<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 1-10239
PLUM CREEK TIMBER COMPANY, L.P.
(Exact name of registrant as specified in its charter)
999 Third Avenue, Seattle, Washington 98104-4096
Telephone: (206) 467-3600
Organized in the State of Delaware I.R.S. Employer Identification No.
91-1443693
Securities registered pursuant to Section 12(b) of the Act:
Depositary Units, Representing Limited Partner Interests
The above securities are registered on the New York Stock Exchange.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (Section.229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant'S knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of Units held by non-affiliates based on the closing
sales price on February 28, 1997 was approximately $1,317,059,696. For this
calculation, all executive officers and directors have been deemed affiliates.
Such determination should not be deemed an admission that such executive
officers and directors are, in fact, affiliates of the registrant.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: None.
<PAGE> 2
PART I
ITEM 1. BUSINESS
GENERAL
Plum Creek Timber Company, L.P. (the "Partnership"), a Delaware limited
partnership organized in 1989, Plum Creek Manufacturing, L.P. ("Manufacturing"),
and Plum Creek Marketing, Inc. ("Marketing"), own, manage, and operate
approximately 2.4 million acres of timberland and twelve wood products
conversion facilities in the northwest and southeast United States. The
Partnership owns 98 percent of Manufacturing, and 96 percent of Marketing. Plum
Creek Management Company, L.P., (the "General Partner"), manages the businesses
of the Partnership, Manufacturing and Marketing and owns the remaining two
percent and four percent of Manufacturing and Marketing, respectively. As used
herein, "Company" refers to the combined entities of the Partnership,
Manufacturing and Marketing.
ACQUISITIONS AND DISPOSITION
On October 18, 1996, the Partnership acquired approximately 529,000
acres (plus approximately 9,000 leased acres) of timberland in Louisiana and
Arkansas, along with two sawmills, a plywood plant and a nursery from Riverwood
International Corporation for a total purchase price of $540 million, plus $11.9
million for working capital (the "Southern Region Acquisition"). See Financial
Condition and Liquidity and Note 2 of Notes to Combined Financial Statements.
On October 11, 1996, the Company consummated the sale to Stimson Lumber
Company ("Stimson") of 107,000 acres of timberland in Northeast Washington and
Northern Idaho and the Company's sawmill near Colville, Washington (the "Newport
Asset Sale") for approximately $141.9 million, plus $8.7 million for working
capital. The Company used the net proceeds from the Newport Asset Sale to pay a
portion of the purchase price for the Southern Region Acquisition. See Financial
Condition and Liquidity and Note 2 of Notes to Combined Financial Statements.
On November 1, 1993, the Partnership purchased approximately 865,000
acres of timberland and other timber related assets located in western Montana
(the "Montana Timberland Acquisition") from Champion International Corporation
for approximately $260 million.
SEGMENT INFORMATION
As used herein, "Resources Segment" refers to the combined timber and
land management business of the Partnership. "Manufacturing Segment" refers to
the combined business of Manufacturing and Marketing. Certain financial
information for each business segment is included in Note 13 of Notes to
Combined Financial Statements.
2
<PAGE> 3
RESOURCES SEGMENT
GENERAL. The Partnership owns and manages approximately 2.4 million
acres of timberland in the northwest and southeast United States (the
"Timberlands"). The Timberlands are geographically segregated into three
regions: the Cascades Region in western Washington, the Rocky Mountain Region in
western Montana and northern Idaho, and the Southern Region in Louisiana and
Arkansas. At December 31, 1996, the Timberlands contained an estimated timber
inventory of 8.9 billion board feet ("BBF") of standing timber in the Cascades
and Rocky Mountain Regions (the "Northwest Timberlands") and approximately 5.4
million Cunits in the Southern Region (the"Southern Timberlands").
The Resources Segment grows and harvests timber for sale in export and
domestic markets and sells, on an opportunistic basis, land which is designated
as having a higher and better use than for forest management.
The Cascades Region consists of approximately 311,000 acres of
timberland containing an estimated 2.1 BBF of standing timber. Logs harvested in
the Cascades Region are sold for export to Pacific Rim countries, principally
Japan, and to domestic mills owned by third parties, as the Company does not own
mills in the Cascades Region. Logs sold for export are generally of higher
quality than logs sold into the domestic market.
The Rocky Mountain Region consists of approximately 1,593,000 acres of
timberland containing an estimated 6.8 BBF of standing timber. The Rocky
Mountain Region sells logs to the Manufacturing Segment, with the remainder sold
to third-party domestic mills. Simultaneously with the Montana Timberland
Acquisition, the Partnership entered into a log sourcing agreement with Stimson
to supply Stimson's Montana mills with logs, at prevailing market prices, over a
ten year period ending in 2003.
The Southern Region consists of approximately 538,000 acres (including
9,000 acres of leased land) containing an estimated 5.4 million Cunits of
standing timber. The Southern Timberlands are nearing the end of a process
commenced in 1972 of conversion from unmanaged second growth timber into
plantation forests. The Partnership expects this process to be completed by
approximately 2000. The pine fiber growth from these plantations is expected to
increase substantially over the next 10 to 15 years as a result of this
conversion. The Southern Region sells sawlogs to the Manufacturing Segment and
to third-party domestic mills and sells pulp logs to third-party domestic pulp
and paper manufacturers. As part of the Southern Region Acquisition, the
Partnership entered into a long-term agreement to supply pulp wood fiber to
Riverwood International's West Monroe paperboard plant at prevailing market
prices. The Partnership expects that the agreement will provide the Company with
a secure market for its local mill residuals and a substantial portion of the
pine and hardwood pulp logs harvested from the Southern Timberlands.
DOMESTIC LOGS. The Partnership sells its sawlogs directly to the
Manufacturing Segment and unaffiliated wood products manufacturers and sells its
pulpwood and in-woods chips to unaffiliated pulp and paper manufacturers. The
percentage of logs which are sold as sawlogs or pulp logs varies by region and
is dependent on, among other things, the species mix and quality of
3
<PAGE> 4
the inventory harvested and the market dynamics affecting the given region. The
Partnership's customers include numerous operators of conversion facilities.
Domestic sawlog sales accounted for approximately 21%, 21% and 22% of the
Company's combined revenues in 1996, 1995 and 1994, respectively.
In the Cascades Region, approximately 51% of the total volume harvested
in 1996 was sold to unaffiliated domestic wood products manufacturers. The
Partnership also sold 9% of the volume harvested in 1996 to third parties as
pulp logs. Pulp logs generally constitute smaller and lower quality logs which
are not suitable for use by wood products manufacturers.
In the Rocky Mountain Region, the Partnership sells its logs
domestically, virtually all as saw timber. In 1996, approximately 57% of the
timber harvested was sold to the Manufacturing Segment and the remainder was
sold to third-party domestic mills. In addition, a small amount of lower quality
logs is sold to pulp and paper manufacturers when market conditions permit.
The fee harvest in the Southern Region during the period from October
19, 1996 through December 31, 1996 consisted of 55% pulp logs and 45% sawlogs.
Approximately 43% of the total timber harvest in the Southern Region was sold to
the Manufacturing Segment, with the remainder sold to third-party domestic
conversion facilities.
Due to the strength in the pulp and paper markets in 1995, the
Partnership implemented in- woods chipping operations in conjunction with
conventional logging operations wherever feasible, producing wood-chips from
once valueless treetops and other debris that were previously unutilized. Chip
markets are highly susceptible to fluctuations in markets for pulp and paper
because pulp and paper manufacturers are the primary customers. During the first
half of 1996, a decline in chip prices made it uneconomical to continue most of
the Partnership's in-woods chipping operations. However, operations resumed at
reduced levels in the second half of the year.
Domestic wood and fiber consuming facilities tend to purchase raw
materials within relatively confined geographic areas, generally within a
200-mile radius, due to transportation costs. Competitive factors within a
market area generally will include price, species and grade, quality, proximity
to wood consuming facilities, ability to consistently supply logs meeting the
customer's specifications and ability to meet delivery requirements. The
Partnership has a reputation as a stable and consistent supplier of
well-merchandised, high-quality logs. In domestic log markets, the Partnership
competes with numerous private land and timber owners in the northwestern and
southeastern United States and the state agencies of Arkansas, Idaho, Louisiana,
Montana, Oregon and Washington, as well as lesser amounts of foreign imports,
primarily from Chile and New Zealand. In addition, the Partnership competes with
the United States government, principally the United States Forest Service
("USFS"), the Bureau of Land Management ("BLM") and the Bureau of Indian Affairs
("BIA"). Timber supplied from public lands in Washington and Oregon is
restricted from export, and is sold solely into domestic markets.
EXPORT LOGS. Due to its extensive timber holdings, the Partnership
harvests large volumes of Douglas-fir logs, historically a preferred species in
Japan. Approximately 40% of the total 1996 timber harvest in the Cascades Region
was sold for export to Pacific Rim countries, principally
4
<PAGE> 5
Japan. Douglas-fir logs sold for export have generally commanded a significant
premium over Douglas-fir sold domestically. Export log revenues accounted for
8%, 10% and 12% of combined revenues for 1996, 1995 and 1994, respectively, and
accounted for 18%, 21% and 24%, respectively, of operating income in such
periods.
The Partnership's export log customers consist of large Japanese
trading companies who resell the logs purchased to Japanese conversion
facilities or wholesalers. Competitors in this market include numerous private
land or timber owners in the United States and Canada, as well as companies and
state-controlled enterprises in Chile, New Zealand, Russia and Scandinavia, all
of which have abundant timber resources. In the export log market, the
Partnership competes based on its long- term relationships with established
customers and its reputation as a reliable supplier of premium grade logs. Other
competitive factors include price, species and grade, and the ability to meet
delivery requirements on a year-round basis.
TIMBER RESOURCE MANAGEMENT. The Partnership's resource operations
involve timber management and harvesting operations, which include road
construction and reforestation, as well as wildlife and watershed management.
The Partnership employs a number of traditional and newly developed harvesting
techniques on its lands based on site specific characteristics and other
considerations. The Partnership practices "Environmental Forestry" on the
Northwest Timberlands which attempts to better protect and maintain the
ecosystem while providing for a reasonable harvest. The Partnership also manages
the Southern Timberlands, which consist primarily of managed plantations, in a
manner consistent with its environmental stewardship approach.
Particular forestry practices vary by geographic region and depend upon
factors such as soil productivity, tree size, age and stocking. Forest stands
are thinned periodically to improve growth and stand quality until they are
harvested. The Partnership actively utilizes pre-commercial and commercial
thinning timber management practices. Pre-commercial thinning occurs when the
timber harvested is not merchantable. The Partnership believes that such
thinning improves the overall productivity of the Timberlands by enhancing the
growth of the remaining trees.
It is the Partnership's policy to ensure that every acre harvested is
promptly reforested. Based on the geographic and climatic conditions of the
harvest site, harvested areas may be regenerated naturally by leaving mature
trees to reseed the area. Natural regeneration methods are widely used on about
70% of the harvested land in the Rocky Mountain Region. During 1996, the
Partnership planted over 4 million seedlings on the Northwest Timberlands,
mostly in the Cascades Region where substantially all of the reforestation is
done by planting. Substantially all of the areas harvested in the Southern
Timberlands are regenerated with seedlings.
Forests are subject to a number of natural hazards, including damage by
fire, insects and disease. Severe weather conditions and other natural disasters
can also reduce the productivity of forest lands and can interfere with the
processing and delivery of forest products. However, damage from natural causes
is typically localized and would only affect a portion of the Timberlands at any
given time. Nevertheless, such hazards are to a large extent unpredictable and
there can be no assurance that losses will be so limited. The size, species,
diversity and checker-board ownership of the Northwest Timberlands, as well as
the Partnership's forest management practices, should help
5
<PAGE> 6
to minimize these risks. Consistent with the practices of other large timber
companies, the Partnership does not maintain insurance against loss to standing
timber on the Timberlands, but maintains insurance for loss of logs due to fire
and other occurrences following harvesting.
LAND MANAGEMENT. The Partnership seeks to realize the value of property
that may have a higher and better use than for commercial timberland management
or is otherwise a candidate for sale or exchange. The Partnership identified
approximately 150,000 acres of land located in recreational areas or near
expanding population centers that may optimally be used for conservation,
residential or recreational purposes. Over the next five to fifteen years the
Partnership expects to realize the value of these properties, either through
sales or exchanges. Approximately 21,600 acres of this land were sold or
exchanged during 1996.
MANUFACTURING SEGMENT
GENERAL. The Manufacturing Segment consists of four lumber mills, two
plywood plants, a lumber remanufacturing facility and a medium density
fiberboard ("MDF") facility in western Montana and a wood chip plant in
Washington (collectively known as the "Northwest Conversion Facilities") and a
lumber mill and plywood plant located in Joyce, Louisiana and a lumber mill
located in Huttig, Arkansas, all of which were purchased in connection with the
Southern Region Acquisition (collectively known as the "Southern Conversion
Facilities", and together with the Northwest Conversion Facilities, the
"Conversion Facilities"). The Northwest Conversion Facilities produce a wide
variety of lumber, plywood and MDF products that are sold to Marketing, which
markets and sells the products. Marketing targets the products to retail home
centers and various specialty niche markets which are less cyclical than
traditional housing related markets. In addition, in order to enhance customer
service and provide prompt deliveries, Marketing has established a network of
over 40 independent warehouses located strategically throughout the United
States. The Southern Conversion Facilities produce a wide variety of lumber and
plywood products that are sold to home construction and industrial markets.
LUMBER. Manufacturing produces a diverse line of lumber products,
including boards, studs and dimension lumber which are manufactured at two
studmills, two dimension lumber mills, two random-length lumber mills and a
lumber remanufacturing plant. For the years ended December 31, 1996, 1995 and
1994 these mills produced 461 million board feet ("MMBF"), 433 MMBF, and 388
MMBF of lumber, respectively. Production increased in 1996 primarily due to the
addition of the two dimension lumber mills in the southeast United States,
offset in part by the disposition of the Company's Arden random-length lumber
mill, in October 1996. Production increased in 1995 due to the addition of the
lumber remanufacturing plant, which began operations in late November 1994,
higher productivity due to improved log merchandising specifications and capital
improvements, and additional production shifts. Lumber product revenues
represented approximately 38% of total combined revenues in 1996, 1995 and 1994.
Upgrades at the Pablo mill to allow for more efficient processing of small logs
were begun in 1996. This project will be completed in 1997.
6
<PAGE> 7
Lumber products manufactured in the Northwest Conversion Facilities are
targeted towards domestic lumber retailers, such as retail home center chains,
for use in repair and remodeling projects. Value-added products and services
such as consumer appearance boards, pull-to-length boards, premium furring
strips, premium studs and pattern boards, aimed at retail and other specialty
markets, have made the Manufacturing Segment less dependent on the cyclical
housing related market. Lumber products manufactured in the Southern Conversion
Facilities are targeted toward the home construction, industrial and export
markets. In 1996, 54% of Manufacturing's lumber products was sold into retail
markets, 19% to stocking distributors, 17% to industrial and remanufactured
product markets, 4% to export markets and 6% to other markets.
Competition in the Company's lumber markets is primarily based on price
and quality, and to a lesser extent, the ability to meet delivery requirements
on a consistent long-term basis and to provide specialized customer service. The
Partnership competes in domestic lumber markets primarily with other United
States and Canadian companies. Canadian lumber producers have increased their
penetration into the United States market due to their lower wood fiber costs
and favorable exchange rates. During the five-year period ended December 31,
1995, Canadian producers increased their percentage of the North American lumber
markets from 27% to 36%. In 1995, the United States and Canadian governments
announced a five-year lumber trade agreement effective April 1, 1996. This
agreement is intended to reduce the volume of Canadian lumber exported into the
United States through the assessment of an export tariff on annual lumber
exports to the United States in excess of certain levels from the four major
producing provinces. The lumber market is also subject to competition from
substitute products, primarily in shelving, window and door markets. Substitute
products include radiata pine, MDF, particle board, laminates and wire shelving.
Substitution has significantly increased in the past several years due to the
increase in the price of studs and boards in the early 1990's.
PLYWOOD. Manufacturing produces a diverse line of plywood products at
the Company's three plywood facilities. The Northwest Conversion Facilities
produce high-grade plywood which is primarily sold into specialized industrial
markets. The Southern Conversion Facilities produce commodity and specialty
grade panel products used in home construction and furniture. For the years
ended December 31, 1996, 1995 and 1994 the plywood plants produced 334 million
square feet ("MMSF") (3/8" basis), 294 MMSF, and 290 MMSF of plywood,
respectively. The increase in production in 1996 is due to the addition of the
Joyce, Louisiana plywood plant in October 1996. Plywood product revenues
represented 17%, 18% and 17% of total combined revenues in 1996, 1995 and 1994,
respectively. During 1996, the lathe was upgraded at the Evergreen plywood plant
which will increase wood recovery by allowing logs to be peeled to a smaller
core. During 1995, capital improvements were made that expanded production to
include medium-density overlay plywood and scarfed (joined together) plywood to
produce longer lengths for specialty products.
During 1996, 67% of Manufacturing's plywood products was sold in
specialty industrial markets, including carpet strip, recreational boat,
recreational vehicle, fiberglass-reinforced panel, manufactured home and
furniture markets. Manufacturing's plywood products are generally of higher
quality than commodity construction grade products, which makes them more
valuable in these specialty niche markets.
7
<PAGE> 8
Competition within the plywood market is based primarily on price and
quality, and to a lesser extent, the ability to offer a full line of products
and to meet delivery requirements on a consistent, long-term basis. The domestic
plywood market is characterized by numerous large and small producers and is
also subject to competition from oriented strand board ("OSB"), a wood product
which is a less expensive and generally lower quality substitute. Due to OSB's
cost advantage, its demand and market share in the residential segment has been
increasing, and this trend is expected to continue. Between 1994 and 1998 the
annual capacity for OSB is expected to nearly double to an industry-wide
capacity of 20 billion square feet ("BSF") (3/8" basis). The quality of OSB
continues to improve and has become widely accepted in many building
applications. However, since OSB does not have the strength, weight and
machinability of plywood, it cannot be used in certain specialty applications.
Some commodity plywood manufacturers, in order to avoid closing their
facilities, have been refocusing their products toward the industrial markets
which has resulted in increased competition in markets that the Company serves.
The Company expects to remain competitive due to its strong customer base, years
of experience in the industrial markets, reputation for high quality products
(including various trademarked products such as MarineTech, RV-X, DuraFloor, and
Ultra-Core), superior wood, and the full line of products that it offers.
MEDIUM DENSITY FIBERBOARD. Manufacturing produces MDF products which
are primarily sold to distributors and door, moulding, fixture and furniture
manufacturers. During 1995, the manufacturing process was redesigned to produce
MDF(2), a higher quality MDF product that can be machined and finished more
efficiently. For the years ended December 31, 1996, 1995 and 1994 the plant
produced 113 MMSF (3/4" basis), 102 MMSF, and 123 MMSF of MDF, respectively.
Production for 1995 was below full capacity due to downtime encountered during
the start-up of new high-energy refiners for the Company's new MDF(2) product
and deterioration in market demand. Production for 1996 was also below full
capacity due to a continued focus on producing high quality MDF(2) during the
extended start-up phase. MDF(2) start-up was completed in the second half of
1996.
The Manufacturing Segment supplies high quality MDF to markets
primarily in North America and Pacific Rim countries. The introduction of
MDF(2), one of the highest quality MDF products available, has expanded the
Partnership's markets to include higher value applications, such as moulding and
kitchen cabinets. In 1996, the Manufacturing Segment sold approximately 58% of
its MDF directly to domestic industrial manufacturers or fabricators, 26% to
stocking distributors, 10% into overseas export markets, primarily Pacific Rim
countries, and 6% to retail and other markets.
MDF producers compete on a global scale, primarily on the basis of
price, quality and the level of service provided. MDF is also subject to
competition from solid wood products and hardboard and particle board products.
Competition in the industry has been increasing as a result of significant
capacity expansion both in the United States and Canada. In 1996, North American
capacity was approximately 1.7 BSF and, by the year 2000, capacity is expected
to increase by an additional 0.9 BSF. Much of the capacity additions will be in
direct competition with MDF(2). Over the same time period demand is also
expected to increase, but at a slower rate. The Partnership believes it is well
positioned to compete based on quality and price. MDF(2) commands a price
8
<PAGE> 9
premium over standard MDF due to its superior quality, and the panel's physical
properties and densities. Moreover, because the Company's fiber supply consists
of western softwoods, a slow growth species with a low abrasive content, MDF(2)
has proven to have superior machining qualities over competing MDF products. In
addition, by eliminating wood chips from the MDF manufacturing process (which
substantially reduces raw material costs) and because of the facility's access
to low cost energy sources the Partnership believes it is one of the lowest cost
producers in the market.
CHIPS. Manufacturing's lumber and plywood mills produce residual wood
chips as a by-product from the conversion of raw logs into finished products.
These wood chips are sold to regional paper and pulp mills. The Company's lumber
and plywood facilities produced 333 thousand bone dry units ("MBDU"), 297 MBDU
and 288 MBDU of chips in 1996, 1995 and 1994, respectively. The increase in
volume in 1996 was due to the addition of the Southern Conversion Facilities in
October 1996. In addition, residual wood chip sales volume has increased
annually due to increased lumber and plywood production and increased chip
recoveries. A substantial portion of the Company's chips produced in the Rocky
Mountain Region are sold to a customer under a long-term supply agreement.
Manufacturing also produces wood chips at its Cle Elum, Washington chip
plant. The chip plant produced 6 MBDU, 32 MBDU and 45 MBDU in 1996, 1995 and
1994, respectively. The chip plant was shut down on April 1, 1996 due to weak
chip markets and will not reopen until prices improve. The decrease in
production in 1995 resulted from production curtailments for approximately five
months due to log supply shortages.
RAW MATERIALS. Manufacturing obtains the majority of its raw logs from
the Partnership's Timberlands. The Resources Segment provided 70%, 73%, and 63%
of the Northwest Conversion Facilities raw log needs in 1996, 1995 and 1994,
respectively. The Southern Conversion facilities obtained 75% of their raw logs
from the Resources Segment during the period from October 19 through December
31, 1996. The price of logs obtained from the Partnership is determined
quarterly based upon estimated market prices and terms in effect at the time.
The Timberlands provide a consistent supply of quality logs and preferred
species to the Conversion Facilities, although over time the average log size is
expected to decline, and the species mix is expected to change due to harvest
and growth patterns.
Manufacturing has and will continue to purchase stumpage and logs from
external sources, which include the USFS, BIA, BLM and state and private
timberland owners. At December 31, 1996 and 1995, the Northwest Conversion
Facilities had 84 MMBF and 75 MMBF, respectively, of timber under contract from
external sources which may be harvested over the next three years. The USFS
harvest plan is expected to provide for a 1997 harvest of 300 MMBF in the
geographic area of the Northwest Conversion Facilities. However, due in part to
legal challenges and changes in public policy, the USFS will most likely sell
less volume. Manufacturing is permitted to bid on up to approximately fifty
percent annually of this USFS volume, with the remainder set aside for small
businesses. In addition, approximately 450 MMBF of timber is expected to be made
available annually from other sources. At December 31, 1996, the Southern
Conversion Facilities had 18 MMBF of timber under contract from external sources
which may be harvested over a three
9
<PAGE> 10
year period. The amount of timber expected to be available from other sources in
1997 in the geographic area of the Southern Conversion Facilities is 16 MMBF and
200 MMBF from the USFS and other sources, respectively. The geographic area in
which the Conversion Facilities operate may expand or contract from year to year
as the cost of logs and value of manufactured products fluctuate. (For further
discussion of other timber supply issues see "Federal and State Regulations".)
The MDF facility has a consistent supply of sawdust and wood shavings
from internal and external sources. The remanufacturing facility uses short
pieces of lumber, a by-product of Manufacturing's studmill operations.
COMPETITION
Markets for forest products are highly competitive in terms of price
and quality. Many of the Company's competitors have substantially greater
financial and operating resources than the Company. In addition, wood products
are subject to increasing competition from a variety of substitute products,
including non-wood and engineered wood products. Plywood markets are subject to
competition from OSB, and lumber and log markets are subject to competition from
other worldwide suppliers. The Partnership believes it is able to compete
effectively due to its extensive private timber inventory (which includes
several premium species such as Douglas-fir and Ponderosa Pine), its proven
leadership in environmental forestry which has reduced the uncertainty
associated with ever increasing levels of federal and state regulation, its
reputation as a dependable, long-term supplier of quality products, its
innovative approach to providing high quality, value-added products to various
specialty and industrial niche markets and the integration of its timberlands
with its efficient manufacturing processes. See "Resources Segment" and
"Manufacturing Segment."
SEASONALITY
Domestic log sales volumes from the Northwest Timberlands are typically
at their lowest point in the second quarter of each year during spring break-up,
when warming weather thaws and softens roadbeds, restricting access to logging
sites. Log sales volumes from the Southern Timberlands are generally at their
lowest point during the first quarter of each year, as winter rains limit
operations in some areas. Export log sales are affected in part by variations in
inventory, both domestically and in the countries where such logs are sold, as
well as by weather conditions. Winter logging activity in the Pacific Northwest
takes place at lower elevations, where predominantly second growth logs are
found, affecting the volume of higher quality export logs sold during this time
of the year.
Demand for manufactured products is generally lower in the fall and
winter quarters when activity in the construction markets is slower, and higher
in the spring and summer quarters when these markets are more active. In
addition to seasonal fluctuations in demand, prices of manufactured products can
be impacted by weather-related, seasonal fluctuations in supply, as production
can be hampered during severely cold winter months and then rebound when warmer
spring weather arrives. Working capital varies with seasonal fluctuations. Log
inventories increase
10
<PAGE> 11
going into the winter season to prepare for reduced harvest during spring
break-up.
FEDERAL AND STATE REGULATIONS
GENERAL. The activities of the Company are subject to various federal
and state environmental laws and regulations which impose limitations on the
discharge of pollutants into the air and water and which also establish
standards for the treatment, storage and disposal of solid and hazardous waste
and govern the discharge of runoff stormwater and wastewater. The General
Partner believes that the Company is in substantial compliance with such laws
and regulations. (See Item 3. Legal Proceedings.)
The activities of the Company are also subject to federal and state
regulations regarding natural resources and forestry operations and the
requirements of the federal Occupational Safety and Health Act and comparable
state statutes relating to the health and safety of the Company's employees. The
General Partner believes that the Company is in substantial compliance with such
laws and regulations.
The Company conducts operations in or near significant environmentally
sensitive areas which include the habitats of numerous species, including a
number of threatened or endangered species. As a result, the Company's
activities in such areas may be subject to restrictions relating to the
harvesting of timber and the construction of roads.
THREATENED AND ENDANGERED SPECIES. The Endangered Species Act ("ESA")
protects species threatened with possible extinction. Protection of endangered
species may include the imposition of restrictions on timber harvesting and road
building activities in areas containing the affected species. A number of
species indigenous to the Timberlands have been listed as threatened or
endangered or have been proposed for such status under the ESA, including the
northern spotted owl, marbled murrelet, gray wolf, red cockaded woodpecker,
mountain caribou, grizzly bear, bald eagle and various salmon species.
In 1990, the United States Fish and Wildlife Service (the "USFWS")
listed the northern spotted owl ("Owl") as a threatened species throughout its
range in Washington, Oregon and California. At the time of the listing, the
USFWS issued suggested guidelines ("Guidelines") to be followed by landowners in
order to comply with the ESA's prohibition against harming or harassing Owls.
The Guidelines recommend several measures, including the restriction of harvest
activities in areas within a certain proximity of known Owl activity centers.
The USFWS also has proposed a rule for the conservation of the Owl on
non-federal land. Such proposed rule has not been adopted but is substantially
similar to the Washington Rule described below.
In May 1996, the Washington State Forest Practices Board (the "Board")
adopted permanent regulations, effective July 1996, to protect habitat for the
Owl (the "Washington Rule"). Under the Washington Rule, designated Owl special
emphasis areas ("SEAs") have restrictions that are similar to but slightly
greater than those contained in the Guidelines. Approximately 60% of the
Partnership's timberlands in the Cascades Region are within SEAs.
11
<PAGE> 12
The Washington Rule exempts from its provisions forest practices that are
consistent with a federally approved habitat conservation plan and related
permit.
In June 1996, the Partnership received a permit under the ESA from the
USFWS and the National Marine Fisheries Service ("NMFS" and together with the
USFWS, the "Services") that covers the Partnership's forest management on
170,000 acres within SEAs in the Cascades Region (the "Planning Area").
Substantially all of the areas impacted by Owls are within the Planning Area. As
a part of the permit application, the Partnership prepared a multi-species
habitat conservation plan (the "HCP") that will govern the Partnership's
management activities in the Planning Area during the 50-year life of the
permit. Consistent with government policy (the "No-Surprises Policy"), the
implementing agreement for the HCP provides that no additional costs will be
imposed on or land restrictions required from the Partnership in the Planning
Area, absent extraordinary circumstances, so long as the Partnership is in
compliance with the terms of the HCP. The HCP requires the Partnership to
maintain certain levels of wildlife habitat and to take numerous other
mitigation measures, including the protection of riparian areas.
In consideration for such mitigation, the permit authorizes forestry
practices that are consistent with the HCP even though they may have an adverse
impact on the four listed species currently covered by the plan and permit,
including the Owl. The HCP provides that the Services will amend the permit to
add subsequently listed species without requiring the Partnership to provide
additional mitigation absent extraordinary circumstances. Such circumstances
would include situations where continued activity under the HCP would have a
significant material adverse impact on the species and mitigation on federal
land would not alleviate the concern. As an incentive to the Partnership to
create additional wildlife habitat in the Planning Area, the permit provides
certain additional authorization during a second 50-year period if the wildlife
habitat within the Planning Area exceeds levels set in the HCP. The permit thus
is expected to provide long-term certainty and predictability for the
Partnership's harvest activities in the Planning Area. For lands within the
Planning Area, the HCP management restrictions replace existing state and
federal restrictions for Owls.
In November 1996, a lawsuit was filed by a number of groups in Federal
District Court for the District of Columbia challenging the process by which the
Clinton Administration adopted the No-Surprises Policy. The Partnership is
unable at this time to predict the outcome of the challenge, or what effect, if
any, it might have on the HCP, if successful.
