call Period**
50% of the number From one year From one year
of shares from the Date of from the Date of
specified in Grant to end of Grant to end of
Section 3 of the term for Option term for Option
addendum
50% of the number From two years From two years
of shares from the Date of from the Date of
specified in Grant to end of Grant to end of
Section 3 of the term for Option term for Option
addendum
No Partial Exercise of this Option may be for less than ten
(10) Share lots or multiples thereof:
If a period of six (6) months has elapsed from the
Date of Grant, Employee shall have the right to exercise the
Option (or in lieu thereof to call the related stock
appreciation right), in whole or in part:
(a) Within thirty (30) days following the
consummation of any transaction approved by the
stockholders of the Corporation in which the
Corporation will cease to be an independent
publicly owned corporation (including, without
limitation, a reverse merger transaction in which
the Corporation becomes the subsidiary of another
corporation) or the sale or other disposition of
all or substantially all of the assets of the
Corporation;
(b) Within three hundred sixty-five (365)
days following the date on which more than one-
third (determined by rounding down to the next
whole number) of the individual members of the
Board neither (i) were directors of the Corporation
on a date three years earlier nor (ii) are
individuals whose election or nomination for
election as directors was affirmatively voted on by
at least a majority of those directors described in
* See Paragraph 5 for further explanation of end of term
for Option.
** This column is applicable only if the Option is granted
with a stock appreciation right as indicated in Sec-
tion 6 of the addendum to this Agreement.
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<PAGE>
(i) above who were still in office as of the date
the Board approved such election or nomination;
(c) Within three hundred sixty-five (365)
days following the date on which any "person" (as
such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended
(the "1934 Act") that has acquired Shares pursuant
to a tender offer subject to Section 14(d) of the
1934 Act becomes entitled to vote twenty percent
(20%) or more of the aggregate voting power of the
capital stock of the Corporation issued and
outstanding; and
(d) Within thirty (30) days prior to any
dissolution or liquidation of the Corporation or
any merger or consolidation in which the Corpo-
ration is not the surviving corporation, but not
earlier than the date on which any required
stockholder approval is obtained.
If an option is not exercised during any thirty (30) day
period described in (a) or (b) above, the option shall
terminate at the close of business on the last day of the
thirty (30) day period; provided, however, that if periods
described in (a) and (b) are contiguous or overlap, unexer-
cised options shall terminate at the close of business on the
last day of the second thirty (30) day period.
4. If the Option is designated in Section 6 of
the addendum to this Agreement as being granted with a stock
appreciation right, under the conditions described herein,
Employee may surrender all or part of this Option and exer-
cise the stock appreciation right in lieu of exercising all
or any part of this Option, provided that the Fair Market
Value of the Common Stock on the date of such exercise is
higher than the Exercise Price specified in Section 2 of the
addendum to this Agreement. The exercise of a stock appreci-
ation right shall be referred to herein as the "call"
thereof. Upon the call of a stock appreciation right
Employee shall be entitled to receive payment of an amount
equal to the difference obtained by subtracting the aggregate
option price of the shares subject to the Option (or the
portion thereof) from the Fair Market Value of such Shares on
the date of such call. For all purposes under this Agreement
(unless the context requires otherwise), the terms "exercise"
or "exercisable" shall be deemed to include the terms "call"
or "callable" as such terms may apply to a stock appreciation
right granted in conjunction with the Option and in the event
of the call of the stock appreciation right the underlying
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<PAGE>
Option will be deemed to have been exercised for all
purposes under the Plan.
If the Option is not designated in Section 6 of the
addendum to this Agreement as being granted with a stock
appreciation right, the Option shall nevertheless automati-
cally include a stock appreciation right that may be called
in the event of a Change in Control, only during the periods
described in Subparagraphs (a), (b), (c) or (d) of Para-
graph 3 In the case of any stock appreciation right that
is called during either of the thirty (30) day periods
described in Paragraph 3(a) or 3(d), for purposes of
measuring the value of the stock appreciation right, "Fair
Market Value" shall be the greater of (a) the value of the
consideration per share that the Employee would have
received in connection with such transaction as a
stockholder of the Corporation if he or she had exercised
the Option prior to the consummation of the transaction
described in Paragraph 3(a) or Paragraph 3(d) or (b) the
value determined in good faith by the Committee (as
composed on the day preceding the date of consummation of
the transaction described in Paragraph 3(a) or 3(d)), taking
into consideration all relevant facts and circumstances.
Payment of a stock appreciation right shall be
made as soon as reasonably practicable following receipt by
the Corporation of the form described in Paragraph 8. Pay-
ment of the stock appreciation right shall be made in such
form as may be permitted pursuant to the Rules as in effect
on the date the stock appreciation right is called.
5. The term of this Option shall end and (any
other provision of the Plan to the contrary notwithstanding)
this Option shall not be exercisable after seven (7) years
from the Date of Grant if this Option is designated as an
Incentive Stock Option in Section 4 of the addendum to this
Agreement or ten (10) years from the Date of Grant if this
Option is designated as a Nonqualified Stock Option in
Section 4 of such addendum, or, if earlier, upon the
termination of Employee's employment with the corporation or
its Subsidiaries, subject to the following provisions:
(a) If the termination of employment is
caused by Employee's death, this Option, to the
extent that it was exercisable under Paragraph 3 of
this Agreement at the date of death and had not
previously been exercised or called, may be
exercised or called, within thirty-six (36) months
after Employee's death by Employee's executors or
administrators or by any person or persons who
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<PAGE>
shall have acquired this Option directly from
Employee by bequest or inheritance.
(b) If the termination of Employees'
employment is caused by disability or retirement
under the Potlatch Corporation Salaried Employees'
Retirement Plan, this Option, to the extent it was
exercisable under Paragraph 3 of this Agreement at
the date of such termination and had not previously
been exercised, may be exercised or called within
thirty-six (36) months after the date of such
termination.
(c) If the termination of Employee's
employment is for any reason other than death,
disability, or retirement under the Potlatch
Corporation Salaried Employees' Retirement Plan,
this Option, to the extent that it was exercisable
under Paragraph 3 of this Agreement at the date of
such termination and had not previously been
exercised, may be exercised within three (3) months
after the date of such termination; provided,
however, that in such case the right to call a
stock appreciation right shall terminate on the
date Employee's employment terminates unless
Employee requests and the Committee permits the
call of the stock appreciation right within three
(3) months after the date of such termination.
Notwithstanding the foregoing, if the termination
of employment is by reason of Employee's
misconduct, the option shall cease to be
exercisable or callable at the time of such
termination. As used herein "misconduct" means
that Employee has engaged in unfair competition
with the Corporation or a Subsidiary, induced any
customer of the Corporation or a Subsidiary to
breach any contract with the Corporation or a
Subsidiary, made any unauthorized disclosure of any
of the secrets or confidential information of the
Corporation or a Subsidiary, committed an act of
embezzlement, fraud or theft with respect to the
property of the Corporation or a Subsidiary, or
engaged in conduct which is not in good faith and
which directly results in material loss, damage or
injury to the business, reputation or employees of
the corporation or a Subsidiary. The Committee
shall determine whether Employee's employment is
terminated by reason of misconduct. In making such
determination the Committee shall act fairly and
-7-
<PAGE>
shall give Employee an opportunity to be heard and
present evidence on Employee's behalf.
6. The Corporation agrees that it will at all
times during the Option Period reserve and keep available
sufficient authorized but unissued or reacquired Common
Stock to satisfy the requirements of this Agreement. The
number of Shares so reserved and the Exercise Price thereof
shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding Shares by
reason of stock dividends, split-ups, consolidations,
recapitalizations, reorganizations or like events, as
determined by the Committee pursuant to the Plan.
7. Subject to any required action by the
stockholders, if the Corporation shall be the surviving
corporation in any merger, consolidation or other
reorganization, this Option shall pertain and apply to the
securities to which a holder of the number of Shares subject
to this Option would have been entitled. Except insofar as
Paragraph 3 (and Paragraph 4) permit the exercise of Options
(and stock appreciation rights) within a specified time
period before or after a Change in Control, a dissolution or
liquidation of the Corporation or a merger, consolidation or
other reorganization in which the Corporation is not the
surviving corporation shall cause this Option to terminate on
the effective date of such dissolution, liquidation or
reorganization, unless the agreement of merger, consolidation
or reorganization shall otherwise provide. In the event that
the Corporation undergoes a reverse merger transaction,
Employee (or Employee's representative) shall be entitled to
receive the same consideration in such transaction
(including, without limitation, cash) as other shareholders
are entitled to receive .
8. Employee, or Employee's representative, may
call twenty percent (20%) or more of that portion of the
Option which has become vested in accordance with Paragraph 3
of this Agreement at any time during each applicable Call
Period, except as requested by Employee or Employee's
representative and approved by the Committee. For purposes
of the Plan, the date of call shall be the date a form
provided by the Corporation for this purpose is filed by the
Employee or the Employee's representative and received by the
Vice President, Employee Relations of the Corporation.
Employee, or Employee's representative, may exercise
this Option by giving written notice to the Corporation at
San Francisco, California, attention of the Vice President,
Employee Relations, specifying the election to exercise
-8-
<PAGE>
the Option, the number of Shares in respect of which it is
being exercised and the method of payment for the amount of
the Purchase Price of the Shares as to which this Option is
exercised. Such payment shall be made:
(a) In United States dollars delivered at the
time of exercise;
(b) Subject to the conditions stated in rules
and regulations adopted by the Corporation to
govern its stock option program, by the surrender
of Shares in good form for transfer, owned by the
person exercising this Option and having an
aggregate Fair Market Value on the date of exercise
equal to the Purchase Price; or
(c) In any combination of Subparagraphs (a)
and (b) above, if the total of the cash so paid and
the Fair Market Value of the Shares so surrendered
equals the Purchase Price of the Shares with
respect to which this Option is being exercised.
The notice shall be signed by the person or persons
exercising this Option, and in the event this Option is being
exercised by the representative of Employee, it shall be
accompanied by proof satisfactory to the Corporation of the
right of the representative to exercise the Option. No Share
shall be issued until full payment therefor has been made.
The Corporation shall thereafter cause to be issued a cer-
tificate or certificates for the Shares as to which this
Option shall have been so exercised, registered in the name
of the person or persons so exercising the Option (or in the
name of such person or persons and another person as community
property or as joint tenants), and cause such certificate
or certificates to be delivered to or upon the order of such
person or persons.
9. Payments or transfers to the Employee under
this Agreement shall be limited to the amount (the "Capped
Amount") necessary to avoid characterization of any amount
payable to the Employee (including, but not limited to,
amounts payable under this Agreement) as an "excess
parachute payment" as defined in section 280G of the Code,
except in the event that the total amount that the Employee
would receive from all "parachute payments" (as defined in
Code section 280G), net of all applicable taxes, including
the excise tax that would be imposed pursuant to Code section
4999, would exceed the Capped Amount, net of all applicable
taxes.
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<PAGE>
The firm of independent certified public accountants
serving as the Corporation's outside auditor as of the date of
a Change in Control shall determine whether any amount would
constitute an "excess parachute payment," disregarding any
payments or benefits available to the Employee under any plan,
contract or program if the Employee irrevocably elects to
relinquish or not exercise such payments or benefits before
the payment or enjoyment thereof.
10. In the event the Corporation determines that
it is required to withhold state or federal income tax as a
result of the exercise of this Option, as a condition to the
exercise of the Option, Employee will make arrangements
satisfactory to the Corporation to enable it to satisfy such
withholding requirements.
