<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): October 11, 1996
PLUM CREEK TIMBER COMPANY, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-10239 91-1443693
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation or Identification Number)
organization)
999 Third Avenue, Suite 2300
Seattle, Washington 98104-4096
Telephone: (206) 467-3600
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 27, 1996, Plum Creek Timber Company, L.P. ("Plum Creek" or
the "Partnership") and its subsidiary Plum Creek Manufacturing, L.P.
("Manufacturing") entered into agreements (the "Newport Agreements") to sell to
Stimson Lumber Company ("Stimson") 107,000 acres of timberland located in
Northeast Washington and Northern Idaho (the "Newport Timberlands"), along with
Manufacturing's sawmill near Colville, Washington (the "Arden Sawmill", together
with the Newport Timberlands, the "Newport Assets", and collectively the
"Newport Asset Sale"). The Newport Asset Sale closed on October 11, 1996, for
a cash purchase price of $143.7 million, plus $8.5 million for working capital,
subject to certain customary post-closing adjustments. Under the Newport
Agreements, the Partnership retained certain pre-closing liabilities and
indemnified Stimson for certain post-closing liabilities. The sale price for
the Newport Asset Sale was determined through arm's length negotiations.
On August 6, 1996, the Partnership entered into an agreement (as
amended on October 16, 1996, the "Riverwood Purchase Agreement") with Riverwood
International Corporation ("Riverwood International") to acquire approximately
529,000 acres (plus approximately 9,000 leased acres) of timberlands in
Louisiana, Arkansas and Texas, along with two sawmills, a plywood plant and a
nursery (the "Riverwood Acquisition"; collectively, the timberlands,
sawmills, plywood plant and nursery are referred to herein as the "Riverwood
Assets"). The Riverwood Acquisition closed on October 18, 1996, for a cash
purchase price of $540 million, plus $11.9 million for working capital,
subject to certain customary post-closing adjustments. The purchase price for
the Riverwood Acquisition was determined through arm's length negotiations.
The Partnership intends to use the assets obtained in the Riverwood
Acquisition in its timber and wood products business. As part of the Riverwood
Acquisition, Plum Creek entered into a long-term agreement to supply a
significant portion of the pine pulpwood and residual chip requirements of
Riverwood International's paperboard plant in West Monroe, Louisiana, as well as
a portion of the plant's needs for hardwood pulpwood, at prevailing market
prices. The Partnership also assumed certain pre-closing liabilities and
indemnified Riverwood International for certain post-closing liabilities.
The Partnership financed the Riverwood Acquisition from cash on hand,
including proceeds from certain ordinary course asset dispositions, the proceeds
from the Newport Asset Sale and borrowings under the Partnership's two new bank
credit facilities. These facilities, dated as of October 17, 1996, between the
Partnership and Bank of America National Trust and Savings Association, consist
of a five-year $400 million unsecured, revolving credit facility (the "New Line
of Credit") and an 18-month $250 million unsecured bridge facility (the "Bridge
Facility", and, together with the New Line of Credit, the "New Bank
Facilities"). To effect the Riverwood Acquisition, the Partnership borrowed $50
million under the Bridge Facility and $322 million under the New Line of Credit.
Of the borrowings under the New Line of Credit, $12 million was used to repay
all amounts outstanding under the Partnership's prior lines of credit (the
"Existing Lines of Credit"). No further borrowings are permitted under the
Bridge Facility.
On September 11, 1996, the Partnership filed a registration statement
on Form S-3 (File No. 333-11727) (as amended, the "Registration Statement") with
the
<PAGE> 3
Securities and Exchange Commission (the "Commission") relating to the
Partnership's public offering of 5,000,000 Depositary Units Representing Limited
Partner Interests (the "Units"). On October 22, 1996, the Registration Statement
was declared effective by the Commission. On October 22, 1996 the Partnership
filed a registration statement on Form S-3 pursuant to Rule 462(b) under the
Securities Act of 1933 (File No. 333-14623) relating to the Partnership's public
offering of an additional 100,000 Units, which registration statement became
effective upon filing. The net proceeds from the Units offering, expected to
settle on October 28, 1996, will be used first to repay all amounts outstanding
under the Bridge Facility and second to reduce amounts outstanding under the New
Line of Credit. The Company may sell an additional 765,000 Units pursuant to an
"over-allotment option" granted to the underwriters of the Units offering, the
net proceeds of which would be used to reduce amounts outstanding under the New
Line of Credit.
The foregoing descriptions of the Riverwood Purchase Agreement and the
Newport Agreements, and the transactions contemplated thereby, are not intended
to be complete and are qualified in their entirety by the complete text of those
agreements, filed as Exhibits 2.1, 2.2, 2.3 and 2.4 hereto, and incorporated
herein by reference. For a more detailed description of the Riverwood
Acquisition and the Newport Asset Sale, see the Registration Statement.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
The required financial statements were previously provided in the
Partnership's registration statement on Form S-3, File No. 333-11727,
as amended.
<PAGE> 4
(b) Pro Forma Financial Information
PLUM CREEK TIMBER COMPANY, L.P.
UNAUDITED COMBINED PRO FORMA FINANCIAL STATEMENTS
The Unaudited Combined Pro Forma Financial Statements reflect the
consummation of the Newport Asset Sale and the Riverwood Acquisition and the
financing thereof, including borrowings under the New Bank Facilities and the
public offering of the Units (which public offering is expected to settle on
October 28, 1996) by the Partnership (collectively, the "Transactions"), as more
fully described in the accompanying notes. The Unaudited Combined Pro Forma
Statements of Income assume the Transactions occurred as of January 1, 1995. The
Unaudited Combined Pro Forma Balance Sheet assumes the Transactions occurred on
June 30, 1996. The Riverwood Acquisition will be accounted for as a purchase in
accordance with the provisions of Accounting Principles Board Opinion No. 16,
"Business Combinations."
The pro forma adjustments are based upon currently available information
and certain estimates and assumptions, and therefore the actual adjustments may
differ from the pro forma adjustments. However, the Partnership believes that
the assumptions provide a reasonable basis for presenting the significant
effects of the Transactions as contemplated and that the pro forma adjustments
give appropriate effect to those assumptions and are properly applied to the
unaudited combined pro forma financial statements. The pro forma results of
operations are not necessarily indicative of results that would have occurred or
of the future results of operations.
PLUM CREEK TIMBER COMPANY, L.P.
UNAUDITED COMBINED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
PLUM CREEK
PLUM CREEK DIVISION PRO FORMA COMBINED
HISTORICAL(a) HISTORICAL(b) ADJUSTMENTS PRO FORMA
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues.................................. $ 585,074 $ 159,749 $ (67,803)(c) $ 688,766
9,377 (d)
2,369 (e)
----------- -------- ---------- -----------
Costs and expenses:
Cost of goods sold...................... 388,450 109,195 (52,458)(c) 462,473
9,377 (d)
7,519 (f)
390 (g)
Selling, general and administrative..... 37,648 3,340 (788)(c) 40,191
(9)(h)
----------- -------- ---------- -----------
Total costs and expenses............. 426,098 112,535 (35,969) 502,664
----------- -------- ---------- -----------
Operating income.......................... 158,976 47,214 (20,088) 186,102
Interest expense.......................... (46,836) (18,347)(i) (65,183)
Interest income........................... 1,073 1,073
Other income (expense) -- net............. (1,910) 2,369 (2,369)(e) (1,910)
----------- -------- ---------- -----------
Income before income taxes................ 111,303 49,583 (40,804) 120,082
Provision for income taxes................ 572 572
----------- -------- ---------- -----------
Net income/Excess of revenues over costs
and expenses............................ $ 110,731 $ 49,583 $ (40,804) $ 119,520
General Partner interest.................. 22,487 2,722 (j) 25,209
----------- -------- ---------- -----------
Net income allocable to
Unitholders/Riverwood International..... $ 88,244 $ 49,583 $ (43,526)(j) $ 94,301
=========== ======== ========== ===========
Net income per Unit(j).................... $ 2.17 $ 2.06
=========== ===========
Average Units outstanding................. 40,608,300 5,100,000 (k) 45,708,300
=========== ========== ===========
</TABLE>
See Accompanying Notes to Unaudited Combined Pro Forma Financial Statements
2
<PAGE> 5
PLUM CREEK TIMBER COMPANY, L.P.
UNAUDITED COMBINED PRO FORMA INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
PLUM CREEK
PLUM CREEK DIVISION PRO FORMA COMBINED
HISTORICAL(a) HISTORICAL(b) ADJUSTMENTS PRO FORMA
------------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues......................................... $ 283,466 $83,902 $ (29,142)(c) $ 343,862
4,770 (d)
866 (e)
---------- ------- --------- ----------
Costs and expenses:
Cost of goods sold............................. 187,912 52,598 (24,245)(c) 225,102
4,770 (d)
3,917 (f)
150 (g)
Selling, general and administrative............ 17,941 2,371 (408)(c) 19,352
(552)(h)
---------- ------- --------- ----------
Total costs and expenses..................... 205,853 54,969 (16,368) 244,454
---------- ------- --------- ----------
Operating income................................. 77,613 28,933 (7,138) 99,408
Interest expense................................. (23,754) (9,410)(i) (33,164)
Interest income.................................. 621 621
Other income (expense) -- net.................... (984) 866 (866)(e) (984)
---------- ------- --------- ----------
Income before income taxes....................... 53,496 29,799 (17,414) 65,881
Provision for income taxes....................... 570 570
---------- ------- --------- ----------
Net income/Excess of revenues over costs and
expenses....................................... $ 52,926 $29,799 $ (17,414) $ 65,311
General Partner interest......................... 10,531 1,438(j) 11,969
---------- ------- --------- ----------
Net income allocable to Unitholders/Riverwood
International.................................. $ 42,395 $29,799 $ (18,852)(j) $ 53,342
========== ======= ========= ==========
Net income per Unit(j)........................... $ 1.04 $ 1.17
========== ==========
Average Units outstanding........................ 40,608,300 5,100,000(k) 45,708,300
========== ========= ==========
</TABLE>
See Accompanying Notes to Unaudited Combined Pro Forma Financial Statements
3
<PAGE> 6
PLUM CREEK TIMBER COMPANY, L.P.
UNAUDITED COMBINED PRO FORMA INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
DIVISION HISTORICAL(b)
------------------------------
THREE MONTHS
ENDED THREE MONTHS PLUM CREEK
PLUM CREEK MARCH 27, 1996 ENDED PRO FORMA COMBINED
HISTORICAL(a) (PREDECESSOR) JUNE 29, 1996 ADJUSTMENTS PRO FORMA
------------- -------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues.............................. $ 266,438 $ 37,336 $36,162 $ (31,810)(c) $ 316,008
7,491 (d)
391 (e)
---------- -------- ------- --------- -----------
Costs and expenses:
Cost of goods sold.................. 190,903 22,903 24,311 (25,542)(c) 223,330
7,491 (d)
2,940 (f)
324 (g)
Selling, general and
administrative.................... 15,387 579 475 (325)(c) 16,283
167 (h)
---------- -------- ------- --------- -----------
Total costs and expenses.......... 206,290 23,482 24,786 (14,945) 239,613
---------- -------- ------- --------- -----------
Operating income...................... 60,148 13,854 11,376 (8,983) 76,395
Interest expense...................... (23,061) (6,886) (1,522)(i) (31,469)
Interest income....................... 331 331
Other income (expense) -- net......... (83) 14 377 (391)(e) (83)
---------- -------- ------- --------- -----------
Income before income taxes............ 37,335 13,868 4,867 (10,896) 45,174
Provision for income taxes............ 443 443
---------- -------- ------- --------- -----------
Net income/Excess of revenues over
costs and expenses.................. $ 36,892 $ 13,868 $ 4,867 $ (10,896) $ 44,731
General Partner interest.............. 11,537 1,514 (j) 13,051
---------- -------- ------- --------- -----------
Net income allocable to Unitholders/
Riverwood International............. $ 25,355 $ 13,868 $ 4,867 $ (12,410)(j) $ 31,680
========== ======== ======= ========= ===========
Net income per Unit(j)................ $ 0.62 $ 0.69
========== ===========
Average Units outstanding............. 40,608,300 5,100,000 (k) 45,708,300
========== ========= ===========
</TABLE>
See Accompanying Notes to Unaudited Combined Pro Forma Financial Statements
4
<PAGE> 7
PLUM CREEK TIMBER COMPANY, L.P.
UNAUDITED COMBINED PRO FORMA BALANCE SHEET
AS OF JUNE 30, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PLUM CREEK
PLUM CREEK DIVISION PRO FORMA COMBINED
HISTORICAL(a) HISTORICAL(b) ADJUSTMENTS PRO FORMA
------------- ------------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 61,849 $ 150,601(l) $ 59,717
128,766(k)
278,265(m)
(2,132)(m)
(557,632)(n)
Accounts receivable................... 38,442 $ 6,554 (6,554)(o) 38,442
Inventories........................... 44,946 7,718 (7,477)(l) 45,187
Timber contract deposits.............. 1,646 7,264 8,910
Other current assets.................. 7,809 (625)(l) 7,184
-------- -------- --------- ----------
154,692 21,536 (16,788) 159,440
Timber and timberlands -- net........... 454,449 489,028 (18,553)(l) 947,849
22,925(n)
Property, plant and equipment -- net.... 162,996 40,713 (18,899)(l) 177,494
(7,316)(n)
Other assets............................ 17,176 2,132(m) 19,308
-------- -------- --------- ----------
Total assets.................. $ 789,313 $ 551,277 $ (36,499) $1,304,091
======== ======== ========= ==========
LIABILITIES
Current liabilities:
Current portion of long-term debt..... $ 17,400 $ 17,400
Accounts payable...................... 12,361 $ 1,014 $ (1,014)(o) 12,361
Interest payable...................... 7,313 6,886 (6,886)(o) 7,313
Wages payable......................... 6,897 1,233 1,000(n) 7,897
(1,233)(o)
Taxes payable......................... 5,827 5,827
Workers' compensation liabilities..... 2,014 2,014
Other current liabilities............. 7,465 1,743 272(1) 7,737
(1,743)(o)
-------- -------- --------- ----------
59,277 10,876 (9,604) 60,549
Long-term debt.......................... 402,400 275,000 (275,000)(o) 402,400
Lines of credit......................... 97,500 278,265(m) 375,765
Workers' compensation liabilities....... 8,685 8,685
Other liabilities....................... 2,545 238 1,700(n) 4,245
(238)(o)
-------- -------- --------- ----------
Total liabilities............. 570,407 286,114 (4,877) 851,644
-------- -------- --------- ----------
Commitments and contingencies
CAPITAL
Riverwood International's net
investment............................ 265,163 (265,163)(o)
Limited Partners' Units................. 219,676 128,766(k) 451,121
102,679(l)
General Partner......................... (770) 2,096(l) 1,326
-------- -------- --------- ----------
Total capital...................... 218,906 265,163 (31,622) 452,447
-------- -------- --------- ----------
Total liabilities and
capital..................... $ 789,313 $ 551,277 $ (36,499) $1,304,091
======== ======== ========= ==========
</TABLE>
See Accompanying Notes to Unaudited Combined Pro Forma Financial Statements
5
<PAGE> 8
PLUM CREEK TIMBER COMPANY, L.P.
UNAUDITED COMBINED PRO FORMA FINANCIAL STATEMENTS
(a) See Notes to Combined Financial Statements filed in the Registration
Statement for the basis of presentation of the Plum Creek Historical
Financial Statements.
(b) See Notes to Financial Statements filed in the Registration Statement for
the basis of presentation of the Riverwood U.S. Timberlands/ Wood Products
Division (the "Division") Historical Financial Statements. For income
statement purposes herein, research, development and engineering costs have
been grouped with selling, general and administrative expenses. For balance
sheet purposes herein, prepaid expenses have been reclassified as timber
contract deposits in the historical financial statements column.
(c) Elimination of the historical operating results for the Newport Timberlands
and the Arden Sawmill reflecting the disposition of the these assets
pursuant to the Newport Asset Sale. Depreciation, depletion and
amortization of approximately $4.0 million, $1.9 million and $2.0 million
for the year ended December 31, 1995 and the six months ended June 30, 1995
and 1996, respectively, is included in the cost of goods sold elimination.
Capital expenditures for the year ended December 31, 1995 and the six
months ended June 30, 1995 and 1996 related to the Newport Assets were
approximately $1.7 million, $1.0 million and $1.5 million, respectively.
(d) Reclassification of certain items from cost of sales to revenues for
consistency with Plum Creek's accounting policies.
(e) Reclassification of other income to revenues for consistency with Plum
Creek's accounting policies.
(f) As a result of the Riverwood Acquisition, the Partnership will record a
step-up in the basis of the assets acquired to reflect the purchase price.
The following reflects the resulting increase in depreciation, depletion
and amortization:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1995 JUNE 30, 1996
----------------- ---------------- ----------------
(IN THOUSANDS)
<S> <C> <C> <C>
Elimination of historical
depreciation, depletion and
amortization.................. $(7,110) $ (3,811) $ (4,472)
New depreciation, depletion and
amortization expense related
to Riverwood Assets acquired
by the Partnership............ 14,629 7,728 7,412
------- ------- -------
Net Adjustment........ $ 7,519 $ 3,917 $ 2,940
======= ======= =======
</TABLE>
Depletion (cost of timber harvested) is determined based on the volume of
timber harvested in relation to the total amount of estimated recoverable
timber, taking into effect the basis of the new assets. The cost of logging
roads is amortized over the estimated useful life on a straight-line basis.
Depreciation is provided for on a straight-line basis for buildings and on
a unit-of-production basis for machinery and equipment.
(g) Reflects an assumed increase in cost of goods sold related to pension
expense, retiree medical expense and employee benefits (to include amounts
consistent with Plum Creek's benefit plans).
(h) Reflects the assumed increase in certain general and administrative
expenses for items that were not historically allocated to the Division or
that are expected to increase because of Plum Creek's operation of the
Division, including additional computer system costs, travel, professional
fees and rent expenses. In addition, the adjustment reflects the
elimination of stock-based incentive compensation incurred by the Division
that the Partnership has determined will not be recurring after the
Riverwood Acquisition. The adjustment reflects the net change resulting
from the above items. The Partnership does not expect to incur material
integration costs or non-recurring charges or credits related to the
Riverwood Acquisition.
6
<PAGE> 9
(i) Reflects additional interest expense (including amortization of related
deferred financing fees) related to the New Line of Credit, net of the
elimination of the Division's historical interest expense, assuming an
outstanding balance of $375.8 million on the New Line of Credit at annual
interest rates of 6.44%, 6.61%, and 5.89% for the year ended December 31,
1995 and the six months ended June 30, 1995 and 1996, respectively. A
0.25% change in the interest rate would have an annual impact of $0.8
million on net income. The Partnership anticipates that a portion of the
outstanding borrowings under the New Line of Credit will be reduced with
the proceeds from approximately $200 million aggregate principal amount of
unsecured senior notes of the Partnership that are expected to be issued
in a private placement that is expected to close in mid-November 1996 (the
"New Notes Offering"). The Partnership may postpone or not consummate the
New Notes Offering. The impact of such issuance of long-term notes bearing
interest at an assumed annual rate of 8% would be an increase in interest
expense for every $50 million of borrowings so refinanced of $0.8 million,
$0.3 million and $0.5 million for the year ended December 31, 1995 and the
six months ended June 30, 1995 and 1996, respectively. The New Line of
Credit has replaced the Existing Lines of Credit.
(j) Net income per Unit assumes 45,708,300 Units outstanding for the pro forma
periods. Net income attributable to Unitholders represents pro forma net
income less the General Partner interest, which is based on 2% of the
Partnership's combined net income (adjusted for the incentive
distribution), plus the incentive distribution, as provided for in the
Partnership Agreement. For purposes of calculating the incentive
distribution, per Unit distributions for the additional 5,100,000 Units
were assumed to equal historical per Unit distributions.
(k) Reflects the issuance of 5,100,000 Units, by the Partnership at an
offering price of $26 3/4 per Unit for net proceeds of $128.8 million
(after deducting underwriting discount and estimated offering expenses).
(l) Reflects the receipt of the net proceeds, the elimination of the assets
sold and the estimated net gain for financial statement purposes related
to the Newport Asset Sale. The estimated net proceeds include $143.7
million for the Newport Timberlands and the Arden Mill plus $8.7 million
for working capital (the June 30, 1996 balances were used for pro forma
purposes), net of estimated costs associated with the sale of $1.8
million.