In December 1995, the Partnership entered into an agreement to conserve
grizzly bears (the "Grizzly Bear Agreement") with the USFWS, the USFS, and the
state of Montana covering 83,000 acres of the Partnership's timberlands in the
Swan Valley in western Montana. Under the Grizzly Bear Agreement, the
Partnership has agreed to protect certain habitat and to minimize the impact of
the Partnership's forestry activities on the grizzly bear. In consideration for
this mitigation, the USFWS authorized forestry practices in the Swan Valley that
are consistent with the agreement even though such practices may have an adverse
impact on grizzly bears.
In November 1996, several organizations filed a lawsuit against the
Secretary of the Interior and certain USFWS and Forest Service officials in
Federal District Court for the District
12
<PAGE> 13
of Montana challenging the Grizzly Bear Agreement under the ESA and the National
Environmental Policy Act. The Partnership is unable at this time to predict the
outcome of the challenge or what effect, if any, it might have on the Grizzly
Bear Agreement, if successful.
Although the HCP and Grizzly Bear Agreement have been implemented and
are functioning as expected, there can be no assurance that the terms of such
agreements will remain in force or be sufficient to protect against subsequent
amendment of the ESA or additional listings thereunder, or against changes to
other applicable laws and regulations. Any such changes could materially and
adversely affect the Partnership's operations. In addition, legal challenges
such as those described above could disrupt the continued operation of the HCP
and the Grizzly Bear Agreement and thereby reduce the level of certainty the
Partnership anticipates gaining from such plans.
The ESA also prohibits the federal government from jeopardizing species
listed under the ESA or from destroying or adversely modifying their designated
critical habitat. Private landowners are potentially affected by these
restrictions if a private activity requires federal action, such as the granting
of access or federal funding. Where there is such a federal connection, the
federal agency involved must consult with the USFWS or, in the case of
anadromous fish, NMFS to determine that the proposed activity would not
jeopardize the listed species or cause direct or indirect adverse modification
of its designated critical habitat. If the landowner's proposed activity would
have such effects, the USFWS or NMFS must propose, where possible, alternatives
or modifications to the proposed activity.
The Northwest Timberlands are often intermingled with federal land in
or near areas that include the habitats of a number of threatened or endangered
species such as the Owl and the grizzly bear. Access across federal lands may
require federal approval. In the past, the Partnership's access to such areas
has been delayed by administrative processes and legal challenges and has been
restricted under the ESA. The Partnership believes that access to its lands in
the Planning Area and the Swan Valley should be facilitated by the HCP and the
Grizzly Bear Agreement, although no assurance can be given that further such
delays will not occur.
At this time, the Partnership believes that federal and state laws and
regulations related to the environment and the protection of endangered species
will not have a material adverse effect on the Partnership's financial position,
results of operations or liquidity. The Partnership anticipates, however, that
increasingly strict laws and regulations relating to the environment, natural
resources and forestry operations, as well as increased social concern over
environmental issues, may result in additional restrictions on the Partnership
leading to increased costs, additional capital expenditures and reduced
operating flexibility.
LEGISLATION RESTRICTING LOG EXPORTS. Federal legislation currently
prohibits the sale of unprocessed logs harvested from federal lands located in
the western half of the U.S. if such logs will be exported from the U.S. by the
purchaser thereof, or if such logs will be used by the purchaser thereof, as a
substitute for timber from private lands which is exported by such purchaser. In
order to enforce this substitution prohibition, the legislation requires persons
who export private logs and who wish to purchase federal timber to obtain an
approved federal timber "sourcing area".
13
<PAGE> 14
To obtain approval it must be shown that the desired federal timber sourcing
area is economically and geographically separate from the area from which such
person exports private logs. In 1991, the Company applied for and obtained an
approved sourcing area for the Partnership's conversion facilities. Under the
legislation, sourcing areas are subject to review and renewal at least every
five years.
In October 1995, the United States Forest Service issued final
regulations implementing the 1990 legislation that could have made it more
difficult to obtain sourcing areas. These regulations, along with regulations
providing for periodic review of sourcing areas, however, have been temporarily
withdrawn pursuant to Congressional action to allow time for further public
comment and for Congress to consider modifications to the export law. Revisions
to the law and regulations have not yet been proposed. Although the uncertainty
surrounding the export regulations makes it difficult to predict the timing or
the outcome of a review, the Company believes that its sourcing area meets the
current statutory test and should be renewed.
In addition, federal legislation prohibits the export of unprocessed
logs harvested from certain state lands. Initially, Washington and Oregon
prohibited the export of all logs harvested from state lands. The legislation
provided, however, that the ban in Washington state on the export of state logs
would become a partial ban beginning January 1, 1996. Pending finalization of
the rules, the full ban is being maintained. Proposals have also been made from
time to time, but to date have been unsuccessful, to either ban or tax the
export of unprocessed logs harvested from private lands.
INCOME TAX CONSIDERATIONS
PARTNERSHIP STATUS. The Partnership is not a taxable entity and incurs
no federal income tax liability. Each partner is required to take into account
in computing his or her federal income tax liability, his or her allocable share
of income, gains, losses, deductions and credits of the Partnership, regardless
of whether cash distributions are made. Distributions by the Partnership to a
partner are generally not taxable.
Publicly traded partnerships will, as a general rule, be taxed as
corporations. However, an exception (the "Qualifying Income Exception") exists
with respect to publicly traded partnerships of which 90% or more of the gross
income for every taxable year consists of qualifying income. Qualifying income
includes income from the processing, refining, marketing or transportation of
timber and land sales. The Partnership's principal sources of income include
income from the sale of timber, the transportation of timber, the operation of
sawmills and the production of plywood and MDF. The Internal Revenue Service
("IRS") has issued two rulings to the Partnership that income from the operation
of sawmills and the production of plywood and MDF is qualified for this purpose.
SECTION 754 ELECTION. The Partnership has made the election permitted
by Section 754 of the Internal Revenue Code (the "Code"). The election requires
a purchaser of depositary units representing limited partner interests ("Units")
to adjust his or her share of the basis in the
14
<PAGE> 15
Partnership's properties ("Inside Basis") pursuant to Section 743(b) of the Code
to fair market value (as reflected by his or her Unit cost). A Unitholder's
allocable share of Partnership income, gains, losses and deductions is
determined in accordance with the Unitholder's unique basis under this election.
Such election is irrevocable and may not be changed without the consent of the
IRS. The Section 743(b) adjustment is attributed solely to a purchaser of Units
and is not added to the basis of the Partnership's assets associated with all of
the Unitholders.
FEDERAL INCOME TAXATION - GENERAL. Marketing, organized as a separate
corporation, reports all of its income, gains, losses, deductions and credits
arising from its operations on its own tax return and pays a corporate tax on
any resulting net income. Under current law, Marketing's net income is subject
to federal income tax at rates of up to 35%. Losses realized by Marketing do not
flow through to the Partnership, but are carried back and forward, within
certain limitations, to offset taxable income of Marketing in past or future
years. Distributions, if any, received by the Partnership from Marketing
generally would be characterized as either taxable dividends of current or
accumulated earnings and profits or in the absence of earnings and profits, as a
nontaxable return of capital (to the extent of the Partnership's tax basis in
Marketing's stock) or as taxable capital gain (after the Partnership's basis in
such stock is reduced to zero).
STATE TAX INFORMATION. The Partnership conducts operations in six
states, four of which (Arkansas, Idaho, Louisiana and Montana) have a state
income tax. To simplify the Unitholders' state filing requirements, the
Partnership files composite returns in each of those states and pays the state
income tax due on behalf of non-resident Unitholders. Marketing conducts
operations in approximately 25 states for which it pays state corporate income
taxes.
TAX-EXEMPT ENTITIES. Certain entities otherwise generally exempt from
federal income taxes (such as individual retirement accounts ("IRAs"), employee
benefit plans and other charitable or exempt organizations) may be subject to
federal income tax if their share of Unrelated Business Taxable Income ("UBTI")
exceeds $1,000. For years prior to 1994, all income derived from publicly traded
partnerships was classified as UBTI. For years after 1993, income is classified
as UBTI dependent upon source. Most of the Partnership's income continues to be
classified as UBTI. Regulated investment companies are required to derive 90% or
more of their gross income from qualified sources, such as interest or security
trading income; gross income from the Partnership is not qualifying income for
purposes of this test.
TIMBER INCOME. Section 631 of the Code provides special rules by which
gains from the sale of timber or cut logs, which would otherwise be taxable as
ordinary income, are treated in whole or in part as capital gains from the sale
of property used in a trade or business. The Partnership has elected to apply
the provisions of Section 631. Substantially all of the Partnership's 1996
taxable income is expected to qualify for capital gains treatment.
15
<PAGE> 16
ENCUMBRANCES
Under the terms of the Partnership's debt agreements, the Partnership
has agreed not to pledge, assign or transfer the Timberlands, except under
limited circumstances. Under the terms of the First Mortgage Notes of
Manufacturing, the holders of these notes have a first mortgage lien on a
significant portion of the Conversion Facilities. In addition, the Partnership
guarantees the First Mortgage Notes of Manufacturing.
The Partnership's title to the timberlands acquired during the
formation of the Company on June 8, 1989 and in the Southern Region Acquisition
includes substantially all the related hard rock mineral interests. However, the
Partnership did not obtain the hard rock mineral interests to a significant
portion of the 865,000 acres of timberland purchased in the Montana Timberland
Acquisition. In addition, the Partnership does not own oil and gas interests to
any of its Timberlands. The title to the Timberlands is subject to presently
existing easements, rights of way, flowage and flooding rights, servitudes,
cemeteries, camping sites, hunting and other leases, licenses and permits, none
of which materially adversely affect the value of the Timberlands or materially
restrict the harvesting of timber or other operations of the Partnership.
EMPLOYEES
The Company currently has approximately 425 salaried and 1,950 hourly
employees, including employees of the General Partner that manage the businesses
of the Company. The Company believes that its employee relations are good. The
Company's wage scale and benefits are generally competitive with other forest
products companies. Hourly employees (154 employees) at the Huttig, Arkansas
lumber mill participated in the UBC Southern Council of Industrial Workers,
Local Union No. 2346, AFL-CIO under a contract with Riverwood International
Corporation. The Company is currently meeting with union representatives
regarding contract negotiation. The harvesting and delivery of logs are
conducted by independent contractors who are not employees of the Company.
ITEM 2. PROPERTIES
The Company believes that its Timberlands and Conversion Facilities are
suitable and adequate for current operations. The Conversion Facilities are
maintained through on-going capital investments, regular maintenance and
equipment upgrades. The majority of the Conversion Facilities are modern, state
of the art facilities. The Company owns all of the Conversion Facilities.
Substantially all of the Conversion Facilities are operated at, or near, maximum
capacity levels year round. See Item 1. Business for discussion of the location
and description of properties and encumbrances related to properties.
16
<PAGE> 17
ITEM 3. LEGAL PROCEEDINGS
In June 1995, the Company received a Compliance Order ("Order") from
the Environmental Protection Agency ("EPA") under the Clean Air Act. The Order
alleges that the startup in 1990 of a boiler at the Company's Pablo sawmill did
not meet new source performance standards ("NSPS"). Work on the boiler project
commenced in March 1989, when NSPS did not apply to boilers of this size. Prior
to final startup of the boiler, however, new rules were proposed that, if
applicable, would have required meeting these standards. The EPA has taken the
position that the new rules applied, and is seeking compliance with NSPS. In
December 1995, the Company voluntarily installed a pollution control device and
an opacity monitor on the boiler at a cost of $700,000 without waiving any
defenses to the EPA claim. The Company believes it is in full compliance with
both the Order and NSPS. On March 12, 1996, the Department of Justice, on behalf
of the EPA, filed suit in federal court seeking civil penalties and injunctive
relief for the alleged violation of NSPS in accordance with the Clean Air Act
which contemplates civil penalties. The Company believes it has meritorious
defenses to the claim. However, due to the inherent nature of litigation, the
Company cannot predict the outcome of the enforcement case. If not resolved
earlier, it is likely that the matter will go to trial in 1997. The General
Partner believes, based upon available information and current EPA enforcement
policies, that the ultimate outcome of this action will not have a material
adverse effect on the Company's financial position, results of operations or
liquidity.
The Company has worked with the State of Washington Department of
Ecology ("DOE") concerning opacity above permitted levels associated with
emissions at the Arden Sawmill that may have occurred prior to the sale of the
mill to Stimson Lumber Company in October of 1996 as part of the Newport Asset
Sale. Prior to the sale of the mill, the Company received a letter from DOE
requesting information concerning such emissions. DOE has not taken any other
compliance actions with respect to this matter. As part of the Newport Asset
Sale, the Company agreed to indemnify Stimson for any liabilities that arise
relating to the period when the Company owned the Arden Sawmill. The Company
believes that this matter will not materially affect the Company's financial
position, results of operations or liquidity.
There is no pending litigation, and to the knowledge of the General
Partner there is no threatened litigation involving the Company which would have
a material adverse effect on the financial position, the results of operations
or liquidity of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
17
<PAGE> 18
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED UNITHOLDER MATTERS
The Partnership's Units are traded on the New York Stock Exchange. As
of February 28, 1997, there were approximately 61,000 beneficial owners of
46,323,300 outstanding Units.
Trading price data, as reported by the New York Stock Exchange, and
declared cash distribution information for 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
- - ---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
High $ 27-3/4 $ 27-5/8 $ 27 $ 27-1/8
Low 23-3/4 23-1/4 22-7/8 25
Cash Distribution per Unit $ 0.49 $ 0.51 $ 0.51 $ 0.51
</TABLE>
<TABLE>
<CAPTION>
1995 1st Qtr. 2nd Qtr. 3rd Qtr. 4th Qtr.
- - ---- -------- -------- -------- --------
<S> <C> <C> <C> <C>
High $ 24 $ 26-1/8 $ 26-5/8 $ 25-1/4
Low 19-7/8 21-7/8 23-5/8 21-7/8
Cash Distribution per Unit $ 0.49 $ 0.49 $ 0.49 $ 0.49
</TABLE>
Cash distributions are paid from available cash as defined by the
Partnership's partnership agreement. It is the Company's intention to maintain
the distribution into the foreseeable future; however, there can be no
guarantee. In addition, the Company's debt agreements have certain restrictive
covenants limiting the amount of cash distributions.
18
<PAGE> 19
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1996(1) 1995 1994 1993(2) 1992(3)
------- ---- ---- ------- -------
<S> <C> <C> <C> <C> <C>
For the year:
(In millions, except per Unit):
Revenues $ 633.7 $ 585.1 $ 578.7 $ 501.0 $ 439.9
Depreciation, Depletion and Amortization 56.9 54.1 54.1 38.8 39.0
Operating Income 165.0 159.0 164.1 126.6 97.8
Net Income 223.6 110.7 112.2 91.4 64.2
Capital Expenditures (4) 19.3 30.7 25.8 29.3 25.6
Net Cash Provided by Operations 171.9 165.2 155.1 115.3 78.0
Net Income per Unit (5) 4.71 2.17 2.36 1.92 1.34
Cash Distributions Declared per Unit (5) 2.02 1.96 1.67 1.38 1.17
At year end (in millions):
Working Capital 153.0 111.5 90.5 51.0 99.7
Total Assets 1,336.4 826.1 826.2 818.7 587.0
Total Debt 780.8 531.4 544.4 569.9 318.5
Partners' Capital (6) $ 491.6 $ 233.9 $ 223.0 $ 192.6 $ 225.3
Operating Data:
Northwest Timberlands Fee Timber
Harvested (MMBF) 577 562 559 458 469
Southern Timberlands Fee Timber Harvested
(thousand Cunits) 127
Northwest Timberlands Non-Fee Timber
Harvested (MMBF) 128 116 71 77 117
Southern Timberlands Non-Fee Timber
Harvested (thousand Cunits) 21
Lumber Production (MMBF) 461 433 388 352 395
Plywood Production (MMSF) (3/8" basis) 334 294 290 289 294
MDF Production (MMSF) (3/4" basis) 113 102 123 106 109
</TABLE>
(1) Included in 1996 results of operations was a gain of $105.7 million related
to the Newport Asset Sale. Results include the impact of the Southern Region
Acquisition from October 19, 1996 and the Newport Asset Sale from October 12,
1996.
(2) During 1993, the Company elected to change its method for valuing
inventories from average cost to the last-in, first-out ("LIFO") method. This
change in accounting lowered 1993 earnings by $8.0 million or $0.18 per Unit.
The cumulative effect of the accounting change and pro forma effects on prior
years' earnings have not been included because such effects are not reasonably
determinable. In addition, on August 30, 1993, the Partnership redeemed the 1.25
million Deferred Participation Interests (on a pre-Unit split basis) for $63.0
million. Results subsequent to 1993 include the impact of the November 1993
Montana Timberland Acquisition.
(3) Included in 1992 results of operations was the sale of the 164,000 acre
Gallatin Unit, together with the Belgrade sawmill for $23 million plus the value
of inventory. The sale resulted in a net gain of $15.6 million.
(4) Does not include $560.7 million related to the Southern Region Acquisition
in 1996 or $255.3 million related to the timberlands acquired as part of the
Montana Timberland Acquisition in 1993.
(5) Per Unit amounts have been restated for the December 6, 1993 three-for-one
Unit split.
(6) The Partnership issued 5.7 million Units during 1996 for net proceeds of
$144.3 million.
19
<PAGE> 20
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
EVENTS AND TRENDS AFFECTING OPERATING RESULTS
MARKET FORCES. The demand for logs and manufactured wood products
depends upon international and domestic market conditions, the value of the U.S.
dollar in foreign exchange markets, competition, the availability of substitute
products and other factors. In particular, the demand for logs, lumber, plywood
and MDF is affected by residential and industrial construction, and repair and
remodel activity. These activities are subject to fluctuations due to changes in
economic conditions, tariffs, interest rates, population growth and other
economic, demographic and environmental factors. Additionally, the demand for
logs is impacted by the demand for wood chips in the pulp and paper markets.
CURRENT MARKET CONDITIONS. Prices for domestic logs in the Cascades
Region for 1996 decreased from levels experienced in 1995, primarily as a result
of weak pulp and chip markets. Pulp and paper markets have been weak for the
past year resulting in an excess supply of wood chips. The over-supply has
depressed chip prices and caused downward pressure on the price of domestic logs
in the Cascades Region. However, prices have improved slightly since the third
quarter of 1996 as a result of the robust housing market, the strong export
market and reduced log production due to winter weather. Prices for domestic
logs in the Rockies Region for 1996 have remained relatively flat from those
experienced during 1995. The downward pressure due to weak chip prices and
declining commodity plywood prices has been offset by favorable lumber prices.
Prices have declined since the third quarter of 1996 due to seasonal declines in
building activity and declining commodity plywood prices. Pulp log prices
declined significantly during 1996 in both regions as a result of weakness in
the pulp and paper markets. Domestic and pulp log prices in the Southern Region
increased during the fourth quarter of 1996 as a result of wet weather limiting
supply.
In the export market, 1996 Douglas-fir prices were stable compared to
1995. Japanese demand was strong due to a robust Japanese housing market as a
result of an improving economy, record low interest rates and an upcoming
increase in the Japanese consumption tax. At year end, prices for Douglas-fir
began to soften as a result of importers adjusting to an anticipated decline in
demand following an April 1, 1997 consumption tax increase. Export prices for
whitewoods have declined as compared to 1995 due to ample supply and increased
acceptance of substitute products. However, whitewood prices improved during the
fourth quarter of 1996 due to a temporary supply shortage which resulted from
strong domestic demand and prior production curtailments.
Industry composite indices for lumber commodity prices were 19% higher
in 1996 than in 1995. The increase in lumber prices was a result of the robust
housing market, the reduced supply of Canadian lumber and strength in the repair
and remodel markets in the retail sector. The housing sector has been strong
throughout 1996 due to favorable interest rates and a good economy. As a result,
the backlog of unsold homes has been declining and housing starts have remained
strong. Effective April 1, 1996 the United States and Canada agreed to place a
quota on the amount of duty- free lumber that can be exported to the United
States. Additionally, the cost of manufacturing
20
<PAGE> 21
lumber in the Canadian Provence of British Columbia has increased due to higher
stumpage prices and environmental costs. Both the quota and higher costs have
contributed to the upward pressure on the price of lumber. Lumber prices in the
repair and remodel markets continued to improve as a result of supply
limitations caused by a decline in the supply of preferred western species and
numerous mills targeting production toward the housing market sector.
Industry composite indices for plywood commodity prices were 12% lower
than in 1995 primarily due to increased competition from OSB. North American OSB
capacity increased by over 20% in 1996, and capacity is expected to increase by
approximately 50% in 1997 through 2001. In the fourth quarter of 1996, OSB
prices declined to a record five-year low due to seasonal declines in building
activity and increased capacity. This has resulted in an unusually high plywood
to OSB price premium. Prices for the Company's MDF were 16% lower in 1996,
compared to 1995, due to significant capacity expansion during 1996. Between
1995 and 1996, North American MDF capacity increased from approximately 1.5
billion square feet to approximately 1.7 billion square feet and is expected to
expand even faster in 1997. At the same time demand has been reduced as
distributors reduce inventory levels in anticipation of further price declines.
COMPARABILITY OF FINANCIAL STATEMENT PERIODS. As part of its business
strategy, the Company has pursued and will continue to pursue the acquisition of
additional timberlands to increase inventories of fee timber. On November 1,
1993, the Company completed the Montana Timberland Acquisition. In addition, on
October 18, 1996, the Company completed the Southern Region Acquisition. (See
Note 2 to Notes to Combined Financial Statements.) The Company may also, from
time to time, sell timberlands and facilities if attractive opportunities arise.
The Newport Asset Sale was completed on October 11, 1996. Revenues and operating
income generated by the assets sold in the Newport Asset Sale were $61.0 million
and $15.7 million, respectively, in 1996 and were $67.8 million and $14.6
million, respectively in 1995. Accordingly, the comparability of periods covered
by the Company's financial statements is, and in the future may be, affected by
the impact of acquisitions and divestitures.
HARVEST PLANS. The Partnership determines its harvesting plans based on
a number of factors, including age and size of, and species distribution within,
its timber acreage, economic maturity of each harvest area, environmental
considerations and mill requirements both in the Conversion Facilities and at
unaffiliated mills. The timing of harvests of merchantable timber depends in
part on growth cycles and in part on economic conditions. Harvest levels in the
Rocky Mountain Region have averaged approximately 360 MMBF (excluding the
harvest from the timberlands sold in the Newport Asset Sale) over the last three
years. These harvest levels are expected, on average, to remain relatively
stable over the next several years. By the year 2001, the Partnership
anticipates that it will have nearly completed the conversion of slower growing
forests to younger, more productive stands in the Rocky Mountain Region, at
which time it anticipates a moderate reduction in the region's harvest levels.
Harvest levels in the Cascades Region have averaged 155 MMBF over the past three
years. The Partnership expects its harvest levels to decline gradually for the
foreseeable future as the conversion process in the region approaches
completion.
Harvest levels in the Southern Region are expected to increase modestly
between 1997 and 2000 as we complete the conversion of mature second growth pine
timberlands into intensively
21
<PAGE> 22
managed pine plantations. Following the completion of the conversion process,
harvest levels should decline and then gradually increase as the Company
benefits from the faster growing, intensively managed plantations.
Since harvest plans are influenced by projections of demand, price,
availability of timber from other sources and other factors that may be outside
of the Partnership's control, actual harvest levels may vary. The Partnership
believes that its harvest plans are sufficiently flexible to permit modification
in response to short-term fluctuations in the markets for logs and lumber.
RESULTS OF OPERATIONS
The following table compares operating income by segment for the years
ended December 31, 1996, 1995 and 1994.
Operating Income by Segment
(In Thousands)
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Resources ......................... $ 163,306 $ 139,192 $ 150,730
Manufacturing ..................... 22,516 35,567 32,175
Other & Eliminations .............. (20,834) (15,783) (18,771)
--------- --------- ---------
Total ............................. $ 164,988 $ 158,976 $ 164,134
--------- --------- ---------
</TABLE>
1996 COMPARED TO 1995
Resources Segment revenues increased by $42.3 million, or 12.9%, to
$369.3 million in 1996, as compared to $327.0 million in 1995. Such increase was
primarily due to a $38.2 million increase in land sales revenue and an $18.3
million increase as a result of the addition of the Southern Timberlands in the
Southern Region Acquisition, offset in part by a decrease of $14.4 million in
revenues from Northwest Timberland pulpwood and chip sales. The increase in land
sales revenue was due to approximately 21,600 acres of higher and better use
land sales in 1996 resulting in revenues of $42.3 million, compared to $4.1
million in 1995. (See Item 1. Business Resources Segment - Land Management.) The
decrease in pulpwood and chip revenues was a result of weak pulp and paper
markets and the over supply of available wood fiber. Domestic log sales volume
in the Northwest Timberlands increased by 5%, compared to 1995, as a result of
increased harvest levels to take advantage of favorable pricing resulting from
strong product markets. Export prices decreased by 8%, compared to 1995, due to
a higher percentage of lower valued logs in the 1996 sales mix.
Resources Segment costs and expenses increased by $18.2 million, or
9.7%, to $206.0 million in 1996 compared to $187.8 million in 1995. Such
increase was primarily due to $10.1
22
<PAGE> 23
million of additional costs related to the Southern Region, the increase in land
sales, the increase in Northwest Timberlands domestic log sales volume and
increased costs related to longer hauling distances, offset in part by reduced
pulpwood and chip operations.
Manufacturing Segment revenues increased by $12.2 million, or 3.2%, to
$387.9 million in 1996 compared to $375.7 million in 1995. Such increase was due
to additional revenues of $24.7 million from the Southern Conversion Facilities,
increased lumber sales prices and increased MDF sales volumes, offset in part by
lower MDF sales prices and decreased chip revenues. Lumber sales prices in the
Northwest increased by 6% as compared to the year earlier period as a result of
the robust housing market, strength in the repair and remodel markets and supply
constraints. The U.S. housing market remained unusually strong throughout most
of the summer and fall. Additionally, as a result of the U.S. - Canada trade
agreement, Canada was not able to significantly increase its output to take full
advantage of the improving U.S. housing market. The Partnership also experienced
favorable pricing in the repair and remodel markets due to reduced supply as a
result of a number of mills targeting production toward the home construction
segment. MDF sales volume was restored to normal levels during the second half
of 1996 and was 8% higher than the sales volume for 1995. MDF sales volume was
unusually low during 1995 due to production downtime associated with the
conversion of production processes to manufacture high quality, super-refined
MDF(2) and weak market conditions. MDF prices decreased by 16% as a result of
significant 1996 capacity expansion. However, the Company experienced less
downward price pressure than the industry as a whole due to increasing demand
for its higher quality MDF(2) product. Residual chip prices decreased by 29%
over 1995 due to excess chip inventories throughout the entire industry. The
chip plant was closed during most of 1996 as a result of weak chip markets.
Manufacturing Segment costs and expenses increased by $25.3 million, or
7.4%, to $365.4 million in 1996 compared to $340.1 million in 1995. Such
increase was primarily due to $24.0 million of additional costs related to the
Southern Conversion Facilities and increased MDF sales volumes.
Other Costs and Eliminations (which consists of corporate overhead,
intercompany log profit elimination, and intercompany LIFO elimination)
decreased operating income by $20.8 million in 1996 compared to $15.8 million in
1995. The variance of $5.0 million was primarily due to the release of more
intercompany log profit in 1995 than in 1996 as a result of reducing inventory
levels in 1995. On a combined basis, the Resources Segment's profit on
intercompany log sales is deferred until Manufacturing converts existing log
inventories into finished products and sells them to third parties.
Interest expense increased by $3.3 million as a result of both an
increase in outstanding debt and debt issuance costs related to the October 1996
Southern Region Acquisition. Gain on disposition of assets increased in 1996
primarily as a result of a $105.7 million gain related to the Newport Asset
Sale.
The income allocated to the General Partner increased by $5.3 million
during 1996 compared to 1995 as a result of higher quarterly distributions to
the Unitholders which increased the incentive distribution paid to the General
Partner and an increase in net income. Net income is allocated to
23
<PAGE> 24
the General Partner based on two percent of the Company's net income (adjusted
for the incentive distribution paid), plus the incentive distribution. The
incentive distribution is based on a percentage of the quarterly distribution
paid which totaled $2.00 per Unit for the year ended 1996, compared to $1.90 per
Unit in 1995.
1995 COMPARED TO 1994
Resources Segment revenues increased by $2.6 million, or 0.8%, to
$327.0 million in 1995, as compared to $324.4 million in 1994. Such increase was
primarily due to a $21.7 million increase in revenues from pulpwood and chip
sales offset in part by lower export log sales volume and lower domestic log
prices. The increase in pulpwood and chip revenues was due to the addition in
1995 of in-woods chipping operations, which utilize small tops of trees and
small trees from thinning operations, and a significant increase in pulp log
prices and sales volume as compared to 1994 due to strong pulp and paper
markets. Export log sales volume decreased by 18% as compared to 1994 due to the
shifting of lower quality export logs to the domestic market as a result of a
weaker Japanese economy and a planned reduction in harvest levels. Domestic log
prices decreased by 8% as compared to 1994. The decrease was attributable
entirely to the Rocky Mountain Region and was due to weak lumber markets and
aggressive competition from Canadian lumber producers.
Resources Segment costs and expenses increased by $14.1 million, or
8.1%, to $187.8 million in 1995 as compared to $173.7 million in 1994. Such
increase was primarily due to the costs relating to higher volumes of pulpwood
and chip sales.
Manufacturing Segment revenues increased by $3.5 million, or 0.9%, to
$375.7 million in 1995 as compared to $372.2 million in 1994. Such increase was
due to an increase in lumber sales volume and a 60% increase in revenues from
residual chip sales, offset in part by lower lumber prices and lower MDF sales
volume. Lumber sales volume increased by 8% as compared to 1994 due to increased
production as a result of the Partnership's new lumber remanufacturing facility,
higher productivity due to improved log merchandising specifications and capital
improvements, and additional production shifts. Lumber prices decreased by 13%
as compared to 1994 due to a weaker housing market as a result of generally
slower economic conditions, and increased competition from both Canadian imports
and substitute products. While the Partnership's lumber prices are influenced by
commodity prices, it is able to maintain sales volume due to its high
concentration of sales in the repair and remodel and industrial markets, which
are less affected by the slow housing market. MDF sales volume decreased by 15%
as compared to 1994 as a result of production downtime associated with weak
market conditions and operational issues encountered during the start-up of new
high-energy refiners for the Partnership's new MDF(2) product. Residual chip
revenues increased due to a substantial increase in prices over 1994 due to
strong pulp and paper markets.