11. Neither Employee nor Employee's
representative shall have any rights as a stockholder with
respect to any Shares subject to this Option until such
Shares shall have been issued and delivered to Employee or
Employee's representative.
12. Unless the Shares to be acquired are regis-
tered under the Securities Act, Employee represents and
agrees that upon the exercise of the Option herein granted
Employee will purchase such Shares for the purpose of
investment and without present intention of resale. Unless
at the time Employee gives notice of the exercise of this
Option, the Shares to be issued are registered under the
Securities Act, the notice shall include a statement to the
effect that all Shares in respect of which this Option is
being exercised are being purchased for investment, and
without present intention of resale, and will not be sold
without registration under the Securities Act or exemption
therefrom, and such other representations as the Committee
may require. The Corporation may permit the sale or other
disposition of any Shares acquired pursuant to any such
representation if it is satisfied that such sale or other
disposition would not be in contravention of applicable state
or Federal securities laws. Unless the Corporation shall
determine that, in compliance with the Securities Act or
other applicable statute or regulation, it is necessary to
register any of the Shares with respect to which the exercise
of this Option has been made, and unless such registration,
if required, has been completed, certificates to be issued
upon the exercise of this Option shall contain the following
legend:
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<PAGE>
"The Shares represented by this certificate
have not been registered under the Securities Act
of 1933 and may be offered, sold or transferred
only if registered pursuant to the provisions of
that Act or if an exemption from registration is
available."
13. Except as otherwise provided herein, the
Option herein granted and the rights and privileges
conferred hereby shall not be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution,
attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of
this Option, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted
sale under any execution, attachment or similar process upon
the rights and privileges conferred hereby, this Option and
the rights and privileges conferred hereby shall immediately
become null and void.
14. Nothing in this Agreement shall be construed
as giving Employee the right to be retained as an employee or
as impairing the rights of the Corporation to terminate his
or her employment at any time, with or without cause.
15. This Agreement shall be interpreted and con-
strued in accordance with the laws of the State of
California.
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<PAGE>
ADDENDUM TO STOCK OPTION AGREEMENT
POTLATCH CORPORATION 1983 STOCK OPTION PLAN
Name of Employee:___________________________
1. Date of Grant: December 13 , 1990.
2. Exercise Price: $ 29.50 per share, which is agreed
to be one hundred percent (100%) of the Fair Market Value
of the common stock subject to the Option on the Date of
Grant.
3. The number of Shares subject to this Stock Option
Agreement is ___________, subject to adjustment as provided
in Section 10 of the Plan and Paragraph 6 of this
Agreement.
4. This Option is:
X A Nonqualified Stock option
5. The Vesting Schedule for this Option is:
__ The schedule specified in Paragraph 3 of the Stock
Option Agreement except that no exercise or call
will be permitted for a fractional Share.
6. This Option is granted:
__ With a stock appreciation right
__ Without a stock appreciation right
The document entitled Stock Option Agreement Potlatch
Corporation 1983 Stock Option Plan is hereby incorporated
by reference into this addendum.
IN WITNESS WHEREOF, the Corporation has caused this
addendum to the Stock Option Agreement to be executed on its
behalf by its duly authorized representative and the Employee
has executed the same on the day and year indicated below.
POTLATCH CORPORATION
Date:__________________ By__________________________________
Vice President, Employee Relations
Date:__________________ By__________________________________
Employee
COMPENSATION OF DIRECTORS
May 18, 1995
WHEREAS, Article IV, Section 10 of the corporation's
By-Laws states: "The board of directors shall have the authority
to fix the compensation of directors.";
NOW, THEREFORE, BE IT RESOLVED, that effective May 1, 1995,
the compensation of the outside directors of this corporation
shall be:
1. An annual retainer fee in the sum of
$24,000, irrespective of attendance
at meetings of the board of directors;
and
In addition, an annual retainer fee in
the sum of $3,000 for all committee
chairmen irrespective of attendance at
committee meetings;
2. An additional fee in the sum of $1,200
for each meeting of the board of direc-
tors attended or held via means of a
conference telephone call;
3. An additional fee in the sum of $l,200
for each meeting of a committee of the
board of directors attended or held via
means of a conference telephone call; and
4. Reimbursement for all expenses incidental
to attendance at a meeting of the board
of directors or a meeting of a committee
of the board of directors, and for any
other expense incurred on behalf of the
corporation.
Exhibit (10)(i)
STOCK OPTION AGREEMENT
POTLATCH CORPORATION 1989 STOCK INCENTIVE PLAN
THIS AGREEMENT made and entered into the day
specified in the attached addendum to this Agreement by and
between POTLATCH CORPORATION, a Delaware corporation (the
"Corporation") and the employee of the Corporation named in
the attached ("Employee"),
W I T N E S S E T H:
That to encourage stock ownership by employees of
the Corporation and for other valuable consideration, the
parties agree as follows:
1. Definitions.
(a) "Agreement" shall mean this stock option
agreement.
(b) "Board" shall mean the Board of Directors of
the Corporation.
(c) "Change in Control" shall mean an event or
transaction described in Subparagraph (a), (b), (c) or (d) of
Paragraph 3 (without regard to the thirty (30) and three
hundred sixty-five (365) day periods also described in those
Subparagraphs).
(d) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(e) "Common Stock" shall mean the $1 par value
Common Stock of the Corporation.
(f) "Committee" shall mean the Committee appointed
by the Board to administer the Plan.
(g) "Corporation" shall mean Potlatch Corporation,
a Delaware corporation.
(h) "Date of Grant" shall mean the date on which
the Committee determined to grant this Option, as specified
in Section 1 of the addendum to this Agreement.
-1-
Exhibit (10)(l)(ii)
<PAGE>
(i) "Disability" shall mean the Employee is unable
to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not
less than twelve (12) months.
(j) "Exercise Price" shall mean the price per
Share designated in Section 2 of the addendum to this
Agreement at which this Option may be exercised.
(k) "Fair Market Value" of a Share as of a speci-
fied date shall mean the closing price at which such Shares
are traded as of the close of business on such date as
reported on the composite tape, or if no trading of the
Common Stock is reported for that day, on the next preceding
day on which trading was reported.
(l) "Incentive Stock Option" shall mean an Option
described in Code section 422A(b).
(m) "Nonqualified Stock Option" shall mean an
Option other than an Incentive Stock Option.
(n) "Option" shall mean a stock option granted
pursuant to the Plan.
(o) "Option Period" shall mean the term of this
Option as provided in Paragraph 3 of this Agreement.
(p) "Partial Exercise" shall mean an exercise with
respect to less than all of the accrued but unexercised
Shares subject to Option held by the person exercising the
Option.
(q) "Plan" shall mean the Potlatch Corporation
1989 Stock Incentive Plan, as adopted by the Board on
December 8, 1988, and as amended by the Board on
February 24, 1989, to be effective on January 1, 1989, and
pursuant to which the parties have entered into this
Agreement.
(r) "Purchase Price" shall mean the Exercise
Price times the number of whole shares with respect to which
this Option is exercised.
(s) "Rules" shall mean the regulations and rules
adopted from time to time by the Committee.
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<PAGE>
(t) "Securities Act" shall mean the Securities Act
of 1933, as amended.
(u) "Share" shall mean one share of Common Stock,
adjusted in accordance with Section 11 of the Plan.
(v) "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Corporation
if each of the corporations other than the last corporation
in the unbroken chain owns stock possessing fifty percent
(50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such
chain.
2. The Corporation hereby grants to Employee the
option to purchase that number of shares of Common Stock
specified in Section 3 of the addendum to this Agreement for
the Exercise Price specified in Section 2 of the addendum to
this Agreement, on the terms and conditions hereinafter
stated, and in consideration for which Employee hereby agrees
to continue in the employment of the Corporation or its
Subsidiaries for a period of at least one (1) year from the
date of this Agreement .
This Option has been granted pursuant to the Plan,
a copy of the text of which Employee may obtain upon request
to the Corporation.
3. Subject to the conditions stated herein,
unless a different period is specified in Section 5 of the
addendum to this Agreement, the period during which the
option may be exercised (the "Vesting Schedule") and the Call
Periods applicable to such Vesting Schedule pursuant to
Paragraph 4 shall be as follows:
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<PAGE>
Number of Shares Vesting Schedule* Call Period**
50% of the number From one year From one year
of shares from the Date of from the Date of
specified in Grant to end of Grant to end of
Section 3 of the term for Option term for Option
addendum
50% of the number From two years From two years
of shares from the Date of from the Date of
specified in Grant to end of Grant to end of
Section 3 of the term for Option term for Option
addendum
No Partial Exercise of this Option may be for less than ten
(10) Share lots or multiples thereof:
If a period of six (6) months has elapsed from the
Date of Grant, Employee shall have the right to exercise the
Option (or in lieu thereof to call the related stock
appreciation right), in whole or in part:
(a) Within thirty (30) days following the
consummation of any transaction approved by the
stockholders of the Corporation in which the
Corporation will cease to be an independent
publicly owned corporation (including, without
limitation, a reverse merger transaction in which
the Corporation becomes the subsidiary of another
corporation) or the sale or other disposition of
all or substantially all of the assets of the
Corporation;
(b) Within three hundred sixty-five (365)
days following the date on which more than one-
third (determined by rounding down to the next
whole number) of the individual members of the
Board neither (i) were directors of the Corporation
on a date three years earlier nor (ii) are
individuals whose election or nomination for
election as directors was affirmatively voted on by
at least a majority of those directors described in
* See Paragraph 5 for further explanation of end of term
for Option.
** This column is applicable only if the Option is granted
with a stock appreciation right as indicated in Sec-
tion 6 of the addendum to this Agreement.
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<PAGE>
(i) above who were still in office as of the date
the Board approved such election or nomination;
(c) Within three hundred sixty-five (365)
days following the date on which any "person" (as
such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended
(the "1934 Act")) that has acquired Shares pursuant
to a tender offer subject to Section 14(d) of the
1934 Act becomes entitled to vote twenty percent
(20%) or more of the aggregate voting power of the
capital stock of the Corporation issued and
outstanding; and
(d) Within thirty (30) days prior to any
dissolution or liquidation of the Corporation or
any merger or consolidation in which the Corpo-
ration is not the surviving corporation, but not
earlier than the date on which any required
stockholder approval is obtained.
If an option is not exercised during any thirty (30) day
period described in (a) or (b) above, the option shall
terminate at the close of business on the last day of the
thirty (30) day period; provided, however, that if periods
described in (a) and (b) are contiguous or overlap, unexer-
cised options shall terminate at the close of business on the
last day of the second thirty (30) day period.
4. If the Option is designated in Section 6 of
the addendum to this Agreement as being granted with a stock
appreciation right, under the conditions described herein,
Employee may surrender all or part of this Option and exer-
cise the stock appreciation right in lieu of exercising all
or any part of this Option, provided that the Fair Market
Value of the Common Stock on the date of such exercise is
higher than the Exercise Price specified in Section 2 of the
addendum to this Agreement. The exercise of a stock appreci-
ation right shall be referred to herein as the "call"
thereof. Upon the call of a stock appreciation right
Employee shall be entitled to receive payment of an amount
equal to the difference obtained by subtracting the aggregate
option price of the shares subject to the Option (or the
portion thereof) from the Fair Market Value of such Shares on
the date of such call. For all purposes under this Agreement
(unless the context requires otherwise), the terms "exercise"
or "exercisable" shall be deemed to include the terms "call"
or "callable" as such terms may apply to a stock appreciation
right granted in conjunction with the Option and in the event
of the call of the stock appreciation right the underlying
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<PAGE>
Option will be deemed to have been exercised for all
purposes under the Plan.