(m) Reflects the New Line of Credit and the payment of the related debt
issuance costs (from existing cash balances), net of retirement of the
Existing Lines of Credit.
(n) Reflects purchase of the Riverwood Assets and the allocation of the total
purchase price of $560.3 million, based on currently available information
and certain estimates and assumptions, as follows:
<TABLE>
<CAPTION>
IN THOUSANDS
------------
<S> <C>
Elimination of historical cost of the Division's timber and
timberlands, net of accumulated depletion and amortization........... $ (489,028)
Purchase of Southern Timberlands (as defined in the Registration
Statement)........................................................... 511,953
---------
Net adjustment............................................... $ 22,925
=========
Elimination of historical cost of the Division's property, plant and
equipment, net of accumulated depreciation........................... $ (40,713)
Purchase of the Southern Region (as defined in the Registration
Statement) property, plant and equipment............................. 33,397
---------
Net adjustment............................................... $ (7,316)
=========
</TABLE>
The purchase price of $560.3 million consists of $555.0 million paid to the
seller for the Riverwood Assets, including certain working capital items
(estimates herein reflect the June 30, 1996 balances; such amounts will be
based on the balances at closing), the assumption of $2.7 million in
7
<PAGE> 10
the seller related to certain employee benefits and $2.6 million in
estimated acquisition expenses. Funding of the purchase price for pro
forma purposes was assumed to include the following:
<TABLE>
<S> <C>
Proceeds from borrowings under New Line of Credit...................... $278,265
Net proceeds from Newport Asset Sale................................... 150,601
Net proceeds from issuance of 5,100,000 Units.......................... 128,766
Assumed liabilities.................................................... 2,700
--------
Total purchase price......................................... $560,332
========
</TABLE>
The purchase price allocation, by categories of assets acquired and
obligations assumed, is as follows (the allocation is based on preliminary
estimates made by management of the fair value of assets acquired and
liabilities assumed, which are subject to refinement as additional
information becomes available):
<TABLE>
<CAPTION>
IN THOUSANDS
------------
<S> <C>
Assets acquired:
Inventories.......................................................... $ 7,718
Timber contract deposits............................................. 7,264
--------
Total current assets......................................... 14,982
--------
Timber and timberlands:
Land.............................................................. 56,275
Timber............................................................ 450,578
Roads............................................................. 5,100
--------
Total timber and timberlands................................. 511,953
--------
Property, plant and equipment........................................ 33,397
--------
Total assets................................................. $560,332
========
Liabilities assumed:
Current liabilities.................................................. $ 1,000
Other liabilities.................................................... 1,700
--------
Total liabilities............................................ $ 2,700
========
</TABLE>
(o) Reflects the elimination of assets and liabilities that are included in the
historical Division financial statements that were not assumed by the
Partnership, consisting of receivables, certain liabilities, long-term debt
and Riverwood International's net investment.
8
<PAGE> 11
(c) Exhibits.
See the Exhibit Index following the Signature page of this Report and
incorporated herein by reference.
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Plum Creek Timber Company, L.P.
BY: Plum Creek Management Company, L.P.
Date: October 23, 1996 BY: /s/ Diane M. Irvine
--------------------------------------
Diane M. Irvine
Vice President and Chief Financial
Officer
<PAGE> 13
EXHIBIT INDEX
TO
FORM 8-K CURRENT REPORT
Exhibit
Number Description of Exhibit
------ ----------------------
2.1 Asset Purchase Agreement Among Plum Creek Timber Company,
L.P., Riverwood International Corporation and New River
Timber, LLC, dated August 6, 1996.(1)(2)
2.2 Amendment to Asset Purchase Agreement Among Plum Creek Timber
Company, L.P., Riverwood International Corporation and New
River Timber, LLC, dated October 16, 1996.
2.3 Timberland Purchase and Sale Agreement for Newport Unit
Timberlands by and between Plum Creek Timber Company, L.P. as
Seller, and Stimson Lumber Company as Purchaser, dated as of
September 27, 1996.(2)
2.4 Mill Asset Purchase and Sale Agreement By and Between Plum
Creek Manufacturing, L.P. as Seller, and Stimson Lumber
Company as Purchaser, dated as of September 27, 1996.(2)
99.1 Press Release dated August 7, 1996
99.2 Press Release dated September 4, 1996
99.3 Press Release dated October 11, 1996
99.4 Press Release dated October 21, 1996
(1) Previously filed as Exhibit 2 to the Current Report on Form 8-K
dated August 7, 1996, filed by Riverwood Holding, Inc., Commission file
no. 1-11113, and incorporated herein by reference.
(2) The schedules (or similar attachments) to this exhibit have been
omitted. Such schedules are listed at the end of the exhibit and copies
thereof will be furnished supplementally to the Commission upon
request.
<PAGE> 1
EXHIBIT 2.2
AMENDMENT TO ASSET PURCHASE AGREEMENT
This AMENDMENT, dated as of October 16, 1996 (this
"Amendment"), among PLUM CREEK TIMBER COMPANY, L.P., a Delaware limited
partnership (the "Buyer"), RIVERWOOD INTERNATIONAL CORPORATION, a Delaware
corporation (the "Seller Parent"), and NEW RIVER TIMBER, LLC, a Delaware limited
liability company (the "Company" and, together with the Seller Parent, the
"Sellers") and a wholly owned subsidiary of the Seller Parent, to the Asset
Purchase Agreement (the "Asset Purchase Agreement"), dated as of August 6, 1996,
among the Buyer and the Sellers,
WITNESSETH:
WHEREAS, the Buyer and the Sellers have executed
and delivered the Asset Purchase Agreement;
WHEREAS, Section 12.4 of the Asset Purchase Agreement provides
that no amendment or modification of the Asset Purchase Agreement shall be valid
or binding unless set forth in writing;
WHEREAS, the Buyer and the Sellers have agreed to amend
certain provisions of the Asset Purchase Agreement, as provided in this
Amendment;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements hereinafter set forth, the parties hereto
hereby agree as follows:
1. Definitions. Capitalized terms used herein without
definition are used as defined in the Asset Purchase Agreement.
<PAGE> 2
2. Amendment to Section 1.1. Section 1.1 of the Asset Purchase
Agreement is hereby amended by amending the definition of the term "Forestry
Consultant" to read in its entirety as follows:
"Forestry Consultant" shall mean such firm as may be
mutually acceptable to the Sellers and the Buyer in their reasonable
judgment."
3. Amendment to Section 2.3. Section 2.3 of the Asset Purchase
Agreement is hereby amended by inserting the phrase ", and subject to adjustment
following the Closing pursuant to Section 2.4(d)" immediately prior to the
semicolon at the end of clause (i) thereof.
2. Amendment to Section 2.4(d)(i). Section 2.4(d)(i) of the
Asset Purchase Agreement is hereby amended to read in its entirety as follows:
"(d) Adjustment for Excess Harvesting. (i) In the event
that, after the date hereof and prior to the Closing, (x) the
respective amounts of pine sawlogs, pine pulpwood and hardwood pulpwood
harvested for the portion of calendar 1996 preceding the Closing Date
exceed by more than five percent (5%) the respective Scheduled Amounts
thereof (which harvesting may in any event include cutting diseased or
insect-infested trees), or (y) the amount of hardwood sawlogs harvested
for the portion of calendar 1996 preceding the Closing Date exceeds an
amount equal to the Scheduled Amount of hardwood sawlogs plus an amount
equal to five percent (5%) of such Scheduled Amount plus 1,500 ccf (one
hundred cubic feet of solid wood) of hardwood sawlogs, or (z) the
aggregate amount of pine sawlogs, hardwood sawlogs, pine pulpwood and
hardwood pulpwood harvested for the portion of calendar 1996 preceding
the Closing Date exceeds 505,000 ccf, the Base Purchase Price shall be
adjusted after the Closing to reflect such excess harvesting, to the
extent of such excess (without duplication among any
2
<PAGE> 3
such excess amounts). The amount of any such adjustment to the Base
Purchase Price under this Section 2.4(d)(i) shall be mutually
determined by the parties hereto based on the books and records of the
Sellers related to the harvesting prior to the Closing of pine sawlogs,
hardwood sawlogs, pine pulpwood and hardwood pulpwood (collectively,
the "Harvesting Records"). Each party will make the Harvesting Records
in such party's possession available for inspection by any other party
at such other party's reasonable request. If the parties are unable to
agree on the amount of any such adjustment within thirty (30) days from
the Closing Date, such amount shall be determined by the Forestry
Consultant, whose determination shall be conclusive and binding upon
the Sellers and the Buyer."
4. Amendment to Section 2.4(d)(i). Section 2.4(e) of the Asset
Purchase Agreement is hereby amended by adding immediately after words "Section
2.4(a)" in the first sentence thereof the words "and Section 2.4(d)".
5. Amendment to Section 5.1. Section 5.1 of the Asset Purchase
Agreement is hereby amended by adding the following clause to the end of the
second sentence thereof:
", provided that prior to the Closing the Sellers shall be entitled to
harvest an additional amount of hardwood sawlogs not to exceed 1,500
ccf (one hundred cubic feet of solid wood) as long as the aggregate
amount of pine sawlogs, hardwood sawlogs, pine pulpwood and hardwood
pulpwood harvested for the portion of calendar 1996 preceding the
Closing Date does not exceed 505,000 ccf".
6. Amendment to Section 6.1(a). The second sentence of Section
6.1(a) of the Asset Purchase Agreement is hereby amended by replacing the phrase
"twelve (12)" with the phrase "thirteen (13)".
3
<PAGE> 4
7. Amendment to Section 10.4(d)(iii). Section 10.4(d)(iii) of
the Asset Purchase Agreement is hereby amended by inserting the words "and
management" after the phrase "proper and adequate defense" where the same
appears therein, and by inserting the following sentences as the second and
third sentences thereof:
"Whether or not a Third Party Claim has been made or commenced with
respect to any Excluded Liability, the Buyer shall cooperate with each
Seller in all reasonable respects in connection with the defense and
management of such Excluded Liability, and render such assistance to
each Seller as may be reasonably requested in order to ensure the
proper and adequate defense and management thereof, including making
available records relating to such Excluded Liability and furnishing,
without expense to the Sellers, such employees of the Buyer and its
Affiliates as may be reasonably necessary for the preparation of such
defense and management or for testimony as witnesses. Whether or not a
Third Party Claim has been made or commenced with respect to any
Assumed Liability, the Sellers shall cooperate with the Buyer in all
reasonable respects in connection with the defense and management of
such Assumed Liability, and render such assistance to the Buyer as may
be reasonably requested in order to ensure the proper and adequate
defense and management thereof, including making available records
relating to such Assumed Liability and furnishing, without expense to
the Buyer, such employees of the Sellers and their respective
Affiliates as may be reasonably necessary for the preparation of such
defense and management or for testimony as witnesses."
8. Miscellaneous. Except as expressly amended and modified
hereby, the Asset Purchase Agreement is hereby ratified and reaffirmed in all
respects and all the terms and provisions thereof shall be and remain in full
force and effect. The section and other headings in this Amendment are inserted
solely as a matter of convenience and for
4
<PAGE> 5
reference, are not a part of this Amendment, and shall not be deemed to affect
the meaning or interpretation of this Amendment. This Amendment may be executed
in two or more counterparts, each of which shall be deemed an original, and all
of which together shall constitute one and the same instrument. This Amendment
shall be governed by and construed in accordance with the internal laws of the
state of New York applicable to agreements made and to be performed entirely
within such state, without regard to the conflict of laws principles or rules of
such state.
5
<PAGE> 6
IN WITNESS WHEREOF, each party hereto has executed or caused
this Amendment to be executed on its behalf, all on the day and year first above
written.
PLUM CREEK TIMBER COMPANY,
L.P.
By: Plum Creek Management
Company, L.P., its General
Partner
By:/s/James A. Kraft
-----------------------------
Name: James A. Kraft
Title: Vice President,
General Counsel and Secretary
RIVERWOOD INTERNATIONAL
CORPORATION
By:/s/ B.H. Chastaine
-----------------------------
Name: Bill H. Chastaine
Title: Secretary
NEW RIVER TIMBER, LLC
By:/s/ B.H. Chastaine
------------------------------
Name: Bill H. Chastaine
Title: Vice President and
Secretary
6
<PAGE> 1
EXHIBIT 2.3
TIMBERLAND
PURCHASE AND SALE AGREEMENT
FOR NEWPORT UNIT TIMBERLANDS
BY AND BETWEEN
PLUM CREEK TIMBER COMPANY, L.P.,
AS SELLER
AND
STIMSON LUMBER COMPANY,
AS PURCHASER
DATED AS OF SEPTEMBER 27, 1996
<PAGE> 2
TIMBERLAND
PURCHASE AND SALE AGREEMENT
FOR THE NEWPORT UNIT TIMBERLANDS IN
NORTHERN IDAHO AND NORTHEAST WASHINGTON
THIS AGREEMENT is made and entered into this 27th day of September,
1996, by and between PLUM CREEK TIMBER COMPANY, L.P., a Delaware limited
partnership, whose address is 999 Third Avenue, Suite 2300, Seattle, Washington
98104 ("Seller"), and STIMSON LUMBER COMPANY, an Oregon corporation whose
address is 520 S.W. Yamhill Street, Suite 308, Portland, Oregon 97204
("Purchaser").
RECITALS
A. Purchaser desires to purchase from Seller and Seller desires to sell
to Purchaser approximately 107,000 acres of timberland and associated real
property and assets located in Northeast Washington State and Northern Idaho,
known as the Newport Unit Timberlands.
B. This transaction is conditioned, among other things, upon the
simultaneous closing of a transaction which involves the sale of Seller's
sawmill and associated assets in Arden, Washington as described in the Mill
Asset Purchase and Sale Agreement of even date by and between Purchaser and Plum
Creek Manufacturing, L.P. ("Mill Asset Purchase Agreement").
AGREEMENTS
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, the receipt and sufficiency of which are acknowledged, and
subject to all terms of this Agreement, the parties agree as follows:
1. PURCHASE AND SALE OF ASSETS. Subject to the contingencies and other
terms and conditions contained herein, Seller agrees to sell and Purchaser
agrees to purchase the Assets (as defined in Paragraph 1.5), which shall not
include the Excluded Assets set forth on SCHEDULE 1 or the assets that are the
subject of the Mill Asset Purchase Agreement, as follows:
1.1 TIMBERLANDS. All of Seller's right, title and interest in
and to the Timberlands (defined below) and other rights related or appurtenant
thereto, including but not limited to all of Seller's right, title, and interest
(i) in and to the merchantable and unmerchantable timber, growing, lying,
standing or felled, timber interests and timber rights located on or appurtenant
to the Timberlands; (ii) in and to any cutting rights under public or private
timber deeds; (iii) in and to any mineral, sand, oil, gas, hydrocarbon
substances and gravel and other hard rock rights on and under the Timberlands;
and (iv) in and to all improvements, including without limitation the office
building and related improvements of Seller located in Newport, Washington (
"Building"). The "Timberlands" are defined as certain real property owned by
Seller in Stevens, Pend Oreille and Ferry Counties, Washington and Kootenai,
Boundary and Bonner Counties, Idaho, as further described on EXHIBITS "A"
through "F" attached hereto and incorporated herein by this reference and timber
rights only with respect
1
<PAGE> 3
to the properties described on EXHIBIT "G" attached hereto and incorporated
herein by this reference ("Timber Rights"). The legal description of the
Building is contained on EXHIBIT "H" attached hereto and incorporated herein by
this reference.
1.2 CONTRACTS. All rights of Seller in and to any development
rights, air rights, water, water rights, ditch and ditch rights appurtenant to
the Timberlands, all contracts relating primarily to the Timberlands, including
without limitation operating contracts, stumpage contracts, leases, permits,
licenses, governmental consents and agreements, approvals and clearances, and
service, maintenance, utility and operating contracts and warranties, including
without limitation agreements for construction of roads or other improvements,
rights under any payment, performance, or bonds relating to or associated with
the Timberlands, to the extent assignable ("Contracts").
1.3 ACCESS RIGHTS AND EASEMENTS. All rights of Seller in and
to any access rights, rights-of-way and easements appurtenant to the
Timberlands, to the extent assignable ("Access Rights and Easements").
1.4 PERSONAL PROPERTY. Any and all personal property, tangible
and intangible, including without limitation all furniture, fixtures, equipment,
vehicles and tools, used primarily in connection with the Timberlands or the
Building, any and all of Seller's maps, seeds, property books, aerial photos,
plans, drawings, specifications, renderings, engineering studies, biological
studies, grading or drainage studies, environmental and hazardous waste studies
and reports and related data and materials in Seller's possession relating to
the Timberlands or the Building, and all administrative software solely
concerning the Timberlands or the Building, including the timber inventory and
computerized forest industry software program, data base software program and
mapping software program, that can operate independent of Seller's mainframe and
that Seller is permitted to license to Purchaser but excluding proprietary
software of a type used by or which may be used by Seller in its other timber,
forestry or mill operations ("Personal Property").
1.5 ASSETS. The Timberlands, the Building, Timber Rights,
Contracts, Access Rights and Easements and Personal Property are sometimes
collectively referred to as the "Assets," and the Contracts, Access Rights and
Easements and Personal Property are sometimes referred to as the "Associated
Assets."
2. PURCHASE PRICE AND TERMS.
2.1 BASE VALUE. The base value for the Assets is ONE HUNDRED
FORTY- FIVE MILLION DOLLARS ($145,000,000) ("Base Value"), based on Seller's
timber inventory as of January 1, 1996 ("Timber Inventory"). Seller and
Purchaser agree that Seller's Timber Inventory shall be deemed accurate for
purposes of determining the Base Value and Seller's Purchase Price Estimate
(defined below).
2.2 FINAL PURCHASE PRICE. The final purchase price ("Purchase
Price") for the Assets shall be the Base Value, less (i) the value of the timber
harvested from the Timberlands from January 1, 1996 to the date of Closing
(defined below), which volume shall be determined
2
<PAGE> 4
solely on the basis of Seller's books and records, plus (ii) the value of timber
growth on the Timberlands from January 1, 1996 to the date of Closing. The
Purchase Price shall be reduced further pursuant to the (iii) "Pulp Value
Adjustment" and the (iv) "Dead Value Adjustment" as defined below. In addition,
at Closing the Purchase Price will be reduced by the amount of Seller's Deferred
Obligations (as defined in Paragraph 19.2). In calculating the value of
harvested and grown timber for purposes of the adjustments in clauses (i) and
(ii) of the preceding sentence, the applicable volume, expressed in MBF, shall
be multiplied by the following value-per-volume factor, expressed in $/MBF
("Adjustment Factor"):
{[the Base Value]
--less--
[the value, as of January 1, 1996, of all Assets other
than the timber located on or appurtenant to the
Timberlands ("Other Asset Value")]}
equals the "Timberlands Stumpage Value"
--divided by--
[the volume, as of January 1, 1996, of all the timber
located on or appurtenant to the Timberlands]
("1/1/96 Timber Inventory")
For purposes of this Paragraph 2.2, the parties agree that the Other Asset Value
is $23,967,970, and that the Timberlands Stumpage Value is thus $121,032,030.
Because the 1/1/96 Timber Inventory equals 815,000 MBF, the Adjustment Factor is
$148.51/MBF.
<TABLE>
<S> <C>
Base Value: $145,000,000.00
Less Other Assets Value - 23,967,970.00
-----------------
Timberlands Stumpage Value $121,032,030.00
</TABLE>
Divided by 1/1/96 Timber Inventory (815,000)= $148.51/MBF (Adjustment Factor)
LESS ADJUSTMENTS:
(i) Volume Harvested = 43,000 MBF x 148.51/MBF =$6,385,930
Since 1/1/96
Timber Inventory
PLUS ADJUSTMENT:
Growth of Unharvested Volume since 1/1/96 Timber Inventory
(ii) Growth Volume = 16,300 MBF x 148.51/MBF =$2,420,713
since 1/1/96
Timber Inventory
Net Adjustment for harvest and growth: $3,965,217
3
<PAGE> 5
LESS PULP VALUE ADJUSTMENT
(iii) 16,579 MBF Pulp per 1/1/96 Timber Inventory
Adjustment Factor: $148.51/MBF
Less discount: 36.64
Discounted adjustment: $111.87/MBF
Adjustment: 16,579 x $111.87 = $1,854,693
----------
LESS DEAD VALUE ADJUSTMENT
(iv) 43,631 MBF Dead per 1/1/96 Timber Inventory, including the following:
8,219 MBF Lodgepole Pine
3,941 MBF White Pine
1,177 MBF Ponderosa Pine
22 MBF Bull Pine
------
13,459 MBF
Market value of dead pine is 20% less than green value:
$148.51 x .20 = $29.70 stumpage reduction
13,459 x $29.70 = 399,732
-------
<TABLE>
<S> <C>
Therefore, the Final Purchase Price shall be: $ 145,000,000.00
Less Net Adjustment for Harvest/Growth 3,965,217.00
Less Pulp Value Adjustment 1,854,693.00
Less Dead Value Adjustment 399,732.00
------------------
Total $ 138,780,358.00
</TABLE>
The Final Purchase Price shall be further reduced at Closing based on Seller's
estimate of its Deferred Obligations as defined in Pargraph 19.2 hereof.