Manufacturing Segment costs and expenses were $340.1 million for each
of the years ended 1995 and 1994. Increased costs due to increased lumber sales
volumes were offset by lower log costs (14% and 4% lower for lumber and plywood,
respectively) and lower MDF
24
<PAGE> 25
production costs as a result of downtime.
Other Costs and Eliminations reduced operating income by $15.8 million
in 1995 as compared to reducing income by $18.8 million in 1994. The variance
was primarily due to lower intercompany profit elimination, offset in part by an
increase in the intercompany LIFO elimination. On a combined basis, the
Resources Segment's profit on intercompany log sales is deferred until
Manufacturing converts existing log inventories into finished products and sells
them to third parties. The 1995 intercompany profit elimination was lower than
the prior year's due to a decrease in log inventory levels, and a lower log
transfer price as a result of a weaker domestic log market. On a combined basis,
the LIFO impact related to price fluctuations on the sale of intercompany logs
is eliminated. The 1995 intercompany LIFO elimination was greater than the prior
year's due to a lower log transfer price, which resulted in a greater decrement
in Manufacturing's separate company LIFO reserve as compared to the combined
LIFO reserve.
The income allocated to the General Partner increased by $6.2 million
during 1995 compared to 1994 as a result of higher quarterly distributions to
the Unitholders which increased the incentive distribution paid to the General
Partner. Net income is allocated to the General Partner based on 2% of the
Company's net income (adjusted for the incentive distribution paid), plus the
incentive distribution. The incentive distribution is based on a percentage of
the quarterly distribution paid which totaled $1.90 per Unit for the year ended
1995, as compared to $1.62 per Unit in 1994.
EXPORT SALES
The Company sells logs and finished wood products for export. These
sales are denominated in U.S. dollars and are generally sold to Pacific Rim
countries, principally Japan, Canada and Europe. Combined export revenues as a
percentage of total revenues were 11%, 13% and 15% for 1996, 1995, and 1994,
respectively.
FINANCIAL CONDITION AND LIQUIDITY
Net cash provided by operating activities was $171.9 million, $165.2
million and $155.1 million for 1996, 1995 and 1994, respectively. The increase
of $6.7 million in 1996 is primarily a result of increased operating income
compared to 1995. In 1994, operating cash flow was reduced by $9.2 million, net
of expense, for the funding of certain employee benefit plans. There was no such
funding in 1996 or 1995. For further discussion of these benefit plans, see Note
11 of Notes to Combined Financial Statements. On December 31, 1996, the Company
had $123.9 million of cash and cash equivalents.
On October 18, 1996, the Partnership acquired approximately 529,000
acres (plus approximately 9,000 leased acres) of timberland in Louisiana and
Arkansas, along with two sawmills, a plywood plant and a nursery in the Southern
Region Acquisition for a total purchase price of $540 million, plus $11.9
million for working capital. The Partnership financed the Southern Region
Acquisition from cash on hand, including proceeds from certain ordinary course
asset dispositions, the proceeds from the Newport Asset Sale, and two new bank
credit
25
<PAGE> 26
facilities dated as of October 17, 1996, (the "New Bank Facilities"), consisting
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"). The Partnership borrowed $50 million under the Bridge Facility and
$322 million under the New Line of Credit to finance the Southern Region
Acquisition. No further borrowings are permitted under the Bridge Facility. On
October 22, 1996, the Partnership issued 5,600,000 Units for net proceeds of
$141.4 million. On November 5, 1996, 115,000 additional Units were issued by the
Partnership for net proceeds of $2.9 million. The combined net proceeds were
used to repay the Bridge Facility and a portion of the amount outstanding under
the New Line of Credit.
On November 13, 1996, the Partnership issued $200 million of senior
notes (the "New Notes") in a private placement. The New Notes have an average
life of 13 years and bear interest at a weighted average rate of 7.88% annually.
The New Notes are unsecured obligations of the Partnership and the terms of the
New Notes are substantially similar to the terms of its existing senior notes.
The proceeds from the New Notes were used to repay a portion of the outstanding
borrowings under the New Line of Credit. The commitment under the New Line of
Credit was reduced to $225 million in November 1996. See Note 2 and 6 of Notes
to Combined Financial Statements.
As of December 31, 1996, the Partnership had $161.0 million outstanding
under the New Line of Credit. The New Line of Credit permits the Partnership to
borrow up to $225 million for general corporate purposes, including standby
letters of credit issued on behalf of the Partnership or Manufacturing. The New
Line of Credit matures on December 13, 2001 and bears interest at a floating
rate. Borrowings on the New Line of Credit fluctuate daily based on cash needs.
As of January 3, 1997, the Partnership had repaid $126.0 million of the
borrowings under the New Line of Credit.
The Company's loan agreements contain certain restrictive covenants,
including limitations on harvest levels, sale of assets, cash distributions and
the amount of future indebtedness. In addition, the New Line of Credit requires
the maintenance of a required interest coverage ratio. The Company was in
compliance with its debt covenants as of December 31, 1996.
The Partnership will distribute $0.51 per Unit for the fourth quarter
of 1996. The distribution will equal $31.0 million (including $7.4 million to
the General Partner), and will be paid on February 28, 1997 to Unitholders of
record on February 14, 1997. The computation of cash available for distribution
includes required reserves for the payment of principal and interest, as well as
other reserves established at the discretion of the General Partner for working
capital, capital expenditures, and future cash distributions.
Cash required to meet the Partnership's quarterly cash distributions,
capital expenditures and to satisfy interest and principal payments on the
Company's debt will be significant. The General Partner expects that all debt
service will be funded from cash generated by operations. The Partnership
expects to make cash distributions from current funds and cash generated from
operations. It is anticipated that future capital expenditures will be funded
from cash on hand,
26
<PAGE> 27
cash generated from operations, and borrowings under the New Line of Credit.
The Company is involved in certain environmental and regulatory
proceedings and other related matters. Although it is possible that new
information or future developments could require the Company to reassess its
potential exposure related to these matters, the Company believes, based upon
available information, that the resolution of these issues will not have a
materially adverse effect on its results of operations, financial position or
liquidity.
CAPITAL EXPENDITURES. Capital expenditures for the Resources Segment
were $6.5 million, $8.5 million and $7.1 million for 1996, 1995 and 1994,
respectively, excluding $514.9 million related to the Southern Region
Acquisition in 1996. Resources Segment capital expenditures included the
construction of logging roads and reforestation. Capital expenditures for the
Manufacturing Segment were $12.8 million, $22.2 million and $18.7 million for
1996, 1995 and 1994, respectively, excluding $45.8 million related to the
Southern Region Acquisition in 1996. Capital expenditures in 1996 included the
purchase and installation of various lumber and plywood optimization projects,
as well as replacements and upgrades of other equipment in several of the
Conversion Facilities. Capital expenditures have decreased as compared to 1995
and 1994 due to the completion of major improvements at the majority of the
manufacturing facilities.
Planned capital expenditures for the Resources Segment in 1997 are $12
million, primarily for logging roads and reforestation. The Manufacturing
Segment's 1997 planned capital expenditures are $12 million which includes
various lumber and plywood projects to improve productivity and increase
recovery, as well as replacements and upgrades of equipment in several of the
Conversion Facilities.
EFFECT OF INFLATION
During recent years the Company has generally experienced increased
costs due to the effect of inflation, particularly in the Manufacturing Segment,
on the cost of raw materials, labor, supplies and energy and, in the Resources
Segment, on logging and hauling costs. However, the Company utilizes the LIFO
inventory valuation method for its raw materials, work-in-process and finished
goods inventory which generally matches current costs to current revenues and
thus, tends to reflect the impact of inflation on cost of goods sold.
27
<PAGE> 28
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
PLUM CREEK TIMBER COMPANY, L. P.
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1996 1995 1994
(In Thousands, Except Per Unit)
<S> <C> <C> <C>
Revenues ....................................... $633,741 $585,074 $578,657
-------- -------- --------
Costs and Expenses:
Cost of Goods Sold ....................... 429,897 388,450 375,782
Selling, General and Administrative ...... 38,856 37,648 38,741
-------- -------- --------
Total Costs and Expenses ............... 468,753 426,098 414,523
-------- -------- --------
Operating Income ............................... 164,988 158,976 164,134
Interest Expense ............................... (50,141) (46,836) (47,410)
Interest Income ................................ 1,291 1,073 889
Gain (Loss) on Disposition of Assets - Net ..... 108,852 (133) (1,074)
Other Expense - Net ............................ (1,777) (3,403)
-------- -------- --------
Income before Income Taxes ..................... 224,990 111,303 113,136
Provision for Income Taxes ..................... 1,391 572 924
-------- -------- --------
Net Income ..................................... $223,599 $110,731 $112,212
General Partner Interest ....................... 27,777 22,487 16,325
-------- -------- --------
Net Income Allocable to Unitholders ............ $195,822 $ 88,244 $ 95,887
======== ======== ========
Net Income per Unit ............................ $ 4.71 $ 2.17 $ 2.36
======== ======== ========
</TABLE>
See accompanying Notes to Combined Financial Statements.
28
<PAGE> 29
PLUM CREEK TIMBER COMPANY, L.P.
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
December 31,
------------------------------
1996 1995
(In Thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents............ $ 123,892 $ 87,604
Accounts Receivable.................. 23,697 31,750
Inventories.......................... 53,884 47,366
Timber Contract Deposits............. 5,987 2,320
Other Current Assets................. 15,025 4,949
------------ ------------
222,485 173,989
Timber and Timberlands - Net............ 922,652 467,992
Property, Plant and Equipment - Net..... 172,688 166,152
Other Assets............................ 18,609 17,953
------------ ------------
Total Assets............................ $ 1,336,434 $ 826,086
============ ============
LIABILITIES
Current Liabilities:
Current Portion of Long-Term Debt.... $ 17,400 $ 14,100
Accounts Payable..................... 13,443 15,771
Interest Payable..................... 9,530 7,543
Wages Payable........................ 13,187 11,513
Taxes Payable........................ 5,275 5,122
Workers' Compensation Liabilities.... 1,450 2,318
Other Current Liabilities............ 9,212 6,081
------------ ------------
69,497 62,448
Long-Term Debt.......................... 602,400 419,800
Lines of Credit......................... 161,000 97,500
Workers' Compensation Liabilities....... 8,533 8,405
Other Liabilities....................... 3,356 4,065
------------ ------------
Total Liabilities....................... 844,786 592,218
------------ ------------
Commitments and Contingencies
PARTNERS' CAPITAL
Limited Partners' Units................. 490,105 234,117
General Partner......................... 1,543 (249)
------------ ------------
Total Partners' Capital................. 491,648 233,868
------------ ------------
Total Liabilities and Partners' Capital. $ 1,336,434 $ 826,086
============ ============
See accompanying Notes to Combined Financial Statements.
</TABLE>
29
<PAGE> 30
PLUM CREEK TIMBER COMPANY, L. P.
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1996 1995 1994
-------- -------- --------
(In Thousands)
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income ...................................................... $223,599 $110,731 $112,212
Adjustments to Reconcile Net Income to
Net Cash Provided By Operating Activities:
Depreciation, Depletion and Amortization ..................... 56,945 54,097 54,143
Gain on Property Dispositions - Net .......................... (108,852) (2,986) (419)
Working Capital Changes, net of effect of business
acquisition and disposition:
Accounts Receivable ......................................... 8,053 (4,884) 1,845
Inventories ................................................. (1,052) 7,319 (6,583)
Timber Contract Deposits .................................... 1,663 503 164
Other Current Assets ........................................ (10,579) (936) 1,386
Accounts Payable ............................................ (2,328) 2,540 193
Interest Payable ............................................ 1,987 (138) 4,676
Wages Payable ............................................... (77) 2,089 (645)
Taxes Payable ............................................... (661) (972) 446
Workers' Compensation Liabilities ........................... (868) (292)
Other Current Liabilities ................................... 2,148 (697) (1,560)
Funding of Benefit Plans - Net ............................... 4,375 2,411 (9,198)
Other ........................................................ (2,405) (3,571) (1,545)
-------- -------- --------
Net Cash Provided By Operating Activities ....................... 171,948 165,214 155,115
-------- -------- --------
Cash Flows From Investing Activities:
Southern Region Acquisition ..................................... (555,966)
Proceeds from Newport Asset Sale ................................ 148,676
Additions to Other Properties ................................... (19,280) (30,683) (25,837)
Proceeds from Other Property Dispositions ....................... 7,329 6,777 4,472
Other ........................................................... (1,806) 458
-------- -------- --------
Net Cash Used In Investing Activities ........................... (419,241) (25,712) (20,907)
-------- -------- --------
Cash Flows From Financing Activities:
Cash Distributions .............................................. (110,116) (99,840) (81,790)
Borrowings on Lines of Credit and Bridge Facility ............... 948,250 399,000 368,345
Payments on Lines of Credit and Bridge Facility ................. (884,750) (399,000) (530,846)
Issuance of Long-Term Debt ...................................... 200,000 150,000
Retirement of Long-Term Debt .................................... (14,100) (13,000) (13,000)
Issuance of Limited Partner Units ............................... 144,297
-------- -------- --------
Net Cash Provided By (Used In)
Financing Activities .......................................... 283,581 (112,840) (107,291)
-------- -------- --------
Increase in Cash
and Cash Equivalents ........................................... 36,288 26,662 26,917
Cash and Cash Equivalents:
Beginning of Year ............................................... 87,604 60,942 34,025
-------- -------- --------
End of Year ..................................................... $123,892 $ 87,604 $ 60,942
======== ======== ========
Supplementary Cash Flow Information
Interest Paid ................................................... $ 46,635 $ 46,904 $ 42,734
Income Taxes Paid - Net ......................................... $ 972 $ 952 $ 973
</TABLE>
See accompanying Notes to Combined Financial Statements.
30
<PAGE> 31
PLUM CREEK TIMBER COMPANY, L. P.
NOTES TO COMBINED FINANCIAL STATEMENTS
NOTE 1. ACCOUNTING POLICIES
BASIS OF PRESENTATION. Plum Creek Timber Company, L.P. (the
"Partnership"), a Delaware limited partnership, Plum Creek Manufacturing, L.P.
("Manufacturing"), and Plum Creek Marketing, Inc. ("Marketing"), own, manage and
operate approximately 2.4 million acres of timberland and twelve wood products
conversion facilities in the northwestern and southeastern United States. See
Note 2 to Notes to Combined Financial Statements. The Partnership owns 98
percent of Manufacturing and 96 percent of Marketing. Plum Creek Management
Company, L.P. (the "General Partner"), manages the businesses of the
Partnership, Manufacturing and Marketing and owns the remaining two percent
general partner interest of Manufacturing and four percent of Marketing. As used
herein, "Company" refers to the combined entities of the Partnership,
Manufacturing and Marketing. "Resources Segment" refers to the timber and land
management business of the Partnership, and "Manufacturing Segment" refers to
the combined businesses of Manufacturing and Marketing.
The Resources Segment grows and harvests timber for sale in export
markets, primarily Pacific Rim countries, and domestic markets, primarily in
Arkansas, Idaho, Louisiana, Montana and Washington. The Manufacturing Segment
produces a wide variety of lumber, plywood and medium density fiberboard ("MDF")
products. The Manufacturing Segment targets these products to retail home
centers and various specialty niche markets as well as housing related markets.
The principal markets for lumber and plywood products are in the United States
and, to a lesser extent, Pacific Rim countries and Europe. MDF markets primarily
consist of North America and, to a lesser extent, Pacific Rim countries.
The combined financial statements of the Company include all the
accounts of the Partnership, Manufacturing and Marketing. All significant
intercompany transactions have been eliminated in combination. Certain financial
statement reclassifications have been made to the 1995 and 1994 amounts
presented for comparability purposes and have no impact on net income.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NET INCOME PER UNIT. Net income per Unit is calculated using the
weighted average number of Units outstanding, divided into the combined
Partnership net income, after adjusting for the General Partner interest. The
weighted average number of Units outstanding was 41,619,803, 40,608,300 and
40,608,300 for the years ended December 31, 1996, 1995 and 1994, respectively.
31
<PAGE> 32
REVENUE RECOGNITION. Revenues received from the sale of logs, wood
products and by-products, primarily wood chips, are generally recorded as
revenue at the time of shipment. Sales are denominated in U.S. dollars. Sales of
timberlands identified by the Partnership as higher and better use lands (for
use other than for forest management purposes) are included in revenues when the
sale is consummated.
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents. Substantially all of the cash and cash equivalents are
deposited with one financial institution.
INVENTORIES. Logs, work-in-process, and finished goods inventories are
stated at the lower of cost or market on the last-in, first-out ("LIFO") method.
Cost for manufactured inventories includes raw materials, labor, supplies,
energy, depreciation and production overhead. Cost of log inventories includes
timber depletion, stumpage, associated logging and harvesting costs, road costs
and production overhead. The average cost method is used to value the Company's
supplies inventories.
TIMBER AND TIMBERLANDS. Timber and timberlands, including logging
roads, are stated at cost less depletion for timber previously harvested and
accumulated amortization. Cost of the Partnership's timber harvested is
determined based on the volume of timber harvested in relation to the amount of
estimated recoverable timber. The Partnership estimates its timber inventory
using statistical information and data obtained from physical measurements, site
maps, photo-types and other information gathering techniques. For timberlands
located in the southern United States, estimates of future growth and costs
related thereto are also made. The cost of logging roads is amortized over the
estimated useful life on a straight-line basis.
PROPERTY, PLANT AND EQUIPMENT. Property, plant and equipment is stated
at cost. Improvements and replacements are capitalized. Depreciation is provided
for on a straight-line basis for buildings and on a unit-of-production basis for
machinery and equipment, which approximates a straight-line basis. Maintenance
and repairs necessary to maintain properties in operating condition are expensed
as incurred. The cost and related accumulated depreciation of property sold or
retired are removed from the accounts and any gain or loss is recorded.
INCOME TAXES. The Partnership and Manufacturing are not subject to
federal income tax and their income or loss is included in the tax returns of
individual Unitholders. The Partnership files composite returns in the states in
which it does business, paying taxes on behalf of nonresident Unitholders. State
taxes paid on behalf of nonresident Unitholders are included in other expense.
Marketing, as a separate taxable corporation, provides for income taxes on a
separate company basis.
UNIT-BASED COMPENSATION PLANS. The Company accounts for Unit-based
compensation plans under the provisions of Accounting Principles Board Opinion
No. 25 ("APB 25"). The Company has adopted the disclosure-only provisions of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123") for the year ended December 31, 1996.
32
<PAGE> 33
The difference between compensation cost under APB 25 and FAS 123 is not
material. See Note 11 to Notes to Combined Financial Statements for discussion
of the above referenced plans.
NOTE 2. ACQUISITION AND DISPOSITION
On October 18, 1996, the Partnership acquired approximately 529,000
acres (plus approximately 9,000 leased acres) of timberlands in Louisiana and
Arkansas, along with two sawmills, a plywood plant and a nursery from Riverwood
International Corporation for a total cash purchase price of $540 million, plus
$11.9 million for working capital (the "Southern Region Acquisition"). The
acquisition was accounted for as a purchase and the operations of the business
acquired have been included in the Company's combined financial statements from
the date of acquisition. The total purchase price of $560.7 million, including
$4.1 million of acquisition costs and $4.7 million of assumed liabilities, was
allocated as follows (in thousands):
<TABLE>
<S> <C>
Timber and Timberlands $508,834
Property, Plant and Equipment 33,477
Other Assets 18,429
--------
Total Assets Acquired $560,740
========
Total Liabilities Assumed $ 4,745
========
</TABLE>
The Southern Region Acquisition was initially financed with the New
Bank Facilities (see Note 6 to Notes to Combined Financial Statements) and cash
on hand, including the proceeds from the Newport Asset Sale (discussed below).
The proceeds from the issuance of Limited Partner Units (see Note 8 to Notes to
Combined Financial Statements) and the Senior Notes due 2016 (see Note 6 to
Notes to Combined Financial Statements) were used to repay a portion of the New
Bank Facilities.
The unaudited combined results of operations of the Company on a pro
forma basis as though the Southern Region Acquisition, the issuance of Limited
Partner Units and borrowings on the New Bank Facilities and Senior Notes due
2016 had occurred as of the beginning of the years ended December 31, 1996 and
1995 are as follows (in thousands, except per Unit):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues $771,153 $756,569
Net Income 240,540 122,653
Net Income Allocable to Unitholders 210,080 97,073
Net Income per Unit $ 4.54 $ 2.10
</TABLE>
The pro forma financial information is not necessarily indicative of
results of operations that would have occurred had the Southern Region
Acquisition occurred as of those dates or of results which may occur in the
future.
33
<PAGE> 34
On October 11, 1996, the Company consummated the sale to Stimson Lumber
Company ("Stimson") of 107,000 acres of timberland in northeastern Washington
and northern Idaho and its sawmill near Colville, Washington (the "Newport Asset
Sale") for approximately $141.9 million, plus $8.7 million for working capital
as of the closing date. The Company used the net proceeds from the Newport Asset
Sale to pay a portion of the purchase price for the Southern Region Acquisition.
The sale resulted in a net gain of approximately $105.7 million, net of expenses
of approximately $2.0 million.
NOTE 3. ACCOUNTS RECEIVABLE
Accounts receivable were presented net of allowances for doubtful
accounts of $1,425,000 and $1,316,000 at December 31, 1996 and 1995,
respectively.
NOTE 4. INVENTORIES
Inventories consisted of the following at December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Raw materials (logs) ....................... $23,171 $18,967
Work-in-process ............................ 7,227 5,798
Export logs ................................ 1,048 420
Finished goods ............................. 15,034 16,012
------- -------
46,480 41,197
Supplies ................................... 7,404 6,169
------- -------
Total ...................................... $53,884 $47,366
======= =======
</TABLE>
Excluding supplies, which are valued at average cost, the cost of the
LIFO inventories valued at the lower of average cost or market (which
approximates current cost) at December 31, 1996 and 1995 was $46.4 million and
$46.3 million, respectively.
NOTE 5. TIMBER AND TIMBERLANDS AND PROPERTY, PLANT AND EQUIPMENT
Timber and timberlands consisted of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Timber and logging roads - net ............... $824,160 $423,475
Timberlands .................................. 98,492 44,517
-------- --------
Timber and Timberlands - net ................. $922,652 $467,992
======== ========
</TABLE>
34
<PAGE> 35
Property, plant and equipment consisted of the following at December 31 (in
thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Land, buildings and improvements ............. $ 60,173 $ 50,056
Machinery and equipment ...................... 229,513 227,598
--------- ---------
289,686 277,654
Accumulated depreciation ..................... (116,998) (111,502)
--------- ---------
Property, Plant and Equipment - net .......... $ 172,688 $ 166,152
========= =========
</TABLE>
NOTE 6. BORROWINGS
Long-term debt and lines of credit consisted of the following at
December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Senior Notes due 2007 ................................ $ 138,600 $ 145,200
Senior Notes due 2009 ............................... 150,000 150,000
First Mortgage Notes ................................. 131,200 138,700
Senior Notes due 2016 ................................ 200,000
Lines of Credit ...................................... 161,000 97,500
--------- ---------
Total Long-term Debt ................................. 780,800 531,400
Less: Current Portion ................................ (17,400) (14,100)
--------- ---------
Long-Term Portion .................................... $ 763,400 $ 517,300
========= =========
</TABLE>
In October 1996, the Partnership entered into two new bank credit
facilities (the "New Bank Facilities"), consisting 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") which were used
to finance a portion of the Southern Region Acquisition. On October 28, 1996,
the Bridge Facility was terminated and on November 13, 1996 the commitment under
the New Line of Credit was reduced to $225 million, including standby letters of
credit issued on behalf of the Partnership or Manufacturing. The New Line of
Credit matures on December 13, 2001 and bears interest at a floating rate (7.0%
as of December 31, 1996). The weighted average interest rate for borrowings
under the New Line of Credit during 1996 was 6.0%. Borrowings on the New Line of
Credit fluctuate daily based on cash needs. As of January 3, 1997, the
Partnership had repaid $126.0 million of the borrowings under the New Line of
Credit.
35
<PAGE> 36
The New Line of Credit replaced two revolving credit facilities which
allowed the Partnership to borrow up to $135 million and matured through October
2000. The revolving credit facilities bore interest at a variable rate (6.5% as
of December 31, 1995).
On November 13, 1996, the Partnership issued $200 million of senior
notes (the "Senior Notes due 2016") in a private placement. The Senior Notes due
2016 mature in 2006 through 2016 and bear interest at rates ranging from 7.74%
through 8.05%, payable semiannually. The proceeds from the Senior Notes due 2016
were used to repay a portion of the outstanding borrowings under the New Line of
Credit.
On August 1, 1994, the Partnership issued $150 million of senior notes
due in full on August 1, 2009 (the "Senior Notes due 2009") which bear interest
at 8.73%, payable semiannually. The proceeds obtained from the issuance of the
Senior Notes due 2009 were used to refinance a portion of the $260 million line
of credit incurred to finance the November 1, 1993 Montana Timberland
Acquisition.
The Senior Notes due 2007 and the First Mortgage Notes bear interest of
11.125%, payable semiannually. The Senior Notes and the First Mortgage Notes
(collectively, the "Note Agreements") are redeemable prior to maturity subject
to a premium on redemption, which is based upon interest rates of U.S. Treasury
securities having similar average maturity as the Note Agreements. At December
31, 1996 and 1995, the premium that would have been due upon early retirement
would have approximated $99 million and $119 million, respectively. The three
series of senior notes are unsecured. The First Mortgage Notes are
collateralized by a significant portion of the property, plant and equipment of
Manufacturing and are guaranteed by the Partnership.
The annual principal payments on the Note Agreements and mandatory
principal payments under the New Line of Credit are as follows (in thousands):
<TABLE>
<CAPTION>
Note New Line
Agreements Of Credit
---------- ---------
<S> <C> <C>
1997 $ 17,400
1998 18,400
1999 18,400
2000 26,950
2001 26,950 $ 161,000
Thereafter 511,700
</TABLE>
All principal and interest payments due under the Note Agreements are
nonrecourse to the General Partner.
The Note Agreements and the New Line of Credit contain certain
restrictive covenants, including limitations on harvest levels, sales of assets,
cash distributions and the amount of future
36
<PAGE> 37
indebtedness. In addition, the New Line of Credit requires the maintenance of a
required interest coverage ratio. The Company was in compliance with such
covenants at December 31, 1996 and 1995.
NOTE 7. FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents approximate fair
value due to the short-term maturities of these instruments. The estimated fair
value of the Company's debt, based on current interest rates for similar
obligations with like maturities, was approximately $842 million and $615
million and was carried at $781 million and $531 million as of December 31, 1996
and 1995, respectively.
NOTE 8. PARTNERS' CAPITAL
The changes in Partners' Capital were as follows (in thousands):
<TABLE>
<CAPTION>
Limited General
Partners Partner Total
--------- --------- ---------
<S> <C> <C> <C>
January 1, 1994 ...................... $ 192,925 $ (370) $ 192,555
Net Income ........................... 95,887 16,325 112,212
Cash Distributions ................... (65,784) (16,006) (81,790)
--------- --------- ---------
December 31, 1994 ................... 223,028 (51) 222,977
Net Income ........................... 88,244 22,487 110,731
Cash Distributions ................... (77,155) (22,685) (99,840)
--------- --------- ---------
December 31, 1995 .................... 234,117 (249) 233,868
Net Income ........................... 195,822 27,777 223,599
Cash Distributions ................... (84,131) (25,985) (110,116)
Issuance of Limited Partner Units .... 144,297 144,297
--------- --------- ---------
December 31, 1996 .................... $ 490,105 $ 1,543 $ 491,648
========= ========= =========
</TABLE>
The total number of Units outstanding at December 31, 1996 and 1995 was
46,323,300 and 40,608,300, respectively. On October 22, 1996, the Partnership
issued 5,600,000 Units for net proceeds of $141.4 million. On November 5, 1996,
115,000 additional Units were issued by the Partnership for net proceeds of $2.9
million. The combined proceeds are net of issuance costs of $8.6 million. The
combined net proceeds were used to repay the Bridge Facility and a portion of
the amounts outstanding under the New Line of Credit.
In accordance with the Partnership Agreement, the General Partner is
authorized to make quarterly cash distributions. For the years ended December
31, 1996, 1995 and 1994, the General Partner declared $2.02, $1.96 and $1.67 per
Unit, respectively, to be paid to the Partnership's Unitholders. If quarterly
cash distributions exceed $0.21-2/3 per Unit, the General Partner is provided
with an incentive distribution. See Note 11 to Notes to Combined Financial
Statements.
36
<PAGE> 38
NOTE 9. INCOME TAXES
The provision for income taxes was as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Current Federal ................... $1,201 $ 464 $ 829
Current State ..................... 190 108 95
------ ------ ------
Total ............................. $1,391 $ 572 $ 924
====== ====== ======
</TABLE>
Reconciliation of the federal statutory rate to the effective income
tax rate was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Statutory tax rate ................................................. 35.0% 35.0% 35.0%
State tax net of federal tax benefit ............................... 0.1 0.1 0.1
Nontaxable partnership income ...................................... (34.6) (34.1) (33.6)
Net operating loss carryforward .................................... 0.0 0.0 (0.7)
Other .............................................................. 0.1 (0.5) 0.0
---- ---- ----
Effective tax rate ................................................. 0.6% 0.5% 0.8%
---- ---- ----
</TABLE>
NOTE 10. EMPLOYEE PENSION AND RETIREMENT PLANS
PENSION PLAN. The Company's pension plan is a non-contributory defined
benefit plan covering substantially all employees. The salaried employee
benefits are based on years of credited service and the highest five-year
average compensation levels, and the hourly employee benefits are based on years
of service. Contributions to the plan are based upon the Projected Unit Credit
actuarial funding method and are limited to amounts that are currently
deductible for tax purposes.