If the Option is not designated in Section 6 of the
addendum to this Agreement as being granted with a stock
appreciation right, the Option shall nevertheless automati-
cally include a stock appreciation right that may be called
in the event of a Change in Control, only during the periods
described in Subparagraphs (a), (b), (c) or (d) of Para-
graph 3 In the case of any stock appreciation right that
is called during either of the thirty (30) day periods
described in Paragraph 3(a) or 3(d), for purposes of
measuring the value of the stock appreciation right, "Fair
Market Value" shall be the greater of (a) the value of the
consideration per share that the Employee would have
received in connection with such transaction as a
stockholder of the Corporation if he or she had exercised
the Option prior to the consummation of the transaction
described in Paragraph 3(a) or Paragraph 3(d) or (b) the
value determined in good faith by the Committee (as
composed on the day preceding the date of consummation of
the transaction described in Paragraph 3(a) or 3(d)), taking
into consideration all relevant facts and circumstances.
Payment of a stock appreciation right shall be
made as soon as reasonably practicable following receipt by
the Corporation of the form described in Paragraph 8. Pay-
ment of the stock appreciation right shall be made in such
form as may be permitted pursuant to the Rules as in effect
on the date the stock appreciation right is called.
5. The term of this Option shall end and (any
other provision of the Plan to the contrary notwithstanding)
this Option shall not be exercisable after seven (7) years
from the Date of Grant if this Option is designated as an
Incentive Stock Option in Section 4 of the addendum to this
Agreement or ten (10) years from the Date of Grant if this
Option is designated as a Nonqualified Stock Option in
Section 4 of such addendum, or, if earlier, upon the
termination of Employee's employment with the corporation or
its Subsidiaries, subject to the following provisions:
(a) If the termination of employment is
caused by Employee's death, this Option, to the
extent that it was exercisable under Paragraph 3 of
this Agreement at the date of death and had not
previously been exercised or called, may be
exercised or called, within thirty-six (36) months
after Employee's death by Employee's executors or
administrators or by any person or persons who
-6-
<PAGE>
shall have acquired this Option directly from
Employee by bequest or inheritance.
(b) If the termination of Employees'
employment is caused by disability or retirement
under the Potlatch Corporation Salaried Employees'
Retirement Plan, this Option, to the extent it was
exercisable under Paragraph 3 of this Agreement at
the date of such termination and had not previously
been exercised, may be exercised or called within
thirty-six (36) months after the date of such
termination.
(c) If the termination of Employee's
employment is for any reason other than death,
disability, or retirement under the Potlatch
Corporation Salaried Employees' Retirement Plan,
this Option, to the extent that it was exercisable
under Paragraph 3 of this Agreement at the date of
such termination and had not previously been
exercised, may be exercised within three (3) months
after the date of such termination; provided,
however, that in such case the right to call a
stock appreciation right shall terminate on the
date Employee's employment terminates unless
Employee requests and the Committee permits the
call of the stock appreciation right within three
(3) months after the date of such termination.
Notwithstanding the foregoing, if the termination
of employment is by reason of Employee's
misconduct, the option shall cease to be
exercisable or callable at the time of such
termination. As used herein "misconduct" means
that Employee has engaged in unfair competition
with the Corporation or a Subsidiary, induced any
customer of the Corporation or a Subsidiary to
breach any contract with the Corporation or a
Subsidiary, made any unauthorized disclosure of any
of the secrets or confidential information of the
Corporation or a Subsidiary, committed an act of
embezzlement, fraud or theft with respect to the
property of the Corporation or a Subsidiary, or
engaged in conduct which is not in good faith and
which directly results in material loss, damage or
injury to the business, reputation or employees of
the corporation or a Subsidiary. The Committee
shall determine whether Employee's employment is
terminated by reason of misconduct. In making such
determination the Committee shall act fairly and
-7-
<PAGE>
shall give Employee an opportunity to be heard and
present evidence on Employee's behalf.
6. The Corporation agrees that it will at all
times during the Option Period reserve and keep available
sufficient authorized but unissued or reacquired Common
Stock to satisfy the requirements of this Agreement. The
number of Shares so reserved and the Exercise Price thereof
shall be proportionately adjusted for any increase or
decrease in the number of issued and outstanding Shares by
reason of stock dividends, split-ups, consolidations,
recapitalizations, reorganizations or like events, as
determined by the Committee pursuant to the Plan.
7. Subject to any required action by the
stockholders, if the Corporation shall be the surviving
corporation in any merger, consolidation or other
reorganization, this Option shall pertain and apply to the
securities to which a holder of the number of Shares subject
to this Option would have been entitled. Except insofar as
Paragraph 3 (and Paragraph 4) permit the exercise of Options
(and stock appreciation rights) within a specified time
period before or after a Change in Control, a dissolution or
liquidation of the Corporation or a merger, consolidation or
other reorganization in which the Corporation is not the
surviving corporation shall cause this Option to terminate on
the effective date of such dissolution, liquidation or
reorganization, unless the agreement of merger, consolidation
or reorganization shall otherwise provide. In the event that
the Corporation undergoes a reverse merger transaction,
Employee (or Employee's representative) shall be entitled to
receive the same consideration in such transaction
(including, without limitation, cash) as other shareholders
are entitled to receive .
8. Employee, or Employee's representative, may
call twenty percent (20%) or more of that portion of the
Option which has become vested in accordance with Paragraph 3
of this Agreement at any time during each applicable Call
Period, except as requested by Employee or Employee's
representative and approved by the Committee. For purposes
of the Plan, the date of call shall be the date a form
provided by the Corporation for this purpose is filed by the
Employee or the Employee's representative and received by the
Vice President, Employee Relations of the Corporation.
Employee, or Employee's representative, may exercise
this Option by giving written notice to the Corporation at
San Francisco, California, attention of the Vice President,
Employee Relations, specifying the election to exercise
-8-
<PAGE>
the Option, the number of Shares in respect of which it is
being exercised and the method of payment for the amount of
the Purchase Price of the Shares as to which this Option is
exercised. Such payment shall be made:
(a) In United States dollars delivered at the
time of exercise;
(b) Subject to the conditions stated in rules
and regulations adopted by the Corporation to
govern its stock option program, by the surrender
of Shares in good form for transfer, owned by the
person exercising this Option and having an
aggregate Fair Market Value on the date of exercise
equal to the Purchase Price; or
(c) In any combination of Subparagraphs (a)
and (b) above, if the total of the cash so paid and
the Fair Market Value of the Shares so surrendered
equals the Purchase Price of the Shares with
respect to which this Option is being exercised.
The notice shall be signed by the person or persons
exercising this Option, and in the event this Option is being
exercised by the representative of Employee, it shall be
accompanied by proof satisfactory to the Corporation of the
right of the representative to exercise the Option. No Share
shall be issued until full payment therefor has been made.
The Corporation shall thereafter cause to be issued a cer-
tificate or certificates for the Shares as to which this
Option shall have been so exercised, registered in the name
of the person or persons so exercising the Option (or in the
name of such person or persons and another person as community
property or as joint tenants), and cause such certificate
or certificates to be delivered to or upon the order of such
person or persons.
9. Payments or transfers to the Employee under
this Agreement shall be limited to the amount (the "Capped
Amount") necessary to avoid characterization of any amount
payable to the Employee (including, but not limited to,
amounts payable under this Agreement) as an "excess
parachute payment" as defined in section 280G of the Code,
except in the event that the total amount that the Employee
would receive from all "parachute payments" (as defined in
Code section 280G), net of all applicable taxes, including
the excise tax that would be imposed pursuant to Code section
4999, would exceed the Capped Amount, net of all applicable
taxes.
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<PAGE>
The firm of independent certified public accountants
serving as the Corporation's outside auditor as of the date of
a Change in Control shall determine whether any amount would
constitute an "excess parachute payment," disregarding any
payments or benefits available to the Employee under any plan,
contract or program if the Employee irrevocably elects to
relinquish or not exercise such payments or benefits before
the payment or enjoyment thereof.
10. In the event the Corporation determines that
it is required to withhold state or federal income tax as a
result of the exercise of this Option, as a condition to the
exercise of the Option, Employee will make arrangements
satisfactory to the Corporation to enable it to satisfy such
withholding requirements.
11. Neither Employee nor Employee's
representative shall have any rights as a stockholder with
respect to any Shares subject to this Option until such
Shares shall have been issued and delivered to Employee or
Employee's representative.
12. Unless the Shares to be acquired are regis-
tered under the Securities Act, Employee represents and
agrees that upon the exercise of the Option herein granted
Employee will purchase such Shares for the purpose of
investment and without present intention of resale. Unless
at the time Employee gives notice of the exercise of this
Option, the Shares to be issued are registered under the
Securities Act, the notice shall include a statement to the
effect that all Shares in respect of which this Option is
being exercised are being purchased for investment, and
without present intention of resale, and will not be sold
without registration under the Securities Act or exemption
therefrom, and such other representations as the Committee
may require. The Corporation may permit the sale or other
disposition of any Shares acquired pursuant to any such
representation if it is satisfied that such sale or other
disposition would not be in contravention of applicable state
or Federal securities laws. Unless the Corporation shall
determine that, in compliance with the Securities Act or
other applicable statute or regulation, it is necessary to
register any of the Shares with respect to which the exercise
of this Option has been made, and unless such registration,
if required, has been completed, certificates to be issued
upon the exercise of this Option shall contain the following
legend:
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<PAGE>
"The Shares represented by this certificate
have not been registered under the Securities Act
of 1933 and may be offered, sold or transferred
only if registered pursuant to the provisions of
that Act or if an exemption from registration is
available."
13. Except as otherwise provided herein, the
Option herein granted and the rights and privileges
conferred hereby shall not be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to sale under execution,
attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of
this Option, or of any right or privilege conferred hereby,
contrary to the provisions hereof, or upon any attempted
sale under any execution, attachment or similar process upon
the rights and privileges conferred hereby, this Option and
the rights and privileges conferred hereby shall immediately
become null and void.
14. Nothing in this Agreement shall be construed
as giving Employee the right to be retained as an employee or
as impairing the rights of the Corporation to terminate his
or her employment at any time, with or without cause.
15. This Agreement shall be interpreted and con-
strued in accordance with the laws of the State of
California.
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<PAGE>
ADDENDUM TO STOCK OPTION AGREEMENT
POTLATCH CORPORATION 1989 STOCK INCENTIVE PLAN
Name of Employee:___________________________
1. Date of Grant: December 13 , 1990.
2. Exercise Price: $ 29.50 per share, which is agreed
to be one hundred percent (100%) of the Fair Market Value
of the common stock subject to the Option on the Date of
Grant.
3. The number of Shares subject to this Stock Option
Agreement is ___________, subject to adjustment as provided
in Section 10 of the Plan and Paragraph 6 of this
Agreement.
4. This Option is:
X A Nonqualified Stock option
5. The Vesting Schedule for this Option is:
__ The schedule specified in Paragraph 3 of the Stock
Option Agreement except that no exercise or call
will be permitted for a fractional Share.
6. This Option is granted:
__ With a stock appreciation right
__ Without a stock appreciation right
The document entitled Stock Option Agreement Potlatch
Corporation 1989 Stock Incentive Plan is hereby incorporated
by reference into this addendum.
IN WITNESS WHEREOF, the Corporation has caused this
addendum to the Stock Option Agreement to be executed on its
behalf by its duly authorized representative and the Employee
has executed the same on the day and year indicated below.