2.3 POST-CLOSING ADJUSTMENTS. Not less than five (5) business
days prior to Closing, Seller shall provide to Purchaser and the Escrow Agent
(described below) Seller's estimate of the Purchase Price and the supporting
calculations ("Seller's Purchase Price Estimate"). The Seller's Purchase Price
Estimate shall be used solely for purposes of Closing. Within thirty (30) days
after Closing, Purchaser, with the cooperation of Seller, shall verify Seller's
Purchase Price Estimate. If Seller and Purchaser agree that the Purchase Price
should be adjusted, the party owing to the other shall make such payment within
fifteen (15) days of such final determination. In the event Seller and Purchaser
cannot agree to the adjustments that either have been or should be made to the
Purchase Price, the parties shall select an independent auditor to perform an
analysis. Seller and Purchaser agree that they shall be bound by the final
determination of such auditor and shall share equally the costs of the audit.
4
<PAGE> 6
2.4 PAYMENT OF PURCHASE PRICE. At Closing, Purchaser shall pay
Seller the Seller's Purchase Price Estimate in cash, by wire transfer in
immediately available federal funds, to the Escrow Agent.
2.5 PURCHASE PRICE ALLOCATION. The parties shall allocate the
Purchase Price among the Assets in accordance with Section 1060 of the Internal
Revenue Code and shall cooperate with each other and provide such information as
may be requested in connection with the preparation of the allocation. The
parties shall report the federal, state and local tax consequences of the
purchase and sale contemplated hereby (including the filing of IRS Form 8594) in
a manner consistent with such allocation.
3. CLOSING. Closing ("Closing") shall occur at the offices of
Transnation Title Insurance Company, 1200 Sixth Avenue, Seattle, Washington
98101 ("Escrow Agent") on October 1, 1996, unless such date is extended pursuant
to Paragraphs 14 or 17 or otherwise by agreement of the parties, but in no event
later than December 31, 1996 ("Closing Date").
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Purchaser that except as disclosed in a Schedule:
4.1 ORGANIZATION. Seller is a limited partnership duly
organized and validly existing under the laws of the State of Delaware.
4.2 GOOD STANDING. Seller is qualified to do business in the
States of Washington and Idaho.
4.3 POWER AND AUTHORITY FOR TRANSACTION. Seller has the power
and authority to execute, deliver and perform this Agreement and the
transactions contemplated herein in accordance with the terms hereof.
4.4 AUTHORIZATION. Subject to obtaining the consents,
approvals and authorizations described in Paragraph 17, the execution and
delivery by Seller of this Agreement and the due consummation of the
transactions contemplated herein have been duly and validly authorized by all
necessary partnership action on the part of Seller and this Agreement
constitutes a valid and legally binding agreement of Seller.
4.5 NO VIOLATION OR CONFLICTS. Subject to obtaining the
consents and approvals described in Paragraph 17.2(b), neither the execution and
delivery of this Agreement by Seller nor the consummation by Seller of the
transactions contemplated herein (i) constitute a violation of Seller's
certificate of limited partnership or limited partnership agreement, or (ii)
result in the breach of or the imposition of any lien on any Assets pursuant to,
or constitute a material default under, any indenture or bank loan or credit
agreement or other agreement or instrument to which Seller is a party or by
which it or its property may be bound or affected. Except for consents or
approvals which will have been obtained or actions which will have been taken on
or prior to the Closing Date, and except for consents, approvals, authorizations
or actions described in Paragraphs 14, 17.2 or 19.6, no consent, approval,
authorization or action by any governmental authority, or any person having
legal rights against or jurisdiction over Seller,
5
<PAGE> 7
is required in connection with the execution and delivery by Seller of this
Agreement or the consummation by Seller of the transactions contemplated herein,
except as set forth on SCHEDULE 4.5.
4.6 NO DEFAULTS. To Seller's knowledge, the Contracts and
Access Rights and Easements are valid and in full force and effect except as
would not materially and adversely affect the Assets. Neither Seller nor, to
Seller's knowledge, any other party thereto has breached any material provision
of, or is in default in any material respect under, the terms of any Contract.
4.7 CONDEMNATION PROCEEDINGS. Subject to Paragraph 17.1(f), no
condemnation proceeding is pending or, to the knowledge of Seller, threatened
which would materially preclude or impair the use of the Timberlands or the
Building for the respective purposes for which such properties are currently
used.
4.8 ENVIRONMENTAL MATTERS. To Seller's knowledge, except as
set forth on SCHEDULE 4.8 and in the environmental reports identified on
SCHEDULE 4.8:
(a) neither the Timberlands nor the Building have at
any time been used for the generation, transportation, management, handling,
treatment, storage, manufacture, emission disposal, release or deposit of any
hazardous substances or fill or other material containing hazardous substances
in material violation of levels permitted under applicable laws;
(b) there are no underground storage tanks on the
Timberlands or the Building; and
(c) Seller has not received notification from any
third party, including but not limited to governmental agency alleging that the
Timberlands or the Building are not materially in compliance with applicable
environmental laws.
Subject to Seller's warranty set forth in this Paragraph 4.8, the liability for
which Seller remains responsible pursuant to the terms of this Agreement,
Purchaser releases Seller from all costs, losses, liabilities, obligations and
claims, of any nature whatsoever, known and unknown, that Purchaser may have
against Seller or that may arise after the date of Closing based in whole or in
part upon (i) Seller's failure to comply with any environmental laws applicable
to the Timberlands or the Building; or (ii) the presence, release or disposal of
any hazardous substance, solid waste, or any other environmental contamination
on, within, or from the Timberlands or the Building before, as of, or after the
Closing Date. The above-referenced release does not cover or apply to any
statutory or common law claim for contribution or indemnity that may arise to
the extent Purchaser suffers any liabilities or obligations from future claims
of any governmental agency arising out of (i) or (ii) above. As used herein, the
term "environmental laws" shall mean all applicable federal, state or local
laws, rules, regulations, governmental permits or other binding determinations
of any governmental authority relating to or addressing the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, as amended ("CERCLA"), and the Resource
Conservation and Recovery Act, as amended ("RCRA"), the Toxic Substances Control
Act, as amended ("TSCA"), the Clean Water
6
<PAGE> 8
Act, as amended ("CWA"), the Clean Air Act, as amended ("CAA"), and the Oil
Pollution Control Act of 1990, as amended ("OPA"). As used herein, the terms
"hazardous substance" and "release" (as it relates to the release of hazardous
substances as opposed to the release of claims) have the meanings specified in
CERCLA and the terms "solid waste" and "disposal" (or "disposed") have the
meanings specified in RCRA. If either CERCLA or RCRA is amended to broaden the
meaning of any term defined thereby, the broader meaning shall apply to this
paragraph 4.8 after the effective date of the amendment. Moreover, to the extent
that Washington law establishes a meaning for "hazardous substance," "release,"
"solid waste," or "disposal" that is broader than that specified in either
CERCLA or RCRA, the broader meaning shall apply.
4.9 SUITS, ACTIONS OR PROCEEDINGS. Except as disclosed in
SCHEDULE 4.9, to the knowledge of Seller, there is (i) no court or
administrative judgment or order which adversely affects the Timberlands or
current operations thereon; and (ii) no legal, administrative or other suit,
action, proceeding or arbitration, or governmental investigation pending or
threatened which would reasonably be expected to materially and adversely affect
the Timberlands or current operations thereon. Except as set forth in Paragraph
14, Seller has no knowledge of any suit, action, arbitration or other proceeding
threatened or pending before any court or governmental agency, which may result
in the restraint or prohibition of the consummation of the transactions
contemplated by this Agreement.
4.10 BROKER FEES. Seller has not employed any broker, agent or
finder, or incurred any liability for any brokerage fees, agents' commissions or
finders' fees, in connection with the transactions contemplated herein.
4.11 COMPLIANCE. Except as disclosed on SCHEDULE 4.11, to
Seller's knowledge, Seller has not received notification from any governmental
agency alleging that the Timberlands or the Building are not in compliance with
applicable laws (other than environmental laws which are covered in Paragraph
4.8) as would materially and adversely affect the Assets. Seller has no
knowledge of any such violations relating to the use of the Timberlands or the
Building.
4.12 SCHEDULES. Seller has delivered to Purchaser herewith, or
will deliver as soon as practicable, the Schedules referred to in this
Agreement.
4.13 MARKETABLE TITLE. Subject to the Permitted Exceptions
(defined below) and the provisions of Paragraph 19.6, Seller has good and
marketable title to the Assets and at Closing such Assets will be free and clear
of all liens, security interests, charges and encumbrances.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Seller that:
7
<PAGE> 9
5.1 INCORPORATION AND CORPORATE POWER. Purchaser is a
corporation duly incorporated and validly existing under the laws of the State
of Oregon, and has the corporate power to enter into this Agreement and to carry
out the transactions contemplated herein in accordance with the terms hereof.
5.2. AUTHORIZATION; NO VIOLATION OR CONFLICTS. The execution
and delivery of this Agreement by Purchaser and the due consummation of the
transactions contemplated herein, subject to obtaining the approval described in
Paragraph 17, have been duly and validly authorized by all necessary corporate
action on the part of Purchaser, and this Agreement constitutes a valid and
legally binding agreement of Purchaser. Neither the execution and delivery of
this Agreement by Purchaser nor the consummation by Purchaser of the
transactions contemplated herein constitute a violation of Purchaser's
Certificate of Incorporation or Bylaws, or result in the breach of, or the
imposition of any lien on any assets of Purchaser pursuant to, or constitute a
default under, any indenture or bank loan or credit agreement, or other
agreement or instrument to which Purchaser is a party or by which it or any of
its properties may be bound or affected. Except for the approvals described in
Paragraphs 14 and 17 and except for consents, approvals, or authorizations which
will have been obtained or actions which will have been taken on or prior to the
Closing Date, no consent, approval, authorization or action by any governmental
authority or any person having legal rights against or jurisdiction over
Purchaser is required in connection with the execution and delivery by Purchaser
of this Agreement or for consummation by Purchaser of the transactions
contemplated herein, except as may be set forth on SCHEDULE 5.2 hereto.
5.3 BROKER FEES. Purchaser has not employed any broker, agent
or finder, or incurred any liability for any brokerage fees, agents' commissions
or finders' fees, in connection with the transactions contemplated herein.
5.4 FINANCING. Purchaser has access to the funds or financing
necessary to consummate the transactions contemplated by this Agreement.
5.5 SUITS, ACTIONS OR PROCEEDINGS. Except as set forth in
Paragraph 14, Purchaser has no knowledge of any suit, action, arbitration or
other proceeding pending before any court or governmental agency, which may
result in the restraint or prohibition of the consummation of the transactions
contemplated by this Agreement.
6. SURVIVAL; CUSHION AGAINST CLAIMS; KNOWLEDGE; MATERIALITY.
6.1 SURVIVAL. The respective representations and warranties of
Seller and Purchaser contained herein or in any Schedule, certificate or other
instrument delivered by or on behalf of such party pursuant to this Agreement,
including the environmental matters set forth in Paragraph 4.8, shall survive
the Closing for a period of eighteen (18) months and thereafter shall expire and
terminate, and each party shall be forever released from liability to the other
based upon such representations and warranties except as to matters for which
notice has been given by a party of the inaccuracy or breach of any
representation or warranty on or prior to such termination date.
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<PAGE> 10
6.2 CUSHION AGAINST CLAIMS. In the event of any claim by
Purchaser against Seller under Paragraphs 4 or 18.1 of this Agreement, no amount
shall be owing by Seller unless and until the amount of damage, loss or expense
incurred by Purchaser exceeds $100,000 in the aggregate for all claims
("Cushion"), and Seller shall be obligated only with respect to such excess. The
aggregate amount paid or payable by the Seller pursuant to claims made under
Paragraphs 4 or 18.1 of this Agreement shall not exceed $3,000,000.
Notwithstanding anything herein to the contrary, the Cushion shall not apply to
any representations or warranties described in Paragraph 4 which are qualified
by a "materiality," "material," "materially" or "materially and adversely
affected" threshold.
6.3 SELLER'S KNOWLEDGE DEFINED. "Knowledge" as used in this
Agreement with respect to the Seller shall mean actual current knowledge (as
opposed to constructive or imputed knowledge) of the fact or matter in question
by Dwight Opp, the current Superintendent of Timberlands, or by the superiors of
Mr. Opp which are employed by Seller.
6.4 MATERIALITY DEFINED. "Material" or "materiality" or
"materially" or "materially and adversely affect" as used in this Agreement with
respect to Seller shall mean a claim, encumbrance or occurrence (including
without limitation a breach of warranty or violation by Seller) that could
lessen the value of the Assets by, or cause damages of, at least $100,000 or
encumber or adversely affect more than 2,000 acres of Timberlands in the
aggregate.
7. CONDITION OF TITLE AND TITLE INSURANCE.
7.1 CONDITION OF TITLE. As of the Closing Date, title to the
Timberlands and the Building is to be free of all monetary encumbrances or
defects and other encumbrances or defects which appear in the preliminary
commitment for title insurance mutually deemed unacceptable by Seller and
Purchaser. Monetary encumbrances or defects to be discharged by Seller shall be
paid from Seller's funds at Closing or Seller shall indemnify Purchaser against
such monetary encumbrances or defects. In addition to any other permitted
exceptions agreed upon by the parties, the following shall not be deemed
unacceptable encumbrances or defects: rights reserved in federal patents or
state deeds; building or use restrictions consistent with current zoning;
easements not inconsistent with Purchaser's intended use; reserved rights for
minerals, metals and ores of every kind and nature, and all oil, gas and other
hydrocarbons, together with reserved rights of ingress and egress; and any other
non-monetary encumbrance or defect that does not affect more than 2,000 acres in
the aggregate or affect the value of the Timberlands by at least $100,000.
Following Closing, Seller shall use its reasonable efforts to assist Purchaser
in removing any encumbrances or defects that Purchaser and Seller deemed as
objectionable.
7.2 TITLE INSURANCE. Seller shall furnish to Purchaser at
Closing a standard form Owner's or Purchaser's Policy of Title Insurance for the
Timberlands and the Building in the amount of the Purchase Price. Seller shall
provide to Purchaser preliminary commitments for title insurance for all
properties located within the Timberlands and the Building as soon as practical
after execution hereof, including copies of all exception documents referred to
in such title commitments.
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8. CONDITION OF PROPERTY; SUBSEQUENT ACTS.
8.1 LIMITATION ON REPRESENTATIONS. Purchaser agrees that
neither Seller nor its agents, officers, employees or assigns shall be held to
any covenant or representation respecting the condition of the Timberlands or
any improvements thereon, or the Building, nor shall Purchaser or Seller or the
assigns of either be held to any covenant or agreement for alterations,
improvements or repairs unless the covenant or agreement relied on is contained
herein or is in writing and attached to and made a part of this Agreement.
8.2 LIMITATION OF WARRANTIES. Except for the warranties made
in Paragraph 4, Purchaser specifically acknowledges and agrees that (i) Seller
does not make any representations or warranties of any kind whatsoever, either
express or implied, with respect to the Timberlands or the Building; and (ii)
the Timberlands and the Building are sold to Purchaser in an "AS IS" and "WITH
ALL FAULTS" condition as of the Closing Date, including without limitation the
stability of soils, suitability for any construction or development,
encroachment or boundary questions, drainage, availability of utilities, zoning,
quantity, quality, acreage, access and similar matters. Purchaser assumes the
risk that adverse physical conditions may not have been revealed by its
investigation.
8.3 FORESTLAND OR TIMBERLAND TAX DESIGNATION. With respect to
the Timberlands located within the State of Washington, Purchaser agrees that it
shall continue the current real property tax designation as timberland or
forestland at Closing.
9. LIABILITIES NOT ASSUMED. Except for the Contracts and the Access
Rights and Easements, and as otherwise set forth in this Agreement, Purchaser
shall not assume or be responsible for any liabilities of Seller.
10. CONTRACTS; ACCESS RIGHTS AND EASEMENTS.
10.1 CONTRACTS. As soon as practicable following full
execution hereof, Seller shall provide to Purchaser a list of all Contracts.
Such list shall become SCHEDULE 10.1 to this Agreement and shall become a part
hereof. At Closing, Seller shall assign, to the extent assignable, and Purchaser
shall assume such Contracts pursuant to an executed Assignment and Assumption
Agreement in such form as is approved by the parties hereto. Subject to the
provisions of Paragraph 19.6, Seller will cooperate in obtaining any consents
necessary for the assignment of the Contracts.
10.2 ACCESS RIGHTS AND EASEMENTS. As soon as practicable
following full execution hereof, Seller shall provide to Purchaser a list of all
Access Rights and Easements. Such list shall become SCHEDULE 10.2 to this
Agreement and shall become a part hereof. At Closing, Seller shall assign, to
the extent assignable, and Purchaser shall assume such Access Rights and
Easements pursuant to executed blanket assignments in such form as is approved
by the parties hereto. Subject to the provisions of Paragraph 19.6, Seller will
cooperate in obtaining any consents necessary for the assignment of the Access
Rights and Easements.
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11. PERSONAL PROPERTY. As soon as practicable following full execution
hereof, Seller shall provide to Purchaser a list of all Personal Property which
shall become SCHEDULE 11 to this Agreement and shall become a part hereof. At
Closing, Seller shall transfer all of Seller's right, title and interest to such
Personal Property, free and clear of any monetary liens and encumbrances,
pursuant to a bill of sale or other conveyancing document in a form acceptable
to the parties.
12. EMPLOYEES AND BENEFIT PLANS.
12.1 TERMINATION AND REHIRING OF EMPLOYEES.
(a) On and as of the Closing Date, Seller will take
all action necessary to terminate its Newport Unit Timberlands and Building
employees and shall pay such employees all accrued employment related financial
obligations due to them through the close of business on the Closing Date except
as otherwise provided in this Paragraph 12. Seller has delivered to Purchaser a
list of all employees who are currently on Seller's employment roll employed in
the operation of the Newport Unit Timberlands or the Building, other than those
employees who are on long-term disability ("Business Employees"), as of the most
recent date for which such information is reasonably available. Purchaser may
(i) submit employment applications to Business Employee any time after mutual
execution of the Agreement; and (ii) conduct drug testing of Business Employees
no sooner than five (5) days prior to Closing; provided that such drug testing
shall not unreasonably interfere with Seller's business operations. Purchaser
shall extend written offers of employment to all Business Employees conditioned
upon reasonable satisfaction of Purchaser's standard drug testing procedure,
other than those Business Employees identified to Seller by Purchaser in writing
within five (5) days of the date hereof (such Business Employees to whom
Purchaser is to extend such conditional offers of employment are referred to as
the "Current Employees," and such Business Employees to whom Purchaser will not
extend such offers of employment are referred to as the "Excluded Employees").
The number of Excluded Employees identified by Purchaser pursuant to this
Paragraph 12.1 and pursuant to Paragraph 10.1 of the Mill Asset Purchase
Agreement shall not exceed 10 in the aggregate; provided that Purchaser shall
not be obligated to hire Current Employees that fail to reasonably satisfy
Purchaser's standard drug testing procedure. Purchaser shall identify those
Excluded Employees that failed to satisfy drug tests and provide to Seller
copies of any drug test results requested by Seller. Notwithstanding anything
herein to the contrary, the aggregate number of Excluded Employees and Current
Employees that are not hired as a result of drug test failure pursuant to this
Agreement or the Mill Asset Purchase Agreement shall not exceed 49. Each such
offer of employment by Purchaser to Current Employees shall (i) be effective
subject to and as of the Closing; (ii) provide for employment at the location of
the Building or the Timberlands, as the case may be; (iii) be at a salary or
hourly wage rate, as applicable, that is at least equal to the salary or hourly
wage rate of similarly situated employees of Purchaser; (iv) provide for
employee benefits that are equivalent to the employee benefits of similarly
situated employees of Purchaser at its Forest Grove, Oregon operations; and (v)
be for a position that is substantially similar to the Current Employee's
present position with Seller. Those Current Employees who accept such offers of
employment with Purchaser are referred to herein as the "Transitioning
Employees," and those Current Employees who do not accept such offers of
employment, together with the Excluded Employees, are referred to herein as the
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"Nontransitioning Employees."