38
<PAGE> 39
The following table sets forth the funded status of the Company's
pension plan at December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested .......................................... $ 34,704 $ 36,431
Non-vested ...................................... 882 926
-------- --------
Accumulated benefit obligation ...................... $ 35,586 $ 37,357
======== ========
Projected benefit obligation ........................ $ 44,386 $ 46,979
Plan assets, primarily marketable equity and debt
securities, at fair market value ................ 48,300 40,576
-------- --------
Projected benefit obligation in excess of plan assets 3,914 (6,403)
Unrecognized net loss ............................... 2,954 12,554
Prior service cost not yet recognized ............... (1,200) (78)
-------- --------
Prepaid pension cost ................................ $ 5,668 $ 6,073
======== ========
</TABLE>
The components of the Company's pension cost were as follows (in thousands):
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Service cost ................................ $ 1,910 $ 1,277 $ 1,441
Interest cost on projected benefit obligation 3,103 2,886 2,709
Actual return on plan assets ................ (7,568) (6,210) 432
Net amortization and deferral ............... 4,548 3,273 (2,715)
------- ------- -------
Net pension cost ............................ $ 1,993 $ 1,226 $ 1,867
======= ======= =======
</TABLE>
The following assumptions were used in the accounting for the Company's
pension plan as of December 31:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate ................. 7.5% 7.0% 8.5%
Rate of increase in compensation levels ........ 5.0% 5.0% 5.0%
Expected long-term rate of return on plan assets 8.5% 8.5% 8.0%
</TABLE>
The Company adopted two nonqualified defined benefit pension plans for
executives and key management employees effective January 1, 1993 and January 1,
1994, respectively. The projected benefit obligation for these plans was $4.4
million as of December 31, 1996 and 1995. The Company's pension expense for
these plans was $0.9 million, $0.6 million and $0.8 million for 1996, 1995 and
1994, respectively.
39
<PAGE> 40
THRIFT AND PROFIT SHARING PLAN. The Company sponsors an employee thrift
and profit sharing plan under section 401 of the Internal Revenue Code. This
plan covers substantially all full-time employees. The Company matches employee
contributions of up to six percent of compensation at rates ranging from 35 to
100 percent, depending upon the Company's financial performance. Amounts charged
to expense were $2.6 million, $2.7 million and $2.0 million during 1996, 1995
and 1994, respectively.
OTHER BENEFIT PLANS. Certain executives and key employees of the
General Partner participate in incentive benefit plans established by the
General Partner which provide for the granting of Units and/or cash bonuses upon
meeting performance objectives. See Note 11 to Notes to Combined Financial
Statements.
NOTE 11. RELATED-PARTY TRANSACTIONS
The General Partner has overall responsibility for the management of
the Company. The General Partner has a two percent general partner interest in
the income and cash distributions of the Partnership, subject to certain
adjustments, and owns two percent and four percent interests in Manufacturing
and Marketing, respectively. The Company reimburses the General Partner for the
actual cost of administering its businesses. Amounts reimbursed to the General
Partner for such costs were $5.7 million, $5.6 million and $5.0 million for the
years ended December 31, 1996, 1995 and 1994, respectively.
Effective October 1, 1993, the General Partner established a Long-Term
Incentive Plan ("LTIP") which authorizes granting up to 2,000,000 Unit
Appreciation Rights ("UARs") to certain executives of the General Partner. When
any of five Unit Value Targets ("UVTs") established by the LTIP are met through
a combination of Unit market appreciation plus Partnership cash distributions, a
percentage of the UARs is triggered and Units are credited to the executives'
accounts. The performance period under the LTIP during which UVTs may be met
ends December 31, 1998, at which time any earned Units will be distributed.
Earned Units generally vest at the end of the performance period. Costs incurred
by the General Partner in administering and funding the LTIP are borne by the
Partnership.
The General Partner has granted 1,382,267 UARs, net of forfeitures,
which could result in a total of 695,085 Units being earned under the LTIP if
all UVTs were met. Units in the executives' accounts will earn additional Units
equal to the amount of any subsequent Partnership cash distributions. As of
December 31, 1996, three UVTs had been achieved and 309,737 Units had been
allocated to the executives' accounts. Total compensation expense with respect
to the achievement of these three UVTs will be approximately $8.3 million, of
which $3.1 million, $1.0 million and $0.8 million was recognized in 1996, 1995
and 1994, respectively. The remaining compensation expense of $3.4 million will
be recognized over the remaining performance period ending December 31, 1998.
40
<PAGE> 41
Effective January 1, 1994, the General Partner established a Key
Employee Long-Term Incentive Plan ("KLTIP") for certain of its other key
employees which authorizes granting up to 500,000 UARs. The KLTIP provisions are
similar to the LTIP described above. The General Partner has granted 391,334
UARs, net of forfeitures, which could result in a total of 196,786 Units being
earned under the KLTIP if all UVTs were met. Units in the participants' accounts
will earn additional Units equal to the amount of any subsequent Partnership
cash distributions. As of December 31, 1996, three UVTs had been achieved and
77,910 Units had been allocated to the key employees' accounts. Total
compensation expense with respect to the achievement of these three UVTs will be
approximately $2.1 million, of which $0.8 million and $0.5 million was
recognized in 1996 and 1995, respectively. The remaining compensation expense of
$0.8 million will be recognized over the remaining performance period ending
December 31, 1998. Costs incurred by the General Partner in administering and
funding the plan are borne by the Partnership.
The Partnership is required under the Partnership Agreement to
reimburse the General Partner for compensation costs related to the management
of the Partnership, including the purchase of Units associated with these
benefit plans. During 1994, the Partnership paid the General Partner for its
purchase of 496,800 Units at a total cost of $12.8 million, of which $10.5
million was funded from current operations and $2.3 million from funds held by
an employee benefit trust of the Partnership.
Effective January 1, 1994, the General Partner established a Management
Incentive Plan ("MIP") for certain executives of the General Partner. An annual
bonus of up to 100% of the respective executive's base salary may be awarded if
certain performance objectives established by the General Partner are met by the
Company and by the executive. One-half of the bonus will be paid annually in
cash and the remaining half will be converted into Units at fair market value
and will be distributed at the end of three years. Units in executives' accounts
will earn additional Units equal to the amount of any subsequent Partnership
cash distributions. Costs incurred in administering and funding the MIP have
been borne by the General Partner.
Net income is allocated to the General Partner based on two percent of
the Company's combined net income (adjusted for the incentive distribution),
plus the incentive distribution, as provided by the Partnership Agreement. The
incentive distributions paid in 1996, 1995 and 1994 were approximately $23.8
million, $20.7 million and $14.4 million, respectively.
Certain conflicts of interest could arise as a result of the
relationships described above. The Board of Directors and management of the
General Partner have a duty to manage the Company in the best interests of the
Unitholders and, consequently, must exercise good faith and integrity in
handling the assets and affairs of the Company. Related non-interest bearing
receivables and payables between the General Partner and the Company are settled
in the ordinary course of business. As of December 31, 1996, the Company had a
receivable from the General Partner of $168,600. As of December 31, 1995, the
Company had a payable to the General Partner of $42,000.
41
<PAGE> 42
NOTE 12. COMMITMENTS AND CONTINGENCIES
A portion of the Company's log requirements is acquired through
contracts with public and private sources. Except for required deposits, no
amounts are recorded until such time as the Company harvests the timber. At
December 31, 1996 and 1995, the unrecorded amounts of those contract commitments
were approximately $14.6 million and $18.2 million, respectively. During 1993,
the Partnership entered into a log sourcing contract to sell logs to a customer
over a ten-year period ending in 2003, at prevailing market rates. The
Partnership has an annual commitment to supply pulpwood and residual chips to a
customer for a twenty-year period ending in 2016, at prevailing market rates.
There are no contingent liabilities which would have a materially
adverse effect on the financial position, the results of operations or liquidity
of the Company.
The Company is subject to regulations regarding harvest practices and
is involved in various legal proceedings, including environmental matters,
incidental to its business. While administration of current regulations and any
new regulations or proceedings have elements of uncertainty, the General Partner
believes that none of the pending legal proceedings or regulatory matters will
have a materially adverse effect on the financial position, the results of
operations or liquidity of the Company.
The Company leases buildings and equipment under non-cancelable
operating lease agreements. The Company's operating lease expense was $2.3
million, $2.2 million and $1.8 million for 1996, 1995 and 1994, respectively.
The following summarizes the future minimum lease payments (in thousands):
1997 ............... $ 3,066
1998 ............... 2,636
1999 ............... 1,676
2000 ............... 1,342
2001 ............... 887
Thereafter 2,121
-------
Total .............. $11,728
=======
42
<PAGE> 43
NOTE 13. SEGMENT INFORMATION
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
(In Thousands)
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Revenues
Resources .................... $ 369,335 $ 327,043 $ 324,426
Manufacturing ................ 387,875 375,677 372,248
Eliminations ................. (123,469) (117,646) (118,017)
----------- ----------- -----------
$ 633,741 $ 585,074 $ 578,657
=========== =========== ===========
Operating Income
Resources .................... $ 163,306 $ 139,192 $ 150,730
Manufacturing ................ 22,516 35,567 32,175
Other and Eliminations ....... (20,834) (15,783) (18,771)
----------- ----------- -----------
$ 164,988 $ 158,976 $ 164,134
=========== =========== ===========
Depreciation, Depletion and
Amortization
Resources .................... $ 36,160 $ 35,394 $ 36,782
Manufacturing ................ 20,785 18,703 17,361
----------- ----------- -----------
$ 56,945 $ 54,097 $ 54,143
=========== =========== ===========
Identifiable Assets
Resources .................... $ 1,098,203 $ 604,510 $ 617,934
Manufacturing ................ 262,380 244,877 247,415
Eliminations ................. (24,149) (23,301) (39,129)
----------- ----------- -----------
$ 1,336,434 $ 826,086 $ 826,220
=========== =========== ===========
Capital Expenditures
Resources .................... $ 6,470 $ 8,481 $ 7,139
Manufacturing ................ 12,810 22,202 18,698
----------- ----------- -----------
$ 19,280 $ 30,683 $ 25,837
=========== =========== ===========
</TABLE>
Revenues include both sales to unaffiliated customers and intersegment
sales. Intersegment sales prices are determined quarterly, based upon estimated
market prices and terms in effect at that time and are eliminated in
combination. Intersegment sales from the Resources Segment to the Manufacturing
Segment were $123.5 million, $117.6 million and $118.0 million for 1996, 1995
and 1994, respectively.
Operating income from the Resources Segment includes land sales of
$35.4 million, $1.6 million and $1.9 million, for 1996, 1995 and 1994,
respectively. Combined export revenues, primarily to Pacific Rim countries, as a
percentage of total revenues were 11%, 13% and 15%, for 1996, 1995 and 1994,
respectively. During 1995 and 1994, net sales to one Resources Segment customer
were approximately 10% and 11% of combined revenues, respectively.
Capital expenditures do not include $514.9 million and $45.8 million in
1996 for the Resources Segment and Manufacturing Segment, respectively, related
to the Southern Region
43
<PAGE> 44
Acquisition.
NOTE 14. SUBSEQUENT EVENT
On January 21, 1997, the Board of Directors of the General Partner
authorized the Partnership to make a distribution of $0.51 per Unit for the
fourth quarter of 1996. Total distributions will approximate $31.0 million
(including $7.4 million to the General Partner) and will be paid on February 28,
1997 to Unitholders of record on February 14, 1997.
44
<PAGE> 45
REPORT OF INDEPENDENT ACCOUNTANTS
To the Unitholders and Directors of the General Partner of Plum Creek Timber
Company, L.P.
We have audited the accompanying combined balance sheet of Plum Creek Timber
Company, L.P. as of December 31, 1996 and 1995, and the related combined
statements of income and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Plum Creek Timber
Company, L.P. at December 31, 1996 and 1995, and the combined results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
Coopers & Lybrand L.L.P.
Seattle, Washington
January 21, 1997
45
<PAGE> 46
REPORT OF MANAGEMENT
The management of Plum Creek Timber Company, L.P. is responsible for
the preparation, fair presentation, and integrity of the information contained
in the financial statements in this Annual Report on Form 10-K. These statements
have been prepared in accordance with generally accepted accounting principles
and include amounts determined using management's best estimates and judgements.
The Company maintains a system of internal controls to provide
reasonable assurance that assets are safeguarded and that transactions are
recorded properly to produce reliable financial records. The system of internal
controls includes appropriate divisions of responsibility, established policies
and procedures (including a code of conduct to foster a strong ethical climate)
that are communicated throughout the Company, and careful selection, training
and development of our people. The Company conducts a corporate audit program to
provide assurance that the system of internal controls is operating effectively.
Our independent certified public accountants have performed audit
procedures deemed appropriate to obtain reasonable assurance that the financial
statements are free of material misstatement.
The Board of Directors provides oversight to the financial reporting
process through its Audit and Compliance Committee, which meets regularly with
management, corporate audit, and the independent certified public accountants to
review the activities of each and to ensure that each is meeting its
responsibilities with respect to financial reporting and internal controls.
/s/ RICK R. HOLLEY
Rick R. Holley
President and Chief Executive Officer
/s/ DIANE M. IRVINE
Diane M. Irvine
Vice President and Chief Financial Officer
46
<PAGE> 47
SUPPLEMENTARY FINANCIAL INFORMATION
Combined Quarterly Information
(Unaudited)
(In Thousands, Except per Unit)
<TABLE>
<CAPTION>
1996 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr(2)
- - ---- ------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenues ....................... $127,694 $138,744 $173,039 $194,264
Operating Income ............... 27,398 32,750 48,449 56,391
Net Income ..................... 15,915 20,977 36,776 149,931
Net Income Allocable
to Unitholders ................ 10,197 15,158 30,198 140,269
Net Income per Unit(1) ......... $ 0.25 $ 0.37 $ 0.75 $ 3.14
<CAPTION>
1995 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
- - ---- ------- ------- ------- --------
<S> <C> <C> <C> <C>
Revenues ....................... $144,094 $139,372 $152,296 $149,312
Operating Income ............... 40,958 36,655 42,382 38,981
Net Income ..................... 28,392 24,534 30,173 27,632
Net Income Allocable
to Unitholders ................ 23,751 18,644 24,170 21,679
Net Income per Unit ............ $ 0.58 $ 0.46 $ 0.60 $ 0.53
</TABLE>
(1) Net income per Unit is computed independently for each of the quarters
presented. Therefore, the sum of the quarterly net income per Unit does
not equal the total computed for the year due to the issuance of Units
during the fourth quarter of 1996. See Note 8 to Notes to Combined
Financial Statements.
(2) Included in fourth quarter 1996 results of operations was a gain of $105.7
million related to the Newport Asset Sale.
47
<PAGE> 48
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Items 10. and 11. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
and EXECUTIVE COMPENSATION, Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT and Item 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS will be filed by amendment to this Form 10-K on Form 10-K/A.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) THE FOLLOWING DOCUMENTS ARE FILED AS A PART OF THIS REPORT:
(1) FINANCIAL STATEMENTS AND SUPPLEMENTARY FINANCIAL INFORMATION
The following combined financial statements of the Company are included
in Part II, Item 8 of this Form 10-K:
Combined Statement of Income .................................... 28
Combined Balance Sheet .......................................... 29
Combined Statement of Cash Flows ................................ 30
Notes to Combined Financial Statements .......................... 31
Report of Independent Accountants ............................... 45
Report of Management ............................................ 46
Supplementary Financial Information ............................. 47
(2) FINANCIAL STATEMENT SCHEDULES
Not applicable.
48
<PAGE> 49
(3) LIST OF EXHIBITS
Each exhibit set forth below in the Index to Exhibits is filed as
a part of this report. Exhibits not incorporated by reference to a
prior filing are designated by an asterisk ("*"); all exhibits not
so designated are incorporated herein by reference to a prior
filing as indicated. Exhibits designated by a positive sign ("+")
indicates management contracts or compensatory plans or
arrangements required to be filed as an exhibit to this report.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Designation Nature of Exhibit
<S> <C>
2.1 Asset Purchase Agreement Among Plum Creek Timber Company, L.P., Riverwood
International Corporation and New River Timber, LLC, dated August 6, 1996 (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).
2.2 Amendment to Asset Purchase Agreement Among Plum Creek Timber Company, L.P.,
Riverwood International Corporation and New River Timber, LLC, dated October 18, 1996
(Form 8-K, File No. 1-10239, filed October 23, 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 (Form 8-K, File No. 1-10239, filed October 23, 1996).
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
(Form 8-K, File No. 1-10239, filed October 23, 1996).
3.1 Amended and Restated Agreement of Limited Partnership of Plum Creek Timber Company,
L.P. dated June 8, 1989, as amended and restated through October 17, 1995 (Form 10-Q,
No. 1-10239, for the quarter ended September 31, 1995).
3.2 Certificate of Limited Partnership of Plum Creek Timber Company, L.P., as filed with the
Secretary of State of the state of Delaware on April 12, 1989 (Form S-1, Regis. No.
33-28094, filed May 1989).
4.1 Form of Deposit Agreement by and among Plum Creek Timber Company, L.P. and The First
National Bank of Boston, dated as of May 1989, (Form S-1, Regis. No. 33-28094, filed May
1989).
4.2 Form of Transfer Application (Form S-1, Regis. No. 33-28094, filed May 1989).
4.3 Senior Note Agreement, dated May 31, 1989, 11 1/8 percent Senior Notes due June 8, 2007,
Plum Creek Timber Company, L. P. (Form 10-Q, No. 1-10239, for the quarter ended June
</TABLE>
49
<PAGE> 50
<TABLE>
<S> <C>
30, 1989). Amendment No. 1, consent and waiver dated January 1, 1991 to Senior Note
Agreement, dated May 31, 1989, 11 1/8 percent Senior Notes due June 8, 2007, Plum Creek
Timber Company, L.P. (Form 8 Amendment No. 1, for the year ended December 31, 1990).
Amendment No. 2, consent and waiver dated September 1, 1993 to the Senior Note
Agreement (Form 10-K/A, Amendment No. 1, for the year ended December 31, 1993).
Amendment No. 3, Senior Note Agreement Amendment dated May 20, 1994 (Form 10-K/A,
Amendment No. 1, for the year ended December 31, 1994). Senior Note Agreement
Amendment dated May 31, 1996 (Form 10-Q, No. 1-10239, for the quarter ended June 30,
1996).
4.4 Mortgage Note Agreement, dated May 31, 1989, 11 1/8 percent First Mortgage Notes due
June 8, 2007, Plum Creek Manufacturing, Inc. (Form 10-Q, No. 1-10239, for the quarter
ended June 30, 1989). Amendment No. 1, consent and waiver dated January 1, 1991 to
Mortgage Note Agreement, dated May 31, 1989, 11 1/8 percent First Mortgage Notes due
June 8, 2007, Plum Creek Manufacturing, Inc., now Plum Creek Manufacturing, L.P. (Form
8 Amendment No. 1, for the year ended December 31, 1990). Amendment No. 2, consent
and waiver dated September 1, 1993 to the Mortgage Note Agreement (Form 10-K/A,
Amendment No. 1, for the year ended December 31, 1993). Amendment No. 3, Mortgage
Note Agreement Amendment dated May 20, 1994 (Form 10-K/A, Amendment No. 1, for
the year ended December 31, 1994). Amendment to Mortgage Note Agreement dated June
15, 1995 (Form 10-Q, No. 1-10239, for the quarter ended September 30, 1995). Mortgage
Note Agreement Amendment dated May 31, 1996 (Form 10-Q, No. 1-10239, for the quarter
ended June 30, 1996).
4.5 Senior Note Agreement, dated August 1, 1994, 8.73% Senior Notes due August 1, 2009,
Plum Creek Timber Company, L.P. (Form 10-K/A, Amendment No. 1, for the year ended
December 31, 1994). Senior Note Agreement Amendment dated as of October 15, 1995
(Form 10-K, No. 1-10239, for the year ended December 31, 1995). Senior Note Agreement
Amendment dated May 31, 1996 (Form 10-Q, No. 1-10239, for the quarter ended June 30,
1996).
4.6* Senior Note Agreement, dated as of November 13, 1996, $75 million Series A due
November 13, 2006, $25 million Series B due November 13, 2008, $75 million Series C due
November 13, 2011, $25 million Series D due November 13, 2016. See attached exhibit.
10.1* Revolving Credit and Bridge Loan Agreement dated as of October 17, 1996 among Plum
Creek Timber Company, L.P., Bank of America National Trust and Savings Association, as
Agent, and the Other Financial Institutions Party Hereto. See attached exhibit.
10.2* Amended and Restated Revolving Credit Agreement dated as of December 13, 1996 among
Plum Creek Timber Company, L.P., Bank of America National Trust and Savings
Association, as Agent, NationsBank of North Carolina, N.A., as senior co-agent and the
Other Financial Institutions Party Hereto. See attached exhibit.
10.3+ Plum Creek Supplemental Benefits Plan (Form 10-K/A, Amendment No. 1, for the year
ended December 31, 1994). First Amendment to the Plum Creek Supplemental Benefits
Plan (Form 10-Q, No. 1-10239, for the quarter ended September 30, 1995).
10.4+ Long-Term Incentive Plan, Plum Creek Management Company, L.P. (Form 10-K/A,
Amendment No. 1, for the year ended December 31, 1993). First Amendment to the Plum
Creek Management Company, L.P. Long-Term Incentive Plan (Form 10-Q, No. 1-10239,
</TABLE>
50
<PAGE> 51
<TABLE>
<CAPTION>
<S> <C>
for the quarter ended September 30, 1995).
10.5+ Management Incentive Plan, Plum Creek Management Company, L.P.
(Form 10-K/A, Amendment No. 1, for the year ended December 31,
1993).
10.6+ Executive and Key Employee Salary and Incentive Compensation
Deferral Plan, Plum Creek Management Company, L.P. (Form
10-K/A, Amendment No. 1, for the year ended December 31,
1994).
10.7+ Deferred Compensation Plan for Directors, PC Advisory Corp. I
(Form 10-K/A, Amendment No. 1, for the year ended December 31,
1994).
10.8+* Plum Creek Director Unit Ownership and Deferral Plan. See
attached exhibit.
21 Subsidiaries of the Registrant. (Form 8 Amendment No. 1, for
the year ended December 31, 1990).
27* Financial Data Schedule for the year ended December 31, 1996.
See attached exhibit.
</TABLE>
(B) REPORTS ON FORM 8-K
The Partnership filed a current report on Form 8-K dated October 11,
1996, in which it reported the Southern Region Acquisition and the Newport
Asset Sale and related pro forma financial information under Item 2 -
Acquisition or Disposition of Assets and Item 7 - Financial Statements and
Exhibits.
51
<PAGE> 52
SIGNATURES
Pursuant to the requirements of Section 13 (or 15(d)) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
PLUM CREEK TIMBER COMPANY, L. P.
(Registrant)
By: Plum Creek Management Company, L.P.
as General Partner
BY: /s/ RICK R. HOLLEY
--------------------------------------
Rick R. Holley
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons, in the capacities and on the
dates indicated, on behalf of, as applicable, Plum Creek Management Company,
L.P., the registrant's general partner, and/or PC Advisory Corp. I, the general
partner of the managing general partner of the registrant's general partner.
By /s/ DAVID D. LELAND Chairman of the Board of January 21, 1997
------------------------ Directors, PC Advisory Corp. I
David D. Leland
By /s/ IAN B. DAVIDSON Director, PC Advisory Corp. I January 21, 1997
------------------------
Ian B. Davidson
By /s/ GEORGE M. DENNISON Director, PC Advisory Corp. I January 21, 1997
------------------------
George M. Dennison
By /s/ CHARLES P. GRENIER Executive Vice President, Plum January 21, 1997
------------------------ Creek Management Co., L.P.
Charles P. Grenier Director, PC Advisory Corp. I
By /s/ RICK R. HOLLEY President and Chief Executive January 21, 1997
------------------------ Officer, Plum Creek Management
Rick R. Holley Co., L.P.
Director, PC Advisory Corp. I
52
<PAGE> 53
By /s/ WILLIAM E. OBERNDORF Director, PC Advisory Corp. I January 21, 1997
------------------------
William E. Oberndorf
By /s/ WILLIAM J. PATTERSON Director, PC Advisory Corp. I January 21, 1997
------------------------
William J. Patterson
By /s/ JOHN H. SCULLY Director, PC Advisory Corp. I January 21, 1997
------------------------
John H. Scully
By /s/ DIANE M. IRVINE Vice President and Chief January 21, 1997
------------------------ Financial Officer, Plum Creek
Diane M. Irvine Management Co., L.P. (Principal
Financial and Accounting Officer)
53
<PAGE> 54
INDEX TO EXHIBITS
Each exhibit set forth below in the Index to Exhibits is filed as a part of this
report. Exhibits not incorporated by reference to a prior filing are designated
by an asterisk ("*"); all exhibits not so designated are incorporated herein by
reference to a prior filing as indicated. Exhibits designated by a positive sign
("+") indicates management contracts or compensatory plans or arrangements
required to be filed as an exhibit to this report.
<TABLE>
<CAPTION>
Exhibit
Designation Nature of Exhibit
<S> <C>
2.1 Asset Purchase Agreement Among Plum Creek Timber Company, L.P., Riverwood International
Corporation and New River Timber, LLC, dated August 6, 1996 (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).
2.2 Amendment to Asset Purchase Agreement Among Plum Creek Timber
Company, L.P., Riverwood International Corporation and New
River Timber, LLC, dated October 18, 1996 (Form 8-K, File No.
1-10239, filed October 23, 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 (Form 8-K, File No. 1-10239, filed October 23, 1996).
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 (Form 8-K, File No.
1-10239, filed October 23, 1996).
3.1 Amended and Restated Agreement of Limited Partnership of Plum Creek Timber Company, L.P.
dated June 8, 1989, as amended and restated through October 17, 1995 (Form 10-Q, No. 1-10239,
for the quarter ended September 31, 1995).
3.2 Certificate of Limited Partnership of Plum Creek Timber Company, L.P., as filed with the Secretary
of State of the state of Delaware on April 12, 1989 (Form S-1, Regis. No. 33-28094, filed May 1989).
4.1 Form of Deposit Agreement by and among Plum Creek Timber Company, L.P. and The First National
Bank of Boston, dated as of May 1989, (Form S-1, Regis. No. 33-28094, filed May 1989).
4.2 Form of Transfer Application (Form S-1, Regis. No. 33-28094, filed May 1989).
4.3 Senior Note Agreement, dated May 31, 1989, 11 1/8 percent Senior Notes due June 8, 2007, Plum
Creek Timber Company, L. P. (Form 10-Q, No. 1-10239, for the quarter ended June 30, 1989).
Amendment No. 1, consent and waiver dated January 1, 1991 to Senior Note Agreement, dated May
31, 1989, 11 1/8 percent Senior Notes due June 8, 2007, Plum Creek Timber Company, L.P. (Form
8 Amendment No. 1, for the year ended December 31, 1990). Amendment No. 2, consent and waiver
dated September 1, 1993 to the Senior Note Agreement (Form 10-K/A, Amendment No. 1, for the
year ended December 31, 1993). Amendment No. 3, Senior Note Agreement Amendment dated May
20, 1994 (Form 10-K/A, Amendment No. 1, for the year ended December 31, 1994). Senior Note
Agreement Amendment dated May 31, 1996 (Form 10-Q, No. 1-10239, for the quarter ended June
30, 1996).
</TABLE>
54
<PAGE> 55
<TABLE>
<S> <C>
4.4 Mortgage Note Agreement, dated May 31, 1989, 11 1/8 percent First Mortgage Notes due June 8,
2007, Plum Creek Manufacturing, Inc. (Form 10-Q, No. 1-10239, for the quarter ended June 30,
1989). Amendment No. 1, consent and waiver dated January 1, 1991 to Mortgage Note Agreement,
dated May 31, 1989, 11 1/8 percent First Mortgage Notes due June 8, 2007, Plum Creek
Manufacturing, Inc., now Plum Creek Manufacturing, L.P. (Form 8 Amendment No. 1, for the year
ended December 31, 1990). Amendment No. 2, consent and waiver dated September 1, 1993 to the
Mortgage Note Agreement (Form 10-K/A, Amendment No. 1, for the year ended December 31,
1993). Amendment No. 3, Mortgage Note Agreement Amendment dated May 20, 1994 (Form 10-
K/A, Amendment No. 1, for the year ended December 31, 1994). Amendment to Mortgage Note
Agreement dated June 15, 1995 (Form 10-Q, No. 1-10239, for the quarter ended September 30,
1995). Mortgage Note Agreement Amendment dated May 31, 1996 (Form 10-Q, No. 1-10239, for
the quarter ended June 30, 1996).
4.5 Senior Note Agreement, dated August 1, 1994, 8.73% Senior Notes due August 1, 2009, Plum Creek
Timber Company, L.P. (Form 10-K/A, Amendment No. 1, for the year ended December 31, 1994).
Senior Note Agreement Amendment dated as of October 15, 1995 (Form 10-K, No. 1-10239, for the
year ended December 31, 1995). Senior Note Agreement Amendment dated May 31, 1996 (Form
10-Q, No. 1-10239, for the quarter ended June 30, 1996).
4.6* Senior Note Agreement, dated as of November 13, 1996, $75 million Series A due November 13,
2006, $25 million Series B due November 13, 2008, $75 million Series C due November 13, 2011,
$25 million Series D due November 13, 2016. See attached exhibit.
10.1* Revolving Credit and Bridge Loan Agreement dated as of October 17, 1996 among Plum Creek
Timber Company, L.P., Bank of America National Trust and Savings Association, as Agent, and the
Other Financial Institutions Party Hereto. See attached exhibit.
10.2* Amended and Restated Revolving Credit Agreement dated as of December 13, 1996 among
Plum Creek Timber Company, L.P., Bank of America National Trust and Savings Association,
as Agent, NationsBank of North Carolina, N.A., as senior co-agent and the Other Financial
Institutions Party Hereto. See attached exhibit.
10.3+ Plum Creek Supplemental Benefits Plan (Form 10-K/A, Amendment No. 1, for the year ended
December 31, 1994). First Amendment to the Plum Creek Supplemental Benefits Plan (Form 10-Q,
No. 1-10239, for the quarter ended September 30, 1995).
10.4+ Long-Term Incentive Plan, Plum Creek Management Company, L.P. (Form 10-K/A, Amendment No.
1, for the year ended December 31, 1993). First Amendment to the Plum Creek Management
Company, L.P. Long-Term Incentive Plan (Form 10-Q, No. 1-10239, for the quarter ended
September 30, 1995).