POTLATCH CORPORATION
Date:__________________ By__________________________________
Vice President, Employee Relations
Date:__________________ By__________________________________
Employee
Potlatch
Intra Company Memo Potlatch Corporation
Date: March 30, 1990
To: Participants in Stock Option Programs
From: B. W. Davis
Subject: Amendments to Stock Option and Stock Incentive Plans
On February 22, 1990, the Board of Directors of
Potlatch Corporation amended the 1976 Stock Option Plan, the 1983
Stock Option Plan and the 1989 Stock Incentive Plan to provide
new, liberalized rules for the exercise of vested options
following termination of employment. The Board of Directors also
authorized the amendment of outstanding nonqualified options to
reflect these new provisions. If you wish to have the new rules
apply to your outstanding nonqualified option(s), please sign and
return the enclosed copy of this memorandum. If you are the
holder of more than one nonqualified option granted by Potlatch,
this amendment will apply to all of the nonqualified options you
held on February 22, l990. A brief description of the changes in
the option exercise rules follows:
Under your option as originally granted, upon termina-
tion of employment you had three months to exercise the option to
the extent that it was vested at the time of termination of
employment, except that in the case of death or disability the
exercise period was 12 months. If employment terminated on
account of misconduct (as defined in the option agreement) the
option could not be exercised after termination. Under the
amendment, if your employment terminates because of death,
disability or Normal, Early or Late Retirement under the Potlatch
Corporation Salaried Employees' Retirement Plan you will have 36
months after termination to exercise your stock option(s) to the
extent vested at the time your employment terminated. In all
other cases, the exercise period is three months. However, if
employment terminates by reason of misconduct, the option ceases
to be exercisable at the time of termination. Of course, the
extension of the exercise period does not extend the term of the
option beyond the term set when the option was originally
granted.
The relevant sections of your option agreement(s) that
will be amended if you agree to the amendment are subparagraphs
(a) and (b) of the section dealing with the term of the option.
Exhibit (10)(m)
<PAGE>
(It is section 5, 6 or 7 of the option agreement, depending on
which plan your option was granted under and when the option was
granted.) If you agree to this amendment by signing and
returning this agreement, the relevant section will be amended to
read as follows:
"The term of this Option shall end and (any other
provision of the Plan to the contrary notwithstanding) this
Option shall not be exercisable after seven (7) years from the
date of Grant if this Option is designated as an Incentive Stock
Option in Section 4 of the addendum to this Agreement or ten (10)
years from the Date of Grant if this Option is designated as a
Nonqualified Stock Option in Section 4 of such addendum, or, if
earlier, upon the termination of Employee's employment with the
Corporation or its Subsidiaries, subject to the following
provisions:
"(a) If the termination of employment is
caused by Employee's death, this Option, to the
extent that it was exercisable under Paragraph 3
of this Agreement at the date of death and had not
previously been exercised or called, may be exer-
cised or called, within thirty-six (36) months
after Employee's death by Employee's executors or
administrators or by any person or persons who shall
have acquired this Option directly from Employee by
bequest or inheritance.
"(b) If the termination of Employee's employ-
ment is caused by Disability or Early, Normal or
Late Retirement under the Potlatch Corporation
Salaried Employee's Retirement Plan, this Option, to
the extent it was exercisable under Paragraph 3 of
this Agreement at the date of such termination and
had not previously been exercised, may be exercised
or called within thirty-six (36) months after the
date of such termination.
"(c) If the termination of Employee's employ-
ment is for any reason other than death, Disability,
or Normal, Early or Late Retirement under the Potlatch
Corporation Salaried Employees' Retirement Plan, this
Option, to the extent that it was exercisable under
Paragraph 3 of this Agreement at the date of such
termination and had not previously been exercised, may
be exercised within three (3) months after the date of
such termination; provided, however, that in such case
the right to call a stock appreciation right shall
terminate on the date Employee's employment terminates
unless Employee requests and the Company permits the
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call of the stock appreciation right within three (3)
months after the date of such termination.Notwith-
standing the foregoing, if the termination of employ-
ment is by reason of Employee's misconduct, the option
shall cease to be exercisable or callable at the time
of such termination. As used herein "misconduct"
means that Employee has engaged in unfair competition
with the Corporation or a Subsidiary, induced any
customer of the Corporation or a Subsidiary to breach
any contract with the Corporation or a Subsidiary,
made any unauthorized disclosure of any of the secrets
or confidential information of the Corporation or a
Subsidiary, committed an act of embezzlement, fraud or
theft with respect to the property of the Corporation
or a Subsidiary, or engaged in conduct which is not
in good faith and which directly results in material
loss, damage or injury to the business, reputation or
employees of the Corporation or a Subsidiary. The
Committee shall determine whether Employee's employ-
ment is terminated by reason of misconduct. In making
such determination the Committee shall act fairly and
shall give Employee an opportunity to be heard and
present evidence on Employee's behalf."
If you have any questions regarding the proposed amend-
ment to your nonqualified stock option(s), please call me at
(415) 576-8807.
POTLATCH CORPORATION
By /s/Brian W. Davis
Secretary
I agree to the foregoing
amendments to my nonqualified
stock option agreement(s):
_____________________________
Employee
_____________________________
Date
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POTLATCH CORPORATION
1995 STOCK INCENTIVE PLAN
1. PURPOSE.
This Potlatch Corporation 1995 Stock Incentive Plan is
intended to provide incentive to employees and directors of
Potlatch Corporation (the "Corporation") and its eligible
subsidiaries, to encourage proprietary interest in the
Corporation and to encourage employees and directors to remain
in the service of the Corporation or its subsidiaries.
2. DEFINITIONS.
(a) "Award" means any award of an Option, Restricted Stock
or an Other Share-Based Award under the Plan.
(b) "Board" means the Board of Directors of the
Corporation.
(c) "Code" means the Internal Revenue Code of l986, as
amended.
(d) "Committee" means the Committee appointed by the Board
in accordance with Section 4.
(e) "Common Stock" means the $1 par value common stock of
the Corporation.
(f) "Corporation" means Potlatch Corporation, a Delaware
corporation.
(g) "Director" means a director of the Corporation.
(h) "Disability" means the condition of an Employee who is
unable to engage in any substantial gainful activity by reason
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Exhibit (10)(n)
<PAGE>
of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of at least 12
months.
(i) "Employee" means an individual (who may be an officer
or a Director) employed by the Corporation or a Subsidiary
(within the meaning of Code section 3401 and the regulations
thereunder).
(j) "Exercise Price" means the price per Share of Common
Stock at which an Option may be exercised.
(k) "Fair Market Value" of a Share as of a specified date
means the closing price at which Shares are traded at the close
of business on such date as reported in the New York Stock
Exchange composite transactions published in the Western Edition
of the Wall Street Journal, or if no trading of Shares is
reported for that day, on the next preceding day on which
trading was reported.
(l) "Incentive Stock Option" means an Option described in
Code section 422(b).
(m) "Misconduct" means that a Participant has engaged in
unfair competition with the Corporation or a Subsidiary, induced
any customer of the Corporation or a Subsidiary to breach any
contract with the Corporation or a Subsidiary, made any
unauthorized disclosure of any of the secrets or confidential
information of the Corporation or a Subsidiary, committed an act
of embezzlement, fraud or theft with respect to the property of
the Corporation or a Subsidiary, or engaged in conduct which is
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not in good faith and which directly results in material loss,
damage or injury to the business, reputation or employees of the
Corporation or a Subsidiary.
(n) "Nonqualified Stock Optiona" means an Option not
described in Code section 422(b) or 423(b).
(o) "Option" means a stock option granted pursuant to
Section 7 or Section 10. "Option Agreement" means the agreement
between the Corporation and the Participant which contains the
terms and conditions pertaining to such Option.
(p) "Other Share-Based Award" means an Award granted
pursuant to Section 9. "Other Share-Based Award Agreement"
means the agreement between the Corporation and the recipient of
an Other Share-Based Award which contains the terms and
conditions pertaining to the Other Share-Based Award.
(q) "Outside Director" means a Director who is not an
Employee.
(r) "Participant" means an Employee who has received an
Award or an Outside Director who has received an Option.
(s) "Plan" means this Potlatch Corporation 1995 Stock
Incentive Plan.
(t) "Purchase Price" means the Exercise Price times the
number of whole Shares with respect to which an Option is
exercised.
(u) "Restricted Stock" means Shares granted pursuant to
Section 8. "Restricted Stock Agreement" means the agreement
between the Corporation and the recipient of Restricted Stock
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which contains the terms, conditions and restrictions pertaining
to the Restricted Stock.
(v) "Share" means one share of Common Stock, adjusted in
accordance with Section 13 (if applicable).
(w) "Stock Right" means a bookkeeping entry representing a
right to the equivalent of one Share.
(x) "Subsidiary" means any corporation in an unbroken
chain of corporations beginning with the Corporation if each of
the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
3. EFFECTIVE DATE.
This Plan was adopted by the Board on December 7, 1995, to
be effective immediately, subject to approval by the
Corporation's stockholders.
4. ADMINISTRATION.
The Plan shall be administered by a committee (the
"Committee") appointed by the Board, consisting of not less than
two disinterested members. The term "disinterested members" as
applied to Directors shall include only Directors who are not
active Employees of the Corporation or of any of its
Subsidiaries, who are not eligible to receive discretionary
Awards under Sections 7, 8 and 9 of this Plan or under any other
stock incentive plan of the Corporation and who have not
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<PAGE>
received such discretionary Awards for at least one year
preceding appointment as a member of the Committee. The Board
may from time to time remove members from, or add members to,
the Committee. Vacancies on the Committee shall be filled by
the Board. The Board shall appoint one of the members of the
Committee as Chairman.
If any member of the Committee does not qualify as an
"outside director" for purposes of section 162(m) of the Code,
Awards under the Plan for the chief executive officer and the
four most highly compensated officers of the Corporation (other
than the chief executive officer) shall be administered by a
subcommittee consisting of each Committee member who qualifies
as an "outside director." If fewer than two Committee members
qualify as "outside directors," the Board shall appoint one or
more other members to such subcommittee who do qualify as
"outside directors" so that it will at all times consist of at
least two members who qualify as "outside directors" for
purposes of section 162(m) of the Code.
The Committee shall hold meetings at such times and places
as it may determine. Acts of a majority of the Committee at
which a quorum is present, or acts reduced to or approved in
writing by a majority of the Committee, shall be the valid acts
of the Committee. The Committee shall from time to time at its
discretion make determinations with respect to Employees who
shall be granted Awards, the number of Shares or Share
equivalents to be subject to each Award, the vesting of Awards,
the designation of Options as Incentive Stock Options or
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Nonqualified Stock Options and other conditions of Awards to
Employees.
The interpretation and construction by the Committee of any
provisions of the Plan or of any Award shall be final. No
member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
Award.
5. ELIGIBILITY.
Participants shall be such key Employees (who may be
officers, whether or not they are Directors) of the Corporation
or of its Subsidiaries as the Committee shall select, but
subject to the terms and conditions set forth below. In
addition, all Outside Directors shall be Participants solely for
purposes of the nondiscretionary Awards described in Section 10.
(a) Ten Percent Stockholders.
An Employee who owns more than 10% of the total combined
voting power of all classes of outstanding stock of the
Corporation, its parent or any of its Subsidiaries is not
eligible to receive an Incentive Stock Option pursuant to this
Plan. For purposes of this Section 5(a) the stock ownership of
an Employee shall be determined pursuant to section 424(d) of
the Code.
(b) Number of Awards.
A Participant may receive more than one Award, including
Awards of the same type, but only on the terms and subject to
the restrictions set forth in the Plan. The maximum aggregate
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number of Shares or Share equivalents that may be subject to
Awards to a Participant in any calendar year is 60,000 Shares.