(b) Effective from and after the first day after
Closing, Purchaser shall assume and become solely responsible for any and all
liabilities in respect to the Transitioning Employees relating to or arising in
connection with any actual or constructive termination of any such Transitioning
Employee's employment with Purchaser after the Closing, including, without
limitation, any and all such liabilities relating to the claims of any such
Transitioning Employees for any severance compensation or benefits. Purchaser
agrees that in the event Purchaser terminates any Transitioning Employee without
cause within twelve months from Closing, Purchaser shall pay to such
Transitioning Employee any and all benefits payable to such Transitioning
Employee pursuant to Seller's severance policies in existence as of Closing. Any
and all liabilities for accrued but unpaid vacation days for services rendered
by the Transitioning Employees prior to Closing shall be allocated between
Seller and Purchaser in an equitable manner prior to and as of Closing. Each
Transitioning Employee will be credited with his or her years of employment
service with Seller for purposes of determining the number of vacation days
available to him or her as an employee of Purchaser.
(c) From and after the Closing, Seller shall remain
solely responsible for any and all liabilities with respect to the
Nontransitioning Employees for all claims arising (whether made on or after
Closing) on or before the Closing, including but not limited to liabilities
arising under the Worker Adjustment and Retraining Notification Act of 1990 or
COBRA. From and after the Closing, Seller shall remain solely responsible for
(i) disability benefits payable under any plan that is a disability benefit plan
in respect of those employees of Seller employed in the operation of the Newport
Unit Timberlands who, on the Closing Date, are on long term disability status
and entitled to benefits under such plans and (ii) post-retirement health and
life insurance benefits payable under the terms of any plan that provides such
post-retirement benefits in respect of those former employees of Seller who, on
the Closing Date, are receiving such post-retirement benefits under such plan.
12.2 EMPLOYEE ERISA AND 401 PLANS GENERALLY. Effective as of
the first day after the Closing Date, Purchaser shall amend any existing plan
established pursuant to the Employee Retirement Income Security Act of 1974 or
Section 401 of the Internal Revenue Code, including but not limited to the
Timber Operators' Council Retirement Plan, defined contribution plans and
"401-k" plans, to provide for (i) the immediate participation of the
Transitioning Employees in each such plan on the same basis as Purchaser's
similarly situated employees at Purchaser's Forest Grove, Oregon operations are
then eligible to participate; and (ii) to the extent permissible under
applicable law and within the control of Purchaser, the recognition under each
such plan of all service of the Transitioning Employees with Seller completed
prior to and as of the Closing, for purposes of eligibility to participate,
vesting and credited service (excluding the Timber Operators' Current Retirement
Plan).
12.3 WELFARE PLANS. Effective from and after the first day
after Closing, Purchaser shall cause each Transitioning Employee and his or her
eligible dependents to become eligible to participate immediately in each
employee welfare benefit plan (as such term is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974) maintained, as of the Closing
Date, by Purchaser and each other benefit arrangement maintained by Purchaser
for the
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benefit of similarly situated employees of Purchaser at Purchaser's Forest
Grove, Oregon operations ("Welfare Plans"). In connection therewith, Purchaser
shall cause each Welfare Plan to (i) recognize the 1996 co-payments and
deductible expenses of the Transitioning Employees and their eligible dependents
incurred under those plans that are health benefit plans; and (ii) waive all
pre-existing condition exclusions and limitations of the Transitioning Employees
and their eligible dependents. From and after the Closing, Seller shall remain
solely responsible for liabilities for claims of the Transitioning Employees and
their eligible dependents incurred prior to the Closing Date under those plans
that are health, disability, accident or life insurance plans and Purchaser
shall be solely responsible for all such liabilities for claims incurred by any
Transitioning Employee and his or her eligible dependents after the Closing
Date. For the purposes of this Paragraph 12.3, a claim for health benefits shall
be deemed to have been incurred when the services that are the subject of such
claim are rendered and a claim for disability, accident or life insurance shall
be deemed to have been incurred when the last event giving rise to such claim
occurs. Purchaser and Seller shall cooperate in ensuring that welfare benefit
coverage for Transitioning Employees and their eligible dependents on and prior
to the Closing is coordinated with such coverage provided after the Closing.
12.4 WORKER'S COMPENSATION. From and after the Closing, (i)
Seller shall remain solely responsible for all worker's compensation claims of
any Transitioning Employee that relate to any accident that occurred or injury
that was documented prior to the Closing, regardless of whether such claim is
filed by such Transitioning Employee before or after the Closing and (ii)
Purchaser shall assume and become solely responsible for all other worker's
compensation claims of any Transitioning Employee.
13. ACCESS TO INFORMATION. Upon full execution hereof, Seller will
permit Purchaser to have reasonable access to all records and information
regarding timber inventories, road agreements, title, environmental matters and
other matters relating to the Timberlands or the operation thereof or the
Building in Seller's possession. Seller shall provide to Purchaser schedules and
copies of all contracts, leases and permits relating to the Timberlands which
are to be assumed by Purchaser, a schedule of all easement and access rights,
all environmental site assessments or other documents related to the
environmental condition of any of the Timberlands or the Building, and all other
materials reasonably requested by Purchaser.
14. HART-SCOTT-RODINO FILING. Prior to the date of this Agreement,
Purchaser and Seller have made appropriate filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and have sought
and will continue to seek expedited review by the examining agency. Seller and
Purchaser shall expeditiously attempt to resolve any issues that may arise in
connection therewith. The Closing Date as provided in Paragraph 3 shall be
extended, if necessary, by not more than ten (10) days after all applicable
waiting periods or extensions under the HSR Act shall have expired without any
indication by the Department of Justice or the Federal Trade Commission that
either of them intends to challenge the sale contemplated hereby. If all such
waiting periods shall not have expired on or before December 31, 1996, then
either party shall be entitled to terminate this Agreement without any further
liability to the other. Each party shall pay its requisite filing fee, if any,
and all costs and expenses relating to such party's compliance with the terms of
this paragraph.
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15. CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS; RETURN OF INFORMATION.
Subject to the provisions of Paragraph 15.3 below:
15.1 Neither Seller nor Purchaser shall disclose the content
or substance of this Agreement to any individual, firm, partnership,
corporation, entity, governmental authority, or other party except advisors,
agents, lenders and representatives assisting each respective party in
connection with this transaction, until such disclosure is agreed upon in
writing and then only to accomplish the consents and approvals required
hereunder.
15.2 No press releases or other public statements concerning
this Agreement or the transactions contemplated hereby shall be made by either
party without the prior written approval of the other.
15.3 Each party hereto, its representatives, agents and
employees shall hold in strict confidence and shall not use or disclose to any
person or organization any information or data concerning this Agreement or the
transaction contemplated hereby except to the extent that (i) said information
has been published or constitutes a matter of public knowledge or record; (ii)
such disclosure is reasonably necessary for communications with and reporting to
the Board of Directors or other governing body of either party or reasonably
appears to be required by a governmental agency having jurisdiction over the
parties; (iii) such information is necessary in connection with any suit brought
to enforce the obligations of any party hereunder; or (iv) if based upon the
legal opinion of counsel for the disclosing party, that such counsel reasonably
believes that disclosure is necessary or desirable to avoid conflict with or
violation of any applicable law, rule, or regulation.
15.4 In the event of termination of this Agreement for
whatever reason, Purchaser will return all originals and copies of documents,
work papers and other material obtained hereunder, whether obtained before or
after the execution hereof (subject to retention of true copies for litigation
purposes as applicable), and Purchaser agrees that it will not disclose or
divulge any such information to any other person without Seller's written
consent, and will use its best efforts to keep any information so obtained
confidential; provided, however, that (i) Purchaser may disclose this
information to its employees, attorneys, accountants and prospective lenders who
need to know such information in connection with this transaction and who have
been informed of Purchaser's obligation to maintain the information as
confidential; and (ii) Purchaser shall not be obligated to treat as confidential
any information which was known to it at the time of disclosure or which becomes
publicly known or available thereafter or is rightfully received by Purchaser
from a third party.
16. EXCHANGE. Seller intends to complete this transaction as part of a
Section 1031 tax-deferred exchange. Purchaser agrees to cooperate with Seller in
documenting and completing such exchange by agreeing that Seller may transfer
Seller's rights and obligations under this Agreement to Seller's Qualified
Intermediary, Exchange Facilitator Corporation. Purchaser agrees to accept
Exchange Facilitator Corporation as the assigned Seller of the Property
described in this Agreement. Purchaser shall incur no additional expense or
liability by such cooperation.
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17. CLOSING.
17.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligations of
Purchaser to perform this Agreement are subject to the satisfaction, in all
material respects on or before the Closing Date, of each of the following
conditions and any other conditions to Purchaser's obligations hereunder
specified elsewhere in this Agreement, unless waived in writing by Purchaser in
its sole discretion:
(a) SIMULTANEOUS CLOSING. There being a simultaneous
closing under the Mill Asset Purchase Agreement.
(b) MATERIAL INACCURACIES. Seller's representations
and warranties shall be true and correct in all material respects on and as of
the Closing Date as though made on and as of the Closing Date and Seller shall
deliver a certificate to that effect at Closing.
(c) PERFORMANCE OF OBLIGATIONS. Seller shall have
performed all obligations required to be performed by it prior to the Closing
Date under this Agreement.
(d) TITLE INSURANCE POLICY. At Seller's expense,
Purchaser shall have received a binding commitment from a recognized title
insurance company for the issuance of a standard coverage owner's policy or
policies of title insurance insuring Purchaser's fee simple title to the
Timberlands and the Building, subject to the Permitted Exceptions described in
Paragraph 7.1.
(e) SUITS, ACTIONS OR PROCEEDINGS. No suit, action,
arbitration or other proceeding shall be pending before any court or
governmental agency, which may result in the restraint or prohibition of the
consummation of the transactions contemplated by this Agreement, and all
governmental and regulatory approvals and clearances which are required to
consummate such transactions shall have been obtained.
(f) CASUALTY, LOSS OR CONDEMNATION. As a condition to
Purchaser's obligation to consummate the transactions set forth herein, the
Timberlands shall not have become subject, subsequent to the date of this
Agreement, to physical damage by fire, flood, windstorm, earthquake or other
similar occurrence, or to any condemnation proceeding, which causes or may
result in a loss affecting at least 2,000 acres in value to the Timberlands. If
Purchaser elects to waive the condition set forth in this Paragraph 17.1(f), or
if any material casualty or condemnation loss affects less than 2,000 acres, the
amounts payable by Purchaser to Seller pursuant to Paragraph 2 shall be reduced
to reflect the diminution in value resulting or expected to result from the
casualty or condemnation based upon the formula described in Paragraph 2, in
which event Seller shall be entitled to retain any compensation, awards,
insurance proceeds or other payment or relief resulting from such casualty or
condemnation. If the parties cannot agree upon the extent of the diminution in
value, the determination shall be made by an independent expert mutually agreed
upon by the parties. If Purchaser elects to terminate this Agreement pursuant to
this Paragraph 17.1(f), the Mill Asset Purchase Agreement shall terminate. If
Purchaser terminates the Mill Asset Purchase Agreement pursuant to Paragraph
12.6 of the Mill Asset Purchase Agreement, this Agreement shall terminate.
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17.2. CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of
Seller to perform this Agreement are subject to the satisfaction, in all
material respects on or before the Closing Date, of each of the following
conditions and any other conditions to Seller's obligations hereunder specified
elsewhere in this Agreement, unless waived in writing by Seller in its sole
discretion:
(a) SIMULTANEOUS CLOSING. There being a simultaneous
closing under the Mill Asset Purchase Agreement.
(b) CONSENTS AND APPROVALS. Seller shall have
received all requisite consents to and approvals of the execution, delivery and
performance of this Agreement and the transactions contemplated hereby from
Seller's and its affiliates' lenders.
(c) NOTICE OF INTENT TO CLOSE THIRD-PARTY
TRANSACTION. Seller shall have provided written notice to Purchaser of Seller's
intent to close the acquisition of timberlands and associated facilities
(referred to as the "Riverwood Acquisition") located in the southern United
States; however, if Seller has provided Purchaser such written notice and
Closing has occurred pursuant to this Agreement, and closing of the Riverwood
Acquisition does not actually occur, Seller may rescind any Closing hereunder.
In the event the Closing of the Riverwood Acquisition does not occur on or
before October 1, 1996, Seller may, in its discretion, extend this Agreement
accordingly. In the event the Riverwood Acquisition does not close by December
31, 1996, or in the event Seller's contractual rights to close the Riverwood
Acquisition terminate for any reason, this Agreement shall terminate.
(d) MATERIAL INACCURACIES. Purchaser's
representations and warranties shall be true and correct in all material
respects on and as of the Closing Date and Purchaser shall have delivered a
certificate to that effect at Closing.
(e) PERFORMANCE OF OBLIGATIONS. Purchaser shall have
performed all obligations required to be performed by it prior to the Closing
Date under this Agreement.
(f) SUITS, ACTIONS OR PROCEEDINGS. No suit, action,
arbitration or other proceedings, shall be pending before any court or
governmental agency which may result in the restraint or prohibition of the
consummation of the transactions contemplated by this Agreement, and all
governmental and regulatory approvals and clearances which are required to
consummate such transactions shall have been received.
(g) AMENDMENT TO LOG PURCHASE AND SALE AGREEMENT.
Seller and Purchaser shall have entered into an amendment to that certain Log
Purchase and Sale Agreement between Purchaser and Seller dated August 30, 1993,
as amended to provide for a prorated reduction in the amount of volume which
Seller is obligated to deliver to Purchaser's Montana mills.
17.3 PRORATIONS. All personal property taxes, real property
taxes, forest patrol assessments, rents, water and other utilities constituting
liens shall be prorated to the Closing Date.
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17.4 CLOSING COSTS.
(a) Seller shall pay the following costs and expenses
associated with the closing of the transactions contemplated hereunder:
(i) The cost of the standard owner's policy or
policies of title insurance;
(ii) One-half of escrow fees; and
(iii) All transfer, excise, and recording taxes or
fees due on the conveyance.
(b) Purchaser shall pay:
(i) One-half of the escrow fees;
(ii) Title insurance premium attributable to extended
coverage, if any, or any endorsements;
(iii) Recording fees for deeds; and
(iv) Real estate compensation taxes or rollback taxes
and penalties, if any, as a result of a change in use or designation of the
Timberlands in Washington State, including but not limited to a change from open
space, agricultural, forestland or recreational status.
Except as otherwise provided in this Agreement, each party shall be responsible
for the payment of costs incurred by said party in connection with the
transaction contemplated by this Agreement.
17.5 CLOSING. At Closing:
(a) Seller shall deliver to Purchaser the following:
(i) Special Warranty Deed for each County in
which the Timberlands and Building are located in Washington State and a Bargain
and Sale Deed for each county in which the Timberlands are located in Idaho in
the forms attached as Schedule 17.5(a)(i)-1 and 17.5(a)(i)-2.
(ii) Bill of Sale for the Personal Property,
in substantially the form attached hereto as SCHEDULE 17.5(A)(II);
(iii) Assignment and Assumption Agreement
for the Contracts, in substantially the form attached hereto as SCHEDULE
17.5(A)(III);
(iv) Nonforeign Affidavit to the effect that
Seller is not a
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foreign person as that term is used in Section 1445 of the Internal Revenue
Code;
(v) An Assignment and Assumption Agreement
for the Access Rights and Easements to be recorded in each county in which such
Access Rights and Easements are located, in substantially the form attached
hereto as SCHEDULE 17.5(A)(V);
(vi) A prepaid binding commitment for a
standard coverage Policy of Title Insurance;
(vii) The amendment to the Log Purchase and
Sale Agreement as described in Section 17.2(g); and
(viii) A Closing Memorandum in form
reasonably acceptable to Purchaser and Seller.
(b) Purchaser shall deliver to Seller the following:
(i) Executed copies of the Assignment and
Assumption Agreements described above;
(ii) Purchase Price (which may be available
to Seller prior to actual recording of all Special Warranty and Bargain and Sale
Deeds);
(iii) The amendment to the Log Purchase and
Sale Agreement as described in Section 17.2(g); and
(iv) A Closing Memorandum in form reasonably
acceptable to Purchaser and Seller.
18. INDEMNIFICATION.
18.1 INDEMNIFICATION BY SELLER.
(a) Subject to the provisions of Paragraphs 6.1, 6.2
and this Paragraph 18.1, Seller shall indemnify Purchaser and hold it harmless
from any claim, damage, liability, loss, cost, deficiency, judgment or expense
(reference to "expense" shall include, without limitation, reasonable attorneys'
fees and other costs and expenses incident to any fines or penalties imposed by
governmental entities, actions, suits, proceedings or investigations or the
defense of any claims, whether prior to or at trial or in appellate
proceedings), arising out of, resulting from or relating to the following:
(i) any breach by Seller of any of its
representations, warranties, covenants or agreements made in or pursuant to this
Agreement or the attachments, exhibits or Schedules hereto; and
(ii) any claims by governmental entities or
any fines or
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penalties imposed by governmental entities against Purchaser for Environmental
Liabilities arising out of the operation or ownership of the Timberlands or the
Building by Seller before the Closing Date. For purposes of this Paragraph
18(a)(ii), "Environmental Liabilities" shall mean all loss and expense related
to, associated with, or arising out of the occupancy, ownership, operation, use
or control of the Timberlands or the Building incurred or imposed as a
requirement of, or arising out of the violation of, any environmental law.
Seller's liability to Purchaser under this Paragraph 18.1(a)(ii) for
Environmental Liabilities arising out of the operation or ownership of the
Timberlands or the Building by Seller before the Closing Date shall continue for
36 months following the Closing Date.
(b) During the period of the indemnity afforded
Purchaser under this Paragraph 18, Seller and its permitted assigns ("Assigns")
may upon notice to Purchaser and obtaining Purchaser's permission, which shall
not unreasonably be withheld, inspect the Timberlands or the Building at
reasonable times and intervals and, at Seller's or its Assign's own expense, use
such qualified and reputable experts as either deems appropriate to conduct any
such inspections and tests which are deemed by such experts to be warranted.
Purchaser will promptly notify Seller or its Assigns within ten (10) days of
Purchaser's receipt of written notice of any proposed, threatened or final
determination by a governmental entity that there exists the presence of any
toxic, hazardous, industrial or chemical waste, substance or contaminate (herein
for the remainder of this Paragraph 18 "Contaminate" or "Contamination") in, on
or under any part of the Timberlands or the Building at any time from and after
the Closing Date. Seller and its Assigns will provide Purchaser with copies of
all reports generated by its experts with respect to the Timberlands and the
Building and Purchaser will provide Seller with any written report it has
received with respect to any such Contamination and afford Seller and its
Assigns and their chosen experts an opportunity to meet and discuss the report
or any findings with its author. Purchaser will also afford Seller and its
Assigns the opportunity, at Seller's or its Assign's expense, to have Seller's
or its Assign's experts conduct such additional investigations or tests which
are deemed by such experts to be warranted and Purchaser will instruct any
expert it has retained to meet with Seller's or its Assign's expert and
thereafter issue, in writing and to the extent possible, a joint determination
detailing the involved Contaminate, the extent of the Contamination and the
experts' opinions as to when the Contamination occurred with specific reference
to dates prior to or after the Closing Date. Promptly after the issuance of such
joint determination or upon notice that the parties' experts cannot agree on the
terms of such a joint determination, Seller and its Assigns and Purchaser will
meet and in good faith and acting reasonably, attempt to determine the
responsibility for the subject Contamination.
(c) Seller and its Assigns shall retain the first
right to undertake the clean-up of any Contamination which is determined to be
the responsibility of Seller and not the responsibility of Purchaser. Any
clean-up activities so undertaken by Seller or its Assigns will be performed in
compliance with and as required by applicable law, with all reasonable efforts
to minimize or avoid any disruption of Purchaser's conduct of business of the
Timberlands.