10.5+ Management Incentive Plan, Plum Creek Management Company, L.P. (Form 10-K/A, Amendment
No. 1, for the year ended December 31, 1993).
10.6+ Executive and Key Employee Salary and Incentive Compensation Deferral Plan, Plum Creek
Management Company, L.P. (Form 10-K/A, Amendment No. 1, for the year ended December 31,
1994).
10.7+ Deferred Compensation Plan for Directors, PC Advisory Corp. I (Form 10-K/A, Amendment No. 1,
for the year ended December 31, 1994).
</TABLE>
55
<PAGE> 56
<TABLE>
<S> <C>
10.8+* Plum Creek Director Unit Ownership and Deferral Plan. See attached exhibit.
21 Subsidiaries of the Registrant. (Form 8 Amendment No. 1, for the year ended December 31, 1990).
27* Financial Data Schedule for the year ended December 31, 1996. See attached exhibit.
</TABLE>
56
<PAGE> 1
EXHIBIT 4.6
[CONFORMED COPY]
================================================================================
PLUM CREEK TIMBER COMPANY, L.P.
$200,000,000
SENIOR NOTES
$75,000,000 Series A due November 13, 2006
$25,000,000 Series B due November 13, 2008
$75,000,000 Series C due November 13, 2011
$25,000,000 Series D due November 13, 2016
- - --------------------------------------------------------------------------------
SENIOR NOTE AGREEMENT
- - --------------------------------------------------------------------------------
Dated as of November 13, 1996
================================================================================
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S><C> <C>
1. Authorization of Issue of Notes . . . . . . . . . . . . . . . . . . . . . . 1
2. Purchase and Sale of Notes . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Conditions of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3A. Opinion of Purchaser's Special Counsel . . . . . . . . . . . . 2
3B. Opinion of Company's Counsel . . . . . . . . . . . . . . . . . 2
3C. Representations and Warranties; No Default . . . . . . . . . . 2
3D. Sale of Notes to All Purchasers . . . . . . . . . . . . . . . . 3
3E. Purchase Permitted by Applicable Laws . . . . . . . . . . . . . 3
3F. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3G. Special Counsel's Fees . . . . . . . . . . . . . . . . . . . . 3
3H. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . 3
4. Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4A(1). Scheduled Prepayments of Series D Notes . . . . . . . . . . . . 4
4A(2). Optional Prepayment With Yield-Maintenance Premium . . . . . . 4
4B. Notice of Optional Prepayment . . . . . . . . . . . . . . . . . 4
4C. Partial Payments Pro Rata . . . . . . . . . . . . . . . . . . . 5
4D. Retirement of Notes . . . . . . . . . . . . . . . . . . . . . . 5
4E. Payments on Business Days . . . . . . . . . . . . . . . . . . . 5
5. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5A. Financial Statements . . . . . . . . . . . . . . . . . . . . . 6
5B. Inspection of Property . . . . . . . . . . . . . . . . . . . . 8
5C. Covenant to Secure Notes Equally . . . . . . . . . . . . . . . 9
5D. Partnership Existence, Etc . . . . . . . . . . . . . . . . . . 9
5E. Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . 9
5F. Compliance with Laws, Etc . . . . . . . . . . . . . . . . . . . 9
5G. Maintenance of Properties . . . . . . . . . . . . . . . . . . . 10
6. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6A. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 10
6B. Lien, Indebtedness and Other Restrictions . . . . . . . . . . . 11
6B(1) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
6B(2) Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6B(3) Loans, Advances, Investments and Contingent Liabilities . . . . 15
6B(4) Sale of Stock and Debt of Subsidiaries . . . . . . . . . . . . 16
6B(5) Merger and Sale of Assets . . . . . . . . . . . . . . . . . . . 17
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
6B(6) Harvesting Restrictions . . . . . . . . . . . . . . . . . . . . 19
6B(7) Sale and Lease-Back . . . . . . . . . . . . . . . . . . . . . . 19
6B(8) Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . 20
6B(9) Transactions with Affiliates . . . . . . . . . . . . . . . . . 20
6C. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 21
6D. Issuance of Stock by Subsidiaries . . . . . . . . . . . . . . . 21
7. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7A. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . 21
7B. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 25
8. Representations, Covenants and Warranties . . . . . . . . . . . . . . . . . 25
8A. Organization . . . . . . . . . . . . . . . . . . . . . . . . . 25
8B. General Partner Net Worth . . . . . . . . . . . . . . . . . . . 26
8C. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 26
8D. Partnership Interests . . . . . . . . . . . . . . . . . . . . . 26
8E. Qualification . . . . . . . . . . . . . . . . . . . . . . . . . 26
8F. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8G. Changes, etc . . . . . . . . . . . . . . . . . . . . . . . . . 27
8H. Tax Returns and Payments . . . . . . . . . . . . . . . . . . . 27
8I. Franchises, Licenses, Agreements, etc . . . . . . . . . . . . . 27
8J. Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . 28
8K. Title to Properties . . . . . . . . . . . . . . . . . . . . . . 28
8L. Compliance with Other Instruments, etc . . . . . . . . . . . . 28
8M. Governmental Consent . . . . . . . . . . . . . . . . . . . . . 29
8N. Foreign Assets Control Regulations, etc . . . . . . . . . . . . 29
8O. Offering of Notes . . . . . . . . . . . . . . . . . . . . . . . 29
8P. Regulation G, etc . . . . . . . . . . . . . . . . . . . . . . . 29
8Q. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8R. Status Under Certain Federal Statutes . . . . . . . . . . . . . 32
8S. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . 32
8T. Environmental Matters . . . . . . . . . . . . . . . . . . . . . 32
8U. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 34
9. Representations of the Purchaser . . . . . . . . . . . . . . . . . . . . . 34
10. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10A. Yield-Maintenance Terms . . . . . . . . . . . . . . . . . . . . 36
10B. Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11A. Note Payments . . . . . . . . . . . . . . . . . . . . . . . . . 49
11B. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
<S> <C> <C>
11C. Consent to Amendments . . . . . . . . . . . . . . . . . . . . . 50
11D. Solicitation of Holders of Notes . . . . . . . . . . . . . . . 50
11E. Form, Registration, Transfer and Exchange of Notes; Lost Notes 51
11F. Persons Deemed Owners; Participations . . . . . . . . . . . . . 52
11G. Non-Recourse Nature of Liability . . . . . . . . . . . . . . . 52
11H. Survival of Representations and Warranties . . . . . . . . . . 52
11I. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 52
11J. Disclosure to Other Persons . . . . . . . . . . . . . . . . . . 53
11K. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11L. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . 54
11M. Substitution of Purchaser . . . . . . . . . . . . . . . . . . . 54
11N. Satisfaction Requirement . . . . . . . . . . . . . . . . . . . 54
11O. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 54
11P. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
ATTACHMENTS TO SENIOR NOTE AGREEMENT
Schedule I --Names and Commitments of Purchasers
Exhibit A --Form of Note
Exhibit B-1 --Form of Opinion of Purchaser's Counsel
Exhibit B-2 --Form of Opinion of Company's Counsel
Exhibit D --Liens
Exhibit E --Investments
Exhibit F --Environmental Notices
Exhibit 8C --Other Subsidiaries
Exhibit 8G --Material Transactions
Exhibit 8K --Property Titles
Exhibit 8T --Environmental Permits and Licenses
Schedule 10B(1) -- Investment Policy
-iii-
<PAGE> 5
PLUM CREEK TIMBER COMPANY, L.P.
999 THIRD AVENUE
SEATTLE, WASHINGTON 98104
As of November 13, 1996
To the Purchasers named in
Schedule I to this Agreement
Dear Purchaser:
The undersigned, Plum Creek Timber Company, L.P. (together with any
Person who succeeds to all or substantially all Plum Creek Timber Company,
L.P.'s assets and business, herein called the "Company"), a Delaware limited
partnership, hereby agrees with the Purchasers named on Schedule I to this
Agreement (the "Purchasers") as follows:
1. AUTHORIZATION OF ISSUE OF NOTES
The Company will authorize the issue of its senior promissory notes
(herein called the "Notes") in the aggregate principal amount of $200,000,000,
to be comprised of Series A Notes to mature on November 13, 2006 in an
aggregate principal amount of $75,000,000, Series B Notes to mature on November
13, 2008 in an aggregate principal amount of $25,000,000, Series C Notes to
mature on November 13, 2011 in an aggregate principal amount of $75,000,000 and
Series D Notes to mature on November 13, 2016 in an aggregate principal amount
of $25,000,000, in each case to be dated the date of issue thereof, and to bear
interest on the unpaid balance thereof from the date thereof to but excluding
the date the principal thereof shall have become due and payable at the rate of
7.74% per annum in the case of the Series A Notes, 7.87% per annum in the case
of the Series B Notes, 7.97% per annum in the case of the Series C Notes and
8.05% per annum in the case of the Series D Notes, and on overdue principal,
premium and interest at the respective rates specified therein, and to be
substantially in the form of Exhibit A attached hereto. Interest on the Notes
of each series will be computed on the basis of a 360-day year of twelve 30-day
months. The term "Notes" as used herein shall include each Note delivered
pursuant to any provision of this Agreement and each Note delivered in
substitution or exchange for any such Note pursuant to any such provision.
2. PURCHASE AND SALE OF NOTES
The Company hereby agrees to sell to each Purchaser and, subject to
the terms and conditions herein set forth, such Purchaser agrees to purchase
from the Company the Notes set forth opposite its name in Schedule I hereto at
a price of 100% of the aggregate principal amount thereof. The Company will
deliver to each Purchaser, at the offices of Chapman and Cutler, 111 West
Monroe Street, Chicago, Illinois 60603, one or more Notes registered in
<PAGE> 6
Plum Creek Timber Company, L.P. Senior Note Agreement
such Purchaser's name or in the name of its nominee, evidencing the aggregate
principal amount of Notes to be purchased by such Purchaser and in the
denomination or denominations specified with respect to it in Schedule I,
against payment of the purchase price thereof by transfer of immediately
available funds for credit to the Company's account #67327817 at Seafirst Bank,
Seattle, Washington, ABA #125-000-024, Message: Senior Note Funding Ref: Plum
Creek Timber Company, L.P. on the date of closing, which shall be November 13,
1996, or any other date on or before November 30, 1996 upon which the Company
and the Purchasers may mutually agree (herein called the "closing" or the "date
of closing"). If at the closing the Company shall fail to tender such Notes to
any Purchaser as provided above in this paragraph 2, or any of the conditions
specified in paragraph 3 shall not have been fulfilled to any Purchaser's
satisfaction, such Purchaser shall, at its election, be relieved of all further
obligations under this Agreement, without thereby waiving any other rights it
may have by reason of such failure or such nonfulfillment. The sale of Notes
to the Purchasers pursuant to this Agreement shall be separate and several
sales. The obligations of each Purchaser hereunder shall be several and not
joint, and no Purchaser shall be liable or responsible for the acts or defaults
of any other Purchaser.
3. CONDITIONS OF CLOSING
The obligation of each Purchaser to purchase and pay for the Notes to
be purchased by it hereunder is subject to the satisfaction, on or before the
date of closing, of the following conditions:
3A. OPINION OF PURCHASER'S SPECIAL COUNSEL
Each Purchaser shall have received from Chapman and Cutler, who are
acting as special counsel for the Purchasers in connection with this
transaction, an opinion satisfactory to each Purchaser and substantially in the
form of Exhibit B-1 attached hereto and including such other matters as it may
reasonably request.
3B. OPINION OF COMPANY'S COUNSEL
Each Purchaser shall have received from James A. Kraft, Vice
President, General Counsel and Secretary for the Company, a favorable opinion
satisfactory to such Purchaser and substantially in the form of Exhibit B-2
attached hereto and including such other matters as it may reasonably request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT
The representations and warranties contained in paragraph 8 shall be
true in all material respects on and as of the date of closing, except to the
extent of changes caused by the transactions herein contemplated; there shall
exist on the date of closing no Event of Default or Default; and the Company
shall have delivered to each Purchaser a certificate signed by a Responsible
Officer, dated the date of closing, to both such effects.
-2-
<PAGE> 7
Plum Creek Timber Company, L.P. Senior Note Agreement
3D. SALE OF NOTES TO ALL PURCHASERS
The Company shall have sold the entire aggregate principal amount of
the Notes scheduled to be sold on the date of closing pursuant to this
Agreement.
3E. PURCHASE PERMITTED BY APPLICABLE LAWS
The purchase of and payment for the Notes to be purchased by each
Purchaser on the date of closing on the terms and conditions herein provided
(including the use of the proceeds of such Notes by the Company) shall not
violate any applicable law or governmental regulation (including, without
limitation, section 5 of the Securities Act or Regulation G, T or X of the
Board of Governors of the Federal Reserve System), shall not subject such
Purchaser to any tax, penalty, liability or other onerous condition under or
pursuant to any applicable law or governmental regulation, and shall be
permitted by the laws and regulations of each jurisdiction to which such
Purchaser is subject, but without recourse to provisions (such as section
1405(a)(8) of the New York Insurance Law) permitting limited investments by
life insurance companies without restriction as to the character of the
particular investment. If required by any Purchaser, such Purchaser shall have
received an Officers' Certificate of the Company certifying as to such matters
of fact as such Purchaser may reasonably specify to enable such Purchaser to
determine whether such purchase is permitted.
3F. INSURANCE
The Company shall have delivered to each Purchaser an Officers'
Certificate, dated the date of closing, certifying that insurance with respect
to its properties and business complying with the provisions of paragraph 5G
(including, without limitation, the provisions of paragraph 5G permitting the
Company to self-insure) is in full force and effect.
3G. SPECIAL COUNSEL'S FEES
The Company shall have paid the reasonable fees and expenses of
Chapman and Cutler, special counsel to the Purchasers, invoiced in connection
with the purchase of the Notes by the Purchasers.
3H. PROCEEDINGS
All proceedings taken or to be taken in connection with the
transactions contemplated hereby and all documents incident thereto shall be
satisfactory in substance and form to each Purchaser, and each Purchaser shall
have received all such counterpart originals or certified or other copies of
such documents as it may reasonably request.
If the above conditions (other than the conditions stated in paragraph
3D) are satisfied, the obligation of the Company to sell to each Purchaser the
Notes to be purchased by it hereunder is subject to the tendering by the other
Purchasers of the purchase price of the Notes to be purchased by them pursuant
to this Agreement on the date of closing.
-3-
<PAGE> 8
Plum Creek Timber Company, L.P. Senior Note Agreement
4. PREPAYMENTS
The Notes shall be subject to prepayment under the circumstances set
forth in paragraph 4A(1) and (2).
4A(1). SCHEDULED PREPAYMENTS OF SERIES D NOTES
The Company agrees that it will prepay and apply and there shall become
due and payable on the principal indebtedness evidenced by the Series D Notes on
each of the following dates an amount equal to the lesser of (i) the amount set
forth opposite such date or (ii) the principal amount of the Series D Notes then
outstanding:
<TABLE>
<S> <C>
November 13, 2010 $3,571,428.57
November 13, 2011 $3,571,428.57
November 13, 2012 $3,571,428.57
November 13, 2013 $3,571,428.57
November 13, 2014 $3,571,428.57
November 13, 2015 $3,571,428.57
</TABLE>
The entire remaining principal amount of the Series D Notes shall become due
and payable on November 13, 2016.
No premium shall be payable in connection with a required prepayment
made pursuant to this paragraph 4A(1). For purposes of this paragraph 4A(1),
any prepayment of less than all of the outstanding Series D Notes pursuant to
paragraph 4A(2) shall reduce the principal amount of the Series D Notes
required to be prepaid on November 13 in each subsequent year to and including
the stated maturity of the Series D Notes in the same proportion as the
aggregate principal amount of the Series D Notes outstanding immediately prior
to such prepayment has been reduced by such prepayment.
4A(2). OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE PREMIUM
In addition to prepayments required with respect to the Series D Notes
pursuant to paragraph 4A(1), the Notes shall be subject to prepayment on any
Business Day, in whole at any time or from time to time in part (other than in
the case of any prepayment pursuant to paragraph 6B(5)(viii) or 6B(6), in
multiples of $5,000,000; provided that, if the Company shall so prepay the
Notes in part, such prepayment shall be made on each series ratably in
accordance with the unpaid principal amount of such series) at the option of
the Company, at 100% of the principal amount so prepaid plus interest thereon
to the prepayment date and the Yield-Maintenance Premium, if any, with respect
to each Note.
4B. NOTICE OF OPTIONAL PREPAYMENT
The Company shall give the holder of each Note irrevocable written
notice of any prepayment pursuant to paragraph 4A(2) not less than 20 Business
Days prior to the prepayment date, specifying such prepayment date and the
principal amount of the Notes,
-4-
<PAGE> 9
Plum Creek Timber Company, L.P. Senior Note Agreement
and of the Notes held by such holder, to be prepaid on such date and stating
that such prepayment is to be made pursuant to paragraph 4A(2). Notice of
prepayment having been given as aforesaid, the principal amount of the Notes
specified in such notice, together with interest thereon to the prepayment date
and together with the premium, if any, herein provided, shall become due and
payable on such prepayment date. The Company shall deliver (i) two (2)
Business Days prior to each prepayment pursuant to paragraph 4A(2) an Officers'
Certificate stating whether a Yield-Maintenance Premium is payable in
connection with such prepayment and setting forth the calculations made in
making such determination based on an estimate of such Yield-Maintenance
Premium and (ii) on the date of such prepayment, an Officers' Certificate
stating whether such Yield-Maintenance Premium is payable and setting forth the
actual calculation.
4C. PARTIAL PAYMENTS PRO RATA
Upon any partial prepayment of the Notes (other than a partial
prepayment of the Series D Notes pursuant to paragraph 4A(1)), the principal
amount so prepaid shall be allocated to all Notes at the time outstanding
(including, for the purpose of this paragraph 4C only, all Notes prepaid or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Subsidiaries or Affiliates other than by prepayment pursuant to paragraph
4A(1) or (2)) in proportion to the respective outstanding principal amounts
thereof. Upon any partial prepayment of the Series D Notes pursuant to
paragraph 4A(1), the principal amount so prepaid shall be allocated to all
Series D Notes at the time outstanding (including, for the purpose of this
paragraph 4C only, all Series D Notes prepaid or otherwise retired or purchased
or otherwise acquired by the Company or any of its Subsidiaries or Affiliates
other than by prepayment pursuant to paragraph 4A(1) or (2)) in proportion to
the respective outstanding principal amounts thereof.
4D. RETIREMENT OF NOTES
The Company shall not, and shall not permit any of its Subsidiaries or
Affiliates to, prepay or otherwise retire in whole or in part prior to their
stated final maturity (other than a prepayment pursuant to paragraph 4A(1) or
(2) or upon acceleration of such final maturity pursuant to paragraph 7A), or
purchase or otherwise acquire, directly or indirectly, Notes held by any holder
unless the Company or such Subsidiary or Affiliate shall have offered to prepay
or otherwise retire or purchase or otherwise acquire, as the case may be, the
same proportion of the aggregate principal amount of Notes held by each other
holder of Notes at the time outstanding upon the same terms and conditions.
Any Notes so prepaid or otherwise retired or purchased or otherwise acquired by
the Company or any of its Subsidiaries or Affiliates shall not be deemed to be
outstanding for any purpose under this Agreement, except as provided in
paragraph 4C.
4E. PAYMENTS ON BUSINESS DAYS
If the date specified for any required payment under this Agreement
falls on a day that is not a Business Day, the payment shall be made on the
next succeeding Business Day and interest shall be payable to the date of such
payment.
-5-
<PAGE> 10
Plum Creek Timber Company, L.P. Senior Note Agreement
5. AFFIRMATIVE COVENANTS
5A. FINANCIAL STATEMENTS
The Company covenants that it will deliver to each Significant Holder
in duplicate:
(i) as soon as available, but not later than 90 days
after the end of each fiscal year, a copy of the audited combined
balance sheet of the Company and its combined Subsidiaries as of the
end of such year and the related combined statement of income and
combined statement of cash flows for such fiscal year, setting forth
in each case in comparative form the figures for the previous fiscal
year, and accompanied by the opinion of Coopers & Lybrand, or another
nationally recognized independent public accounting firm, which report
shall state that such combined financial statements present fairly the
financial position for the dates specified and the results of
operations for the periods indicated in conformity with generally
accepted accounting principles applied on a basis consistent with
prior years;
(ii) as soon as available, but not later than 120 days
after the end of each fiscal year, a copy of a combining balance sheet
of the Company and each of its Subsidiaries as at the end of such
fiscal year and the related combining statement of income and
combining statement of cash flows for such fiscal year, all in
reasonable detail and satisfactory in scope to the Required Holder(s)
and unaudited but certified by an appropriate Responsible Officer as
having been used in connection with the preparation of the financial
statements referred to in clause (i) of this paragraph 5A;
(iii) as soon as available, but not later than 45 days
after the end of each fiscal quarter (other than the last fiscal
quarter) of each year, a copy of the unaudited combined balance sheet
of the Company and its combined Subsidiaries as of the end of such
quarter and the related combined statement of income and combined
statement of cash flows for the period commencing on the first day and
ending on the last day of such quarter, in each case setting forth in
comparative form figures for the corresponding period in the preceding
fiscal year, all in reasonable detail and satisfactory in scope to the
Required Holder(s) (information in detail and scope comparable to
information required to be included in a Quarterly Report on Form 10-Q
shall be deemed to be satisfactory for such purposes), such combined
balance sheets to be as of the end of such quarter and such combined
statements of income and combined statements of cash flows to be for
such quarterly period and for the period from the beginning of the
fiscal year to the end of such quarter, and certified by an
appropriate Responsible Officer as being complete and correct and
presenting fairly the financial position for the dates specified and
the results of operations of the Company and the Subsidiaries for the
periods indicated in conformity with generally accepted accounting
principles applied on a consistent basis;
(iv) as soon as available, but not later than 45 days
after the end of each fiscal quarter (other than the last fiscal
quarter) of each year, a copy of the unaudited combining balance sheet
of the Company and each of its Subsidiaries, and the related
-6-
<PAGE> 11
Plum Creek Timber Company, L.P. Senior Note Agreement
combining statement of income and combining statement of cash flows
for such quarter, in each case setting forth in comparative form
figures for the corresponding period in the preceding fiscal year, all
in reasonable detail and satisfactory in scope to the Required
Holder(s), (information in detail and scope that would normally be
required on interim financial statements, except as provided for in
this paragraph, shall be deemed to be satisfactory for such purposes),
such combining balance sheets to be as of the end of such quarter and
such combining statements of income and combining statements of cash
flows to be for such quarterly period and for the period from the
beginning of the fiscal year to the end of such quarter, and certified
by an appropriate Responsible Officer of the Company as having been
used in connection with the preparation of the financial statements
referred to in clause (iii) of this paragraph 5A;
(v) to the extent not delivered pursuant to clauses (i),
(ii), (iii) and (iv) above, promptly upon transmission thereof, copies
of all such financial statements as are delivered to the Mortgage
Noteholders pursuant to the Mortgage Note Agreements;
(vi) to the extent not delivered pursuant to clause (i),
(ii), (iii), (iv) or (v), promptly upon transmission thereof, copies
of all such financial statements, proxy statements, notices and
reports as it sends to its public security holders and copies of all
registration statements (without exhibits) and all reports which it
files with the Securities and Exchange Commission and any governmental
body or agency succeeding to the functions of the Securities and
Exchange Commission;
(vii) as soon as practicable, and in any event within 10
Business Days after the Company, any of its Subsidiaries or any
Related Person knows of the occurrence or existence or expected
occurrence or existence of any event or condition or series of events
or conditions with respect to any Plan or Plans which are reasonably
likely to result in (a) a material liability to the Company, any of
its Subsidiaries or any Related Person pursuant to ERISA or the Code
(other than liability for PBGC premiums or regular periodic
contributions to any such Plan or Plans) or (b) the imposition of a
Lien on any of the assets or other properties of the Company, any of
its Subsidiaries or any Related Person pursuant to ERISA or the Code,
the Company shall deliver to each Significant Holder a statement
signed by the chief financial officer of the Company setting forth
details respecting such event or condition or series of events or
conditions and the action, if any, that the Company, any of its
Subsidiaries or any Related Person proposes to take with respect
thereto (and a copy of any notice, report or other written
communication, or a written description of any oral communication,
with or from the PBGC, the Internal Revenue Service or the Department
of Labor with respect to such event or condition or series of events
or conditions); and
(viii) with reasonable promptness, such other information
and financial data as such Significant Holder may reasonably request.
Together with each delivery of financial statements required by
clauses (i) and (iii) above, the Company will deliver to each Significant
Holder an Officers' Certificate
-7-
<PAGE> 12
Plum Creek Timber Company, L.P. Senior Note Agreement
demonstrating (with computations in reasonable detail) compliance by the
Company and its Subsidiaries with the provisions of paragraph 6 (including,
without limitation, paragraph 6A) and stating that there exists no continuing
Event of Default or Default, or, if any continuing Event of Default or Default
exists, specifying the nature and period of existence thereof and what action
the Company proposes to take or is taking with respect thereto. Together with
each delivery of financial statements required by clause (i) above, the Company
will deliver to each Significant Holder a certificate of such accountants
stating that, in making the audit necessary to the certification of such
financial statements, they have obtained no knowledge of any Event of Default
or Default continuing, or, if they have obtained knowledge of any Event of
Default or Default continuing, specifying the nature and period of existence
thereof. Such accountants, however, shall not be required to engage in any
auditing procedures other than those procedures required by generally accepted
auditing standards, and shall not be liable to anyone by reason of their
failure to obtain knowledge of any Event of Default or Default which would not
be disclosed in the course of an audit conducted in accordance with generally
accepted auditing standards. Notwithstanding the foregoing provisions of this
paragraph 5A, the Company shall not be required to deliver any financial
statements or other documents (other than documents or information which have
become public information) to any Person engaged in any Permitted Business in
competition with the Company or any Subsidiary. The Company also covenants
that forthwith upon the chief executive officer, principal financial officer or
principal accounting officer of the Company or the General Partner becoming
aware of an Event of Default and within 5 Business Days after the chief
executive officer, principal financial officer or principal accounting officer
of the Company or the General Partner becomes aware of a Default, it will
deliver to each Significant Holder an Officers' Certificate specifying the
nature and period of existence thereof and what action the Company proposes to
take with respect thereto, provided, however, no such officer shall be
obligated to provide a certificate with respect to any such Event of Default or
Default that has been cured on or before the date upon which such officer
becomes aware thereof.
5B. INSPECTION OF PROPERTY
The Company covenants that it will permit any Person designated in
writing by (a) any Purchaser named on Schedule I hereto or (b) any Significant
Holder or Significant Holders of not less than 5% in aggregate principal amount
of the Notes at the time outstanding (other than any Person acting on behalf of
any holder which is engaged directly in any Permitted Business in competition
with the Company or any Subsidiary), at such holder's or holders' expense
(except during the continuance of an Event of Default, in which case at the
expense of the Company), to visit and inspect any of the properties of the
Company and its Subsidiaries, to examine the books and financial records of the
Company and its Subsidiaries and make copies thereof or extracts therefrom and
to discuss the affairs, finances and accounts of the Company or any of such
Subsidiaries with the principal officers of the Company and its independent
public accountants, all upon reasonable notice and at such reasonable times and
as often as such holder or holders may reasonably request.
-8-
<PAGE> 13
Plum Creek Timber Company, L.P. Senior Note Agreement
5C. COVENANT TO SECURE NOTES EQUALLY
The Company covenants that, if it shall create or assume any Lien upon
any of its property or assets, whether now owned or hereafter acquired, other
than Liens permitted by the provisions of paragraph 6B(1) (unless prior written
consent to the creation or assumption thereof shall have been obtained pursuant
to paragraph 11C), it will make or cause to be made effective provision whereby
the Notes will be secured by such Lien equally and ratably with any and all
other Debt thereby secured so long as any such other Debt shall be so secured;
provided that, satisfaction of the foregoing requirements with respect to any
such Lien shall not remedy the Event of Default resulting from such Lien.
5D. PARTNERSHIP EXISTENCE, ETC.
Except as permitted by paragraph 6B(5) the Company covenants that it
will, and will cause each of its Restricted Subsidiaries to, at all times
preserve and keep in full force and effect its partnership or corporate
existence, as the case may be, and rights and franchises material to its
business, and those of each of its Restricted Subsidiaries, and will qualify,
and cause each of its Restricted Subsidiaries to qualify, to do business in any
jurisdiction where the failure to do so would have a material adverse effect on
the business, condition (financial or other), assets, properties or operations
of the Company or the Company and its Restricted Subsidiaries taken as a whole,
provided that the corporate existence of any Restricted Subsidiary or any
rights and franchises of the Company or any Restricted Subsidiary may be
terminated if, in the good faith judgment of the Company, such termination is
in the best interests of the Company and would not have a material adverse
effect on the business, condition (financial or other), assets, properties or
operations of the Company or the Company and its Restricted Subsidiaries taken
as a whole.
5E. PAYMENT OF TAXES AND CLAIMS
The Company covenants that it will, and will cause each of its
Restricted Subsidiaries to, pay all material taxes, assessments and other
governmental charges imposed upon it or any of its properties or assets or in
respect of any of its franchises, business, income or profits before any
penalty accrues thereon, and all material claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which by law have or may become a Lien upon any
of its properties or assets, provided that no such tax, assessment, charge or
claim need be paid if it is being contested in good faith by appropriate
proceedings promptly instituted and diligently conducted and if such accrual or
other appropriate provision, if any, as shall be required by generally accepted
accounting principles shall have been made therefor.
5F. COMPLIANCE WITH LAWS, ETC.
The Company covenants that it will, and will cause each of its
Subsidiaries to, comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, the noncompliance with
which would materially adversely affect the
-9-
<PAGE> 14
Plum Creek Timber Company, L.P. Senior Note Agreement
business, condition (financial or other), assets, properties or operations of
the Company or the Company and its Restricted Subsidiaries taken as a whole.