6. STOCK.
The stock subject to Options, Restricted Stock, or Other
Share-Based Awards granted under the Plan shall be Shares of the
Corporation's authorized but unissued or reacquired Common
Stock. The aggregate number of Options, Restricted Stock or
Other Share-Based Awards issued under this Plan shall not exceed
1,700,000 Shares. In the event that any outstanding Option
under the Plan for any reason expires or is terminated or any
Restricted Stock or Other Share-Based Award is forfeited, the
Shares allocable to the unexercised portion of such Option or
the forfeited Restricted Stock or Other Share-Based Award may
again be subjected to Options, Restricted Stock or Other
Share-Based Awards under the Plan, provided that under the terms
of the Award the Participant received no benefits of ownership
during the period the Award was outstanding. However, if one
Award is granted in tandem with another, so that the exercise of
one causes the other to expire, then the number of Shares
subject to the expired Award shall not be restored to the pool
available for Awards.
The limitations established by this Section 6 shall be
subject to adjustment as provided in Section 13.
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7. TERMS AND CONDITIONS OF EMPLOYEE OPTIONS.
Options granted to Employees pursuant to the Plan shall be
evidenced by written Option Agreements in such form as the
Committee shall determine, subject to the following terms and
conditions:
(a) Number of Shares.
Each Option shall state the number of Shares to which it
pertains and shall provide for the adjustment of such number in
accordance with Section 13.
(b) Exercise Price.
Each Option shall state the Exercise Price, determined by
the Committee, which shall not be less than the Fair Market
Value of a Share on the date of grant.
(c) Medium and Time of Payment.
The Purchase Price shall be payable in full in United
States dollars upon the exercise of the Option; provided that
with the consent of the Committee and in accordance with its
rules and regulations, the Purchase Price may be paid by the
surrender of Shares in good form for transfer, owned by the
person exercising the Option and having a Fair Market Value on
the date of exercise equal to the Purchase Price, or in any
combination of cash and Shares, so long as the total of the cash
and the Fair Market Value of the Shares surrendered equals the
Purchase Price. No Share shall be issued until full payment has
been made.
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(d) Term and Exercise of Options; Nontransferability of
Options.
Each Option shall state the time or times when it becomes
exercisable. No Option shall be exercisable after the
expiration of 10 years from the date it is granted. During the
lifetime of the Participant, the Option shall be exercisable
only by the Participant and shall not be assignable or
transferable. In the event of the Participant's death, no
Option shall be transferable by the Participant other than by
will or the laws of descent and distribution.
Subject to the foregoing, beginning six months after the
date of grant the Participant shall have the right to exercise
the Option (or to call the related stock appreciation right as
described in Section 7(i)) in whole or in part:
(i) Within 30 days following the consummation of
any transaction approved by the stockholders of the
Corporation in which the Corporation will cease to be
an independent publicly owned corporation (including,
without limitation, a reverse merger transaction in
which the Corporation becomes the subsidiary of
another corporation) or the sale or other disposition
of all or substantially all of the assets of the
Corporation;
(ii) Within 365 days following the date on which
more than one-third (determined by rounding down to
the next whole number) of the Directors neither
(A) were Directors on a date three years earlier nor
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(B) are individuals whose election or nomination for
election as Directors was affirmatively voted on by at
least a majority of those Directors described in (A)
above who were still in office as of the date the
Board approved such election or nomination;
(iii) Within 365 days following the date on
which any "person" (as such term is used in
sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "1934 Act")) that has
acquired Shares pursuant to a tender offer subject to
section 14(d) of the 1934 Act becomes entitled to vote
20% or more of the aggregate voting power of the
capital stock of the Corporation issued and
outstanding; and
(iv) within 30 days prior to any dissolution or
liquidation of the Corporation or any merger or
consolidation in which the Corporation is not the
surviving corporation, but not earlier than the date
on which any required stockholder approval is
obtained.
If an Option is not exercised during any 30-day period described
in (i) or (iv) above, the Option shall terminate at the close of
business on the last day of the 30-day period; provided that if
periods described in (i) and (iv) above are contiguous or
overlap, unexercised Options shall terminate at the close of
business on the last day of the second 30-day period. In the
case of a stock appreciation right called during either of the
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30-day periods described in (i) or (iv) above, "Fair Market
Valuer" shall be the greater of (A) the value of the
consideration per share that the Participant would have received
in connection with such transaction as a stockholder of the
Corporation if he or she had exercised the Option prior to the
consummation of the transaction described in (i) or (iv) above,
or (B) the value determined in good faith by the Committee (as
composed on the day preceding the date of consummation of the
transaction described in (i) or (iv) above), taking into consid-
eration all relevant facts and circumstances.
(e) Termination of Employment Except Death.
In the event that a Participant who is an Employee ceases
to be employed by the Corporation or its Subsidiaries for any
reason other than death, such Participant shall have the right
(subject to the limitations of Section 7(d) above) to exercise
the Option within three months after such termination of
employment (36 months in the case of Early, Normal or Late
Retirement under the Salaried Employees Retirement Plan or
Disability), to the extent that, at the date of termination of
employment, the Option had vested pursuant to the terms of the
Option Agreement with respect to which such Option was granted
and had not previously been exercised. However, if the
employment of a Participant is terminated by the Corporation or
a Subsidiary by reason of Misconduct, such Option shall cease to
be exercisable at the time of the Participant's termination of
employment. The Committee shall determine whether a
Participant's employment is terminated by reason of Misconduct.
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In making such determination the Committee shall act fairly and
shall give the Participant an opportunity to be heard and
present evidence on his or her behalf.
For this purpose, the employment relationship will be
treated as continuing while the Participant is on military
leave, sick leave or other bona fide leave of absence (to be
determined in the sole discretion of the Committee, in
accordance with rules and regulations construing Code section
422(a)(2)). Notwithstanding the foregoing, in the case of an
Incentive Stock Option, employment shall not be deemed to
continue beyond the 90th day after the Participant ceased active
employment, unless the Participant's reemployment rights are
guaranteed by statute or by contract.
(f) Death of Participant.
If a Participant who is an Employee dies while in the
employ of the Corporation or a Subsidiary, the Option may be
exercised (subject to the limitations of Section 7(d) above)
within 36 months after the Participant's death by the executors
or administrators of the Participant's estate or by any person
or persons who acquired the Option directly from the Participant
by bequest or inheritance, to the extent that, at the date of
the Participant's death, the Option had vested pursuant to the
terms of the Option Agreement and had not previously been
exercised.
(g) Rights as a Stockholder.
A Participant or a transferee of a Participant shall have
no rights as a stockholder with respect to any Shares covered by
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his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for
dividends, distributions or other rights for which the record
date is prior to the date such stock certificate is issued,
except as provided in Section 13.
(h) Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the
limitations of the Plan, the Committee may modify, extend or
renew outstanding Options granted to Employees under the Plan,
or accept the exchange of outstanding Options (to the extent not
previously exercised) for the granting of new Options (at the
same or a different price). Notwithstanding the foregoing,
however, no modification of an Option shall, without the consent
of the Participant, alter or impair any rights or obligations
under any Option previously granted under the Plan.
(i) Stock Appreciation Rights.
Each Option granted under the Plan shall include a stock
appreciation right which may be exercised only during the
periods described in Section 7(d)(i) through (iv) and subject to
the provisions of Section 7(d). During any such period, the
Participant shall have the right to surrender all or part of the
Option and to exercise the stock appreciation right (the "call")
to obtain payment of an amount equal to the difference obtained
by subtracting the aggregate Exercise Price of the Shares
subject to the Option (or the portion of such Option)
surrendered from the Fair Market Value of such Shares on the
date of such surrender. The call of such stock appreciation
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right shall be subject to such limitations (including, but not
limited to, limitations as to time and amount) as the Committee
shall deem appropriate. The payment may be made in shares of
Common Stock (determined with reference to its Fair Market Value
on the date of call), or in cash, or partly in cash and in
shares of Common Stock, at the discretion of the Committee, pro-
vided that the Committee determines that such settlement is
consistent with the purpose set forth in Section 1. For all
purposes under the Plan, the terms "exercise" or "exercisable"
shall be deemed to include the terms "call" or "callable" as
such terms may apply to a stock appreciation right, and in the
event of the call of a stock appreciation right, the underlying
Option will be deemed to have been exercised for all purposes
under the Plan.
(j) Limitation of Incentive Stock Option Awards.
The aggregate Fair Market Value (determined as of the date
the Option is granted) of the stock with respect to which any
Incentive Stock Options are exercisable for the first time by a
Participant during any calendar year under this Plan and all
other plans maintained by the Corporation, its parent or its
Subsidiaries shall not exceed $100,000.
(k) Other Provisions.
The Option Agreements shall contain such other provisions
that are consistent with the terms of the Plan, including,
without limitation, restrictions upon the exercise of the
Option, as the Committee shall deem advisable.
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8. RESTRICTED STOCK.
(a) Grants.
Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to
whom, and the time or times at which, grants of Restricted Stock
will be made, the number of shares of Restricted Stock to be
awarded, the price (if any) to be paid by the recipient of
Restricted Stock, the time or times within which such Awards may
be subject to forfeiture, and all other terms and conditions of
the Awards. The Committee may condition the grant of Restricted
Stock upon the attainment of specified performance goals or such
other factors as the Committee may determine, in its sole
discretion.
The terms of each Restricted Stock Award shall be set forth
in a Restricted Stock Agreement between the Corporation and the
Employee, which Agreement shall contain such provisions as the
Committee determines to be necessary or appropriate to carry out
the intent of the Plan. Each Participant receiving a Restricted
Stock Award shall be issued a stock certificate in respect of
such shares of Restricted Stock. Such certificate shall be
registered in the name of such Participant, and shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such Award. The Committee shall
require that stock certificates evidencing such shares be held
by the Corporation until the restrictions lapse and that, as a
condition of any Restricted Stock Award, the Participant shall
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deliver to the Corporation a stock power relating to the stock
covered by such Award.
(b) Restrictions and Conditions.
The shares of Restricted Stock awarded pursuant to this
Section 8 shall be subject to the following restrictions and
conditions:
(i) During a period set by the Committee
commencing with the date of such Award (the
"Restriction Period"), the Participant shall not be
permitted to sell, transfer, pledge, assign or
encumber shares of Restricted Stock awarded under the
Plan. Within these limits, the Committee, in its sole
discretion, may provide for the lapse of such
restrictions in installments and may accelerate or
waive suchrestrictions in whole or in part, based on
service, performance, a change of control of the
Corporation or such other factors or criteria as the
Committee may determine in its sole discretion.
(ii) Except as provided in this paragraph (ii)
and paragraph (i) above, the Participant shall have,
with respect to the shares of Restricted-Stock, all of
the rights of a stockholder of the Corporation,
including the right to vote the shares and the right
to receive any cash dividends. The Committee, in its
sole discretion, as determined at the time of Award,
may provide that the payment of cash dividends shall
or may be deferred and, if the Committee so
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determines, reinvested in additional Shares of
Restricted Stock to the extent available under
Section 6, or otherwise reinvested. Stock dividends
issued with respect to Restricted Stock shall be
treated as additional shares of Restricted Stock that
are subject to the same restrictions and other terms
and conditions that apply to the shares with respect
to which such dividends are issued.
(iii) The Committee shall specify the conditions
under which shares of Restricted Stock shall vest or
be forfeited and such conditions shall be set forth in
the Restricted Stock Agreement.