(d) Purchaser and Seller agree not to disclose to any
third party (other than legal counsel and expert consultants specifically
engaged to prepare or review such reports who shall be advised of and be bound
by the terms of this non-disclosure provision) any reports or any part thereof,
except with the prior written consent of the other party or pursuant to valid
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legal process or as otherwise required by applicable law. Purchaser and Seller
agree immediately to notify each other in the event that a demand is made upon
such party for disclosure pursuant to legal process or as otherwise required by
applicable law. It is further agreed by the parties that each will be given the
opportunity to review and comment on the draft reports prepared by their
respective experts prior to finalization.
(e) Seller shall have the right and responsibility of
defending, remedying, compromising, and settling any Environmental Liability for
which it is responsible and shall have the right to employ and control its own
counsel, consultants, and contractors in connection therewith. Seller shall have
full control over any actions (including, without limitation, any remedial
action, negotiation or litigation) in connection with any such Environmental
Liability; provided, that (i) if a remedial or other action proposed to be taken
by Seller in settlement of the Environmental Liability would materially and
adversely affect Purchaser's operations of the Timberlands, such action shall
not be taken without the prior written consent of the Purchaser (which consent
shall not unreasonably be withheld); (ii) Seller shall only settle or compromise
any such Environmental Liability if Seller has the consent of Purchaser (which
consent shall not unreasonably be withheld); and (iii) in the event Purchaser
shall refuse to consent to the taking of any remedial or other action in respect
of, or the compromise or settlement of, any such Environmental Liability,
Purchaser may elect to take over the defense or remediation of such
Environmental Liability and, in such case, the liability of Seller for
indemnification with respect to such Environmental Liability shall not exceed
the amount for which the Environmental Liability could have been settled.
(f) Seller's obligations with respect to an
Environmental Liability for which it is responsible shall include the taking of
such reasonable actions as are necessary under the circumstances giving rise to
such Environmental Liability, including compliance with all laws applicable at
the time Seller's remedial actions are taken; and Seller shall not be liable for
any violations of Environmental Laws or obligations imposed as a requirement of
Environmental Laws, to the extent resulting from action taken or omitted by
Purchaser on or after the Closing Date.
18.2 INDEMNIFICATION BY PURCHASER. Subject to the provisions
of Paragraph 6.1 and this Paragraph 18.2, Purchaser shall indemnify Seller and
hold it harmless from any claim, damage, liability, loss, cost, deficiency,
judgment or expense (reference to "expense" shall include, without limitation,
reasonable attorneys' fees and other costs and expenses incident to any actions,
suits, proceedings or investigations or the defense of any claims, whether prior
to or at trial or in appellate proceedings), arising out of, resulting from or
relating to the following:
(a) any material breach by Purchaser of any of its
representations, warranties, covenants or agreements made in or pursuant to this
Agreement or the attachments, exhibits or Schedules hereto;
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(b) any claims by third parties, including but not
limited to governmental entities, or any fines or penalties for violations of
law and obligations imposed by law, including but not limited to any
environmental laws and any Environmental Liabilities, arising out of the
operation or ownership of the Timberlands or the Building by Purchaser after the
Closing Date;
(c) any damage to Seller's property or claims by
third parties arising out of activities of Purchaser or its invitees, agents or
contractors in performing tests on or inspections of the Timberlands or the
Building prior to Closing;
(d) any acts, omissions, events or circumstances on
or in connection with the operation, condition or ownership of the Timberlands
or the Building occurring on or after the Closing Date, including without
limitation any environmental condition first occurring after the Closing Date on
or about the Timberlands or the Building; provided, however, that such
indemnification shall not apply to the extent that any such liability arises
from any acts or omissions of Seller; and
(e) any expenses, compensating or rollback taxes
which become payable as the result of Purchaser's removal of the Timberlands
located within the State of Washington from the current forestland or timberland
tax designation at or after Closing.
19. POST-CLOSING ADJUSTMENTS AND POST-CLOSING MATTERS.
19.1 BONDS. The amount of any bonds, deposits, or other funds
posted or deposited by Seller which are or may with the passage of time or
otherwise become refundable shall be credited to the account of Seller at
Closing to the extent assigned and refundable to Purchaser.
19.2 DEFERRED OBLIGATIONS. At Closing, Purchaser shall assume
all of Seller's obligations relating to slash treatment, environmental
compliance, replanting and reforestation with respect to the Timberlands to be
acquired ("Deferred Obligations"). All Deferred Obligations shall be performed
or paid by Seller to the extent appropriate in the ordinary course of Seller's
business until Closing. Pursuant to Paragraph 2 hereof, Purchaser shall receive
a credit against the Purchase Price to be paid at Closing, in an amount equal to
Seller's then outstanding Deferred Obligations and thereafter performance of all
such outstanding Deferred Obligations shall become the responsibility of
Purchaser at Closing.
19.3 COST-SHARE BALANCES.
(a) EARNED BALANCES. Seller shall reasonably
determine the net amounts then owing by it to the U.S. Forest Service ("USFS")
and other third parties, if any, pursuant to earned outstanding balances under
cost-share or other USFS access or transportation programs for road construction
and maintenance work previously performed to benefit or provide access to, upon
or across the Timberlands ("Cost-Share Balances"). Seller shall attempt to
settle all accounts with the USFS prior to closing with respect to Cost Share
Balances. In any event, Seller shall remain responsible for any amounts then
owing to the USFS or other third parties for
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such Cost-Share Balances, and shall be entitled to collect from the owing party
all amounts owing to Seller by the USFS or other third parties with respect to
such Cost-Share Balances.
(b) COMMITMENTS FOR FUTURE WORK. Pursuant to the
terms of Road Rights-of-Way Construction and Use Agreements between Seller and
the USFS, there are certain road construction or reconstruction projects
committed to but not yet completed and/or accepted. Purchaser shall assume all
such commitments and shall be responsible for any payments to the USFS for such
work performed by the USFS and Purchaser shall be entitled to receive payments
from the USFS for any such work performed by Purchaser.
19.4 DEFERRED MAINTENANCE. At Closing, the performance of all
deferred road construction and maintenance obligations owing by Seller to the
USFS with respect to the Timberlands as of Closing ("Deferred Maintenance")
shall become the responsibility of Purchaser to perform. After Closing, Seller
and Purchaser shall negotiate with the USFS to determine the amount of Seller's
Deferred Maintenance obligation. Upon such agreement between the Seller, the
Purchaser and the USFS, and the release of Seller by the USFS pursuant to their
existing cost share agreements, Seller shall promptly pay to Purchaser the
amount of such Deferred Maintenance obligation. All Deferred Maintenance shall
be performed or paid by Seller to the extent appropriate in the ordinary course
of Seller's business until Closing.
19.5 CONSULTING. From and after the Closing Date, Seller
agrees to provide Purchaser with consulting services, on terms and conditions to
be agreed upon, with respect to the matters described on SCHEDULE 19.5.
19.6 THIRD PARTY CONSENTS. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement to
assign or transfer any Contracts, Access Rights and Easements, or Timber Rights,
if an assignment or transfer or an attempt to make such an assignment or
transfer without the consent or approval of a third party would constitute a
breach or violation thereof or affect adversely the rights of the Purchaser or
Seller thereunder; and any transfer or assignment to the Purchaser by Seller of
any interest under any such Contracts, Access Rights and Easements, or Timber
Rights, that requires the consent or approval of such third party shall be made
subject to such consent or approval being obtained. In the event any such
consent or approval is not obtained on or prior to the Closing Date, the Seller
shall continue to cooperate in all reasonable respects with the Purchaser in its
efforts to obtain any such consent or approval after the Closing Date until such
time as such consent or approval has been obtained, and the Seller will
cooperate in all reasonable respects with the Purchaser in any lawful and
economically feasible arrangement to provide that the Purchaser shall receive
the interest of the Seller in the benefits under any such Contracts, Access
Rights and Easements, or Timber Rights (except that any such arrangement shall
not require performance by Seller as agent); provided that the Purchaser shall
undertake to and shall pay or satisfy the corresponding liabilities for the
enjoyment of such benefit to the extent Purchaser would have been responsible
therefor if such consent or approval had been obtained.
19.7 NURSERY SEEDLINGS. Following Closing, Seller shall sell
and Purchaser shall purchase nursery seedlings on terms and conditions
reasonably acceptable to Seller and Purchaser. The price for seedlings shall be
based upon a fair market value as agreed upon from
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time to time by Seller and Purchaser.
20. MISCELLANEOUS.
20.1 FURTHER ASSURANCES. If, at any time after the Closing
Date, either party shall consider or be advised that any further instruments or
assurance or any other things are necessary or desirable to carry out the terms
of this Agreement, the other party shall execute and deliver all such
instruments and assurances and do all things reasonably necessary and proper to
carry out the terms of this Agreement.
20.2 INTEGRATION. This Agreement and the documents delivered
pursuant hereto contain the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior negotiations. None of the
parties shall be bound by nor shall be deemed to have made any representations,
warranties or commitments except those required to be made by the terms of this
Agreement, or those which are contained herein or in the documents delivered
pursuant hereto.
20.3 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
instrument, and all such counterparts together shall constitute one Agreement.
20.4 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any term or provision of this Agreement is so broad as to be invalid or
unenforceable, the provision shall be interpreted to be only so broad as is
valid or enforceable. Subject to the foregoing provisions of this Paragraph
20.4, if any term or provision of this Agreement is invalid or unenforceable for
any reason, such circumstances shall not have the effect of rendering such term
or provision invalid or unenforceable in any other case or circumstance.
20.5 SUCCESSOR AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
20.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Washington.
20.7 ASSIGNMENT. Subject to Paragraph 16, neither party may
assign its rights hereunder prior to the Closing without the prior written
consent of the other, which may be withheld for any reason.
20.8 CAPTIONS AND PARAGRAPH HEADINGS. The headings used in
this Agreement are for convenience only and shall not affect the construction of
any of the terms of this Agreement.
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20.9 NOTICES. Notices under this Agreement shall be in writing
and shall be effective when actually delivered or three (3) business days after
being deposited in the United States' mails as certified mail return receipt
requested, directed to the other party at the address set forth below or to such
other address as the party may be given by telecopy or facsimile and shall be
effective when received.
If to Seller: Plum Creek Timber Company, L.P..
999 Third Avenue, Suite 2300
Seattle, WA 98104
Attention: Rick R. Holley, President and CEO
Facsimile: (206) 467-3790
With a copy to: Cairncross & Hempelmann, P.S.
701 Fifth Avenue, Suite 7000
Seattle, WA 98104
Attention: Daniel C. Vaughn, Esq.
Facsimile: (206) 587-2308
If to Purchaser: Stimson Lumber Company
520 SW Yamhill Street, Suite 308
Portland, Oregon 97204-1326
Attention: Dan M. Dutton, President and CEO
Facsimile: (503) 222-2682
With a copy to: Tonkon, Torp, Galen, Marmaduke & Booth
888 SW 5th Avenue, Suite 1600
Portland, Oregon 97204-2099
Attention: George C. Spencer, Esq.
Facsimile: (503) 274-8779
20.10 TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
20.11 SCHEDULES INCORPORATED. The schedules attached to or to
be attached to this Agreement are incorporated herein by reference:
SCHEDULE DESCRIPTION
- -------- -----------
1 Excluded Assets
4.5 Exceptions to No Violations or conflicts
4.8 Environmental Matters
4.9 Listing of Suits, Actions, Proceedings
4.11 Compliance
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5.2 Purchaser's Schedule of Violations and consents
10.1 Listing of contracts
10.2 Schedule of Access Rights and Easements
11 Listing of Personal Property
17.5(a)(i)-1 Form of Deed for Washington
17.5(a)(i)-2 Form of Deed for Idaho
17.5(a)(ii) Bill of Sale
17.5(a)(iii) Assignment and Assumption Agreement for Contracts,
Leases and Permits
17.5(a)(v) Assignment of Access Rights and Assumption Agreement
19.5 Consulting Matters
If all of such schedules have not been prepared, initialed by both parties and
attached hereto, at least five (5) days prior to Closing, either party hereto
shall have the right to terminate this Agreement and following any such
termination neither party shall have any further obligation under this Agreement
except as provided in Paragraph 15.4.
20.12 COSTS AND EXPENSES. Each party to this Agreement shall
pay its own costs and expenses (including, without limitation, the fees and
expenses of its agents, representatives, counsel and accountants) incurred in
connection with the closing of the transactions contemplated under this
Agreement.
20.13 ATTORNEYS FEES AND OTHER COSTS. If either party
initiates any proceeding in law, equity or arbitration concerning this Agreement
or any of its provisions, the party that substantially prevails in such
proceeding shall be paid by the party not so prevailing therein all costs and
expenses incurred in such proceeding, including reasonable attorneys' fees at
the pretrial, trial and appellate levels as determined by the court or courts
considering the matter.
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IN WITNESS WHEREOF, the parties hereto have executed this instrument
the day and year first above written.
SELLER:
PLUM CREEK TIMBER COMPANY, L.P.
By Plum Creek Management Company, Attest:
L.P., General Partner
By: /s/ DIANE M. IRVINE /s/ SHERI L. WARD
------------------------------- --------------------------
Diane M. Irvine, Vice President Sheri L. Ward, Manager Law
and Chief Financial Officer and Assistant Secretary
PURCHASER:
STIMSON LUMBER COMPANY
By /s/ DAN M. DUTTON
---------------------------------
Dan M. Dutton, President and CEO
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<PAGE> 1
EXHIBIT 2.4
MILL ASSET
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
PLUM CREEK MANUFACTURING, L.P.
AS SELLER,
AND
STIMSON LUMBER COMPANY
AS PURCHASER
DATED AS OF SEPTEMBER 27, 1996
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<PAGE> 2
MILL ASSET
PURCHASE AND SALE AGREEMENT
THIS MILL ASSET PURCHASE AND SALE AGREEMENT is made and entered into
this 27th day of September, 1996, by and between PLUM CREEK MANUFACTURING, L.P.,
a Delaware limited partnership ("Seller"), and STIMSON LUMBER COMPANY, an Oregon
corporation ("Purchaser").
RECITALS
A. Purchaser desires to purchase from Seller and Seller desires to sell
to Purchaser substantially all of the assets of Seller's Arden, Washington
sawmill operations commonly known as the Arden Sawmill.
B. This transaction is conditioned, among other things, upon the
simultaneous closing of a transaction which involves the sale of some of
Seller's Washington and Idaho timberlands as described in the Timberland
Purchase and Sale Agreement of even date by and between Purchaser and Plum Creek
Timber Company, L.P. ("Timberland Agreement").
AGREEMENTS
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Closing" shall mean the consummation of the transactions
contemplated by this Agreement on the Closing Date.
(b) "Closing Date" shall mean October 1, 1996 unless such date
is extended pursuant to Paragraph 13.3 or 9 or otherwise by agreement of the
parties, but in no event later than December 31, 1996.
(c) "Mill Manager" shall mean Don Wooten, currently employed
by Seller as the Manager of the Mill.
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(d) "Environmental Laws" shall mean all applicable federal,
state or local laws, rules, regulations, governmental permits or other binding
determinations of any governmental authority relating to or addressing the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act, as amended ("CERCLA"), the Resource
Conservation and Recovery Act, as amended ("RCRA"), the Toxic Substances Control
Act, as amended ("TSCA"), the Clean Water Act, as amended ("CWA"), the Clean Air
Act, as amended ("CAA"), and the Oil Pollution Act of 1990, as amended ("OPA").
(e) "Environmental Liabilities" shall mean all loss and
expense related to, associated with, or arising out of the occupancy, ownership,
operation, use or control of the Mill Assets incurred or imposed as a
requirement of, or arising out of the violation of, any Environmental Law.
(f) "Excluded Assets" shall mean all assets listed on SCHEDULE
1(F).
(g) "Knowledge" as used in this Agreement shall mean actual
current knowledge (as opposed to constructive or imputed knowledge) of the fact
or matter in question by John Chopot, Mitchell Leu, the Mill Manager or by the
superiors of the Mill Manager which are employed by Seller.
(h) "Material" or "materiality" or "materially" as used in
this Agreement shall mean a claim, encumbrance or occurrence (including without
limitation a breach of warranty or violation by Seller) that could lessen the
value of the Mill Assets by, or cause damages of, at least $100,000.
(i) "Mill" shall mean the sawmill and all related wood
products manufacturing operations of Seller located in Arden, Stevens County,
Washington.
(j) "Mill Assets" shall mean all of the assets of the Mill,
including without limitation,
(i) the Mill Personal Property;
(ii) the Mill Contracts;
(iii) the Mill Real Property;
(iv) the Mill Books and Records;
(v) the Mill Leases;
(vi) the Mill Access Rights and Easements; and
(vii) the Mill Inventory
but shall not include Excluded Assets or the assets that are the subject of the
Timberland Agreement.
(k) "Mill Access Rights and Easements" shall mean all rights
of Seller in and
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to the access rights and easements associated with the Mill, to the extent
assignable, including but not limited to access rights and easements as listed
in SCHEDULE 1(K), and those additional rights and easements which are obtained
in the ordinary course of Seller's business between the date of this Agreement
and the Closing Date.
(l) "Mill Books and Records" shall mean all of Seller's books
and records relating to the operation of the Mill, including without limitation
all books and records relating to the purchase of materials, supplies and
services, sale of products, customer lists, dealings with customers and invoices
and records relating to employees of the Mill, and all data relating to or used
in connection with the Mill, including without limitation data relating to
Software.
(m) "Mill Contracts" shall mean all the contracts, agreements,
licenses, and service, maintenance, utility and operating contracts and permits
and warranties relating to the Mill, including but not limited to those
documents described in SCHEDULE 1(M), excluding those which will expire or be
terminated in the ordinary course of Seller's business of the Mill prior to the
Closing Date, and those additional contracts of the Mill which are entered into
in the ordinary course of Seller's business between the date of this Agreement
and the Closing Date and of which Purchaser has been advised pursuant to
Paragraph 8.2.
(n) "Mill Leases" shall mean the leases of the Mill, including
leasehold improvements, listed in SCHEDULE 1(N) excluding those which will
expire or be terminated in the ordinary course of the Mill prior to the Closing
Date, and those additional leases which are entered into in the ordinary course
of Seller's business between the date of this Agreement and the Closing Date and
of which Purchaser has been advised pursuant to Paragraph 8.2.
(o) "Mill Personal Property" shall mean all of the personal
property and assets owned by Seller at the Closing and used primarily in the
business of the Mill including but not limited to the property and assets
reflected in SCHEDULE 1(O) including all rights arising out of the Mill
Contracts and Mill Leases and, to the extent transferable by Seller, all
Software, technologies, methods, formulations and data bases used primarily in
the Mill or under development for use in the Mill, equipment, tools, furniture,
fixtures, motor vehicles, licenses, leasehold improvements, and right to apply
for tax incentives, plus all items of a nature customarily carried as assets in
the accounts of the Mill in accordance with generally accepted accounting
principles, less any items disposed of prior to Closing in the ordinary course
of Seller's business.
(p) "Mill Inventory" shall mean all logs, work-in-process,
supplies, and inventories located on the Mill Real Property at the Closing Date,
including those items listed in SCHEDULE 1(P), less any such items disposed of
prior to Closing in the ordinary course of Seller's business.
(q) "Mill Real Property" shall mean the real property of the
Mill listed in SCHEDULE 1(Q), including any structures or improvements thereon.
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(r) "Permitted Exceptions" shall include those printed and
typewritten exceptions set forth in the preliminary title report for the Mill
Real Property which are agreed to prior to Closing by Purchaser and Seller.
(s) "Schedules" shall mean the documents specifically marked
as schedules and delivered pursuant to this Agreement.
(t) "Software" means all administrative, non-proprietary
software solely concerning the Mill that operates independent of Seller's
mainframe and relates to various administrative functions of the Mill; and all
software that is integral and solely related to the operation of production
equipment included in the Mill Personal Property and Mill Real Property.
"Software" does not include any software program to the extent Seller is
prohibited from licensing such program to Purchaser or proprietary software of a
type used by or which may be used by Seller in its other timber, forestry or
mill operations. Notwithstanding anything herein to the contrary, Seller shall
transfer to Purchaser its hand-held lumber inventory devices to permit Purchaser
to interface inventory bar code information with Purchaser's inventory software.