5G. MAINTENANCE OF PROPERTIES; INSURANCE
The Company covenants that it will maintain or cause to be maintained
in good repair, working order and condition (normal wear and tear excepted) all
properties used or useful in the business of the Company and its Restricted
Subsidiaries and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof except where the failure
to make such repair, renewal or replacement would not have a material adverse
effect on the business, condition (financial or other), assets, properties or
results of operations of the Company or the Company and its Restricted
Subsidiaries taken as a whole. The Company will maintain or cause to be
maintained, with financially sound and reputable insurers, insurance with
respect to its properties and business and the properties and business of its
Restricted Subsidiaries against loss or damage of the kinds customarily insured
against by corporations of established reputation of similar size engaged in
the same or similar business and similarly situated, of such types and in such
amounts as are customarily carried under similar circumstances by such other
corporations, provided that the Company may self-insure with respect to its
properties and business and the properties and business of its Restricted
Subsidiaries to the extent consistent with the practice of corporations of
established reputation of similar size engaged in the same or similar business
and similarly situated.
6. NEGATIVE COVENANTS
6A. RESTRICTED PAYMENTS
The Company covenants that it will not and will not permit any
Subsidiary to directly or indirectly pay, declare, order, make or set apart any
sum for any Restricted Payment, except that the Company may make, pay or set
apart during each calendar quarter one or more Restricted Payments if
(i) such Restricted Payments are in an aggregate amount
not exceeding the amount by which Available Cash with respect to the
immediately preceding calendar quarter exceeds any amount contributed
to Available Cash with respect to such immediately preceding calendar
quarter by any Subsidiary if and to the extent that the payment of
such amount as a dividend or distribution to the Company has not been
made and is not at the time permitted by the terms of such
Subsidiary's charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such
Subsidiary, provided that in determining Available Cash with respect
to such immediately preceding calendar quarter, the Company will
include in the amount of the reserves established during such quarter
pursuant to clause (b)(iv) of the definition of Available Cash an
amount not less than (x) 50% of the aggregate amount of all interest
in respect of the Notes, the 8.73% Senior Notes and the 11 1/8% Senior
Notes to be paid on the interest payment date immediately following
such immediately preceding calendar quarter, and (y) 25% of the
aggregate
-10-
<PAGE> 15
Plum Creek Timber Company, L.P. Senior Note Agreement
amount of all principal in respect of the Series D Notes and the 11
1/8% Senior Notes scheduled to be paid during the 12 calendar months
immediately following such immediately preceding calendar quarter, and
the Company will not reduce the amount of the reserves so included, in
determining Available Cash for any calendar quarter subsequent to such
immediately preceding calendar quarter pursuant to clause (a)(iii) of
the definition of Available Cash, unless and until the amount of
interest or principal, as the case may be, in respect of which such
amount has been reserved has in fact been paid, and
(ii) immediately after giving effect to any such proposed
action no condition or event shall exist which constitutes an Event of
Default or Material Default.
The Company will not, in any event, directly or indirectly declare, order, pay
or make any Restricted Payment except in cash.
6B. LIEN, INDEBTEDNESS AND OTHER RESTRICTIONS
The Company covenants that it will not, and will not permit any
Restricted Subsidiary to:
6B(1) LIENS
Create, assume or suffer to exist any Lien upon any of its property or
assets, whether now owned or hereafter acquired, except
(i) Liens for taxes, assessments or other governmental
charges the payment of which is not at the time required by paragraph
5E,
(ii) Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers and materialmen and similar Liens
incurred in the ordinary course of business for sums not yet due or
the payment of which is not at the time required by paragraph 5E,
(iii) Liens incurred or deposits made incidental to the
conduct of its business or the ownership of its property including,
without limitation, (a) pledges or deposits in connection with
worker's compensation, unemployment insurance and other social
security legislation, (b) deposits to secure insurance, the
performance of bids, tenders, contracts, leases, licenses, franchises
and statutory obligations, each in the ordinary course of business,
and (c) other obligations which were not incurred or made in
connection with the borrowing of money, the obtaining of advances or
credit or the payment of the deferred purchase price of property and
which do not in the aggregate materially detract from the value of its
property or assets or materially impair the use of such property or
assets in the operation of its business,
(iv) any attachment or judgment Lien, unless the judgment
it secures shall not, within 45 days after the entry thereof, have
been discharged or execution thereof
-11-
<PAGE> 16
Plum Creek Timber Company, L.P. Senior Note Agreement
stayed pending appeal, or shall not have been discharged within 45
days after expiration of any such stay,
(v) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances,
which, in each case, and in the aggregate, do not materially interfere
with the ordinary conduct of the business of the Company or any
Restricted Subsidiary,
(vi) Liens on property or assets of any Restricted
Subsidiary securing obligations of such Restricted Subsidiary owing to
the Company or another Restricted Subsidiary,
(vii) any Lien existing prior to the time of acquisition
upon any property acquired by the Company or any Restricted Subsidiary
after the date of closing through purchase, merger or consolidation or
otherwise, whether or not assumed by the Company or such Subsidiary,
or placed upon property at (or within 30 days after) the later of the
time of acquisition or the completion of construction by the Company
or any Restricted Subsidiary to secure all or a portion of (or to
secure Debt incurred to pay all or a portion of) the purchase price
thereof, provided that (w) any such Lien does not encumber any other
property of the Company or such Restricted Subsidiary, (x) the Debt
secured by such Lien is not prohibited by the provisions of paragraph
6B(2), (y) the aggregate principal amount of the Debt secured by any
such Lien at no time exceeds 80% of the cost to the Company and its
Restricted Subsidiaries of the property subject to such Lien, and (z)
the aggregate outstanding principal amount (without duplication) of
the Debt secured by all such Liens and the Debt of all Restricted
Subsidiaries at no time (a) during the period commencing on the date
of closing and ending on June 8, 1999 exceeds $25,000,000, (b) during
the period commencing on June 9, 1999 and ending June 8, 2004 exceeds
$50,000,000, and (c) thereafter exceeds $100,000,000,
(viii) Liens on the accounts, rights to payment for goods
sold or services rendered that are evidenced by chattel paper or
instruments, and rights against persons who guarantee payment or
collection of the foregoing, and on the Company's inventory and on the
proceeds (as defined in the Uniform Commercial Code in any applicable
jurisdiction) thereof securing the obligations of the Company under
the Revolving Credit Facility (and any extension, renewal, refunding
or refinancing thereof) permitted by paragraph 6B(2)(iv),
(ix) from and after the time that the Facilities
Subsidiary becomes a Restricted Subsidiary, Liens on the accounts,
rights to payment for goods sold or services rendered that are
evidenced by chattel paper or instruments, and rights against persons
who guarantee payment or collection of the foregoing, and on the
Facilities Subsidiary's inventory and on the proceeds (as defined in
the Uniform Commercial Code in any applicable jurisdiction) thereof
securing the obligations of the Facilities Subsidiary under the
Facilities Subsidiary's Revolving Credit Facility (and any
-12-
<PAGE> 17
Plum Creek Timber Company, L.P. Senior Note Agreement
extension, renewal, refunding or refinancing thereof) permitted by
paragraph 6B(2)(x),
(x) Liens existing on the property or assets of the
Company or any Subsidiary on the date of closing and set forth on
Exhibit D hereto, and
(xi) any Lien renewing, extending, refunding or
refinancing any Lien permitted by clause (vii) of this paragraph
6B(1), provided that the principal amount secured is not increased and
the Lien is not extended to other property and further provided, that
the maturity of the Lien is not extended beyond the maturity date of
the Debt which, at the time the Lien was initially placed upon the
property secured thereby, Responsible Representatives declare would
have been the maturity date of Debt customary for the type of asset
being financed;
6B(2) DEBT
Create, incur, assume or suffer to exist any Funded or Current Debt,
except
(i) Funded Debt represented by the Notes, the 8.73%
Senior Notes and the 11 1/8% Senior Notes,
(ii) Funded Debt which is unsecured and is incurred by the
Company to finance the making of capital improvements, expansions and
additions to the Company's property (including Timberlands), plant and
equipment, provided that the aggregate outstanding principal amount of
such Funded Debt shall at no time exceed $20,000,000,
(iii) Funded or Current Debt of any Restricted Subsidiary
owing to the Company or to a Restricted Subsidiary,
(iv) Debt incurred by the Company pursuant to (a) the
Revolving Credit Facility (and any extension, renewal, refunding or
refinancing thereof, including any refunding or refinancing in an
amount in excess of the principal amount then outstanding under the
Revolving Credit Facility), or (b) a bank credit facility which is
unsecured or is secured by Liens permitted by paragraph 6B(1)(viii),
provided that the aggregate outstanding principal amount of all Debt
permitted by this clause (iv) shall at no time exceed $15,000,000, and
provided, further, that the Company shall not suffer to exist any Debt
permitted by this clause (iv) on any day unless there shall have been
a period of at least 45 consecutive days within the 12 months
immediately preceding such day during which the Company shall have
been free from all Debt permitted by this clause (iv),
(v) Debt represented by the Guarantee in an amount not
greater than $131,200,000 at any time,
-13-
<PAGE> 18
Plum Creek Timber Company, L.P. Senior Note Agreement
(vi) the Company's guarantee of obligations incurred by
the Facilities Subsidiary pursuant to the Facilities Subsidiary's
Revolving Credit Facility (and any extension, renewal, refunding or
refinancing thereof permitted by clause (iv) of paragraph 6B(2) of the
Mortgage Note Agreements), provided that the aggregate outstanding
principal amount of such Debt shall at no time exceed $20,000,000, and
provided, further, that such guarantee shall be subordinated to the
Notes by subordination provisions substantially the same as those
contained in paragraph 7I of the Mortgage Note Agreements,
(vii) the Company's guarantee of Funded Debt (and related
obligations not constituting Debt) incurred by the Facilities
Subsidiary to finance the making of capital improvements, expansions
and additions to the Facilities Subsidiary's properties pursuant to
the Facilities Subsidiary's Facility, provided that such guarantee
shall be subordinated to the Notes by subordination provisions
substantially the same as those contained in paragraph 7I of the
Mortgage Note Agreements, and provided, further, that the aggregate
outstanding principal amount of such Funded Debt shall at no time
exceed $20,000,000,
(viii) Funded Debt of the Company or any Restricted
Subsidiary secured by a Lien permitted by clause (vii) of paragraph
6B(1), provided that immediately after the acquisition of the property
subject to such Lien or upon which such Lien is placed (or, if later,
the incurrence of the Debt secured by such Lien), the Company could
incur at least $1 of additional Funded Debt pursuant to clause (ix)
below,
(ix) Funded Debt of the Company (other than Funded Debt
owing to a Restricted Subsidiary) in addition to that otherwise
permitted by the foregoing clauses of this paragraph 6B(2), including
guarantees of Debt to the extent permitted by paragraph 6B(3) and not
otherwise permitted by the foregoing clauses of this paragraph 6B(2),
provided that, on the date the Company becomes liable with respect to
any such additional Funded Debt and immediately after giving effect
thereto and to the concurrent retirement of any other Funded Debt, the
ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest
Charges is not less than 2.25 to 1.0,
(x) from and after the time that the Facilities
Subsidiary becomes a Restricted Subsidiary, Debtincurred by the
Facilities Subsidiary pursuant to (a) the Facilities Subsidiary's
Revolving Credit Facility (and any extension, renewal, refunding or
refinancing thereof, including any refunding or refinancing in an
amount in excess of the principal amount then outstanding under the
Facilities Subsidiary's Revolving Credit Facility), or (b) a bank
credit facility which is unsecured or is secured by Liens permitted by
paragraph 6B(1)(ix), provided that the aggregate outstanding principal
amount of all Debt permitted by this clause (x) shall at no time
exceed $20,000,000, and provided, further, that to the extent that the
Facilities Subsidiary is a Restricted Subsidiary, the Facilities
Subsidiary shall not suffer to exist any Debt permitted by this clause
(x) on any day unless there shall have been a period of at least 45
consecutive
-14-
<PAGE> 19
Plum Creek Timber Company, L.P. Senior Note Agreement
days within the 12 months immediately preceding such day during which
the Facilities Subsidiary shall have been free from all Debt permitted
by this clause (x), and
(xi) from and after the time that the Facilities
Subsidiary or any Designated Immaterial Subsidiary becomes a
Restricted Subsidiary, Debt of the Facilities Subsidiary or any such
Designated Immaterial Subsidiary outstanding at the time the
Facilities Subsidiary or such Designated Immaterial Subsidiary becomes
a Restricted Subsidiary, provided that (a) immediately after the
Facilities Subsidiary or any such Designated Immaterial Subsidiary
becomes a Restricted Subsidiary, the Company could incur at least $1
of additional Funded Debt pursuant to clause (ix) above (the
Facilities Subsidiary or any such Designated Immaterial Subsidiary
shall be deemed to be a Restricted Subsidiary for the four consecutive
fiscal quarters immediately prior to its becoming a Restricted
Subsidiary for purposes of determining Pro Forma Free Cash Flow), and
(b) the aggregate amount (without duplication) of such Debt and all
other Debt which is secured by Liens and permitted by clause (vii) of
paragraph 6B(1) does not violate subclause (z) of the proviso to such
clause (vii);
provided that notwithstanding any other provision in this paragraph 6B(2), any
guarantee issued by the Company of any Funded Debt or Current Debt of any
Subsidiary shall be subordinated to the Notes by subordination provisions
substantially the same as those contained in paragraph 7I of the Mortgage Note
Agreements;
6B(3) LOANS, ADVANCES, INVESTMENTS AND CONTINGENT LIABILITIES
Make or permit to remain outstanding any loan or advance to, or
guarantee, endorse or otherwise be or become contingently liable, directly or
indirectly, in connection with the obligations, stock or dividends of, or own,
purchase or acquire any stock, obligations or securities of, or any other
interest in, or make any capital contribution to, any Person (all of the
foregoing, other than Designated Repurchases permitted by paragraph 6A hereof,
being referred to herein as "Investments"), except that the Company or any
Restricted Subsidiary may
(i) make Investments in the Facilities Subsidiary,
provided that the Company will not make or permit any Restricted
Subsidiary to make any such Investment (including any guaranty of
obligations of the Facilities Subsidiary not otherwise permitted by
this paragraph 6B(3)) unless (a) immediately after givingeffect to
such Investment, no Event of Default or Default, or "Default" or
"Event of Default" as defined in the Mortgage Note Agreements, shall
exist, (b) immediately prior to giving effect to such Investment, no
Default or Event of Default (other than under clause (xvi) of
paragraph 7A) shall exist, and (c) immediately after giving effect to
such Investment, the ratio of Pro Forma Free Cash Flow to Maximum Pro
Forma Annual Interest Charges is not less than 2.5 to 1.0,
(ii) own, purchase or acquire real or personal property to
be used in the ordinary course of its business,
-15-
<PAGE> 20
Plum Creek Timber Company, L.P. Senior Note Agreement
(iii) own, purchase or acquire Investments of the type
specified in, and in accordance with the requirements and limitations
of, the Investment Policy,
(iv) continue to own Investments owned on the date of
closing as set forth on Exhibit E,
(v) endorse negotiable instruments for collection in the
ordinary course of business,
(vi) become and be obligated under the Guarantee and under
the guarantees permitted by clauses (vi) and (vii) of paragraph 6B(2),
and acquire and own subordinated subrogation rights upon performance
of such guarantees,
(vii) make advances in the ordinary course of conducting
the business of the Company or any Restricted Subsidiary, including
deposits permitted under paragraph 6B(1)(iii), advances to employees
for travel, relocation and other employment related expenses, advances
to contractors performing services for the Company or such Restricted
Subsidiary, advances to owners of timber or timber properties to
acquire rights to harvest timber and other similar advances,
(viii) make Investments in Restricted Subsidiaries, or any
entity which immediately after such Investment will be a Restricted
Subsidiary, and
(ix) make Investments not otherwise permitted by this
paragraph 6B(3) in entities engaged solely in a Permitted Business,
provided that the cumulative aggregate amount of such Investments
(calculated at original cost and including the principal amount of any
obligations guaranteed to the extent such guarantees are not otherwise
permitted by this paragraph 6B(3)) outstanding from time to time made
pursuant to this clause (ix) between the date of closing and any date
thereafter shall not exceed the greater of $30,000,000 or 60% of the
average annual Pro Forma Free Cash Flow for the two fiscal years
preceding such date;
6B(4) SALE OF STOCK AND DEBT OF SUBSIDIARIES
Sell or otherwise dispose of, or part with control of, any shares of
stock or Debt of any Subsidiary, except to the Company or a Restricted
Subsidiary, and except that all shares of stock and Debt of any Subsidiary
(other than the Facilities Subsidiary) at the time owned by or owed to the
Company and its Restricted Subsidiaries may be sold as an entirety for a cash
consideration which represents the fair value (as determined in good faith by
the Responsible Representatives of the General Partner) at the time of sale of
the shares of stock and Debt so sold; provided that the assets of such
Subsidiary do not include any assets which could not be disposed of pursuant to
the provisions of paragraph 6B(5) unless the conditions to thesale of such
assets set forth in paragraph 6B(5) are complied with, and further provided
that, at the time of such sale, such Subsidiary shall not own, directly or
indirectly, any shares of stock or Debt of any other Subsidiary (unless all of
the shares of stock and
-16-
<PAGE> 21
Plum Creek Timber Company, L.P. Senior Note Agreement
Debt of such other Subsidiary owned, directly or indirectly, by the Company and
its Subsidiaries are simultaneously being sold as permitted by this paragraph
6B(4));
6B(5) MERGER AND SALE OF ASSETS
Merge or consolidate with any other Person or sell, lease or transfer
or otherwise dispose of any assets (other than inventory sold in the ordinary
course of business) except that
(i) any Restricted Subsidiary may merge with the Company
(provided that the Company shall be the continuing or surviving
entity) or with any one or more other Restricted Subsidiaries,
(ii) any Restricted Subsidiary may sell, lease, transfer
or otherwise dispose of any of its assets to the Company or a
Restricted Subsidiary,
(iii) any Restricted Subsidiary may merge or consolidate
with any other entity, provided that, immediately after giving effect
to such merger or consolidation, (a) the continuing or surviving
entity of such merger or consolidation shall be a solvent corporation
or partnership organized under the laws of any State of the United
States of America and shall constitute a Restricted Subsidiary, (b) no
Event of Default or Material Default shall exist, and (c) following
the merger, the entity surviving the merger is not engaged in any
business other than a Permitted Business, provided that, after giving
effect on a pro forma basis to such merger or consolidation, the gross
revenue contribution of pulp and paper manufacturing activities of the
Company and its Subsidiaries on a combined basis for the 12 months
preceding such merger or consolidation does not exceed 33% of the
total revenues of the Company and its Subsidiaries on a combined
basis,
(iv) the Company may merge or consolidate with, or sell or
dispose of all or substantially all of its assets to, any other
entity, provided that (a) either (x) the Company shall be the
continuing or surviving entity (in the case of any such merger), or
(y) the successor or acquiring entity shall be a solvent corporation
or partnership organized under the laws of any State of the United
States of America and shall expressly assume in writing all of the
obligations of the Company under this Agreement and on the Notes,
including all covenants herein and therein contained, and such
successor or acquiring corporation or partnership shall succeed to and
be substituted for the Company with the same effect as if it had been
named herein as a party hereto, provided, however, that no such sale
shall release the Company from any of its obligations and liabilities
under this Agreement or the Notes unless such sale is followed by the
complete liquidation of the Company and substantially all the assets
of the Company immediately following such sale are distributed in such
liquidation, and (b) immediately after such merger or consolidation or
such sale or other disposition, (x) no Event of Default or Material
Default shall exist, (y) the Company could incur at least $1 of
additional Funded Debt pursuant to paragraph 6B(2)(ix), and (z) the
entity surviving the merger or consolidation or to which such assets
have been transferred is
-17-
<PAGE> 22
Plum Creek Timber Company, L.P. Senior Note Agreement
not engaged in any business other than aPermitted Business, provided
that, after giving effect on a pro forma basis to such merger,
consolidation or sale, the gross revenue contribution of pulp and
paper manufacturing activities of the merged or consolidated entity
and its Subsidiaries on a combined basis for the 12 months preceding
such merger, consolidation or sale does not exceed 33% of total
revenues of the Company or such merged or consolidated entity, as the
case may be, and its Subsidiaries on a combined basis,
(v) the Company or any Restricted Subsidiary may sell
Designated Acres for the fair value thereof as reasonably determined
in good faith by the Responsible Representatives,
(vi) the Company and its Restricted Subsidiaries may
exchange Timberlands with other Persons in the ordinary course of
business, provided that (a) the fair value of the Timberlands plus any
net cash proceeds received in such exchange is, in the good faith
judgment of the Responsible Representatives, not less than the fair
value of Timberlands exchanged plus any other consideration paid, (b)
such exchange would not materially and adversely affect the business,
property or assets, condition or results of operations of the Company
and its Restricted Subsidiaries on a combined basis or of the
Facilities Subsidiary or impair the ability of the Company to perform
its obligations hereunder or under the Notes, and (c) any Timberlands
so exchanged shall be deemed sold to the extent of cash proceeds
received in such exchange and such sales shall be allowed only to the
extent otherwise permitted by this paragraph 6B(5),
(vii) the Company and its Restricted Subsidiaries may sell
properties for not less than the fair value thereof as determined in
good faith by the Responsible Representatives, provided that the
aggregate net proceeds of such sales in any calendar year do not
exceed an amount equal to one percent (1%) of Consolidated Total
Assets, determined as of the last day of the immediately preceding
calendar year, and
(viii) the Company and its Restricted Subsidiaries may
otherwise sell for cash properties in an amount not less than the fair
value thereof as determined in good faith by the Responsible
Representatives if and only if (a) immediately after giving effect to
such proposed sale, no condition or event shall exist which
constitutes an Event of Default or Material Default, (b) the net
proceeds of any such sale (x) are applied, within 180 days after such
sale, to the repayment of Qualified Debt selected by the Company,
which, in the case of the Notes, shall be a prepayment pursuant to
paragraph 4A(2), or (y) are applied, within 180 days after such sale,
to the purchase of productive assets in the same line of business, and
(c) immediately after giving effect to such sale (giving effect on a
pro forma basis to any proposed retirement of Qualified Debt out of
the proceeds thereof), the Company could incur $1 of additional Funded
Debt pursuant to paragraph 6B(2)(ix); provided that, if (I) the net
proceeds of any such sale exceed $50,000,000 (and such proceeds are
not immediately applied in accordance with clause (b) above), or (II)
the unapplied net proceeds of all such sales exceed $100,000,000 in
the aggregate at any time, all the net proceeds of any such sale
described in clause (I) and/or all the unapplied net proceeds of such
sales described in
-18-
<PAGE> 23
Plum Creek Timber Company, L.P. Senior Note Agreement
clause (II), as the case may be, shall be placed immediately in an
escrow or cash collateral account or accounts, pursuant to an
agreement or agreements in form and substance reasonably satisfactory
to the holders of greater than 50% of the outstanding principal amount
of Qualified Debt, for the purpose of application in accordance with
clause (b) above;
6B(6) HARVESTING RESTRICTIONS
In any calendar year, harvest Timber on the Timberlands then owned by
the Company in excess of the amount set forth for such calendar year in the
following table:
<TABLE>
<S> <C>
MAXIMUM CUNITS
CALENDAR YEAR TO BE HARVESTED
1996 1,470 MCCF
1997 through 2000 1,970 MCCF
2001 and each calendar year thereafter 1,910 MCCF
</TABLE>
plus, in each year, the amount, if any, by which (a) the sum of (x) the
cumulative amount set forth in the table above for the years preceding such
year of determination and (y) 2,130 MCCF, exceeds (b) the cumulative amount
actually harvested in such years preceding such year of determination;
unless the net cash proceeds from such excess harvest are either (i) applied,
within 180 days after any such excess harvest, to the repayment of Qualified
Debt selected by the Company, which, in the case of the Notes, shall be a
prepayment pursuant to paragraph 4A(2), or (ii) applied, within 180 days after
any such excess harvest, to purchase Timber (including Timber on Timberlands
purchased) having a fair value (in the good faith judgment of the Responsible
Representatives) not less than the fair value of the Timber subject to such
excess harvest; provided that, if the net proceeds of any such excess harvest
exceed $50,000,000 (and such proceeds are not immediately applied in accordance
with clause (i) or (ii) above), all the net proceeds of such excess harvest
shall be placed immediately in an escrow or cash collateral account or
accounts, pursuant to an agreement or agreements in form and substance
reasonably satisfactory to the holders of greater than 50% of the outstanding
principal amount of Qualified Debt, for the purpose of application in
accordance with clause (i) or (ii) above;
6B(7) SALE AND LEASE-BACK
Enter into any arrangement with any lender or investor or to which
such lender or investor is a party providing for the leasing by the Company or
any Restricted Subsidiary of real or personal property which has been or is to
be sold or transferred by the Company or any Restricted Subsidiary to such
lender or investor or to any Person to whom funds have been or are to be
advanced by such lender or investor on the security of such property or
-19-
<PAGE> 24
Plum Creek Timber Company, L.P. Senior Note Agreement
rental obligations of the Company or any Restricted Subsidiary, provided that
this paragraph 6B(7) shall not apply to any property sold pursuant to clause
(vii) of paragraph 6B(5);
6B(8) CERTAIN CONTRACTS
Enter into or be a party to
(i) any contract providing for the making of loans,
advances or capital contributions to any Person or for the purchase of
any property from any Person, in each case in order primarily to
enable such Person to maintain working capital, net worth or any other
balance sheet condition or to pay debts, dividends or expenses, or
(ii) any contract for the purchase of materials, supplies
or other property or services if such contract (or any related
document) requires that payment for such materials, supplies or other
property or services shall be made regardless of whether or not
delivery of such materials, supplies or other property or services is
ever made or tendered, provided that nothing in this clause (ii) shall
prevent the Company from (a) entering into take-or-pay contracts in
the ordinary course of business with the United States Forest Service,
the Bureau of Land Management, the Washington Department of Natural
Resources or similar state or federal governmental agencies, or (b)
making payments in satisfaction of contracts with such Persons which
contracts are deemed by the Responsible Representatives to be
disadvantageous to perform, or
(iii) any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document) provides
that the obligation to make payments thereunder is absolute and
unconditional under conditions not customarily found in commercial
leases then in general use or requires that the lessee purchase or
otherwise acquire securities or obligations of the lessor, or
(iv) any contract for the sale or use of materials,
supplies or other property, or the rendering of services, if such
contract (or any related document) requires that payment for such
materials, supplies or other property, or the use thereof, or payment
for such services, shall be subordinated to any indebtedness (of the
purchaser or user of such materials, supplies or other property or the
Person entitled to the benefit of such services) owed or to be owed to
any Person, or
(v) any other contract which in economic effect, is
substantially equivalent to a guarantee
except as permitted by the provisions of clauses (i), (v), (vi), (vii), (viii)
or (ix) of paragraph 6B(3);
6B(9) TRANSACTIONS WITH AFFILIATES
Directly or indirectly engage in any transaction (including, without
limitation, the purchase, sale or exchange of assets or the rendering of any
service) with any Affiliate
-20-
<PAGE> 25
Plum Creek Timber Company, L.P. Senior Note Agreement
except in the ordinary course of and pursuant to the reasonable requirements of
the Company's or such Restricted Subsidiary's business and upon fair and
reasonable terms that are no less favorable to the Company or such Restricted
Subsidiary, as the case may be, than those which might be obtained in an arm's
length transaction at the time from Persons which are not such an Affiliate.
The foregoing shall not prohibit Designated Repurchases otherwise permitted by
this Agreement.
6C. CONDUCT OF BUSINESS
The Company covenants that it will not, and will not permit any
Subsidiary to, engage in any business other than Permitted Businesses.
6D. ISSUANCE OF STOCK BY SUBSIDIARIES
The Company covenants that it will not permit any Subsidiary (either
directly, or indirectly by the issuance of rights or options for, or securities
convertible into, such shares) to issue, sell or otherwise dispose of any
shares of any class of its stock or partnership or other ownership interests
(other than directors' qualifying shares) except to the Company or a Restricted
Subsidiary and except to the extent that holders of minority interests may be
entitled to purchase stock by reason of preemptive rights.