(iv) If and when the Restriction Period
applicable to shares of Restricted Stock expires
without a prior forfeiture of the Restricted Stock,
certificates for an appropriate number of unrestricted
Shares shall be delivered promptly to the Participant,
and the certificates for the shares of Restricted
Stock shall be canceled.
9. OTHER SHARE-BASED AWARDS.
(a) Grants.
Other Awards of Shares and other Awards that are valued in
whole or in part by reference to, or are otherwise based on,
Shares ("Other Share-Based Awards"), may be granted either alone
or in addition to or in conjunction with other Awards under this
Plan. Awards under this Section 9 may include (without
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limitation) Stock Rights, the grant of Shares conditioned upon
some specified event, the payment of cash based upon the
performance of the Shares or the grant of securities convertible
into Shares.
Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Employees to
whom and the time or times at which Other Share-Based Awards
shall be made, the number of Shares or other securities, if any,
to be granted pursuant to Other Share-Based Awards, and all
other conditions of the Other Share-Based Awards. The Committee
may condition the grant of an Other Share-Based Award upon the
attainment of specified performance goals or such other factors
as the Committee shall determine, in its sole discretion. In
making an Other Share-Based Award, the Committee may determine
that the recipient of an Other Share-Based Award shall be
entitled to receive, currently or on a deferred basis, interest
or dividends or dividend equivalents with respect to the Shares
or other securities covered by the Award, and the Committee may
provide that such amounts (if any) shall be deemed to have been
reinvested in additional Shares or otherwise reinvested. The
terms of any Other Share-Based Award shall be set forth in an
Other Share-Based Award Agreement between the Corporation and
the Employee, which Agreement shall contain such provisions as
the Committee determines to be necessary or appropriate to carry
out the intent of the Plan.
-18-
<PAGE>
(b) Terms and Conditions.
In addition to the terms and conditions specified in the
Other Share-Based Award Agreement, Other Share-Based Awards
shall be subject to the following:
(i) Any Other Share-Based Award may not be sold,
assigned, transferred, pledged or otherwise encumbered
prior to the date on which the Shares are issued or
the Award becomes payable, or, if later, the date on
which any applicable restriction, performance or
deferral period lapses.
(ii) The Other Share-sased Award Agreement shall
contain provisions dealing with the disposition of
such Award in the event of termination of the
Employee's employment prior to the exercise,
realization or payment of such Award, and the
Committee in its sole discretion may provide for
payment of the Award in the event of the Employee's
retirement, Disability or death or the change of
control of the Corporation, with such provisions to
take account of the specific nature and purpose of the
Award.
10. OPTION AWARDS TO OUTSIDE DIRECTORS.
(a) Initial Award Conditioned Upon Plan Approval.
Subject to the approval of the Plan by the stockholders of
the Corporation, each individual who is an Outside Director on
-19-
<PAGE>
December 7, 1995, shall receive a Nonqualified Stock Option for
1000 Shares as of such date.
(b) Award Upon Election.
Each Outside Director who is elected by the Board to fill a
vacancy on the Board after December 7, l995, shall receive a
Nonqualified Stock Option for 1000 Shares on the date of the
Board's regular meeting in December following his or her
election.
(c) Annual Awards.
Each Outside Director shall receive a Nonqualified Stock
Option for 500 Shares on the date of the Board's regular meeting
in December of each year he or she serves as Outside Director,
other than a year in which the Outside Director receives an
award under Section 10(a) or 10(b) above.
(d) Terms and Conditions of Options.
Each Nonqualified Stock Option granted pursuant to this
Section 10 shall be subject to the following terms and
conditions:
(i) The Exercise Price shall be the Fair Market
Value of a Share on the date of grant.
(ii) The Option shall become exercisable in 50%
increments on the first and second anniversaries of
the date of grant, provided the Outside Director has
continuously been an Outside Director from the date of
grant until such time.
(iii) In the event the Outside Director terminates
services as a Director for any reason other than
-20-
<PAGE>
death, the former Director shall have the right to
exercise the Option within three months after such
termination (within 36 months after such termination
in the case of retirement after five years of service
as an Outside Director) to the extent that, at the
date of termination the Option had vested pursuant to
(ii) above and had not previously been exercised.
However, if the services of the Outside Director are
terminated by the Board for cause in accordance with
the Corporation's Restated Certificate of Incorpora-
tion, such Option shall cease to be exercisable at the
time of the Outside Director's termination of
services.
(iv) In the event the Outside Director's services
terminate by reason of death, the Option may be
exercised within 36 months after the Director's death
by the executors or administrators of the Director's
estate or by any person or persons who shall have
acquired the Option directly from the Director by
bequest or inheritance, to the extent that, at the
date of the Director's death, the Option had vested
pursuant to (ii) above and had not previously been
exercised.
Except as specifically set forth in (i) through (iv) above, each
Nonqualified Stock Option granted pursuant to this Section 10
also shall be subject to all of the terms and conditions set
forth in Section 7, other than Section 7(h).
-21-
<PAGE>
11. OTHER PAYMENTS IN SHARES.
Shares may be issued under this Plan to satisfy the payment
of all or part of an award pursuant to the Potlatch Corporation
Management Performance Award Plan. In addition, all or part of
any Directors fees may be paid in Shares issued under this
Plan. Any Shares issued pursuant to this Section 11 shall
reduce the number of Shares authorized for Options, Restricted
Stock or Other Share-Based Awards under Section 6 but shall not
be considered an Award for purposes of the maximum grant
limitation in Section 5(b).
12. TERM OF PLAN.
Awards may be granted and Shares may be issued pursuant to
the Plan until the termination of the Plan on December 6, 2005.
13. RECAPITALIZATION.
Subject to any required action by the stockholders, the
number of Shares covered by this Plan as provided in Section 6,
the maximum grant limitation in Section 5(b), the number of
Shares covered by or referenced in each outstanding Award, the
number of Options to be granted to Outside Directors under
Sections 10(a) through 10(c) and the Exercise Price of each
outstanding Option and any price required to be paid for
Restricted Stock or Other Share-Based Award shall be proportion-
ately adjusted for any increase or decrease in the number of
issued Shares resulting from a subdivision or consolidation of
Shares, the payment of a stock dividend (but only of Common
-22-
<PAGE>
Stock) or any other increase or decrease in the number of such
Shares effected without receipt of consideration by the
Corporation or the declaration of a dividend payable in cash
that has a material effect on the price of issued Shares.
Subject to any required action by the stockholders, if the
Corporation shall be the surviving corporation in any merger,
consolidation or other reorganization, each outstanding Award
shall pertain and apply to the securities to which a holder of
the number of Shares subject to the Award would have been
entitled. Subject to the provisions of Section 7(d), a
dissolution or liquidation of the Corporation or a merger,
consolidation or other reorganization in which the Corporation
is not the surviving corporation shall cause each outstanding
Option and each nonvested Restricted Stock Award or Other
Share-Based Award to terminate, unless the agreement of merger,
consolidation or reorganization shall otherwise provide. In the
event that the Corporation undergoes a reverse merger
transaction, the Participant shall be entitled to receive the
same consideration in such transaction with respect to his or
her Award (including, without limitation, cash) as other
stockholders are entitled to receive.
In the event of a change in the Common Stock as presently
constituted, which is limited to a change of all of its
authorized shares with par value into the same number of shares
with a different par value or without par value, the shares
resulting from any such change shall be deemed to be the Common
Stock within the meaning of the Plan.
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<PAGE>
To the extent that the foregoing adjustments relate to
stock or securities of the Corporation, such adjustments shall
be made by the Committee, whose determination in that respect
shall be final, binding and conclusive, provided that each
Incentive Stock Option granted pursuant to this Plan shall not
be adjusted in a manner that causes the Option to fail to
continue to qualify as an incentive stock option within the
meaning of section 422 of the Code.
Except as expressly provided in this Section 13, a
Participant shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase or decrease in the
number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of
assets or stock of another corporation, and any issue by the
Corporation of shares of stock of any class or securities
convertible into shares of stock of any class, shall not affect
the number or price of Shares subject to the Option.
The grant of an Option pursuant to the Plan shall not
affect in any way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge or consolidate or
to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
-24-
<PAGE>
14. SECURITIES LAW REQUIREMENTS AND LIMITATION OF RIGHTS.
(a) Securities Law.
No Shares shall be issued pursuant to the Plan unless and
until the Corporation has determined that: (i) it and the Par-
ticipant have taken all actions required to register the Shares
under the Securities Act of 1933 or perfect an exemption from
registration; (ii) any applicable listing requirement of any
stock exchange on which the Common Stock is listed has been
satisfied; and (iii) any other applicable provision of state or
federal law has been satisfied.
(b) Employment Rights.
Neither the Plan nor any Award granted under the Plan shall
be deemed to give any individual a right to remain employed by the
Corporation or a Subsidiary or to remain a Director. The
Corporation and its Subsidiaries reserve the right to terminate
the employment of any employee at any time, with or without
cause, subject only to a written employment contract (if any),
and the Board reserves the right to terminate a Director's
membership on the Board for cause in accordance with the
Corporation's Restated Certificate of Incorporation.
(c) Stockholders' Rights.
A Participant shall have no dividend rights, voting rights
or other rights as a stockholder with respect to any Shares
covered by his or her Award prior to the issuance of a stock
certificate for such Shares. No adjustment shall be made for
cash dividends or other rights for which the record date is
prior to the date when such certificate is issued.
-25-
<PAGE>
(d) Creditors' Rights.
A holder of an Other Share-Based Award shall have no rights
other than those of a general creditor of the Corporation. An
Other Share-Based Award shall represent an unfunded and
unsecured obligation of the Corporation, subject to the terms
and conditions of the applicable Other Share-Based Award
Agreement.
15. AMENDMENT OF THE PLAN.
The Board may suspend or discontinue the Plan or revise or
amend it with respect to any Shares at the time not subject to
Awards except that, without approval of the stockholders of the
Corporation, no such revision or amendment shall:
(a) Increase the number of Shares subject to the
Plan;
(b) Change the designation in Section 5 of the class
of Employees eligible to receive Awards;
(c) Decrease the price at which Incentive Stock
Options may be granted;
(d) Remove the administration of the Plan from the
Committee;
(e) Render any disinterested member of the Committee
eligible to receive a discretionary Award under Sections 7,
8 and 9 while serving on the Committee;
(f) Change the provisions of Section 10 more than
once in any six-month period, other than to comply with
changes in the Code or the rules thereunder; or
-26-
<PAGE>
(g) Amend this Section 15 to defeat its purpose.
16. APPLICATION OF FUNDS.
The proceeds received by the Corporation from the sale of
Common Stock pursuant to the exercise of an Option or the grant
of Restricted Stock will be used for general corporate purposes.
17. NO OBLIGATION TO EXERCISE OPTION.
The granting of an Option shall impose no obligation upon
the Participant to exercise such Option.
18. APPROVAL OF STOCKHOLDERS.
This Plan and any amendments requiring stockholder approval
pursuant to Section 15 shall be subject to approval by
affirmative vote of the stockholders in accordance with
applicable law. Such vote shall be taken at the first annual
meeting of stockholders of the Corporation following the
adoption of the Plan or of any such amendments, or any
adjournment of such meeting.
19. LIMITATION ON PLAN PAYMENTS.
Any provision of the Plan to the contrary notwithstanding,
payments or transfers to a Participant under the Plan shall be
limited to the amount (the "Capped Amount") necessary to avoid
characterization of any amount payable to the Participant
(including, but not limited to, amounts payable under the Plan)
as an "excess parachute payment" as defined in Code section
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<PAGE>
280G, except in the event that the total amount that the
Participant would receive from all "parachute payments" as
defined in Code section 280G, net of all applicable taxes,
including the excise tax that would be imposed pursuant to Code
section 4999, would exceed the Capped Amount, net of all
applicable taxes.