2. SALE AND PURCHASE; PURCHASE PRICE.
2.1 BASE PRICE. At the Closing, Seller will sell and Purchaser
will purchase the Mill Assets, and Purchaser will assume the Mill Contracts, the
Mill Access Rights and Easements, and the Mill Leases. The base purchase price
for the Mill Assets, excluding the Mill Inventory discussed in Paragraph 2.2,
shall be FIVE MILLION DOLLARS ($5,000,000) less $110,000 for hog fuel boiler ESP
plate replacement ("Base Price"). Except for the Mill Leases, Mill Access Rights
and Easements and Mill Contracts, and except as otherwise provided in this
Agreement, Purchaser shall not assume or be responsible for any liabilities or
obligations of the Mill or Seller, which have accrued prior to the Closing Date.
2.2 MILL INVENTORY. At the Closing, the Base Price shall be
increased by an estimate equal to the total value of the Mill Inventory existing
on the last day of the month immediately preceding the Closing Date, determined
by Seller's book value. Log and lumber volumes shall be based on inventories as
of the end of September 1996. Log valuations shall be based on actual cost for
September 1996 deliveries. Lumber valuations shall be based on September
weighted average cost for the month as consistently applied in Seller's general
ledger.
2.3 CLOSING PAYMENTS; POST-CLOSING ADJUSTMENT.
(a) Closing Payments. On the Closing Date, and
subject to the prorations and adjustments as herein described, Purchaser shall
pay to Seller the Base Price and the amount payable for the estimated Mill
Inventory value as determined pursuant to Paragraph 2.2 in cash, by wire
transfer in immediately available federal funds, to the escrow established at
Transnation Title Insurance Company, 1200 Sixth Avenue, Seattle, Washington
98101, or at
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such other place as Seller may direct.
(b) Post-Closing Adjustment. Upon Closing, Seller
shall conduct a physical count of the Inventory which count shall be observed by
Purchaser or its outside accountants. Within fifteen (15) days following
Closing, Purchaser and Seller shall confirm the value of the Mill Inventory as
of the Closing Date ("Closing Date Inventory") based upon the physical count, an
analysis of the Mill Books and Records, consistently applied, and in accordance
with the Inventory Valuation Procedures as set forth in Schedule 2.3(b). To the
extent an adjustment is mutually determined necessary, the appropriate party
shall remit to the other the agreed upon amount. In the event of a dispute
regarding the quantity or value of the Closing Date Inventory, the determination
thereof shall be made by an independent auditor mutually acceptable to both
parties, whose decision shall be final and binding. Seller and Purchaser shall
share equally the costs of the audit.
2.4 PURCHASE PRICE ALLOCATION. The parties shall allocate the
Purchase Price among the Mill Assets in accordance with Section 1060 of the
Internal Revenue Code and shall cooperate with each other and provide such
information as may be requested in connection with the preparation of the
allocation. The parties shall report the federal, state and local tax
consequences of the purchase and sale contemplated hereby (including the filing
of IRS Form 8594) in a manner consistent with such allocation.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller represents and
warrants to Purchaser that except as disclosed in a Schedule:
3.1 ORGANIZATION. Seller is a limited partnership duly
organized and validly existing under the laws of the State of Delaware.
3.2 GOOD STANDING. Seller is qualified to do business in the
State of Washington.
3.3 POWER AND AUTHORITY FOR TRANSACTION. Seller has the power
and authority to execute, deliver and perform this Agreement and the
transactions contemplated herein in accordance with the terms hereof.
3.4 AUTHORIZATION. Subject to obtaining the consents,
approvals and authorizations described in Paragraph 13.2, the execution and
delivery by Seller of this Agreement and the due consummation of the
transactions contemplated herein have been duly and validly authorized by all
necessary partnership action on the part of Seller and this Agreement
constitutes a valid and legally binding agreement of Seller.
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<PAGE> 7
3.5 NO VIOLATION OR CONFLICTS. Subject to obtaining the
consents and approvals described in Paragraph 13.2, neither the execution and
delivery of this Agreement by Seller nor the consummation by Seller of the
transactions contemplated herein (i) constitute a violation of Seller's
certificate of limited partnership or limited partnership agreement; or (ii)
result in the breach of or the imposition of any lien on any Mill Assets
pursuant to, or constitute a default under, any indenture or bank loan or credit
agreement or other agreement or instrument to which Seller is a party or by
which it or its property may be bound or affected. Except for consents or
approvals which will have been obtained or actions which will have been taken on
or prior to the Closing Date, and except for consents, approvals, authorizations
or actions described in Paragraphs 9, 13.2 or 15.3, no consent, approval,
authorization or action by any governmental authority, or any person having
legal rights against or jurisdiction over Seller, is required in connection with
the execution and delivery by Seller of this Agreement or the consummation by
Seller of the transactions contemplated herein, except as set forth on SCHEDULE
3.5.
3.6 MARKETABLE TITLE. Subject to Permitted Exceptions and the
provisions of Paragraph 15.3, Seller has good and marketable title to the Mill
Assets, and at Closing such assets will be free and clear of all liens, security
interests, charges and encumbrances.
3.7 DELIVERY OF SCHEDULES. Seller has delivered to Purchaser
herewith, or will deliver as soon as practicable, the following Schedules (as
well as the other Schedules referred to in this Agreement):
(a) SCHEDULE 3.7(A), which contains the names,
current annual salary rates and 1995 bonuses of all present employees of the
Mill who received during the year 1995 $60,000 or more in aggregate
compensation, whether in salary, bonus or otherwise;
(b) SCHEDULE 3.7(B), which contains a complete list
of all employee benefit plans, whether formal or informal, and whether covering
one person or more than one person, sponsored, maintained or contributed to by
Seller for the Mill employees; and
(c) SCHEDULE 3.7(C), which lists all insurance
policies in force with respect to the Mill.
3.8 NO DEFAULTS. To the knowledge of Seller, the Mill
Contracts, Mill Access Rights and Easements, and Mill Leases are valid and in
full force and effect. Neither Seller nor, to Seller's knowledge, any other
party thereto has breached any material provision of, or is in default in any
material respect under, the terms of any of the Mill Contracts, Mill Access
Rights and Easements or Mill Leases.
3.9 CONDEMNATION PROCEEDINGS. Subject to Paragraph 12.6, no
condemnation proceeding is pending or, to the knowledge of Seller, threatened
which would materially preclude or impair the use of the Mill Real Property for
the purposes for which such
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property is currently used.
3.10 ENVIRONMENTAL MATTERS. To Seller's knowledge, except as
set forth on SCHEDULE 3.10 and in the environmental reports identified on
SCHEDULE 3.10:
(a) Seller has obtained and maintained or has
applications pending for all permits, licenses and other authorizations required
under Environmental Laws necessary for the operation of the Mill where such
failure to obtain, maintain or have applications pending for such permits,
licenses and other authorizations would have a material adverse effect;
(b) Seller is currently conducting the operation of
the Mill in compliance in all material respects with all applicable
Environmental Laws and the terms or conditions of any permits, licenses or
authorizations issued under any Environmental Law applicable to the conduct of
the Mill by the Seller;
(c) There are no material pending or threatened civil
or criminal actions, notices of violation or administrative proceedings relating
to or arising under any Environmental Laws relating to the Mill; and
(d) There are no underground storage tanks on the
Mill Real Property. Subject to Seller's warranty set forth in this Paragraph
3.10, the liability for which Seller remains responsible pursuant to the terms
of this Agreement, Purchaser releases Seller from all costs, losses,
liabilities, obligations and claims, of any nature whatsoever, known and
unknown, that Purchaser may have against Seller or that may arise after the date
of Closing based in whole or in part upon (i) Seller's failure to comply with
Environmental Laws applicable to the Mill Real Property; or (ii) the presence,
release or disposal of any hazardous substance, solid waste, or any other
environmental contamination on, within, or from the Mill Real Property before,
as of, or after the date of Closing. The above-referenced release does not cover
or apply to any statutory or common law claim for contribution or indemnity that
may arise to the extent Purchaser suffers any liabilities or obligations from
future claims of any governmental agency arising out of (i) or (ii) above. As
used herein, the terms "hazardous substance" and "release" (as it relates to the
release of hazardous substances as opposed to the release of claims) have the
meanings specified in CERCLA and the terms "solid waste" and "disposal" (or
"disposed") have the meanings specified in RCRA. If either CERCLA or RCRA is
amended to broaden the meaning of any term defined thereby, the broader meaning
shall apply to this Paragraph 3.10 after the effective date of the amendment.
Moreover, to the extent that Washington law establishes a meaning for "hazardous
substance," "release," "solid waste," or "disposal" that is broader than that
specified in either CERCLA or RCRA, the broader meaning shall apply.
3.11 LICENSES, FRANCHISES, PERMITS, ETC. To the knowledge of
Seller and except as may be set forth on SCHEDULE 3.11, and excepting
environmental permits and licenses which are disclosed pursuant to Paragraph
3.10 hereof, Seller owns, holds, or possesses all governmental licenses,
franchises, permits, privileges, immunities, approvals, and other authorizations
that are necessary to entitle it to carry on and conduct the business of the
Mill as
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currently conducted (herein collectively called "Governmental Permits"), except
for such Governmental Permits as to which the failure to so own, hold, or
possess would not have a material effect on the operation or the business of the
Mill. To the knowledge of Seller, and except as may be set forth on SCHEDULE
3.11, (a) Seller has fulfilled and performed in all material respects its
obligations under each of such Governmental Permits; and (b) no event has
occurred or condition or state of facts exists that constitutes or, after notice
or lapse of time or both, would constitute a material breach or default under
any such Governmental Permit. To the knowledge of Seller, no written notice of
cancellation, of default, or of any material dispute concerning any such
Governmental Permit, or of any event, condition, or state of facts described in
clause (b) of the preceding sentence, has been received by Seller, and, to the
knowledge of Seller, there is no proceeding pending or threatened to revoke,
modify, or otherwise deny renewal of any such Governmental Permit. To the
knowledge of Seller, except as set forth in SCHEDULE 3.11, each of such
Governmental Permits is valid and in full force and effect.
3.12 SUITS, ACTIONS OR PROCEEDINGS. Except as disclosed in
SCHEDULE 3.12, to the knowledge of Seller, there is (i) no court or
administrative judgment or order which materially affects the business or
operations of the Mill; and (ii) no legal, administrative or other suit, action,
proceeding or arbitration, or governmental investigation pending or threatened
which would reasonably be expected to materially affect the business or
operations of the Mill. Except as set forth in Paragraph 9, Seller has no
knowledge of any suit, action, arbitration or other proceeding pending before
any court or governmental agency, which may result in the restraint or
prohibition of the consummation of the transactions contemplated by this
Agreement.
3.13 OPERATION OF MILL. Since July 1, 1996, the Mill has been
operated only in the ordinary course of Seller's business.
3.14 BROKER FEES. Seller has not employed any broker, agent or
finder, or incurred any liability for any brokerage fees, agents' commissions or
finders' fees, in connection with the transactions contemplated herein.
3.15 COMPLIANCE. Except as disclosed on SCHEDULE 3.15, to
Seller's knowledge, Seller has not received notification from any third party,
including but not limited to any governmental agency alleging that the Mill Real
Property is not in compliance with applicable laws (other than Environmental
Laws which are covered in Paragraph 3.10). Seller has no knowledge of any such
violations relating to the Mill Real Property or its operation thereof.
3.16 INVENTORY. To Seller's knowledge, all Closing Date
Inventory (other than work in process) will be of good and merchantable quality
and will consist substantially of a quality, quantity and condition usable or
salable in the ordinary course of Seller's business.
3.17 MILL PERSONAL PROPERTY. There have been no deletions of
Mill personal property from the Schedule dated December 31, 1995 previously
provided to Purchaser except in
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the ordinary course of Seller's business.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents
and warrants to Seller that:
4.1 INCORPORATION AND CORPORATE POWER. Purchaser is a
corporation duly incorporated, and validly existing under the laws of the State
of Oregon, and has the corporate power to enter into this Agreement and to carry
out the transactions contemplated herein in accordance with the terms hereof.
4.2. AUTHORIZATION; NO VIOLATION OR CONFLICTS. The execution
and delivery of this Agreement by Purchaser and the due consummation of the
transactions contemplated herein, subject to obtaining the approval described in
Paragraph 12.7, have been duly and validly authorized by all necessary corporate
action on the part of Purchaser, and this Agreement constitutes a valid and
legally binding agreement of Purchaser. Neither the execution and delivery of
this Agreement by Purchaser nor the consummation by Purchaser of the
transactions contemplated herein constitute a violation of Purchaser's
Certificate of Incorporation or Bylaws, or result in the breach of, or the
imposition of any lien on any assets of Purchaser pursuant to, or constitute a
default under, any indenture or bank loan or credit agreement, or other
agreement or instrument to which Purchaser is a party or by which it or any of
its properties may be bound or affected. Except for the approvals described in
Paragraphs 9 and 12.7 and except for consents, approvals, or authorizations
which will have been obtained or actions which will have been taken on or prior
to the Closing Date, no consent, approval, authorization or action by any
governmental authority or any person having legal rights against or jurisdiction
over Purchaser is required in connection with the execution and delivery by
Purchaser of this Agreement or for consummation by Purchaser of the transactions
contemplated herein, except as may be set forth ON SCHEDULE 4.2 hereto.
4.3 BROKER FEES. Purchaser has not employed any broker, agent
or finder, or incurred any liability for any brokerage fees, agents' commissions
or finders' fees, in connection with the transactions contemplated herein.
4.4 FINANCING. Purchaser has access to the funds or financing
necessary to consummate the transactions contemplated by this Agreement.
4.5 SUITS, ACTIONS OR PROCEEDINGS. Except as set forth in
Paragraph 9, Purchaser has no knowledge of any suit, action, arbitration or
other proceeding pending before any court or governmental agency, which may
result in the restraint or prohibition of the consummation of the transactions
contemplated by this Agreement.
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5. SURVIVAL; CUSHION AGAINST CLAIMS.
5.1 SURVIVAL. The respective representations and warranties of
Seller and of Purchaser contained herein or in any Schedule, certificate or
other instrument delivered by or on behalf of such party pursuant to this
Agreement, including the environmental matters set forth in Paragraph 3.10,
shall survive the Closing for a period of eighteen (18) months and thereafter
shall expire and terminate, and each party shall be forever released from
liability to the other except as to matters for which notice has been given by a
party of the inaccuracy or breach of any representation or warranty on or prior
to such termination date.
5.2 CUSHION AGAINST CLAIMS. In the event of any claim by
Purchaser against Seller under Paragraph 3 or 11.1 (a)(i) or (a)(ii) of this
Agreement, no amount shall be owing by Seller unless and until the amount of
damage, loss or expense incurred by Purchaser exceeds $100,000 in the aggregate
for all claims ("Cushion"), and Seller shall be obligated only with respect to
such excess. The aggregate amount paid or payable by the Seller pursuant to
claims made under Paragraph 3 or Paragraph 11.1(a)(i) or (ii) of this Agreement
shall not exceed $3,000,000. Notwithstanding anything herein to the contrary,
the Cushion shall not apply to (i) any representations or warranties described
in Paragraph 3 which are qualified by a "materiality," "materially," or
"material" threshold, or (ii) Paragraph 11.1(a)(ii)(w), (x), (y) or (z).
6. LIMITATION OF WARRANTIES - AS IS CLAUSE. Except for the express
warranties made in Paragraph 3, Purchaser accepts the Mill Assets "AS IS, WHERE
IS" and "WITH ALL FAULTS" in their present condition based solely upon
Purchaser's own inspection and determination as to value and not based upon any
expressed or implied representation or warranty by Seller, and Seller makes no
warranty regarding the suitability of the Mill Assets for Purchaser's intended
use and expressly disclaims any warranties of merchantability or fitness for a
particular purpose with respect to the Mill Assets. In addition, with respect to
the Mill Real Property, Seller makes no warranty with regard to the quantity,
quality, acreage, value or zoning of such assets or any part or portion thereof.
7. ACCESS AND CONFIDENTIALITY.
7.1 ACCESS. Purchaser may, prior to the Closing Date, through
its employees, agents and representatives, including Purchaser's lenders, make
or cause to be made such investigation of the business of the Mill and the Mill
Assets as it deems necessary or advisable. Seller agrees to permit Purchaser and
its employees, agents and representatives to have full access, on reasonable
notice, to the books and records and premises of the Mill, and the officers of
Seller will make available such financial and operating data and other
information with respect to the business and properties of the Mill as Purchaser
shall from time to time reasonably request. Purchaser shall conduct its review
in a manner which does not interfere with the operations of Seller's business.
Seller shall provide to Purchaser copies of a preliminary title commitment
covering the Mill Real Property, copies of all exception documents referred to
in such title
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commitment, schedules and copies of all contracts, leases and permits relating
to the Mill which are to be assumed by Purchaser, a schedule of all easement and
access rights, all environmental site assessments or other documents related to
the environmental condition of the Mill and all other materials reasonably
requested by Purchaser within the Seller's possession.
7.2 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS; RETURN OF
INFORMATION.
(a) Neither Seller nor Purchaser shall disclose the
content or substance of this Agreement to any individual, firm, partnership,
corporation, entity, governmental authority, or other party except advisors,
agents, lenders, and representatives assisting each respective party in
connection with this transaction, until such disclosure is agreed upon in
writing and then only to accomplish the consents and approvals required
hereunder;
(b) No press releases or other public statements
concerning this Agreement or the transactions contemplated hereby shall be made
by either party without the prior written approval of the other;
(c) Each party hereto, its representatives, agents
and employees shall hold in strict confidence and shall not use or disclose to
any person or organization any information or data concerning this Agreement or
the transaction contemplated hereby except to the extent that (i) said
information has been published or constitutes a matter of public knowledge or
record; (ii) such disclosure is reasonably necessary for communications with and
reporting to the Board of Directors or other governing body of either party or
reasonably appears to be required by a governmental agency having jurisdiction
over the parties; (iii) such information is necessary in connection with any
suit brought to enforce the obligations of any party hereunder; or (iv) if based
upon the legal opinion of counsel for the disclosing party, that such counsel
reasonably believes that disclosure is necessary or desirable to avoid conflict
with or violation of any applicable law, rule, or regulation; and
(d) In the event of termination of this Agreement for
whatever reason, Purchaser will return all originals and copies of documents,
work papers and other material obtained hereunder, whether obtained before or
after the execution hereof (subject to retention of true copies for litigation
purposes as applicable), and Purchaser agrees that it will not disclose or
divulge any such information to any other person without Seller's written
consent, and will use its best efforts to keep any information so obtained
confidential; provided, however (i) that Purchaser may disclose this information
to its employees, attorneys, accountants and prospective lenders who need to
know such information in connection with this transaction and who have been
informed of Purchaser's obligation to maintain the information as confidential;
and (ii) that Purchaser shall not be obligated to treat as confidential any
information which was known to it at the time of disclosure or which becomes
publicly known or available thereafter or is rightfully received by Purchaser
from a third party.
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8. CONDUCT OF PARTIES PENDING THE CLOSING.
8.1 OPERATIONS PENDING CLOSING. Seller agrees that from the
date hereof to the Closing Date:
(a) It will maintain all of the Mill Assets in
customary repair, order and condition, reasonable wear, tear and use and damage
by fire or unavoidable casualty excepted.
(b) It will not:
(i) grant any salary increase to any
employee of the Mill; or
(ii) enter into or amend or alter materially
any bonus, incentive compensation, deferred compensation, retirement, pension,
savings, group insurance, death benefit or other fringe benefit plan, trust
agreement or arrangement affecting employees of the Mill generally.
(c) Except for taxes contested in good faith, it will
pay all ad valorem and other taxes upon the properties and business of the Mill
as they become due.
(d) It will not enter into or assume any material
contract, agreement, obligation, lease, license or commitment relating to the
Mill, except in the ordinary course of Seller's business or as contemplated by
this Agreement.
(e) It will not knowingly do, or omit to do, any act
which will cause a material breach of any material contract, governmental
permit, commitment or obligation of the Mill.
(f) It will not amend, terminate or waive any
material right of substantial value relating to the Mill except in the ordinary
course of Seller's business.
(g) It will maintain insurance on the Mill Assets in
the same manner and to the same extent as such insurance has been maintained
with respect to the Mill Assets prior to the date hereof.
(h) It will comply, in all material respects, with
all applicable laws and will diligently work on compliance as to those laws
under which the Mill business is not in compliance and which have been disclosed
to Purchaser under or pursuant to this Agreement.