7. EVENTS OF DEFAULT
7A. ACCELERATION
If any of the following events shall occur and be continuing for any
reason whatsoever (and whether such occurrence shall be voluntary or
involuntary or come about or be effected by operation of law or otherwise):
(i) the Company defaults in the payment of any principal
or of premium on any Note when the same shall become due, either by
the terms thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any interest
on any Note for more than 10 days after the date due; or
(iii) the Company or any Restricted Subsidiary (a) defaults
in any payment of principal of or interest on any other obligation for
money borrowed (or any payment obligation under the Guarantee, any
Capital Lease Obligation, any obligation under a conditional sale or
other title retention agreement, any obligation issued or assumed as
full or partial payment for property whether or not secured by a
purchase money mortgage or any obligation under notes payable or
drafts accepted representing extensions of credit) beyond any period
of grace provided with respect thereto, or (b) fails to perform or
observe any other agreement, term or condition contained in any
agreement under which any such obligation is created within any
applicable grace period provided therein (or if any other event
thereunder or under any such
-21-
<PAGE> 26
Plum Creek Timber Company, L.P. Senior Note Agreement
agreement shall occur and be continuing) and the effect of such
failure or other event is (x) to then cause such obligation to become
due prior to any stated maturity or (y) to then permit the holder or
holders of such obligation (or a trustee on behalf of such holder or
holders) to cause such obligation to become due prior to any stated
maturity, provided that the aggregate outstanding principal amount of
all obligations as to which such payment defaults shall occur and be
continuing or such failures or other events causing or permitting
acceleration shall occur and be continuing exceeds $5,000,000; or
(iv) any representation or warranty made by the Company
herein or in any writing furnished in connection with or pursuant to
this Agreement shall be false in any material respect on the date as
of which made; or
(v) the Company fails to perform or observe any agreement
contained in the last sentence of paragraph 5A or in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall
not be remedied within 30 consecutive days after written notice
thereof shall have been received by the Company from any holder of any
Note; or
(vii) the Company or the General Partner or any Restricted
Subsidiary makes a general assignment for the benefit of creditors or
is generally not paying its debts as such debts become due; or
(viii) any decree or order for relief in respect of the
Company or the General Partner or any Restricted Subsidiary is entered
under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or
similar law, whether now or hereafter in effect (herein called the
"Bankruptcy Law"), of any jurisdiction; or
(ix) the Company or the General Partner or any Restricted
Subsidiary petitions or applies to any tribunal for, or consents to,
the appointment of, or taking possession by, a trustee, receiver,
custodian, liquidator or similar official of the Company or the
General Partner or any Restricted Subsidiary, or of any substantial
part of the assets of the Company or the General Partner or any
Restricted Subsidiary, or commences a voluntary case under the
Bankruptcy Law of the United States or any proceedings (other than
proceedings for the voluntary liquidation and dissolution of a
Restricted Subsidiary) relating to the Company or the General Partner
or any Restricted Subsidiary under the Bankruptcy Law of any other
jurisdiction; or
(x) any such petition or application is filed, or any
such proceedings as described in clause (ix) above are commenced,
against the Company or the General Partner or any Restricted
Subsidiary and the Company or the General Partner or such Restricted
Subsidiary by any act indicates its approval thereof, consent thereto
or acquiescence therein, or an order, judgment or decree is entered
appointing any such
-22-
<PAGE> 27
Plum Creek Timber Company, L.P. Senior Note Agreement
trustee, receiver, custodian, liquidator or similar official, or
approving the petition in any such proceedings, and such order,
judgment or decree remains unstayed and in effect for more than 60
consecutive days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company or the General Partner or any
Restricted Subsidiary decreeing the dissolution, winding-up or
liquidation of the Company or the General Partner or any Restricted
Subsidiary and such order, judgment or decree remains unstayed and in
effect for more than 60 consecutive days; or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Restricted Subsidiary decreeing
a split-up of the Company or such Restricted Subsidiary which requires
the divestiture of assets representing a substantial part, or the
divestiture of the stock of or partnership or other ownership interest
in a Subsidiary whose assets represent a substantial part, of the
combined assets of the Company and its Restricted Subsidiaries
(determined in accordance with generally accepted accounting
principles) or which requires the divestiture of assets, or stock of
or partnership or other ownership interest in a Subsidiary, which
shall have contributed a substantial part of the combined net income
of the Company and its Restricted Subsidiaries (determined in
accordance with generally accepted accounting principles) for any of
the three fiscal years then most recently ended, and such order,
judgment or decree remains unstayed and in effect for more than 60
consecutive days; or
(xiii) a final judgment (which is non-appealable or has not
been stayed pending appeal or as to which all rights to appeal have
expired or been exhausted) in an amount in excess of $5,000,000 is
rendered against the Company or any Restricted Subsidiary and, within
60 consecutive days after entry thereof, such judgment is not
discharged or execution thereof stayed pending appeal, or within 60
consecutive days after the expiration of any such stay, such judgment
is not discharged; or
(xiv) this Agreement shall at any time, for any reason,
cease to be in full force and effect or shall be declared to be null
and void in whole or in any material part by the final judgment (which
is nonappealable or has not been stayed pending appeal or as to which
all rights to appeal have expired or been exhausted) of any court or
other governmental or regulatory authority having jurisdiction in
respect thereof, or the validity or the enforceability of this
Agreement shall be contested by or on behalf of the Company, or the
Company shall renounce this Agreement, or deny that it is bound by the
terms hereof or has any further liability hereunder; or
(xv) any "Event of Default" as defined in the Mortgage
Note Agreements shall exist; or
(xvi) the Facilities Subsidiary, any Subsidiary of the
Facilities Subsidiary or any Designated Immaterial Subsidiary,
immediately after they become Restricted Subsidiaries under the
definition of "Restricted Subsidiary" contained in
-23-
<PAGE> 28
Plum Creek Timber Company, L.P. Senior Note Agreement
paragraph 10B, shall have any Debt outstanding which is not permitted
by clause (x) or (xi) of paragraph 6B(2) insofar as it relates to such
Facilities Subsidiary, Subsidiary of the Facilities Subsidiary or
Designated Immaterial Subsidiary; or
(xvii) if any of the events or conditions or series of
events or conditions described in subparagraph (vii) of paragraph 5A
occurs which events or conditions or series of events or conditions
have, or could reasonably be expected to have, a material adverse
effect on the business, condition (financial or other), assets,
properties or operations of the Company or the Company and its
Restricted Subsidiaries taken as a whole;
then (a) if such event is an Event of Default specified in clause (viii) , (ix)
or (x) of this paragraph 7A with respect to the Company, all of the Notes at
the time outstanding shall automatically become immediately due and payable at
par together with interest accrued thereon, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Company,
and (b) if such event is any other continuing Event of Default, the holder or
holders of a majority of the aggregate principal amount of the Notes at the
time outstanding may at its or their option, by notice in writing to the
Company, declare all of the Notes to be, and all of the Notes shall thereupon
be and become, immediately due and payable together with interest accrued
thereon and together with the Yield-Maintenance Premium, if any, with respect
to each Note, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Company andthe Company shall give notice
in writing of such declaration to the other holders, provided that (x) if such
event is a continuing Event of Default specified in clause (i) or (ii) of this
paragraph 7A in respect of any Note, any Significant Holder may, at its option,
by notice in writing to the Company, declare all of the Notes held by such
Significant Holder to be, and all of such Notes shall thereupon be and become,
immediately due and payable together with interest accrued thereon and together
with the Yield-Maintenance Premium, if any, with respect to each such Note,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Company, (y) if any Significant Holder shall have
declared all of the Notes held by such Significant Holder to be due and payable
pursuant to clause (x) of this proviso, then the Company shall give notice in
writing of such declaration to the other holders and any other holder may at
any time thereafter and until the later of (A) the expiration of 60 days after
such other holder shall have received notice from the Company of such
declaration and (B) the date on which all Events of Default and Defaults have
been cured or waived pursuant to paragraph 11C, by notice in writing to the
Company, declare all of the Notes held by such other holder to be immediately
due and payable, together with interest accrued thereon and together with the
Yield-Maintenance Premium, if any, with respect to each such Note without
presentment, demand, protest or any other notice of any kind, all of which are
hereby waived by the Company, and (z) the Yield-Maintenance Premium, if any,
with respect to each Note shall be due and payable upon any such declaration
only if (1) such event is a continuing Event of Default specified in any of
clauses (i) through (vi), inclusive, (xiii), (xiv), (xv), (xvi) and (xvii) of
this paragraph 7A, (2) the holder or holders effecting such declaration shall
have given to the Company, at least 10 Business Days before such declaration,
written notice stating its or their intention so to declare the Notes to be
immediately due and payable and identifying one or more such
-24-
<PAGE> 29
Plum Creek Timber Company, L.P. Senior Note Agreement
Events of Default whose occurrence on or before the date of such notice permits
such declaration and (3) one or more of the Events of Default so identified
shall be continuing at the time of such declaration.
At any time after the principal of, and interest accrued on, any or
all of the Notes are declared due and payable, the holders of not less than 66
2/3% aggregate principal amount of the Notes then outstanding, by written
notice to the Company, may rescind and annul any such declaration and its
consequences if (x) the Company has paid all overdue interest on the Notes, the
principal of and premium, if any, on any Notes which have become due otherwise
than by reason of such declaration, and interest on such overdue principal and
premium and (to the extent permuted by applicable law) any overdue interest in
respect of such Notes of each series at a rate per annum from time to time
equal to the greater of (i) one percent over the rate of interest borne by the
Notes of such series or (ii) the rate of interest publicly announced by Morgan
Guaranty Trust Company of New York from time to time in New York as its Prime
Rate plus 2.0%, (y) all Events of Default and Defaults, other than non-payment
of amounts which have become due solely by reason of such declaration, have
been cured or waived pursuant to paragraph 11C, and (z) no judgment or decree
has been entered for the payment of any monies due pursuant to the Notes or
this Agreement; but no such rescission andannulment shall extend to or affect
any subsequent Event of Default or Default or impair any right consequent
thereon.
7B. OTHER REMEDIES
If any Event of Default shall occur and be continuing, the holder of
any Note may proceed to protect and enforce its rights under this Agreement and
such Note by exercising such remedies as are available to such holder in
respect thereof under applicable law, either by suit in equity or by action at
law, or both, whether for specific performance of any covenant or other
agreement contained in this Agreement or in aid of the exercise of any power
granted in this Agreement. No remedy conferred in this Agreement upon the
holder of any Note is intended to be exclusive of any other remedy, and each
and every such remedy shall be cumulative and shall be in addition to every
other remedy conferred herein or now or hereafter existing at law or in equity
or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES
The Company represents, covenants and warrants:
8A. ORGANIZATION
The Company is a limited partnership duly organized, validly existing
and in good standing under the Delaware Revised Uniform Limited Partnership Act
and has all requisite partnership power and authority to own and operate its
properties, to conduct its business as currently conducted, to enter into this
Agreement, to issue and sell the Notes and to carry out the terms of this
Agreement and the Notes.
-25-
<PAGE> 30
Plum Creek Timber Company, L.P. Senior Note Agreement
8B. GENERAL PARTNER NET WORTH
On the date of closing the General Partner will have a net worth
(excluding its interest in the Company and any notes receivable from or payable
to the Company) at least equal to the amount sufficient to meet the tax
requirements for a general partner of a Delaware limited partnership (based on
the fair market value of its assets).
8C. SUBSIDIARIES
The General Partner owns 2% and the Company owns 98% of the limited
partnership interest in Manufacturing. The General Partner owns 4% and the
Company owns 96% of the issued and outstanding stock of Marketing. The
Facilities Subsidiary Stock has been duly authorized and validly issued, is
fully paid and non-assessable and is owned free and clear of any Liens. The
Facilities Subsidiary has issued no rights, warrants or options to acquire or
instruments convertible into or exchangeable for any equity interest in the
Facilities Subsidiary. On the date of closing the Company will have no
Subsidiaries other than the Facilities Subsidiary and those listed on Exhibit
8C.
8D. PARTNERSHIP INTERESTS
The only general partner of the Company is the General Partner, which
on the date of closing will own a 2% interest in the Company.
8E. QUALIFICATION
The Company is duly qualified or registered for the transaction of
business and in good standing as a foreign limited partnership in each of the
State of Arkansas, the State of Idaho, the State of Louisiana, the State of
Montana, the State of Texas and the State of Washington, which are the only
jurisdictions in which the failure so to qualify or be registered would have a
material adverse effect on the business, property or assets, condition, or
results of operations of the Company, or on the ability of the Company to
perform its obligations under this Agreement and the Notes.
8F. BUSINESS; FINANCIAL STATEMENTS
(a) The Company and its Subsidiaries have not engaged in any
business or activities prior to the date of this Agreement other than (i)
owning, acquiring and disposing of Timber and Timberlands, and (ii) owning and
operating lumber mills, plywood and fiberboard manufacturing plants, and wood
chip plants. The Company and its Subsidiaries do not have any significant
assets other than Timber, Timberlands and the facilities described in clause
(ii) above, and, after giving effect to the application of the proceeds of the
Notes in accordance with paragraph 8S, on the date of closing will not have any
significant liabilities other than the Notes, the 11 1/8% Senior Notes, the
8.73% Senior Notes, the Guarantee and the Mortgage Notes or indebtedness under
the Bank of America Revolving Credit and Bridge Loan Agreement.
-26-
<PAGE> 31
Plum Creek Timber Company, L.P. Senior Note Agreement
(b) The Company has delivered or caused to be delivered to each
Purchaser complete and correct copies of (i) the Company's Form 10-K as filed
with the Securities and Exchange Commission on March 6, 1996 and the Company's
Form 10-Qs as filed with the Securities and Exchange Commission on May 13, 1996
and August 14, 1996 (together, the "1934 Act Reports") and (ii) the memorandum
dated October 1996 prepared by the Company for use in connection with the
Company's private placement of the Notes (such memorandum, including, without
limitation, the preliminary prospectus contained therein, being herein called
the "Memorandum"). The annual financial statements and schedules included in
the 1934 Act Reports have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
specified and present fairly the financial position for the dates specified,
and the results of their operations and cash flows of the Company for the
respective periods specified. The quarterly financial statements and schedules
included in the 1934 Act Reports present fairly the financial position for the
dates specified and the results of operations for the quarterly periods
presented. The pro forma financial information set forth in the Memorandum is
based upon assumptions stated in the Memorandum that are reasonable in all
material respects and the financial projections contained therein are
reasonable based upon such reasonable assumptions and the best information
available to the officers of the Company.
8G. CHANGES, ETC
Except as contemplated by this Agreement or disclosed in Exhibit 8G,
subsequent to December 31, 1995, (a) neither the Company nor the Facilities
Subsidiary has incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions not in the ordinary
course of business, and (b) there has not been (i) any material adverse change
in the financial condition or operations of the Company or the Facilities
Subsidiary or (ii) any Restricted Payment of any kind declared, paid or made by
the Company.
8H. TAX RETURNS AND PAYMENTS
The Company and each of its Restricted Subsidiaries has filed all tax
returns required by law to be filed by it (or obtained extensions with respect
thereto) and has paid all material taxes, assessments and other material
governmental charges levied upon it, or any of its properties, assets, income
or franchises which are due and payable by it, other than those which are not
past due or delinquent or the non-payment of which is permitted by paragraph
5E.
8I. FRANCHISES, LICENSES, AGREEMENTS, ETC.
Except as disclosed in Exhibit 8T, the Company is in possession of and
operating in substantial compliance with all franchises, grants,
authorizations, approvals, licenses, permits, easements, consents, certificates
and orders required to own or lease its properties and to permit the conduct of
its business, except for those franchises, grants, authorizations, approvals,
licenses, permits, easements, consents, certificates and orders the failure of
which to be obtained, given or complied with would not individually or in the
aggregate materially
-27-
<PAGE> 32
Plum Creek Timber Company, L.P. Senior Note Agreement
and adversely affect the business, property or assets, condition or operations
of the Company or impair the ability of the Company to perform its obligations
hereunder or under the Notes or impair the validity or enforceability of this
Agreement or the Notes.
8J. ACTIONS PENDING
There is no action, suit, investigation or proceeding pending or, to
the knowledge of the Company, threatened against the Company, or any properties
or rights of the Company, by or before any court, arbitrator or administrative
or governmental body which questions the validity of this Agreement or the
Notes or any action taken or to be taken pursuant to this Agreement or the
Notes or which would be reasonably likely to result in any material adverse
change in the business, property or assets, condition or operations of the
Company, or in the inability of the Company to perform its obligations
hereunder or under the Notes.
8K. TITLE TO PROPERTIES
Except as disclosed in Exhibit 8K, the Company has good title to its
real properties (other than properties which it leases) and good title to all
of its other properties and assets, subject to no Lien of any kind except Liens
permitted by paragraph 6B(l), and except such Liens as do not materially
interfere with the full ownership and enjoyment of such properties and assets.
All leases necessary in any material respect for the conduct of the respective
businesses of the Company and its Subsidiaries are valid and subsisting and are
in full force and effect.
8L. COMPLIANCE WITH OTHER INSTRUMENTS, ETC.
The Company is not in violation of any term of the Partnership
Agreement or of any term of any other agreement or instrument to which it is a
party or by which it or any of its properties is bound or any term of any
applicable law, ordinance, rule or regulation of any governmental authority or
any term of any applicable order, judgment or decree of any court, arbitrator or
governmental authority, the consequences of which violation would be reasonably
likely to have a material adverse effect on its business, property or assets,
condition or operations or on the ability of the Company to perform its
obligations under this Agreement or the Notes, and the execution, delivery and
performance by the Company of this Agreement and the Notes will not result in
any violation of or be in conflict with or constitute a default under any such
term or result in the creation of (or impose any obligation on the Company to
create) any Lien (other than the Liens contemplated by this Agreement) upon any
of the properties or assets of the Company, pursuant to any such term except
for Liens permitted by paragraph 6B(1); and there is no such term which
materially adversely affects or in the future would be likely to materially
adversely affect the business, property or assets, condition or operations of
the Company, or the ability of the Company to perform its obligations under
this Agreement or the Notes.
-28-
<PAGE> 33
Plum Creek Timber Company, L.P. Senior Note Agreement
8M. GOVERNMENTAL CONSENT
No consent, approval or authorization of, or declaration or filing
with, any governmental authority is required for the valid execution, delivery
and performance by the Company of this Agreement or the valid offer, issue,
sale and delivery of the Notes pursuant to this Agreement.
8N. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the issue and sale of the Notes by the Company nor its use of
the proceeds thereof as contemplated by this Agreement will violate any of the
regulations administered by the Office of Foreign Assets Control, United States
Department of the Treasury, including, without limitation, the Foreign Assets
Control Regulations, the Transaction Control Regulations, the Cuban Assets
Control Regulations, the Foreign Funds Control Regulations, the Iranian Assets
Control Regulations, the Iranian Transactions Regulations, the Iraqi Sanctions
Regulations, the Haitian Transactions Regulations, the Libyan Sanctions
Regulations, and the Soviet Gold Coin Regulations (31 C.F.R., Subtitle B,
Chapter V, as amended) or the restrictions set forth in Executive Orders No.
12543 (Libya), 12544 (Libya), 12801 (Libya), 12722 (Iraq) or 12724 (Iraq),
12775 (Haiti), 12779 (Haiti), 12808 (Yugoslavia), 12810 (Yugoslavia) or 12831
(Yugoslavia), as amended, of the President of the United States of America or
of any rules or regulations issued thereunder.
8O. OFFERING OF NOTES
Neither the Company nor any agent acting on behalf of the Company has,
directly or indirectly, offered the Notes or any similar security of the
Company for sale to, or solicited any offers to buy the Notes or any similar
security of the Company from, or otherwise approached or negotiated with
respect thereto with any Person other than 60 persons who are "accredited
investors" by reason of the provisions of clause (1), (3) or (7) of the
definition of that term in Regulation D under the Securities Act, each of whom
was offered a portion of the Notes at private sale for investment, and neither
the Company nor any agent acting on behalf of the Company has taken or will
take any action which would subject the issuance or sale of the Notes to the
provisions of section 5 of the Securities Act or to the provisions of any
securities or Blue Sky law of anyapplicable jurisdiction.
8P. REGULATION G, ETC.
The Company does not own or have any present intention of acquiring
any "margin stock" as defined in Regulation G (12 CFR Part 207) of the Board of
Governors of the Federal Reserve System (herein called "margin stock"). None
of the proceeds of the sale of the Notes will be used, directly or indirectly,
for the purpose, whether immediate, incidental or ultimate, of purchasing or
carrying any margin stock or for the purpose of maintaining, reducing or
retiring any indebtedness which was originally incurred to purchase or carry
any stock that is currently a margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of such
Regulation G. Neither the Company nor any agent acting on its behalf has taken
or will take any action which might
-29-
<PAGE> 34
Plum Creek Timber Company, L.P. Senior Note Agreement
cause this Agreement or the Notes to violate Regulation G, Regulation T or any
other regulation of the Board of Governors of the Federal Reserve System or to
violate the Securities Exchange Act of 1934, as amended, in each case as in
effect now or as the same may hereafter be in effect.
8Q. ERISA
(a) Neither the Company nor any of its Subsidiaries has breached
the fiduciary rules of ERISA or engaged in any prohibited transaction which, in
any such case, could reasonably be expected to result in any direct or indirect
material liability (including, without limitation, as a result of an
indemnification obligation) to the Company or any of its Subsidiaries in
connection with a suit for damages or pursuant to section 409, 502(i) or 502(l)
of ERISA or section 4975 of the Code, which liability, either individually or
in the aggregate, has had or could reasonably be expected to have a material
adverse effect on the business, condition (financial or other), assets,
properties or operations of the Company or the Company and its Restricted
Subsidiaries taken as a whole.
(b) None of the Company, any of its Subsidiaries or any Related
Person has incurred any direct or indirect material liability (including,
without limitation, as a result of an indemnification obligation) under or
pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of
the Code relating to employee benefit plans, which liability has had or could
reasonably be expected to have a material adverse effect on the business,
condition (financial or other), assets, properties or operations of the Company
or the Company and its Restricted Subsidiaries taken as a whole. No event,
transaction or condition has occurred or exists or, to the Company's Knowledge,
is expected to occur or exist with respect to any Plan that could reasonably be
expected to result in any direct or indirect material liability to the Company,
any of its Subsidiaries or any Related Person (including, without limitation,
as a result of an indemnification obligation) under or pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, which liability has had or could reasonably be expected
to have a material adverse effect on the business, condition (financial or
other), assets, properties or operations of the Company or the Company and its
Restricted Subsidiaries taken as a whole. There has been no reportableevent
(within the meaning of section 4043(b) of ERISA), other than reportable events
for which the notification requirements have been waived in regulations or
other pronouncements issued by the PBGC, or any other event or condition with
respect to any Plan which presents a risk of the termination of, or the
appointment of a trustee to administer, any such Plan by the PBGC.
(c) Full payment (made in a timely manner such that any incidental
delay in making a payment, if any, has not resulted in any Lien or any material
liability to the Company, any of its Subsidiaries or any Related Person) has
been made of all amounts which the Company, any of its Subsidiaries or any
Related Person is required under applicable law, the terms of each Plan or any
collective bargaining agreement to have paid as contributions to each such
Plan, and no accumulated funding deficiency (as defined in section 302 of ERISA
or section 412 of the Code), whether or not waived, exists or is expected to
exist with respect to any Plan (other than a Multiemployer Plan).
-30-
<PAGE> 35
Plum Creek Timber Company, L.P. Senior Note Agreement
(d) The present value of the accumulated benefit obligations
(whether or not vested) under each Plan (other than a Multiemployer Plan),
determined as of the end of each such Plan's most recently ended Plan year on
the basis of the actuarial assumptions specified for funding purposes in each
such Plan's actuarial valuation report for such Plan year, each of which
assumptions is reasonable and in compliance with section 412 of the Code, did
not exceed the current value of the assets of each such Plan allocable to such
accumulated benefit obligations by an amount which could have a material
adverse effect on the business, condition (financial or other), assets,
properties or operations of the Company or the Company and its Restricted
Subsidiaries taken as a whole, and no event has occurred since such date that
could reasonably be expected to cause the present value of such accumulated
benefit obligations to increase by a material amount. The terms "present
value" and "current value" shall have the meanings assigned to such terms in
section 3 of ERISA, and the term "accumulated benefit obligations" shall have
the meaning assigned to such term in Statement of Financial Accounting
Standards No. 87.
(e) None of the Company, any of its Subsidiaries or any Related
Person has incurred or expects to incur any withdrawal liability under Title IV
of ERISA with respect to any Multiemployer Plan or any Plan that is a "multiple
employer plan" within the meaning of section 4063 or 4064 of ERISA, which
liability has had or could reasonably be expected to have a material adverse
effect on the business, condition (financial or other), assets, properties or
operations of the Company or the Company and its Restricted Subsidiaries taken
as a whole. The aggregate withdrawal liability of the Company, its
Subsidiaries and the Related Persons with respect to all Multiemployer Plans
and Plans that are "multiple employer plans" within the meaning of section 4063
or 4064 of ERISA, determined as if a complete withdrawal had occurred on the
date hereof, does not exceed $25,000,000. To the Company's Knowledge, no
Multiemployer Plan is insolvent or in reorganization within the meaning of
section 4241 or 4245 of ERISA.
(f) The "expected postretirement benefit obligation" (determined
as of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by section
4980B of the Code) of the Company and its Subsidiaries under Plans which are
"employee welfare benefit plans" (as defined in section 3(1) of ERISA) did not
exceed $25,000,000.
(g) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction which is
subject to the prohibitions of section 406(a)(1)(A)-(D) of ERISA or in
connection with which a tax could be imposed on the Company pursuant to section
4975(c)(1)(A)-(D) of the Code. With respect to each employee benefit plan
identified in writing to the Company in accordance with paragraph 9(c), neither
the Company nor any "affiliate" thereof (as defined in section V(c) of
Prohibited Transaction Class Exemption 84-14 (the "QPAM Exemption")) has at
this time, and has not exercised at any time within the preceding year, the
authority to appoint or terminate the "QPAM" (as defined in the QPAM Exemption)
identified in accordance with paragraph 9(c) as manager of any of the assets of
any plan identified in accordance with paragraph 9(c), or to negotiate the
terms of any management agreement with such QPAM on
-31-
<PAGE> 36
Plum Creek Timber Company, L.P. Senior Note Agreement
behalf of any such plan, the Company is not an "affiliate" (as defined in
section V(c) of the QPAM Exemption) of such QPAM, and the Company is not a
party in interest with respect to any plan identified in accordance with
paragraph 9(c). The representations by the Company in this subparagraph (g) of
paragraph 8Q are made in reliance upon and subject to the accuracy of each
Purchaser's representation in paragraph 9 of this Agreement as to the source of
the funds to be used by such Purchaser to pay the purchase price of the Notes
to be purchased by it hereunder.
As used in this paragraph 8Q, the terms "employee benefit plan" and
"party in interest" have the respective meanings assigned to such terms in
section 3 of ERISA.
8R. STATUS UNDER CERTAIN FEDERAL STATUTES
The Company is not (i) an "investment company" or a company
"controlled" by an "investment company", within the meaning of the Investment
Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company or of
a "subsidiary company" of a "holding company", as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended, (iii) a "public
utility" as such term is defined in the Federal Power Act, as amended, nor (iv)
a "rail carrier" or a person controlled by or affiliated with a "rail carrier",
within the meaning of Title 49, U.S.C., and neither the Company, the General
Partner nor the Facilities Subsidiary is a "carrier" to which 49 U.S.C. Section
11301(b)(1) is applicable.
8S. USE OF PROCEEDS
The Company will apply the proceeds of the sale of the Notes to the
Purchasers to repay amounts owing under the Bank of America Revolving Credit
and Bridge Loan Agreement.
8T. ENVIRONMENTAL MATTERS
(a) Except as disclosed in Exhibit 8T, to the Company's Knowledge,
the Company and its Subsidiaries are in compliance in all material respects
with all Environmental Laws applicable to them or to real property owned or
leased by them, or to the ownership, use, operation or occupancy thereof except
where the failure to be in compliance with such Environmental Laws would not
result in liability of the Company or any of its Subsidiaries in an aggregate
amount in excess of $25,000,000. To the Company's Knowledge, neither the
Company, its Subsidiaries nor any other Person acting at the direction of or on
behalf of the Company has engaged in any activity in violation of any provision
of any applicable Environmental Laws, which violation could reasonably be
expected to have a material adverse effect on the business, condition
(financial or other), assets, properties or operations of the Company or the
Company and its Restricted Subsidiaries taken as a whole.
(b) Except as permitted by paragraph 8I or as disclosed in Exhibit
8T, the Company has or will have on the date of closing all environmental
permits or licenses necessary for the conduct of its business as conducted on
the date of closing and, as to any such permit or
-32-
<PAGE> 37
Plum Creek Timber Company, L.P. Senior Note Agreement
license that has expired or is about to expire or is needed for the proposed
conduct of its business, the Company has or will have timely and properly
applied for renewal or receipt of the same. Exhibit F lists all material
notices from Federal, state or local environmental agencies to the Company
citing environmental violations that have not been finally resolved and
disposed of; no such violation, individually or in the aggregate, is reasonably
expected to have a material adverse effect on the business, property or assets,
condition or operations of the Company, and the Company is acting in compliance
with all such notices. Notwithstanding any such notice, the Company is
currently operating in compliance with the limits set forth in such
environmental permits or licenses except for such noncompliance as would not
reasonably be expected to have a material adverse effect on the business,
condition (financial or other), assets, properties or operations of the Company
or the Company and its Restricted Subsidiaries taken as a whole and to the
Company's Knowledge there are no threatened or pending proceedings for the
revocation, loss or termination of any such environmental permits or licenses.
Neither the Company nor any of its Subsidiaries is subject to any
order or decree of any governmental authority under any Environmental Laws,
which order or decree would reasonably be likely to result in a material
adverse effect on the business, condition (financial or other), assets,
properties or operations of the Company or the Company and its Restricted
Subsidiaries taken as a whole, nor is there any basis for such order or decree.
(c) All facilities located on the real property owned by the
Company or the Facilities Subsidiary on the date of closing which are subject
to regulation by the Federal Resource Conservation and Recovery Act, as in
effect on the date hereof, are and to the knowledge of the Company have been
operated in material compliance with such Act and the Company (or the
Facilities Subsidiary, as the case may be) has not received or, to the
knowledge of the Company, has not been threatened with, a notice of violation
under such Act regarding such facilities which can reasonably be expected to
have a material adverse effect on the business, property or assets, conditions
or operations of the Company (or the Facilities Subsidiary, as the case may be),
or the ability of the Company to perform its obligations under this Agreement
or the Notes.
(d) Except as disclosed in Exhibit 8T, with respect to the real
property owned by the Company (or the Facilities Subsidiary, as the case may
be) on the date of closing, there has not occurred to the knowledge of the
Company (i) any Release of any Hazardous Substance in a Reportable Quantity,
(ii) any discharge of any substance into ground, surface, or navigable waters
for which a notice of violation has been received or threatened under any
Federal, state or local laws, rules or regulations concerning water pollution,
or (iii) any assertion of any Lien pursuant to Federal, state or local
environmental law resulting from any use, spill, discharge or clean-up of any
hazardous or toxic substance or waste, which occurrence can reasonably be
expected to have a material adverse effect on the business, property or assets,
condition or operations of the Company (or the Facilities Subsidiary, as the
case may be). As used in this paragraph, the terms "Release," "Hazardous
Substance," and "Reportable Quantity" shall have the meanings assigned such
terms under the Comprehensive Environmental Response Compensation and Liability
Act (CERCLA) as in effect on the date thereof.
-33-
<PAGE> 38
Plum Creek Timber Company, L.P. Senior Note Agreement
8U. DISCLOSURE
Neither this Agreement, the Memorandum, the 1934 Act Reports nor any
other document, certificate or statement furnished to any Purchaser by or on
behalf of the Company in writing, in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading.
There is no fact peculiar to the Company which materially adversely affects or
in the future may (so far as the Company can now reasonably foresee) materially
adversely affect the business, property or assets, condition or results of
operations of the Company and which has not been set forth in this Agreement,
the Memorandum or the 1934 Act Reports or in the other documents, certificates
and statements in writing furnished to any Purchaser by or on behalf of the
Company prior to the date hereof in connection with the transactions
contemplated hereby.
9. REPRESENTATIONS OF THE PURCHASER
Each Purchaser represents, and in making this sale to such Purchaser
it is specifically understood and agreed between the Company and such
Purchaser, that such Purchaser is not acquiring the Notes to be purchased by it
hereunder with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act, provided that the disposition
of its property shall at all times be and remain within its control. Each
Purchaser understands that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the provisions
of the Securities Act or if an exemption from registration is available, except
under circumstances where neither such registration nor such an exemption is
required by law, and that the Company is not required to register the Notes.