The determination of whether any amount would constitute an
"excess parachute payment" shall be made by the firm of
independent certified public accountants serving as the outside
auditor of the Corporation as of the date of the event specified
in Section 7(d)(i) through (iv). In making such determination,
such firm may disregard any payments or benefits available to
the Participant under any contract, plan or program if the
Participant irrevocably elects to relinquish or not exercise
such payments or benefits before receipt of such payments or
benefits. It is intended that payments shall be made under the
Plan whether or not the status of a particular payment as an
"excess parachute payment" has been finally determined by the
Internal Revenue Service or a court of competent jurisdiction.
20. WITHHOLDING TAXES.
(a) General.
To the extent required by applicable law, the recipient of
any payment or distribution under the Plan shall make arrange-
ments satisfactory to the Corporation for the satisfaction of
any withholding tax obligations that arise by reason of such
payment or distribution. The Corporation shall not be required
-28-
<PAGE>
to make such payment or distribution until such obligations are
satisfied.
(b) Nonqualified Options.
The Committee may permit a Participant who exercises
Nonqualified Stock Options to satisfy all or part of his or her
withholding tax obligations by having the Corporation withhold a
portion of the Shares that otherwise would be issued to him or
her under such Nonqualified Stock Options. Such Shares shall be
valued at their Fair Market Value on the date when taxes
otherwise would be withheld in cash. The payment of withholding
taxes by surrendering Shares to the Corporation, if permitted by
the Committee, shall be subject to such restrictions as the
Committee may impose, including any restrictions required by
rules of the Securities and Exchange Commission.
21. EXECUTION.
To record the adoption of the Plan effective as of
December 7, 1995, the Corporation has caused its authorized
officer to execute the same this_________ day of_____________,
1995.
POTLATCH CORPORATION
BY____________________________
-29-
STOCK OPTION AGREEMENT
POTLATCH CORPORATION l995 STOCK INCENTIVE PLAN
THIS AGREEMENT made and entered into the day specified in
the attached addendum to this Agreement by and between
POTLATCH CORPORATION, a Delaware corporation (the "Corporation")
and the employee of the Corporation named in the attached
addendum ("Employee"),
W I T N E S S E T H:
That to encourage stock ownership by employees of the
Corporation and for other valuable consideration, the parties
agree as follows
1. Definitions.
(a) "Agreement" means this stock option agreement.
(b) "Board" means the Board of Directors of the
Corporation.
(c) "Change in Control" means an event or transaction
described in Subparagraph (a), (b), (c) or (d) of Paragraph 3
(without regard to the 30- and 365-day periods also described in
those Subparagraphs).
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Common Stock" means the $1 par value Common Stock of
the Corporation.
(f) "Committee" means the committee appointed by the Board
to administer the Plan.
(g) "Corporation" means Potlatch Corporation, a Delaware
corporation.
(h) "Date of Grant" means the date on which the Committee
determined to grant this Option, as specified in Section 1 of
the addendum to this Agreement.
(i) "Disability" means the Employee is unable to engage in
any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to
last for a continuous period of at least 12 months.
(j) "Exercise Price" means the price per Share designated
in Section 2 of the addendum to this Agreement at which this
Option may be exercised.
-1- Employee Option
Exhibit (10)(n)(i)
<PAGE>
(k) "Fair Market Value" of a Share as of a specified date
means the closing price at which Shares are traded at the close of
business on such date as reported in the New York Stock
Exchange composite transactions published in the Western Edition
of The Wall Street Journal, or if no trading of Shares is
reported for that day, on the next preceding day on which
trading was reported.
(l) "Incentive Stock Option" means an Option described in
Code section 42Z(b).
(m) "Nonqualified Stock Option" means an Option other than
an Incentive Stock option.
(n) "Option" means a stock option granted pursuant to the
Plan.
(o) "Option Period" means the term of this Option as
provided in Paragraph 3 of this Agreement.
(p) "Partial Exercise" means an exercise with respect to
less than all of the vested but unexercised Shares subject to
Option held by the person exercising the Option.
(q) "Plan" means the Potlatch Corporation 1995 Stock
Incentive PIan, pursuant to which the parties have entered into
this Agreement.
(r) "Purchase Price" means the Exercise Price times the
number of whole shares with respect to which this Option is
exercised.
(s) "Securities Act" means the Securities Act of 1933, as
amended.
(t) "Share" means one share of Common Stock, adjusted in
accordance with Section 13 of the Plan.
(u) "Subsidiary" means any corporation in an unbroken chain
of corporations beginning with the Corporation if each of
the corporations other than the last corporation in the unbroken
chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
2. The Corporation grants to Employee the option to
purchase that number of shares of Common Stock specified in
Section 3 of the addendum to this Agreement for the Exercise
Price specified in Section 2 of the addendum to this Agreement,
on the terms and conditions stated in this Agreement.
This Option has been granted pursuant to the Plan, a copy
of the text of which Employee may obtain upon request to the
Corporation.
-2- Employee Option
<PAGE>
3. Subject to the conditions stated in this Agreement,
unless a different period is specified in Section 5 of the
addendum to this Agreement, the period during which the option
may be exercised (the "Vesting Schedule") shall be as follows:
Number of Shares Vesting Schedule*
50% of the number of shares From one year from the Date
specified in Section 3 of of Grant to end of term for
the addendum Option
50% of the number of shares From two years from the
specified in Section 3 of Date of Grant to end of
the addendum term for Option
No Partial Exercise of this Option may be for less than a
multiple of 10 Shares.
Beginning six months after the bate of Grant, Employee
shall have the right to exercise the Option ( or to call the
related stock appreciation right as described in Paragraph 4),
in whole or in part:
(a) Within 30 days following the consummation of
any transaction approved by the stockholders of the
Corporation in which the Corporation will cease to be
an independent publicly owned corporation (including,
without limitation, a reverse merger transaction in
which the Corporation becomes the subsidiary of
another corporation) or the sale or other disposition
of all or substantially all of the assets of the
Corporation;
(b) Within 365 days following the date on which
more than one-third (determined by rounding down to
the next whole number) of the individual members of
the Board neither (i) were directors of the Corpora-
tion on a date three years earlier nor (ii) are
individuals whose election or nomination for election
as directors was affirmatively voted on by at least a
majority of those directors described in (i) above who
were still in office as of the date the Board approved
such election or nomination;
(c) Within 365 days following the date on which
any "person" (as such term is used in sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) that has acquired Shares
pursuant to a tender offer subject to section 14(d) of
the 1934 Act becomes entitled to vote 20% or more of
* See Paragraph 5 for further explanation of end of term for
Option.
-3- Employee Option
<PAGE>
the aggregate voting power of the capital stock of the
Corporation issued and outstanding; and
(d) Within 30 days prior to any dissolution or
liquidation of the Corporation or any merger or
consolidation in which the Corporation is not the
surviving corporation, but not earlier than the date
on which any required stockholder approval is
obtained.
If an option is not exercised during any 30-day period described
in (a) or (d) above, the option shall terminate at the close of
business on the last day of the 30-day period; provided that if
periods described in (a) and (d) are contiguous or overlap,
unexercised options shall terminate at the close of business on
the last day of the second 30-day period.
4. In the event of a Change in Control, this Option shall
automatically include a stock appreciation right that may be
called only during the periods described in Subparagraphs (a),
(b), (c) or (d) of Paragraph 3. During any such period,
Employee may surrender all or part of this Option and exercise
the stock appreciation right in lieu of exercising all or any
part of this Option, provided that at least six months have
elapsed from the Date of Grant and that the Fair Market Value of
the Common Stock on the date of such exercise is higher than the
Exercise Price specified in Section 2 of the addendum to this
Agreement. The exercise of a stock appreciation right is
referred to in this Paragraph 4 as the "call." Upon the call of
a stock appreciation right, Employee shall be entitled to
receive payment of an amount equal to the difference obtained by
subtracting the aggregate option price of the shares subject to
the Option (or the portion of such Option) from the Fair Market
Value of such Shares on the date of such call. In the case of a
stock appreciation right that is called during either of the 30-
day periods described in Paragraph 3(a) or 3(d), for purposes of
measuring the value of the stock appreciation right, "Fair Mar-
ket Value" shall be the greater of (a) the value of the
consideration per share that the Employee would have received in
connection with the transaction described in Paragraph 3(a) or
3(d) as a stockholder of the Corporation if he or she had
exercised the Option prior to the consummation of such
transaction, or (b) the value determined in good faith by the
Committee (as composed on the day preceding the date of
consummation of the transaction described in Paragraph 3(a) or
3(d)), taking into consideration all relevant facts and
circumstances.
For all purposes under this Agreement (unless the context
requires otherwise), the terms "exercise" or "exercisable" shall
be deemed to include the terms "call" or "callable" as such
terms may apply to a stock appreciation right, and in the event
of the call of a stock appreciation right the underlying Option
-4- Employee Option
<PAGE>
will be deemed to have been exercised for all purposes under the
Plan.
Payment of a stock appreciation right shall be made as soon
as reasonably practicable following receipt by the Corporation
of the notice described in Paragraph 8. Payment of the stock
appreciation right shall be made in such form as may be
permitted pursuant to the rules and regulations adopted from
time to time by the Committee, as in effect on the date the
stock appreciation right is called.
5. The term of this Option shall end and this Option
shall not be exercisable after seven years from the Date of
Grant if this Option is designated as an Incentive Stock Option
in Section 4 of the addendum to this Agreement or 10 years from
the Date of Grant if this Option is designated as a Nonqualified
Stock Option in Section 4 of such addendum, or, if earlier, upon
the termination of Employee's employment with the Corporation or
its Subsidiaries, subject to the following provisions:
(a) If the termination of employment is caused
by Employee's death, this Option, to the extent that
it was exercisable under Paragraph 3 of this Agreement
at the date of death and had not previously been
exercised, may be exercised within 36 months after
Employee's death by Employee's executors or admin-
istrators or by any person or persons who shall have
acquired this Option directly from Employee by bequest
or inheritance.
(b) If the termination of employment is caused
by Disability or Early, Normal or Late Retirement
under the Potlatch Corporation Salaried Employees'
Retirement Plan, this Option, to the extent it was
exercisable under Paragraph 3 of this Agreement at the
date of such termination and had not previously been
exercised, may be exercised within 36 months after the
date of such termination.
(c) If the termination of employment is for any
reason other than death, Disability, or Early, Normal
or Late Retirement under the Potlatch Corporation
Salaried Employees' Retirement Plan, this Option, to
the extent that it was exercisable under Paragraph 3
of this Agreement at the date of such termination and
had not previously been exercised, may be exercised
within three months after the date of such
termination; provided that in such case the right to
call a stock appreciation right as described in
Paragraph 4 shall terminate on the date Employee's
employment terminates unless Employee requests and the
Committee permits the call of the stock appreciation
right within three months after the date of such
termination, Notwithstanding the foregoing, if the
-5- Employee Option
<PAGE>
termination of employment is by reason of Employee's
misconduct, the option shall cease to be exercisable
or callable at the time of such termination. As used
in this Paragraph, "misconduct" means that Employee
has engaged in unfair competition with the Corporation
or a Subsidiary, induced any customer of the
Corporation or a Subsidiary to breach any contract
with the Corporation or a Subsidiary, made any
unauthorized disclosure of any of the secrets or
confidential information of the Corporation or a
Subsidiary, committed an act of embezzlement, fraud or
theft with respect to the property of the Corporation
or a Subsidiary, or engaged in conduct which is not in
good faith and which directly results in material
loss, damage or injury to the business, reputation or
employees of the Corporation or a Subsidiary. The
Committee shall determine whether Employee's
employment is terminated by reason of misconduct. In
making such determination the Committee shall act
fairly and shall give Employee an opportunity to be
heard and present evidence on Employee's behalf.