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8.2 DISCLOSURE BY SELLER. Prior to Closing, Seller will have
disclosed to Purchaser all material Mill Contracts and Mill Leases known to it,
which Mill Contracts and Mill Leases will be assumed by Purchaser.
9. HART-SCOTT-RODINO FILING. Prior to the date of this Agreement,
Purchaser and Seller have made appropriate filings under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and have sought
and will continue to seek expedited review by the examining agency. Seller and
Purchaser shall expeditiously attempt to resolve any issues that may arise in
connection therewith. The Closing Date as provided in Paragraph 1(b) shall be
extended, if necessary not more than ten (10) days after all applicable waiting
periods or extensions under the HSR Act shall have expired without any
indication by the Department of Justice or the Federal Trade Commission that
either of them intends to challenge the sale contemplated hereby. If all such
waiting periods shall not have expired on or before December 31, 1996, then
either party shall be entitled to terminate this Agreement without any further
liability to the other. Each party shall pay its requisite filing fee, if any,
and all costs and expenses relating to such party's compliance with the terms of
this paragraph.
10. EMPLOYEES AND BENEFIT PLANS.
10.1 TERMINATION AND REHIRING OF EMPLOYEES.
(a) On and as of the Closing Date, Seller will take
all action necessary to terminate its Mill employees and shall pay such
employees all accrued employment related financial obligations due to them
through the close of business on the Closing Date except as otherwise provided
in this Paragraph 10. Seller has delivered to Purchaser a list of all employees
who are currently on Seller's employment roll employed in the operation of the
Mill, other than those employees who are on long-term disability (the "Business
Employees"), as of the most recent date for which such information is reasonably
available. Purchaser may (i) submit employment applications to Business
Employees any time after mutual execution of the Agreement; and (ii) conduct
drug testing of Business Employees no sooner than five (5) days prior to
Closing; provided that such drug testing shall not unreasonably interfere with
Seller's operations at the Mill. Purchaser shall extend written offers of
employment to all Business Employees conditioned upon reasonable satisfaction of
Purchaser's standard drug testing procedure, other than those Business Employees
identified to Seller by Purchaser in writing within five (5) days of the date
hereof (such Business Employees to whom Purchaser is to extend such conditional
offers of employment are referred to as the "Current Employees," and such
Business Employees to whom Purchaser will not extend such conditional offers of
employment are referred to as the "Excluded Employees"). The number of Excluded
Employees identified by Purchaser pursuant to this Paragraph 10.1 and pursuant
to Paragraph 12.1 of the Timberland Agreement shall not exceed 10 in the
aggregate; provided that Purchaser shall not be obligated to hire Current
Employees that fail to reasonably satisfy Purchaser's standard drug testing
procedure. Purchaser shall identify those Current Employees that failed to
satisfy drug tests and provide to Seller copies of any drug test results
requested by Seller. Notwithstanding anything
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herein to the contrary, the aggregate number of Excluded Employees and Current
Employees that are not hired as a result of drug test failure pursuant to this
Agreement or the Timberland Agreement shall not exceed 49. Each such offer of
employment by Purchaser to Current Employees shall (i) be effective subject to
and as of the first day following Closing; (ii) provide for employment at the
location of the Mill; (iii) be at a salary or hourly wage rate, as applicable,
that is at least equal to the salary or hourly wage rate of similarly situated
employees of Purchaser at its Forest Grove, Oregon operations; (iv) provide for
employee benefits that are equivalent to the employee benefits of similarly
situated employees of Purchaser at its Forest Grove, Oregon operations; and (v)
be for a position that is substantially similar to the Current Employee's
present position with Seller. Those Current Employees who accept such offers of
employment with Purchaser are referred to herein as the "Transitioning
Employees," and those Current Employees who do not accept such offers of
employment, together with the Excluded Employees, are referred to herein as the
"Nontransitioning Employees."
(b) Effective the first day after the Closing,
Purchaser shall assume and become solely responsible for any and all liabilities
in respect to the Transitioning Employees relating to or arising in connection
with any actual or constructive termination of any such Transitioning Employee's
employment with Purchaser after the Closing, including, without limitation, any
and all such liabilities relating to the claims of any such Transitioning
Employees for any severance compensation or benefits. Purchaser agrees that in
the event Purchaser terminates any Transitioning Employee without cause within
twelve months from Closing, Purchaser shall pay to such Transitioning Employee
any and all benefits payable to such Transitioning Employee pursuant to Seller's
severance policies in existence as of Closing. Any and all liabilities for
accrued but unpaid vacation days for services rendered by the Transitioning
Employees prior to and as of Closing shall be allocated between Seller and
Purchaser in an equitable manner prior to Closing. Each Transitioning Employee
will be credited with his or her years of employment service with Seller for
purposes of determining the number of vacation days available to him or her as
an employee of Purchaser.
(c) From and after the Closing, Seller shall remain
solely responsible for any and all liabilities with respect to the
Nontransitioning Employees for all claims arising (whether made on or after
Closing) on or before the Closing, including but not limited to liabilities
arising under the Worker Adjustment and Retraining Notification Act of 1990 or
COBRA. From and after the Closing, Seller shall remain solely responsible for
(i) disability benefits payable under any plan that is a disability benefit plan
in respect of those employees of Seller employed in the operation of the Mill
who, on the Closing Date, are on long term disability status and entitled to
benefits under such plans and (ii) post-retirement health and life insurance
benefits payable under the terms of any plan that provides such post-retirement
benefits in respect of those former employees of Seller who, on the Closing
Date, are receiving such post-retirement benefits under such plan.
10.2 EMPLOYEE ERISA AND 401 PLANS GENERALLY. Effective as of
the first day after the Closing Date, Purchaser shall amend any existing plan
established pursuant to the
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Employee Retirement Income Security Act of 1974 or Section 401 of the Internal
Revenue Code, including but not limited to the Timber Operators' Council
Retirement Plan, defined contribution plans and "401-k" plans, to provide for
(i) the immediate participation of the Transitioning Employees in each such plan
on the same basis as Purchaser's similarly situated employees at Purchaser's
Forest Grove, Oregon operations are then eligible to participate; and (ii) to
the extent permissible under applicable law and within the control of Purchaser,
the recognition under each such plan of all service of the Transitioning
Employees with Seller completed prior to and as of the Closing, for purposes of
eligibility to participate, vesting and credited service (excluding the Timber
Operators' Council Retirement Plan).
10.3 WELFARE PLANS. Effective from and after the first day
after Closing, Purchaser shall cause each Transitioning Employee and his or her
eligible dependents to become eligible to participate immediately in each
employee welfare benefit plan (as such term is defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974) maintained, as of the Closing
Date, by Purchaser and each other benefit arrangement maintained by Purchaser
for the benefit of similarly situated employees of Purchaser at Purchaser's
Forest Grove, Oregon operations ("Welfare Plans"). In connection therewith,
Purchaser shall cause each Welfare Plan to (i) recognize the 1996 co-payments
and deductible expenses of the Transitioning Employees and their eligible
dependents incurred under those plans that are health benefit plans and (ii)
waive all pre-existing condition exclusions and limitations of the Transitioning
Employees and their eligible dependents. From and after the Closing, Seller
shall remain solely responsible for liabilities for claims of the Transitioning
Employees and their eligible dependents incurred prior to the Closing Date under
those plans that are health, disability, accident or life insurance plans and
Purchaser shall be solely responsible for all such liabilities for claims
incurred by any Transitioning Employee and his or her eligible dependents after
the Closing Date. For the purposes of this Paragraph 10.3, a claim for health
benefits shall be deemed to have been incurred when the services that are the
subject of such claim are rendered and a claim for disability, accident or life
insurance shall be deemed to have been incurred when the last event giving rise
to such claim occurs. Purchaser and Seller shall cooperate in ensuring that
welfare benefit coverage for Transitioning Employees and their eligible
dependents on and prior to the Closing is coordinated with such coverage
provided after the Closing.
10.4 WORKER'S COMPENSATION. From and after the Closing, (i)
Seller shall remain solely responsible for all worker's compensation claims of
any Transitioning Employee that relate to any accident that occurred or injury
that was documented prior to the Closing, regardless of whether such claim is
filed by such Transitioning Employee before or after the Closing and (ii)
Purchaser shall assume and become solely responsible for all other worker's
compensation claims of any Transitioning Employee.
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11. INDEMNIFICATION.
11.1 INDEMNIFICATION BY SELLER.
(a) Subject to the provisions of Paragraphs 5.1, 5.2
and this paragraph 11.1, Seller shall indemnify Purchaser and hold it harmless
from any claim, damage, liability, loss, cost, deficiency, judgment or expense
(reference to "expense" shall include, without limitation, reasonable attorneys'
fees and other costs and expenses incident to any actions, suits, proceedings or
investigations or the defense of any claims, whether prior to or at trial or in
appellate proceedings), arising out of, resulting from or relating to the
following:
(i) any breach by Seller of any of its
representations, warranties, covenants or agreements made in or pursuant to this
Agreement or the attachments, exhibits or Schedules hereto; and
(ii) any claims by governmental entities or
any fines or penalties imposed by governmental entities against Purchaser for
Environmental Liabilities arising out of the operation or ownership of the Mill
Assets by Seller before the Closing Date, including but not limited to (w)
disposal of the three out of service PCB-containing capacitors currently at the
Mill; (x) bringing the discharge of industrial process water, from processes
occurring at or before the Closing Date, into compliance with the Clean Water
Act, including, but not limited to, obtaining an NPDES permit for such
discharges, and filtering and routing discharges from the sawmill compressor
room into the process water mixing chamber west of the boiler; (y) violations of
Paragraph S3.A of NPDES storm water permit No. S03-000194, which states
"Discharges to a storm sewer or surface water of process waste water, domestic
waste water or non-contact cooling water not covered by a NPDES permit are
prohibited"; or (z) paying any fines or penalties, if any, assessed by any
governmental agency as a result of Seller's operation of the hog fuel boiler
prior to the Closing Date which is not in compliance with the CAA or the Title V
Air Operating Permit No. DE96AQ-E1200. Seller's liability to Purchaser under
this Paragraph 11(a)(ii) for Environmental Liabilities arising out of the
operation or ownership of the Mill Assets by Seller before the Closing Date
shall continue for 36 months following the Closing Date. Notwithstanding
anything herein to the contrary, Seller shall not be obligated to make any
capital improvements, maintenance or repairs to or of the hog fuel boiler to
satisfy the CAA or the Title V Air Operating Permit No. DE96AQ-E1200 other than
to pay for the costs of replacement of the hog fuel boiler ESP plates as
described in Section 2.1. Purchaser shall be responsible for any fines or
penalties assessed by any governmental agency as a result of Purchaser's
operation of the hog fuel boiler after the Closing Date.
(b) During the period of the indemnity afforded
Purchaser under this Paragraph 11.1, Seller and its permitted assigns
("Assigns") may upon notice to Purchaser and obtaining Purchaser's permission,
which shall not unreasonably be withheld, inspect the Mill Real Property at
reasonable times and intervals and, at Seller's or its Assign's own expense, use
such qualified and reputable experts as either deems appropriate to conduct any
such inspections
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and tests which are deemed by such experts to be warranted. Purchaser will
promptly notify Seller or its Assigns within ten days of Purchaser's receipt of
written notice of any proposed, threatened or final determination by a
governmental entity that there exists the presence of any toxic, hazardous,
industrial or chemical waste, substance or contaminate (herein for the remainder
of this Paragraph 11.1 "Contaminate" or "Contamination") in, on or under any
part of the Mill Real Property at any time from and after the Closing Date.
Seller and its Assigns will provide Purchaser with copies of all reports
generated by its experts with respect to the Mill Real Property and Purchaser
will provide Seller with any written report it has received with respect to any
such Contamination and afford Seller and its Assigns and their chosen experts an
opportunity to meet and discuss the report or any findings with its author.
Purchaser will also afford Seller and its Assigns the opportunity, at Seller's
or its Assign's expense, to have Seller's or its Assign's experts conduct such
additional investigations or tests which are deemed by such experts to be
warranted and Purchaser will instruct any expert it has retained to meet with
Seller's or its Assign's expert and thereafter issue, in writing and to the
extent possible, a joint determination detailing the involved Contaminate, the
extent of the Contamination and the experts' opinions as to when the
Contamination occurred with specific reference to dates prior to or after the
Closing Date. Promptly after the issuance of such joint determination or upon
notice that the parties' experts cannot agree on the terms of such a joint
determination, Seller and its Assigns and Purchaser will meet and in good faith
and acting reasonably, attempt to determine the responsibility for the subject
Contamination.
(c) Seller and its Assigns shall retain the first
right to undertake the clean-up of any Contamination which is determined to be
the responsibility of Seller and not the responsibility of Purchaser. Any
clean-up activities so undertaken by Seller or its Assigns will be performed in
compliance with and as required by applicable law, with all reasonable efforts
to minimize or avoid any disruption of Purchaser's conduct of Mill business.
(d) Purchaser and Seller agree not to disclose to any
third party (other than legal counsel and expert consultants specifically
engaged to prepare or review such reports who shall be advised of and be bound
by the terms of this non-disclosure provision) any reports or any part thereof,
except with the prior written consent of the other party or pursuant to valid
legal process or as otherwise required by applicable law. Purchaser and Seller
agree immediately to notify each other in the event that a demand is made upon
such party for disclosure pursuant to legal process or as otherwise required by
applicable law. It is further agreed by the parties that each will be given the
opportunity to review and comment on the draft reports prepared by their
respective experts prior to finalization.
(e) Seller shall have the right and responsibility of
defending, remedying, compromising, and settling any Environmental Liability for
which it is responsible and shall have the right to employ and control its own
counsel, consultants, and contractors in connection therewith. Seller shall have
full control over any actions (including, without limitation, any remedial
action, negotiation or litigation) in connection with any such Environmental
Liability; provided, that (a) if a remedial or other action proposed to be taken
by
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<PAGE> 19
Seller in settlement of the Environmental Liability would materially and
adversely affect Purchaser's operations at the Mill Real Property, such action
shall not be taken without the prior written consent of the Purchaser (which
consent shall not unreasonably be withheld); (b) Seller shall only settle or
compromise any such Environmental Liability if Seller has the consent of
Purchaser (which consent shall not unreasonably be withheld); and (c) in the
event Purchaser shall refuse to consent to the taking of any remedial or other
action in respect of, or the compromise or settlement of, any such Environmental
Liability, Purchaser may elect to take over the defense or remediation of such
Environmental Liability and, in such case, the liability of Seller for
indemnification with respect to such Environmental Liability shall not exceed
the amount for which the Environmental Liability could have been settled.
(f) Seller's obligations with respect to an
Environmental Liability for which it is responsible shall include the taking of
such reasonable actions as are necessary under the circumstances giving rise to
such Environmental Liability, including compliance with all laws applicable at
the time Seller's remedial actions are taken; and Seller shall not be liable for
any violations of Environmental Laws or obligations imposed as a requirement of
Environmental Laws, to the extent resulting from action taken or omitted by
Purchaser on or after the Closing Date.
11.2 INDEMNIFICATION BY PURCHASER. Subject to the provisions
of Paragraph 5.1 and this Paragraph 11.2, Purchaser shall indemnify Seller and
hold it harmless from any claim, damage, liability, loss, cost, deficiency,
judgment or expense (reference to "expense" shall include, without limitation,
reasonable attorneys' fees and other costs and expenses incident to any actions,
suits, proceedings or investigations or the defense of any claims, whether prior
to or at trial or in appellate proceedings), arising out of, resulting from or
relating to the following:
(a) any material breach by Purchaser of any of its
representations, warranties, covenants or agreements made in or pursuant to this
Agreement or the attachments, exhibits or Schedules hereto;
(b) any claims by third parties, including but not
limited to governmental entities, or any fines or penalties for violations of
law and obligations imposed by law, including but not limited to any
Environmental Laws and any Environmental Liabilities, arising out of the
operation or ownership of the Mill Assets by Purchaser after the Closing Date;
(c) any damage to Seller's property or claims by
third parties arising out of activities of Purchaser or its invitees, agents or
contractors in performing tests on or inspections of the Mill Assets prior to
Closing; and
(d) any acts, omissions, events or circumstances on
or in connection with the operation, condition or ownership of the Mill Assets
occurring on or after the Closing Date, including, without limitation, any
environmental condition first occurring after the Closing Date on or about the
Mill Real Property; provided, however, that such indemnification shall not
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<PAGE> 20
apply to the extent that any such liability arises from any acts or omissions of
Seller.
12. CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligations of Purchaser
to perform this Agreement are subject to the satisfaction, in all material
respects on or before the Closing Date, of each of the following conditions and
any other conditions to Purchaser's obligations hereunder specified elsewhere in
this Agreement, unless waived in writing by Purchaser in its sole discretion:
12.1 SIMULTANEOUS CLOSING. There being a simultaneous closing
under the Timberland Agreement.
12.2 MATERIAL INACCURACIES. Seller's representations and
warranties shall be true and correct in all material respects on and as of the
Closing Date as though made on and as of the Closing Date and Seller shall
deliver a certificate to that effect at Closing.
12.3 PERFORMANCE OF OBLIGATIONS. Seller shall have performed
all obligations required to be performed by it prior to the Closing Date under
this Agreement.
12.4 TITLE INSURANCE POLICY. At Seller's expense, Purchaser
shall have received a binding commitment from a recognized title insurance
company for the issuance of a standard coverage owner's policy or policies of
title insurance insuring Purchaser's fee simple title to the Mill Real Property
subject to the Permitted Exceptions.
12.5 SUITS, ACTIONS OR PROCEEDINGS. No suit, action,
arbitration or other proceeding shall be pending before any court or
governmental agency, which may result in the restraint or prohibition of the
consummation of the transactions contemplated by this Agreement, and all
governmental and regulatory approvals and clearances which are required to
consummate such transactions shall have been obtained.
12.6 CASUALTY, LOSS OR CONDEMNATION. The Mill Assets shall not
have become subject, subsequent to the date of this Agreement, to physical
damage by fire, flood, windstorm, earthquake or other similar occurrence, or to
any condemnation proceeding, which causes at least twenty-five percent (25%) of
the Mill to be inoperable. If Purchaser elects to waive the condition set forth
in this Paragraph 12.6, or if any casualty or condemnation loss is more than
$100,000, the amounts payable by Purchaser to Seller pursuant to Paragraph 2
shall be reduced to reflect the diminution in value resulting or expected to
result from the casualty or condemnation, in which event Seller shall be
entitled to retain any compensation, awards, insurance proceeds or other payment
or relief resulting from such casualty or condemnation. If the parties cannot
agree upon the extent of the diminution in value, the determination shall be
made by an independent expert mutually agreed upon by the parties. If Purchaser
elects to terminate this Agreement as a result of casualty, loss or condemnation
pursuant to this Paragraph 12.6, the Timberland Agreement shall automatically
terminate. If Purchaser elects to terminate the Timberland Agreement pursuant to
Paragraph 17.1 of the Timberland Agreement, this
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<PAGE> 21
Agreement shall automatically terminate.
13. CONDITIONS TO SELLER'S OBLIGATIONS. The obligations of Seller to
perform this Agreement are subject to the satisfaction, in all material respects
on or before the Closing Date, of each of the following conditions and any other
conditions to Seller's obligations hereunder specified elsewhere in this
Agreement, unless waived in writing by Seller in its sole discretion:
13.1 SIMULTANEOUS CLOSING. There being a simultaneous closing
under the Timberland Agreement.
13.2 CONSENTS AND APPROVALS. Seller shall have received all
requisite consents to and approvals of the execution, delivery and performance
of this Agreement and the transactions contemplated hereby from Seller's and its
affiliates' lenders.
13.3 NOTICE OF INTENT TO CLOSE THIRD-PARTY TRANSACTION. Seller
shall have provided written notice to Purchaser of Seller's intent to close the
acquisition of timberlands and associated facilities (referred to as the
"Riverwood Acquisition") located in the southern United States; however, if
Seller has provided Purchaser such written notice and Closing has occurred
pursuant to this Agreement, and closing of the Riverwood Acquisition does not
actually occur, Seller may rescind any Closing hereunder. In the event the
closing of the Riverwood Acquisition does not occur on or before October 1,
1996, Seller may, in its discretion, extend this Agreement accordingly. In the
event the Riverwood Acquisition does not close by December 31, 1996, or in the
event Seller's contractual rights to close the Riverwood Acquisition terminate
for any reason, this Agreement shall terminate.
13.4 MATERIAL INACCURACIES. Purchaser's representations and
warranties shall be true and correct in all material respects on and as of the
Closing Date and Purchaser shall have delivered a certificate to that effect at
Closing.
13.5 PERFORMANCE OF OBLIGATIONS. Purchaser shall have
performed all obligations required to be performed by it prior to the Closing
Date under this Agreement.
13.6 SUITS, ACTIONS OR PROCEEDINGS. No suit, action,
arbitration or other proceedings, shall be pending before any court or
governmental agency which may result in the restraint or prohibition of the
consummation of the transactions contemplated by this Agreement, and all
governmental and regulatory approvals and clearances which are required to
consummate such transactions shall have been received.
14. CLOSING.
14.1 PLACE OF CLOSING. The Closing of the transaction provided
for in this Agreement shall be held at such time and place as the closing
pursuant to the Timberland Agreement.
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<PAGE> 22
14.2 DELIVERIES AT CLOSING BY SELLER. At Closing, and upon
receipt of payment of the consideration described in paragraph 2.3(a), Seller
shall deliver to Purchaser the following executed and acknowledged documents:
(a) Deeds. Special warranty deed in substantially the
form attached hereto as SCHEDULE 14.2(A) conveying title to the Mill Real
Property, subject to the Permitted Exceptions.
(b) Bill of Sale. A Bill of Sale (and assignment, as
appropriate) to all Mill Personal Property being transferred, in substantially
the form attached hereto as SCHEDULE 14.2(B), together with executed
certificates of title to all motor vehicles.
(c) Assignment of Mill Contracts and Mill Leases. An
Assignment and Assumption Agreement in substantially the form of SCHEDULE
14.2(C), assigning and transferring to Purchaser the Mill Contracts and the Mill
Leases. Purchaser will execute such document at Closing.
(d) Assignment of Mill Access Rights and Easements.
An instrument assigning and transferring to Purchaser the Mill Access Rights and
Easements.
(e) Nonforeign Affidavit. An affidavit, in
substantially the form of SCHEDULE 14.2(E), to the effect that Seller is not a
foreign person as that term is used in section 1445 of the Internal Revenue
Code.
(f) Authorization. A certified resolution of the
Board of Directors of the General Partner of Seller approving this transaction.
14.3 DELIVERIES AT CLOSING BY PURCHASER. At Closing, Purchaser
shall deliver to Seller:
(a) Funds. Funds in the amount specified in Paragraph
2.3(a).
(b) Executed Counterparts. Executed counterparts of
the documents described in paragraph 14.2 which require Purchaser's signature.
(c) Authorization. A certified resolution of
Purchaser's Board of Directors approving this transaction.
(d) Documents. The documents required to be executed
by Purchaser pursuant to Paragraph 14.2.
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<PAGE> 23
14.4 PRORATIONS AND CLOSING COSTS.
(a) Seller shall pay the following costs and expenses
associated with the closing of the transactions contemplated hereunder:
(i) Seller's portion of personal property
taxes and real property taxes, as prorated between the parties as of the Closing
Date based upon the most recent tax information available;
(ii) The cost of the standard owner's policy
or policies of title insurance;
(iii) One-half of escrow fees;
(iv) All transfer, excise, and recording
taxes or fees due on the conveyance; and
(v) Insurance, water, and other utilities
constituting a lien, prorated as of the Closing Date.
(b) Purchaser shall pay the following costs and
expenses associated with the closing of the transactions contemplated hereunder:
(i) Purchaser's portion of personal property
taxes and real property taxes, as prorated between the parties as of the Closing
Date based upon the most recent tax information available;
(ii) One-half of escrow fees; and
(iii) Title insurance premium attributable
to extended coverage, if any, or any endorsements.
Except as otherwise provided in this Agreement, each party shall be responsible
for the payment of costs incurred by said party in connection with the
transactions contemplated by this Agreement. Purchaser shall reimburse Seller
for all prepaid expenses of the Mill, including but not limited to loggers'
advances and payments on account of stumpage contracts at Closing.
14.5 APPROVAL OF DOCUMENTS. The form and substance of all
documents delivered hereunder by Seller shall be acceptable to counsel for
Purchaser and the form and substance of all documents delivered hereunder by
Purchaser shall be acceptable to counsel for Seller, both of whose acceptances
will not be unreasonably withheld.
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<PAGE> 24
14.6 POST-CLOSING MATTERS.
(a) As soon as practicable following the Closing,
Purchaser shall deliver to Seller such information and data as Seller may
reasonably request, including that required by Seller's customary tax and
accounting questionnaires, in order to enable Seller to complete and file all
federal and state forms which may be required to be filed by it and to otherwise
enable Seller to satisfy its internal accounting, tax and other requirements.
(b) A clean cut-off of payroll and payroll tax
reporting with respect to the employees of the Mill will be made at the Closing
Date with Seller paying over to the federal, state and city governments those
amounts respectively withheld before the Closing Date. Seller also agrees to
issue, by the date prescribed by Internal Revenue Service regulations, Forms W-2
for wages paid on or before the Closing Date.
(c) Purchaser shall provide to Seller, on or before
March 15th of each year, such information as Seller shall reasonably request
(with due respect to the employees' right of confidentiality) regarding any
former employee of Seller hired by Purchaser who remains covered under any of
Seller's employee benefits.
15. ADDITIONAL POST-CLOSING MATTERS.
15.1 RECORDS RETENTION. After the Closing Date, Purchaser will
preserve and will make available its books and records relating to Mill
operations formerly conducted by Seller upon reasonable notice during normal
business hours. Seller shall have the right to make extracts from and copies of
any of such books and records, all on a confidential basis, provided however,
that Seller may disclose such records, where appropriate, to governmental
agencies. In addition, for a period of six (6) years after the Closing Date,
Purchaser shall not destroy any of such books and records without first
affording Seller a reasonable opportunity to make extracts from and copies of
any such books and records prior to destruction.
15.2 TAX APPEALS. If any tax appeals result in refunds of
taxes paid with respect to the Mill Assets for periods prior to Closing, those
refunds shall belong to Seller. If an appeal is made that results in a refund or
benefit to Purchaser, Purchaser shall pay for a portion of the appeal in the
proportion which the refund and/or benefit received by Purchaser bears to the
total tax refund and/or benefit resulting from the appeal. In no case shall
Purchaser's share of the cost exceed the amount of the refund or benefit it
receives. Seller shall continue to prosecute any pending property tax appeals
relating to 1996 assessments to conclusion at the current level of litigation.
15.3 THIRD PARTY CONSENTS. Notwithstanding anything to the
contrary in this Agreement, this Agreement shall not constitute an agreement to
assign or transfer any Mill Contracts, Mill Leases or Mill Access Rights and
Easements, if an assignment or transfer or an attempt to make such an assignment
or transfer without the consent or approval of a third party
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<PAGE> 25
would constitute a breach or violation thereof or affect adversely the rights of
the Purchaser or Seller thereunder; and any transfer or assignment to the
Purchaser by Seller of any interest under any of such Mill Contracts, Mill
Leases, or Mill Access Rights and Easements that requires the consent or
approval of such third party shall be made subject to such consent or approval
being obtained. In the event any such consent or approval is not obtained on or
prior to the Closing Date, the Seller shall continue to cooperate in all
reasonable respects with the Purchaser in its efforts to obtain any such consent
or approval after the Closing Date until such time as such consent or approval
has been obtained, and the Seller will cooperate in all reasonable respects with
the Purchaser in any lawful and economically feasible arrangement to provide
that the Purchaser shall receive the interest of the Seller in the benefits
under any of such Mill Contracts, Mill Leases or Mill Access Rights and
Easements (except that any such arrangement shall not require performance by
Seller as agent); provided that the Purchaser shall undertake to and shall pay
or satisfy the corresponding liabilities for the enjoyment of such benefit to
the extent the Purchaser would have been responsible therefor if such consent or
approval had been obtained.
15.4 DOMESTIC PROCESSING. Following Closing, Purchaser shall
process logs at the Mill or delivered to the Mill pursuant to Mill Contracts
within the United States and shall not export unfinished raw logs for processing
outside of the United States.
15.5 HOME DEPOT AGREEMENT. Seller and Purchaser shall
cooperate in good faith to satisfy Plum Creek Marketing, Inc.'s obligations
under its various Consignment Agreements with Home Depot, Inc. utilizing lumber
product manufactured at the Mill following Closing.
16. MISCELLANEOUS.
16.1 FURTHER ASSURANCES. If, at any time after the Closing
Date, either party shall consider or be advised that any further instruments or
assurances or any other things are necessary or desirable to carry out the terms
of this Agreement, the other party shall execute and deliver all such
instruments and assurances and do all things reasonably necessary and proper to
carry out the terms of this Agreement.
16.2 INTEGRATION. Together with the Timberland Agreement, this
Agreement and the documents delivered pursuant hereto contain the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior negotiations. None of the parties shall be bound by nor
shall be deemed to have made any representations, warranties or commitments
except those required to be made by the terms of this Agreement, or those which
are contained herein or in the documents delivered pursuant hereto.
16.3 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original
instrument, and all such counterparts together shall constitute one Agreement.
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<PAGE> 26
16.4 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any term or provision of this Agreement is so broad as to be invalid or
unenforceable, the provision shall be interpreted to be only so broad as is
valid or enforceable. Subject to the foregoing provisions of this paragraph
17.4, if any term or provision of this Agreement is invalid or unenforceable for
any reason, such circumstances shall not have the effect of rendering such term
or provision invalid or unenforceable in any other case or circumstance.
16.5 SUCCESSOR AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
16.6 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Washington.
16.7 ASSIGNMENT; EXCHANGE. Seller may determine to complete
this transaction as part of a Section 1031 tax-deferred exchange. Purchaser
agrees to cooperate with Seller in documenting and completing such exchange by
agreeing that Seller may transfer Seller's rights and obligations under this
Agreement to Seller's Qualified Intermediary, Exchange Facilitator Corporation.
Purchaser agrees to accept Exchange Facilitator Corporation as the assigned
Seller of the Property described in this Agreement. Purchaser shall incur no
additional expense or liability by such cooperation. Subject to the foregoing,
neither party may assign its rights hereunder prior to the Closing without the
prior written consent of the other, which may be withheld for any reason.
16.8 CAPTIONS AND PARAGRAPH HEADINGS. The headings used in
this Agreement are for convenience only and shall not affect the construction of
any of the terms of this Agreement.
16.9 NOTICES. Notices under this Agreement shall be in writing
and shall be effective when actually delivered or three business days after
being deposited in the United States' mails as certified mail return receipt
requested, directed to the other party at the address set forth below or to such
other address as the party may be given by telecopy or facsimile and shall be
effective when received.
If to Seller: Plum Creek Manufacturing, L.P.
999 Third Avenue, Suite 2300
Seattle, WA 98104
Attention: Rick R. Holley, President and CEO
Facsimile: (206) 467-3790
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<PAGE> 27
With Copy to: Cairncross & Hempelmann, P.S.
701 Fifth Avenue, Suite 7000
Seattle, WA 98104
Attention: Daniel C. Vaughn, Esq.
Facsimile: (206) 587-2308
If to Purchaser: Stimson Lumber Company
520 SW Yamhill Street, Suite 308
Portland, Oregon 97204-1326
Attention: Dan M. Dutton, President and CEO
Facsimile: (503) 222-2682
With Copy to: Tonkon, Torp, Galen, Marmaduke & Booth
888 SW 5th Avenue. Suite 1600
Portland, Oregon 97204-2099
Attention: George C. Spencer, Esq.
Facsimile: (503) 274-8779
16.10 TIME IS OF THE ESSENCE. Time is of the essence of this
Agreement.
16.11 SCHEDULES INCORPORATED. The following schedules attached
or to be attached to this Agreement are incorporated herein by reference:
1(f) Excluded Assets
1(k) Mill Access rights and Easements
1(m) Mill Contracts
1(n) Mill Leases
1(o) Mill Personal Property
1(p) Mill Inventory
1(q) Mill Real Property
2.3(b) Inventory Valuation Procedures
3.5 Violations or Conflicts
3.7(a) Schedule of Employees Earning in Excess of $60,000.00
Per Year
3.7(b) Employee Benefit Plans
3.7(c) Insurance Policies
3.10 Exceptions to Environmental Matters
3.11 Exceptions to Licenses, Franchises, Permits
3.12 Litigation
3.15 Notifications
14.2(a) Form of Deed
14.2(b) Form of Bill of Sale
14.2(c) Form of Assignment of Mill Contracts, Leases and
Permits and Assumption Agreement
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<PAGE> 28
14.2(e) Nonforeign Affidavit
14.2(f) Certified Board Resolution of Seller's General
Partner
If all of such schedules have not been prepared, initialed by both parties and
attached hereto, at least five (5) days prior to Closing, either party hereto
shall have the right to terminate this Agreement and following any such
termination neither party shall have any further obligation under this
Agreement.
16.12 COSTS AND EXPENSES. Each party to this Agreement shall
pay its own costs and expenses (including, without limitation, the fees and
expenses of its agents, representatives, counsel and accountants) incurred in
connection with the closing of the transactions contemplated under this
Agreement.
16.13 ATTORNEYS' FEES AND OTHER COSTS. If either party
initiates any proceeding in law, equity or arbitration concerning this Agreement
or any of its provisions, the party that substantially prevails in such
proceeding shall be paid by the party not so prevailing therein all costs and
expenses incurred in such proceeding, including reasonable attorneys' fees at
the pretrial, trial and appellate levels as determined by the court or courts
considering the matter.
IN WITNESS WHEREOF, the parties have executed this instrument the day
and year first above written.
SELLER: PLUM CREEK MANUFACTURING, L.P.
By: Plum Creek Management Company, L.P.
Its General Partner
By: /s/ Diane M. Irvine
------------------------------------------
Diane M. Irvine, Vice President and
Chief Financial Officer
Attest:
By: /s/ Sheri L. Ward
-----------------------------------
Sheri L. Ward, Manager Law and
Assistant Secretary
PURCHASER: STIMSON LUMBER COMPANY
By: /s/ Dan M. Dutton
-------------------------------------
Dan M. Dutton, President and CEO
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<PAGE> 1
EXHIBIT 99.1
Contacts: Michelle D. Monfor
Director, Investor Relations
(206) 467-3613
Robert J. Jirsa
Director, Corporate and Environmental Affairs
(206) 467-3626
PLUM CREEK ANNOUNCES SIGNING A DEFINITIVE AGREEMENT
TO PURCHASE RIVERWOOD INTERNATIONAL CORPORATION'S
MID-SOUTH FORESTLANDS & SOLID-WOOD CONVERSION FACILITIES
SEATTLE, WASHINGTON, August 7, 1996 -- Plum Creek Timber Company, L.P.
(NYSE:PCL) announced today that it has signed a definitive agreement with
Riverwood International Corporation to purchase Riverwood's mid-South
forestlands and solid-wood conversion facilities. The purchase price of
approximately $540 million includes 538,000 acres of timberlands along with two
sawmills and a plywood plant located in northern Louisiana and southern
Arkansas, and a nursery in Texas. The obligation of both parties to complete the
transaction is subject to certain conditions, but is not contingent on Plum
Creek obtaining financing. Should these conditions be satisfied, the transaction
is expected to close before the end of the year.
"We view this acquisition as an enhancement of our current ownership of
over 2 million acres of timberland, and a complement to our core business and
timber management expertise. The Riverwood timberlands are high-quality, very
productive southern pine plantations that have been well managed. This
transaction would provide Plum Creek an opportunity to diversify its timber
holdings and business in an area of the country with very competitive markets
for wood fiber," said Rick Holley, President and Chief Executive Officer. "The
integrated conversion facilities are very efficient and will add to the value of
the resource.
"We have the highest regard for Riverwood's management and expect to
hire the vast majority of Riverwood's employees. Plum Creek is also committed to
operating Riverwood's forestlands consistent with our environmental stewardship
approach," Holley stated.
"In this time of diminishing timber resources, adding these assets to
our existing resource base will broaden the Company's competitive position for
the future, particularly since the U.S. South is one of the most efficient fiber
producing regions in the world," Holley continued.
<PAGE> 2
"We expect that this acquisition will increase our overall cash flow
and the value of the business through the ownership of these quality assets and
the support it provides for future growth in our cash distributions," Holley
concluded.
As part of the acquisition, Plum Creek will enter into a long-term
agreement to supply fiber from these timberlands to Riverwood's paper facility
in West Monroe, Louisiana.
Plum Creek is an integrated forest products company with timberlands
and mills located in the Pacific Northwest.
<PAGE> 1
EXHIBIT 99.2
Contacts: Michelle D. Monfor
Director, Investor Relations
(206) 467-3613
Kris Backes
Director, Corporate Affairs - Rocky Mountain Region
(406) 892-6280
PLUM CREEK TIMBER COMPANY, L.P. ANNOUNCES
NON-BINDING LETTER OF INTENT TO SELL ASSETS
IN NORTHEAST WASHINGTON AND NORTHERN IDAHO
SEATTLE, WASHINGTON, September 4, 1996 -- Plum Creek Timber Company,
L.P. (NYSE:PCL) announced today the signing of a non-binding letter of intent to
sell 107,000 acres of timberland located in Northeast Washington and Northern
Idaho and its sawmill near Colville, Washington to Stimson Lumber Company of
Portland, Oregon for $150 million.
The transaction is subject to the negotiation of a definitive purchase
and sale agreement and receipt of approval under the Hart Scott Rodino Antitrust
Improvements Act.
Assuming the above conditions are met, the transaction is expected to
close before the end of the year and prior to the closing of Plum Creek's
previously announced Riverwood acquisition. This will enable Plum Creek to
consummate a like-kind exchange and defer taxes associated with the sale to
Stimson.
Plum Creek is an integrated forest products company with timberlands
and mills located in the Pacific Northwest.
###
<PAGE> 1
EXHIBIT 99.3
Contact: Michelle D. Monfor
Director, Investor Relations
(206) 467-3613
Robert J. Jirsa
Director, Corporate and Environmental Affairs
(206) 467-3626
PLUM CREEK COMPLETES SALE OF ASSETS
IN NORTHEAST WASHINGTON AND NORTHERN IDAHO
SEATTLE, WASHINGTON, October 11, 1996 -- Plum Creek Timber Company,
L.P. (NYSE:PCL) announced today that it has completed the sale of 107,000 acres
of timberland located in Northeast Washington and Northern Idaho and its sawmill
near Colville, Washington to Stimson Lumber Company of Portland, Oregon for
approximately $150 million.
Plum Creek will use the net proceeds of the sale to pay a portion of
the purchase price of the previously announced Riverwood acquisition. Plum Creek
plans to treat this sale as a like-kind exchange for federal income tax
purposes.
Plum Creek is an integrated forest products company with timberlands
and mills located in the Pacific Northwest.
###
<PAGE> 1
EXHIBIT 99.4
Contact: Michelle D. Monfor
Director, Investor Relations
(206) 467-3613
Robert J. Jirsa
Director, Corporate and Environmental Affairs
(206) 467-3626
PLUM CREEK COMPLETES ACQUISITION OF
RIVERWOOD INTERNATIONAL CORPORATION'S
MID-SOUTH FORESTLANDS & SOLID-WOOD CONVERSION FACILITIES
SEATTLE, WASHINGTON, October 21, 1996 -- Plum Creek Timber Company,
L.P. (NYSE:PCL) announced today that it has completed its previously announced
acquisition of Riverwood International Corporation's mid-South forestlands and
solid-wood conversion facilities for $552 million. The assets acquired in the
purchase include 538,000 acres of timberlands, along with two sawmills and a
plywood plant, located in northern Louisiana and southern Arkansas, and a
nursery in Texas.
"We see this as a positive acquisition of quality assets that allows
Plum Creek to diversify its asset base at a time when worldwide timber resources
continue to grow in value, said Rick R. Holley, President and Chief Executive
Officer. "It allows us to complement our current timberland holdings of nearly 2
million acres in the Northwest with high-quality, very productive pine
plantations in the South--an area of the country with highly competitive wood
fiber markets. The efficient, integrated conversion facilities add to the value
of those resources and constitute an excellent match with Plum Creek's existing
core businesses. We look forward to the opportunity to bring our timber
management expertise to the South, along with our commitment to the principles
of environmental stewardship," Holley stated.
Plum Creek is an integrated forest products company with timberlands
and mills located in the Pacific Northwest and the South.