6. The Corporation agrees that it will at all times
during the Option Period reserve and keep available sufficient
authorized but unissued or reacquired Common Stock to satisfy
the requirements of this Agreement. The number of Shares
reserved and the Exercise Price shall be proportionately
adjusted for any increase or decrease in the number of issued
and outstanding Shares by reason of stock dividends, stock
splits, consolidations, recapitalizations, reorganizations or
like events, as determined by the Committee pursuant to the
Plan.
7. Subject to any required action by the stockholders, if
the Corporation shall be the surviving corporation in any
merger, consolidation or other reorganization, this Option shall
apply to the securities to which a holder of the number of
Shares subject to this Option would have been entitled. Except
to the extent Paragraph 3 (and Paragraph 4) permit the exercise
of Options (and stock appreciation rights) within a specified
time period before or after a Change in Control, a dissolution
or liquidation of the Corporation or a merger, consolidation or
other reorganization in which the Corporation is not the
surviving corporation shall cause this Option to terminate on
the effective date of such dissolution, liquidation or
reorganization, unless the agreement of merger, consolidation or
reorganization shall otherwise provide. In the event that the
Corporation undergoes a reverse merger transaction, Employee (or
Employee's representative) shall be entitled to receive the same
consideration in such transaction (including, without
limitation, cash) as other stockholders are entitled to receive.
8. Employee, or Employee's representative, may exercise
20% or more of the portion of this Option that has become vested
-6- Employee Option
<PAGE>
under Paragraph 3 of this Agreement by giving written notice to
the Corporation at San Francisco, California, attention of the
Vice President, Employee Relations, specifying the election to
exercise the Option, the number of Shares for which it is being
exercised and the method of payment for the amount of the
Purchase Price of the Shares for which this Option is exercised.
Such payment shall be made:
(a) In United States dollars delivered at the
time of exercise;
(b) Subject to the conditions stated in rules
and regulations adopted by the Committee, by the
surrender of Shares in good form for transfer, owned
by the person exercising this Option and having an
aggregate Fair Market Value on the date of exercise
equal to the Purchase Price; or
(c) In any combination of Subparagraphs (a) and
(b) above, if the total of the cash paid and the Fair
Market Value of the Shares surrendered equals the
Purchase Price of the Shares for which this Option is
being exercised.
The notice shall be signed by the person or persons
exercising this Option, and in the event this Option is being
exercised by the representative of Employee, shall be
accompanied by proof satisfactory to the Corporation of the
right of the representative to exercise the Option. No Share
shall be issued until full payment has been made. After receipt
of full payment, the Corporation shall cause to be issued a cer-
tificate or certificates for the Shares for which this Option
has been exercised, registered in the name of the person or
persons exercising the Option (or in the name of such person or
persons and another person as community property or as joint
tenants), and cause such certificate or certificates to be
delivered to or upon the order of such person or persons.
9. Payments or transfers to the Employee under this
Agreement shall be limited to the amount (the "Capped Amount")
necessary to avoid characterization of any amount payable to the
Employee (including, but not limited to, amounts payable under
this Agreement) as an "excess parachute payment" as defined in
section 280G of the Code, except in the event that the total
amount that the Employee would receive from all "parachute
payments" (as defined in Code section 280G), net of all applica-
ble taxes, including the excise tax that would be imposed
pursuant to Code section 4999, would exceed the Capped Amount,
net of all applicable taxes.
The firm of independent certified public accountants
serving as the Corporation's outside auditor as of the date of a
Change in Control shall determine whether any amount would con-
stitute an "excess parachute payment," disregarding any payments
-7- Employee Option
<PAGE>
or benefits available to the Employee under any plan, contract
or program if the Employee irrevocably elects to relinquish such
payments or benefits before receipt of such payments or
benefits.
10. In the event the Corporation determines that it is
required to withhold state or federal income tax as a result of
the exercise of this Option, as a condition to the exercise of
the Option, Employee will make arrangements satisfactory to the
Corporation to enable it to satisfy such withholding
requirements.
11. Neither Employee nor Employee's representative shall
have any rights as a stockholder with respect to any Shares
subject to this Option until such Shares shall have been issued
to Employee or Employee's representative.
12. Unless at the time Employee gives notice of the
exercise of this Option, the Shares to be issued are registered
under the Securities Act, the notice shall include a statement
to the effect that all Shares for which this Option is being
exercised are being purchased for investment, and without
present intention of resale, and will not be sold without
registration under the Securities Act or exemption from
registration, and such other representations as the Committee
may require. The Corporation may permit the sale or other
disposition of any Shares acquired pursuant to any such
representation if it is satisfied that such sale or other
disposition would not contravene applicable state or federal
securities laws. Unless the Corporation shall determine that,
in compliance with the Securities Act or other applicable
statute or regulation, it is necessary to register any of the
Shares for which this Option has been exercised, and unless such
registration, if required, has been completed, certificates to
be issued upon the exercise of this Option shall contain the
following legend:
"The Shares represented by this certificate have
not been registered under the Securities Act of 1933
and may be offered, sold or transferred only if
registered pursuant to the provisions of that Act or
if an exemption from registration is available."
13. Except as otherwise provided in this Agreement, this
Option and the rights and privileges conferred by this Agreement
shall not be transferred, assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not
be subject to sale under execution, attachment or similar
process. Upon any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of this Option, or of any right
or privilege conferred by this Agreement, contrary to the
provisions of this Paragraph, or upon any attempted sale under
any execution, attachment or similar process upon the rights and
privileges conferred by this Agreement, this Option and the
-8- Employee Option
<PAGE>
rights and privileges conferred by this Agreement shall
immediately become null and void.
14. Nothing in this Agreement shall be construed as giving
Employee the right to be retained as an employee or as impairing
the rights of the Corporation to terminate his or her employment
at any time, with or without cause.
15. This Agreement shall be interpreted and construed in
accordance with the laws of the State of California.
-9- Employee Option
<PAGE>
ADDENDUM TO STOCK OPTION AGREEMENT
POTLATCH CORPORATION 1995 STOCK INCENTIVE PLAN
Name of Employee:
1. Date of Grant: December 7, 1995.
2. Exercise Price: $ 41.25 per share, which is agreed to be one
hundred percent (100%) of the Fair Market Value of the common stock
subject to the Option on the Date of Grant.
3. The number of Shares subject to this Stock Option Agreement is
, subject to adjustment as provided in Section 13 of
the Plan and Paragraph 6 of this Agreement.
4. This Option is:
X A Nonqualified Stock Option
5. The Vesting Schedule for this Option is:
X The schedule specified in Paragraph 3 of the Stock Option
Agreement except that no exercise or call will be
permitted for a fractional Share.
6. This Option is granted:
With a stock appreciation right
X Without a stock appreciation right
The document entitled Stock Option Agreement Potlatch Corporation 1995
Stock Incentive Plan is hereby incorporated by reference into this
Addendum.
The options specified in Section 3 of this Addendum shall be cancelled
and the Agreement with respect to the options specified in this Addendum
shall be without force and effect if the 1995 Stock Incentive Plan
adopted by the Board of Directors of this corporation on December 7,
1995 is not approved by the stockholders of this Corporation at the 1996
annual meeting of stockholders or any adjournment thereof.
IN WITNESS WHEREOF, the Corporation has caused this Addendum to the
Stock Option Agreement to be executed on its behalf by its duly
authorized representative and the Employee has executed the same on the
day and year indicated below:
POTLATCH CORPORATION
Date:_________________ By__________________________________
Vice President Employee Relations
Date:_________________ By__________________________________
Employee
POTLATCH CORPORATION
Subsidiaries
The following subsidiaries are included in the company's consolidated
financial statements.
State in Which Percentage of
Voting Securities
Name Organized Owned
Duluth & Northeastern Railroad Co. Minnesota 100
Cloquet, Minn.
Prescott & Northwestern Railroad Co. Arkansas 100
Prescott, Ark.
St. Maries River Railroad Co. Idaho 100
Lewiston, Idaho
Warren & Saline River Railroad Co. Arkansas 100
Warren, Ark.
All unnamed subsidiaries, when considered in the aggregate as a single
subsidiary, would not constitute a significant subsidiary. No separate
financial statements are filed for any subsidiary.
Exhibit (22)
KPMG Peat Marwick LLP
Suite 2000
1211 South West Fifth Avenue
Portland, OR 97204
Consent of Independent Certified Public Accountants
The Board of Directors
Potlatch Corporation:
We consent to incorporation by reference in the registration statements (Nos.
33-00805, 33-28220, 33-12809, 33-25352, 33-25353, 33-31372, 33-30836, 33-54515
and 33-54517) on Form S-8 of Potlatch Corporation of our report dated
January 24, 1996, relating to the balance sheets of Potlatch Corporation and
consolidated subsidiaries as of December 31, 1995 and 1994 and the related
statements of earnings, stockholders' equity, and cash flows and related
financial statement schedule for each of the years in the three-year period
ended December 31, 1995 which report appears in the December 31, 1995 annual
report on the Form 10-K of Potlatch Corporation. As discussed in our report,
the Company changed its method of accounting for income taxes, postretirement
benefits other than pensions and postemployment benefits in 1993.
KPMG PEAT MARWICK LLP
March 26, 1996
Exhibit (23)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Richard A. Clarke
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Kenneth T. Derr
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Allen F. Jacobson
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
George F. Jewett, Jr.
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Richard B. Madden
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Richard M. Morrow
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Vivian W. Piasecki
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Toni Rembe
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
John M. Richards
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Reuben F. Richards
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Richard M. Rosenberg
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Robert G. Schwartz
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Charles R. Weaver
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
Frederick T. Weyerhaeuser
(DIRECTOR)
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
I, the undersigned, do hereby make, constitute and
appoint Betty R. Fleshman or, in her absence or inability to
act, John M. Richards or L. Pendleton Siegel, or any of them,
my attorney-in-fact for me and in my name, place and stead to
execute for me and in my behalf in each or any one of my
offices and capacities with Potlatch Corporation, as shown
below, the Annual Report on Form 10-K of Potlatch Corporation
for the fiscal year ended December 31, 1995, to be filed with
the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and any and all amendments thereto,
hereby ratifying, approving and confirming all that any such
attorney-in-fact may do by virtue of these presents.
IN WITNESS WHEREOF, I have executed these presents this
1st day of March, 1996.
William T. Weyerhaeuser
(DIRECTOR)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 7571
<SECURITIES> 100735
<RECEIVABLES> 145103
<ALLOWANCES> 2365
<INVENTORY> 191102
<CURRENT-ASSETS> 477249
<PP&E> 2814414
<DEPRECIATION> 1096984
<TOTAL-ASSETS> 2265311
<CURRENT-LIABILITIES> 349183
<BONDS> 616132
<COMMON> 32722
0
0
<OTHER-SE> 929770
<TOTAL-LIABILITY-AND-EQUITY> 2265311
<SALES> 1605206
<TOTAL-REVENUES> 1605206
<CGS> 1295033
<TOTAL-COSTS> 1295033
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47976
<INCOME-PRETAX> 170939
<INCOME-TAX> 62393
<INCOME-CONTINUING> 108546
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108546
<EPS-PRIMARY> 3.72
<EPS-DILUTED> 0
</TABLE>