Each Purchaser also represents that it is an "accredited investor" by reason of
the provisions of clause (1), (3) or (7) of the definition of that term in
Regulation D under the Securities Act and that at least one of the following
statements is an accurate representation as to each source of funds to be used
by it to pay the purchaseprice of the Notes purchased by it hereunder:
(a) such Purchaser is an insurance company subject to state
regulation and the source of the funds being used by such Purchaser to pay the
purchase price of the Notes being purchased by it hereunder is an "insurance
company general account" within the meaning of Department of Labor Prohibited
Transaction Exemption ("PTE") 95-60 (issued July 12, 1995), and there is no
employee benefit plan (treating as a single plan, all employee benefit plans
maintained by the same employer or an affiliate (as defined in section V(a)(1)
of such PTE) of such employer or by the same employee organization) with
respect to which the amount of the general account reserves and liabilities for
all contracts held by or on behalf of such employee benefit plan exceeds ten
percent (10%) of the total reserves and liabilities of such general account
(exclusive of separate account liabilities) plus surplus, as set forth in the
NAIC Annual Statement filed with such Purchaser's state of domicile; or
(b) such Purchaser is an insurance company subject to state
regulation and to the extent that any part of the funds being used by it to pay
the purchase price of the
-34-
<PAGE> 39
Plum Creek Timber Company, L.P. Senior Note Agreement
Notes being purchased by it hereunder constitutes assets allocated to any
separate account maintained by it, (i) such separate account is an "insurance
company pooled separate account" within the meaning of PTE 90-1, in which case
such Purchaser has disclosed to the Company the name of each employee benefit
plan whose assets in such separate account exceed 10% of the total assets or
are expected to exceed 10% of the total assets of such account as of the date
of such purchase (and for the purposes of this subparagraph (b), all employee
benefit plans maintained by the same employer or employee organization are
deemed to be a single plan), or (ii) such separate account contains only the
assets of a specific employee benefit plan, complete and accurate information
as to the identity of which such Purchaser has delivered to the Company; or
(c) all of the funds being used by such Purchaser to pay the
purchase price of the Notes being purchased by it hereunder constitute assets
of an "investment fund" (within the meaning of Part V of the QPAM Exemption)
managed by a "qualified professional asset manager" or QPAM (within the meaning
of Part V of the QPAM Exemption), no employee benefit plan's assets which are
included in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of section V(c)(1) of the QPAM Exemption) of such
employer or by the same employee organization and managed by such QPAM, exceed
20% of the total client assets managed by such QPAM, the conditions of Part
I(g) of the QPAM Exemption are satisfied and the identity of such QPAM and the
names of each employee benefit plan whose assets are included in such
investment fund have been disclosed to the Company; or
(d) such Purchaser is not an insurance company and all or a
portion of the funds to be used by it to pay the purchase price of the Notes
being purchased by it hereunder does not constitute assets of any employee
benefit plan (other than a governmental plan exempt from the coverage of ERISA)
and the remaining portion, if any, of such funds consists of funds which may be
deemed to constitute assets of one or more specific employee benefit plans,
complete and accurate information as to the identity of each of which such
Purchaser has delivered to the Company.
As used in this paragraph 9, the terms "employee benefit plan", "party in
interest" and "separate account" shall have the respective meanings assigned to
such terms in section 3 of ERISA.
10. DEFINITIONS
For the purpose of this Agreement, the terms defined in paragraphs 1
and 2 shall have the respective meanings specified therein, and the following
terms shall have the meanings specified with respect thereto below:
-35-
<PAGE> 40
Plum Creek Timber Company, L.P. Senior Note Agreement
10A. YIELD-MAINTENANCE TERMS
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City are required or authorized to be
closed.
"Called Principal" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4A(2) (including
partial prepayments made pursuant to paragraphs 6B(5)(viii) and 6B(6)) or is
declared to be immediately due and payable pursuant to paragraph 7A, as the
context requires.
"Discounted Value" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from their respective scheduled due dates
to the Settlement Date with respect to such Called Principal, in accordance
with accepted financial practice and at a discount factor (applied on a
semiannual basis) equal to 50 basis points above the Reinvestment Yield with
respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal
of any Note, the yield to maturity implied by (i) the yields reported, as of
10:00 A.M.. (New York City time) on the Business Day next preceding the
Settlement Date with respect to such Called Principal, on the display
designated as the USD page in the Bloomberg Financial Markets Service (or such
other display as may replace the USD page in the Bloomberg Financial Markets
Service) for actively traded U.S. Treasury securities having a maturity equal
to the Remaining Average Life of such Called Principal as of such Settlement
Date, or if such yields shall not be reported as of such time or the yields
reported as of such time shall not be ascertainable, including by way of
interpolation, (ii) the Treasury Constant Maturity Series yields reported, for
the latest day for which such yields shall have been so reported as of the
Business Day next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for actively traded U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called Principal
as of such Settlement Date. Such implied yield shall be determined, if
necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent
yields in accordance with accepted financial practice and (b) interpolating
linearly between reported yields.
"Remaining Average Life" shall mean, (a) with respect to the Called
Principal of any Series A, B or C Note, the number of years (calculated to the
nearest one-twelfth year) which will elapse between the Settlement Date with
respect to such Called Principal and the stated maturity of such Note, and (b)
with respect to any Called Principal of any Series D Note, the number of years
(calculated to the nearest one-twelfth year) obtained by dividing (i) such
Called Principal into (ii) the sum of the products obtained by multiplying (I)
the principal component of each Remaining Scheduled Payment with respect to
such Called Principal by (II) the number of years (calculated to the nearest
one-twelfth year) that will elapse between the Settlement Date with respect to
such Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
-36-
<PAGE> 41
Plum Creek Timber Company, L.P. Senior Note Agreement
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due on or after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to its
scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid pursuant to
paragraph 4A(2) (including partial prepayments made pursuant to paragraphs
6B(5)(viii) and 6B(6)) or is declared to be immediately due and payable
pursuant to paragraph 7A, as the context requires.
"Yield-Maintenance Premium" shall mean, with respect to any Note, a
premium equal to the excess, if any, of the Discounted Value of the Called
Principal of such Note over the sum of (i) such Called Principal plus (ii)
interest accrued thereon as of (including interest due on) the Settlement Date
with respect to such Called Principal. The Yield-Maintenance Premium shall in
no event be less than zero.
10B. OTHER TERMS
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the Company,
except a Restricted Subsidiary. A Person shall be deemed to control a
corporation or other entity if such Person possesses, directly or indirectly,
the power to direct or cause the direction of the management and policies of
such corporation or other entity, whether through the ownership of voting
securities, by contract or otherwise.
"Available Cash" shall mean, with respect to any calendar quarter, (a)
the sum of:
(i) the Company's net income (or net loss) (excluding
gain on the sale of any Capital Asset) for such quarter,
(ii) the amount of depletion, depreciation, amortization
and other noncash charges utilized in determining net income of the
Company for such quarter,
(iii) the amount of any reduction in reserves of the
Company of the types referred to in clause (b)(iv) below,
(iv) proceeds received by the Company from the sale of
Designated Acres, and
(v) any Cash from Capital Transactions received by the
Company during such quarter in specific contemplation that such Cash
from Capital Transactions will be used to refund or refinance any
payment of Debt of the type specified in clause (b)(i) below which was
made in either of the two immediately preceding quarters,
less (b) the sum of
-37-
<PAGE> 42
Plum Creek Timber Company, L.P. Senior Note Agreement
(i) all payments of principal on Debt made by the Company
in such quarter (excluding any payments of principal on Debt made with
Cash from Capital Transactions received by the Company during such
quarter or, to the extent such Cash from Capital Transactions remains
available, received by the Company during the four immediately
preceding quarters),
(ii) capital expenditures made by the Company during such
quarter (excluding any capital expenditures for such quarter made with
Cash from Capital Transactions received by the Company during such
quarter or, to the extent such Cash from Capital Transactions remains
available, received by the Company during the four immediately
preceding quarters, and capital expenditures which the General Partner
reasonably anticipates will be financed with Cash from Capital
Transactions within 90 days from the end of such quarter),
(iii) the amount of any capital expenditures made by the
Company in a prior quarter which was anticipated would be financed
from Cash from Capital Transactions but which have not been financed
from such source within 90 days from the end of such quarter,
(iv) the amount of any reserves of the Company established
during such quarter which are necessary or appropriate (A) to provide
funds for the future payment of items of the types specified in
clauses (b)(i) and (b)(ii) above, (B) to provide additional working
capital, (C) to provide funds for cash distributions with respect to
any one or more of the next four quarters, or (D) to provide funds for
the future payment of interest in an amount equal to the interest to
be accrued in the next quarter,
(v) the amount of any noncash items of income utilized in
determining net income of the Company for such quarter,
(vi) the amount of any Investments (other than guarantees,
contingent liabilities or endorsements, except to the extent payments
are actually made under such guarantees, contingent liabilities or
endorsements) made by the Company during such quarter pursuant to
clause (i), (viii) or (ix) of paragraph 6B(3) (or in the case of any
Subsidiary, Investments (other than guarantees, contingent liabilities
or endorsements, except to the extent payments are actually made under
such guarantees, contingent liabilities or endorsements) of similar
type) to the extent not included in capital expenditures or payments
on principal on Debt made by the Company during such quarter
(excluding any such Investments for such quarter made with Cash from
Capital Transactions received by the Company during such quarter or,
to the extent such Cash from Capital Transactions remains available,
received by the Company during the four immediately preceding
quarters, and Investments which the General Partner reasonably
anticipates will be financed with Cash from Capital Transactions
within 90 days from the end of such quarter), and
-38-
<PAGE> 43
Plum Creek Timber Company, L.P. Senior Note Agreement
(vii) the amount of any Investments (other than guarantees,
contingent liabilities or endorsements, except to the extent payments
are actually made under such guarantees, contingent liabilities or
endorsements) made by the Company in a prior quarter pursuant to
clause (i), (viii) or (ix) of paragraph 6B(3) (or in the case of any
Subsidiary, Investments (other than guarantees, contingent liabilities
orendorsements, except to the extent payments are actually made under
such guarantees, contingent liabilities or endorsements) of similar
type) to the extent not included in capital expenditures made by the
Company during such quarter which was anticipated would be financed
from Cash from Capital Transactions but which have not been financed
from such source within 90 days from the end of such quarter,
provided, however, (i) net proceeds to the Company from the issuance of SPUs
(as such term is defined in the Partnership Agreement) shall be deemed to be
Available Cash, and shall be deemed to be received, for purposes of determining
Available Cash, during the quarter in respect of which such SPUs are issued,
even if such cash is received by the Company after the last day of such
quarter, and (ii) any disbursements made of the types described in clauses
(b)(i), (ii), (iii), (vi) and (vii) or reserves established, in accordance with
clause (b)(iv), within 45 days after the end of any quarter as to which SPUs
were purchased in respect of such quarter in accordance with the Distribution
Support Agreement shall be deemed to be made or established, for purposes of
determining Available Cash, within such quarter if the General Partner so
determines, provided that the aggregate amount of such disbursements made or
reserves established which are so determined as being made within such quarter
shall not exceed the aggregate dollar amount of SPUs purchased in respect of
such quarter.
Notwithstanding the foregoing, "Available Cash" shall not take into
account any reductions in reserves or disbursements made or reserves
established after commencement of the dissolution and liquidation of the
Company. In determining "Available Cash", (i) all items under clauses (a)(i),
(ii), (iii), (iv) and (v) above and all items under clauses (b)(i), (ii),
(iii), (iv), (v), (vi) and (vii) above shall be calculated on a combined basis
with any Subsidiary of the Company whose income is accounted for on a
consolidated or combined basis with the Company and, in accordance therewith,
"Available Cash" shall include a percentage of each such item of each such
Subsidiary equal to the Company's percentage ownership interest in such
Subsidiary, provided, however, that the items under clauses (a)(i), (ii),
(iii), (iv) and (v) above shall only be included in Available Cash to the
extent that the General Partner determines such amount to be legally available
for dividends or distributions to the Company by such Subsidiary; (ii) the
amount of net income and the amount of depletion, depreciation, amortization
and other noncash charges, utilized in determining net income shall be
determined, with respect to the Company, by the General Partner in accordance
with generally accepted accounting principles and, with respect to any
Subsidiary,
-39-
<PAGE> 44
Plum Creek Timber Company, L.P. Senior Note Agreement
by its Board of Directors (or by such other body or Person which has the
ultimate management authority of such Subsidiary) in accordance with generally
accepted accounting principles; (iii) the net income of any Subsidiary shall be
determined on an after-tax basis; (iv) the amount of any reductions in, or
additions to, reserves for purposes of clauses (a)(iii) and (b)(iv) above shall
be determined, with respect to the Company, by the General Partner in its
reasonable good faith judgment and, with respect to any Subsidiary, by its
Board of Directors (or by such other body or Person which has the ultimate
management authority of such Subsidiary) in its reasonable good faith judgment;
and (v) any determination of whether any capital expenditures orInvestments are
financed, or anticipated to be financed, with Cash from Capital Transactions
for purposes of clause (b) (ii) or (b) (vi) above shall be made, with respect
to the Company, by the General Partner in its reasonable good faith judgment
and, with respect to any Subsidiary, by its Board of Directors (or by such
other body or Person which has the ultimate management authority of such
Subsidiary) in its reasonable good faith judgment.
"Bank of America Revolving Credit and Bridge Loan Agreement" shall
mean the revolving credit and bridge loan agreement between the Company, Bank
of America National Trust and Savings Association, as Administrative Agent, and
certain other lenders pursuant to which the lenders thereunder provide credit
facilities to the Company in an aggregate principal amount not to exceed
$650,000,000 and any extension, renewal, refunding or refinancing thereof
provided that such renewal, refunding or refinancing shall not contain terms
which are any less favorable to the Purchasers.
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
paragraph 7A.
"Board Foot" shall mean a unit of measurement one foot square and one
inch thick.
"Business Day" shall mean any day other than a Saturday, Sunday or
other day on which commercial banking institutions in New York, New York or
Seattle, Washington are authorized or required by law, regulation or executive
order to be closed.
"Capital Asset" shall mean any asset on the Company's or any
Subsidiary's balance sheet, as the case may be, other than inventory, accounts
receivable or any other current asset and assets disposed of in connection with
normal retirements or replacements.
"Capital Lease Obligation" shall mean, with respect to any Person, any
rental obligation which, under generally accepted accounting principles, is or
will be required to be capitalized on the books of such Person, taken at the
amount thereof accounted for as indebtedness (net of interest expenses) in
accordance with such principles.
"Capital Transaction" shall mean (i) borrowings and sales of debt
securities (other than for working capital purposes and other than for items
purchased on open account in the ordinary course of business) by the Company,
(ii) sales of equity interests by the Company and (iii) sales or other
voluntary or involuntary dispositions of any assets of the Company (other than
(x) sales or other dispositions of inventory in the ordinary course of
business, (y) sales or other dispositions of other current assets including
receivables and accounts and (z) sales or other dispositions of assets as a
part of normal retirements or replacements), in each case prior to the
commencement of the dissolution and liquidation of the Company provided, that
in determining Cash from Capital Transactions, items (i), (ii) and (iii) above
shall include, with respect to each Subsidiary of the Company whose income is
accounted for on a consolidated or combined basis with the Company, a
percentage of each such item of such Subsidiary equal to the Company's
percentage ownership interest in such Subsidiary.
-40-
<PAGE> 45
Plum Creek Timber Company, L.P. Senior Note Agreement
"Cash from Capital Transactions" shall mean at any date, such amounts
of cash as are determined by the General Partner to be cash made available to
the Company from or by reason of a Capital Transaction.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company's Knowledge" or "knowledge of the Company" shall mean the
actual knowledge of Rick R. Holley, President and Chief Executive Officer,
Charles P. Grenier, Executive Vice President, Diane M. Irvine, Vice President
and Chief Financial Officer, James A. Kraft, Vice President, General Counsel
and Secretary, Susanna N. Duke, Director, Law and Human Resources, William R.
Brown, Vice President, Resource Management, and Mitchell Leu, Environmental
Engineer and any successor to the offices and officers, such persons being the
principal persons employed by the Company ultimately responsible for
environmental operations and compliance, ERISA and legal matters relating to
the Company.
"Consolidated Total Assets" shall mean the total amount of all the
assets of the Company and its Restricted Subsidiaries, determined on a combined
basis in accordance with generally accepted accounting principles.
A "Cunit" is equal to 100 cubic feet of wood. For purposes of
conversion of Timber in the Company's northwest region, one MMBF shall equal
2.1 MCCF.
"Debt" shall mean, as to any Person, as of any date of determination,
without duplication, (i) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services, (ii) all amounts owed
by such Person to banks or other Persons in respect of reimbursement
obligations under letters of credit, surety bonds and other similar instruments
guaranteeing payment or other performance of obligations by such Person, (iii)
all indebtedness for borrowed money or for the deferred purchase price of
property or services secured by any Lien on any property owned by such Person,
to the extent attributable to such Person's interest in such property, even
though such Person has not assumed or become liable for the payment thereof,
(iv) lease obligations of such Person which, in accordance with generally
accepted accounting principles, should be capitalized, (v) lease obligations of
such Person under leases which have a term (including any option to renew
exercisable at the discretion of the lessee thereunder) longer than 10 years or
under leases under which the lessor, pursuant to an agreement with such Person,
has acquired the property specifically for the purpose of leasing it to such
Person, (vi) obligations payable out of the proceeds of production from
property of such Person, even though such Person has not assumed or become
liable for the payment thereof, and (vii) any obligations of any other Person
of the type described in the above clauses (i) through and including (vi),
inclusive, which are guaranteed or in effect guaranteed by such Person through
any agreement (contingent or otherwise) to purchase, repurchase or otherwise
acquire such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
the solvency or any balance sheet or other financial condition of the obligor
of such obligation, or to make payment for any products, materials or supplies
or for any transportation or services regardless of the non-delivery or
nonfurnishing thereof, in any
-41-
<PAGE> 46
Plum Creek Timber Company, L.P. Senior Note Agreement
such case if the purpose or intent of such agreement is to provide assurance
that such obligation will be paid or discharged, or that any agreements
relating theretowill be complied with, or that the holders of such obligation
will be protected against loss in respect thereof.
"Designated Acres" shall mean up to an aggregate of 150,000 acres
owned by the Company which (based on the good faith determination of the
Responsible Representatives that such acres have at the time such determination
is made a higher value as recreational, residential, grazing or agricultural
property than for timber production) may be reasonably designated by the
General Partner at the time of the sale thereof as constituting Designated
Acres (such aggregate number of acres to be determined over the term of
existence of this Agreement).
"Designated Immaterial Subsidiary" shall mean any entity which would
otherwise be a Restricted Subsidiary and which at any time is designated by the
Company as a Designated Immaterial Subsidiary, provided that no such
designation of any entity as a Designated Immaterial Subsidiary shall be
effective unless (i) at the time of such designation, such entity does not own
any shares of stock or Debt of any Restricted Subsidiary which is not
simultaneously being designated as a Designated Immaterial Subsidiary, (ii)
immediately after giving effect to such designation, (a) the Company could
incur at least $1 of additional Funded Debt pursuant to clause (ix) of
paragraph 6B(2), and (b) no condition or event shall exist which constitutes an
Event of Default or Material Default, (iii) the Company is permitted to make
the Investment in such entity resulting from such designation pursuant to, and
within the limitations specified in, clause (ix) of paragraph 6B(3), treating
the aggregate book value (including equity in retained earnings) of the
Investments of the Company and its Subsidiaries in such entity immediately
prior to such designation as the cost of such Investment, and provided,
further, that if at any time all Designated Immaterial Subsidiaries on a
combined basis would be a "significant subsidiary" (assuming the Company is the
registrant) within the meaning of Regulation S-X (17 CFR Part 210) the Company
shall designate one or more Designated Immaterial Subsidiaries which are
directly owned by the Company and its Restricted Subsidiaries as Restricted
Subsidiaries such that the condition in this proviso is no longer applicable
and the entities so designated shall no longer be Designated Immaterial
Subsidiaries. Any entity which has been designated a Designated Immaterial
Subsidiary shall not thereafter become a Restricted Subsidiary except pursuant
to a designation required by the last proviso in the preceding sentence, and
any Designated Immaterial Subsidiary which has been designated a Restricted
Subsidiary pursuant to the last proviso of the preceding sentence shall not
thereafter be redesignated as a Designated Immaterial Subsidiary.
"Designated Repurchases" shall mean and include purchases, redemptions
or other acquisitions, in each case at a price not to exceed fair market value,
of the publicly traded limited partnership interests in the Company, which are
retired by the Company within six months of such purchase, redemption or other
acquisition.
-42-
<PAGE> 47
Plum Creek Timber Company, L.P. Senior Note Agreement
"Distribution Support Agreement" shall mean the Distribution Support
Agreement, dated as of June 8, 1989, between the Company and Burlington
Resources Inc., a Delaware corporation.
"8.73% Senior Note Agreements" shall mean the Note Agreements, dated
as of August 1, 1994 and amended as of October 15, 1995 and May 31, 1996,
providing for the issuance and sale by the Company of its 8.73% Senior Notes to
the purchasers listed in the schedule of purchasers attached thereto.
"8.73% Senior Notes" shall mean the 8.73% Senior Notes Due August 1,
2009 of the Company issued and sold pursuant to the 8.73% Senior Note
Agreements.
"11 1/8% Senior Note Agreements" shall mean the Note Agreements, dated
as of May 31, 1989 and amended as of January 1, 1991, April 22, 1993, September
1, 1993, May 20, 1994 and May 31, 1996, providing for the issuance and sale by
the Company of its 11 1/8% Senior Notes to the purchasers listed in the
schedule of purchasers attached thereto.
"11 1/8% Senior Notes" shall mean the 11 1/8% Senior Notes Due June 8,
2007 of the Company issued and sold pursuant to the 11 1/8% Senior Note
Agreements.
"Environmental Laws" shall mean Federal, state, local and foreign
laws, rules or regulations relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or industrial, toxic
or hazardous substances or wastes into the environment (including, without
limitation, air, surface water, ground water or land), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection with
such event for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, and "Default" shall mean any of such
events, whether or not any such requirement has been satisfied.
"Facilities Subsidiary" shall mean, collectively, Manufacturing and
Marketing.
"Facilities Subsidiary's Facility" shall mean any facility pursuant to
which the Facilities Subsidiary may incur Debt for purposes of making capital
improvements, additions to, or expansions of, property, plant and equipment of
the Facilities Subsidiary or its Subsidiaries.
-43-
<PAGE> 48
Plum Creek Timber Company, L.P. Senior Note Agreement
"Facilities Subsidiary's Revolving Credit Facility" shall mean any
facility pursuant to which the Facilities Subsidiary may obtain revolving
credit, takedown credit, the issuance of standby and payment letters of credit
and backup for the issuance of commercial paper.
"Facilities Subsidiary Stock" shall mean, collectively, the limited
partner interest of the Company in Manufacturing and the capital stock of
Marketing that is owned by the Company.
"Funded Debt" shall mean, without duplication, any Debt payable more
than one year from the date of the creation thereof. "Current Debt" shall
mean, without duplication, any Debt payable on demand or within a period of one
year from the date of the creation thereof; provided that any Debt shall be
treated as Funded Debt, regardless of its term, if such Debt is renewable
pursuant to the terms thereof or of a revolving credit or similar agreement
effective for more than one year after the date of the creation of such Debt,
ormay be payable out of the proceeds of similar Debt pursuant to the terms of
such Debt or of any such agreement.
"General Partner" shall mean Plum Creek Management Company, L.P., a
limited partnership organized and existing under the laws of the State of
Delaware, and its successors and assigns.
"Guarantee" shall mean the guarantee in paragraph 7 of the Mortgage
Note Agreements.
"Investment Policy" shall mean the Corporate Investment Policy of the
Company, as it exists on April 5, 1993 and as attached hereto as Schedule
10B(1) .
"Investments" shall have the meaning specified in paragraph 6B(3).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction).
"Manufacturing" shall mean Plum Creek Manufacturing, L.P., a Delaware
limited partnership.
"Marketing" shall mean Plum Creek Marketing, Inc., a Delaware
corporation.
"Material Default" shall mean any continuing Default as to which a
written notice of such Default (which notice has not been rescinded) shall have
been received by the Company or the General Partner from any holder of any
Note, or any continuing Event of Default.
"Maximum Pro Forma Annual Interest Charges" shall mean, as of any
date, the highest total amount payable during any period of four consecutive
fiscal quarters,
-44-
<PAGE> 49
Plum Creek Timber Company, L.P. Senior Note Agreement
commencing with the fiscal quarter in which such date occurs and ending with
the fiscal quarter in which November 13, 2016 occurs, by the Company and its
Restricted Subsidiaries on a combined basis, after eliminating all intercompany
transactions, in respect of interest charges ((a) including amortization of
debt discount and expense and imputed interest on Capital Lease Obligations and
on other obligations included in Debt which do not have stated interest, (b)
assuming, in the case of fluctuating interest rates which cannot be determined
in advance, that the rate in effect on such date will remain in effect
throughout such period, and (c) treating the principal amount of all Debt
outstanding as of such date under a revolving credit or similar agreement as
maturing and becoming due and payable on the scheduled maturity date thereof,
without regard to any provision permitting such maturity date to be extended)
on all Debt of the Company and its Restricted Subsidiaries outstanding on such
date (excluding the Guarantee and the guarantees of the Facilities Subsidiary's
Facility and the Facilities Subsidiary's Revolving Credit Facility but
including, to the extent not already included, all other Debt outstanding on
such date which is guaranteed or in effect guaranteed by the Company or any
Restricted Subsidiaries), after giving effect to any Debt proposed to be
created on such date and to the concurrent retirement of any other Debt.
"MCCF" shall mean one thousand Cunits.
"MMBF" shall mean one million Board Feet.
"Mortgage Note Agreements" shall mean the Note Agreements, dated as of
May 31, 1989 and amended as of January 1, 1991, April 22, 1993, September 1,
1993, May 20, 1994, June 15, 1995 and May 31, 1996, providing for the issuance
and sale by the Facilities Subsidiary of its 11 1/8% First Mortgage Notes to
the purchasers listed in the schedule of purchasers attached thereto.
"Mortgage Noteholder" shall mean and include each holder from time to
time of a Mortgage Note issued under the Mortgage Note Agreements.
"Mortgage Notes" shall mean the 11 1/8% First Mortgage Notes of the
Facilities Subsidiary issued and sold pursuant to the Mortgage Note Agreements.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer
plan" (as such term is defined in section 4001(a)(3) of ERISA).
"Officers' Certificate" shall mean, as to any corporation, a
certificate executed on its behalf by the Chairman of the Board of Directors
(if an officer) or its President or one of its Vice Presidents and its
Treasurer, or Controller or one of its Assistant Treasurers or Assistant
Controllers, and, as to any partnership, a certificate executed on behalf of
such partnership by its general partner in a manner which would qualify such
certificate as an Officers' Certificate of such general partner hereunder.
"Partnership Agreement" shall mean the Amended and Restated Agreement
of Limited Partnership of the Company, as in effect on the date of closing, and
as the same may, from time to time, be amended, modified or supplemented in
accordance with the terms thereof.
-45-
<PAGE> 50
Plum Creek Timber Company, L.P. Senior Note Agreement
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
governmental authority succeeding to any of its functions.
"Permitted Business" shall mean any business engaged in by the Company
or the Facilities Subsidiary on the date of closing, pulp and paper
manufacturing, and any business substantially similar or related to any such
business.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Plan" shall mean an "employee benefit plan" (as defined in section
3(3) of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company, any of its Subsidiaries or
any Related Person or with respect to which the Company, any of its
Subsidiaries or any Related Person may have any liability.
"Pro Forma Free Cash Flow" as of any date shall mean (i) net income of
the Company and its Restricted Subsidiaries on a combined basis (excluding (a)
gain on the sale of any Capital Asset, (b) noncash items of income, and (c) any
distributions or other income received from, or equity of the Company or any
Restricted Subsidiary in the earnings of, any entity which is not a Restricted
Subsidiary) for the period of four consecutive fiscal quarters immediately
prior to such date (such period of four consecutive fiscal quarters being the
"Measurement Period"), determined in accordance with generally accepted
accounting principles plusdepreciation, depletion, amortization and other
noncash charges, interest expense on Debt and provision for income taxes, minus
(ii) capital expenditures made by the Company and its Restricted Subsidiaries
during the Measurement Period, to maintain their respective operations;
provided, however, if (A) the Company or a Restricted Subsidiary is acquiring a
Restricted Subsidiary or assets and (B) Pro Forma Free Cash Flow is being
determined in connection therewith, such Restricted Subsidiary shall be
considered to have been a Restricted Subsidiary during the entire Measurement
Period and such assets shall be considered to have been owned by the Company
during the entire Measurement Period if net income attributable to such
Restricted Subsidiary or such assets (as the case may be) for the entire
Measurement Period is readily determinable and confirmed pursuant to an audit
or a certification prepared in good faith by the Company's chief financial
officer; further provided, however, that portion of Pro Forma Free Cash Flow
allocable to such Restricted Subsidiary or assets shall be reduced on a pro
rata basis to the extent Timber has been harvested by such Restricted
Subsidiary or from such assets during the Measurement Period at a rate greater
than the rate at which the Company has harvested Timber from its Timberlands
during the Measurement Period, as certified in good faith by the chief
financial officer of the Company; and finally provided, however, if Pro Forma
Free Cash Flow is being determined for any Measurement Period and a Restricted
Subsidiary or assets have been sold or otherwise disposed of at any time during
such Measurement Period by the Company or any Restricted Subsidiary, such
Restricted Subsidiary shall not be considered to have been a Restricted
Subsidiary during any part of such Measurement Period and such assets shall not
be considered to have been owned by the Company during any part of such
Measurement Period, and the net income that otherwise would have been
attributable to such
-46-
<PAGE> 51
Plum Creek Timber Company, L.P. Senior Note Agreement
Restricted Subsidiary or asset during such Measurement Period shall be
certified in good faith by the chief financial officer of the Company.
"Qualified Debt" shall mean, as to the Company, as of any date of
determination, without duplication, all outstanding indebtedness of the Company
for borrowed money, including, without limitation, Debt represented by the
Notes, the 8.73% Senior Notes and the 11 1/8% Senior Notes.
"Related Person" shall mean, as of any date of determination, any
trade or business, whether or not incorporated, which, together with the
Company or any of its Subsidiaries, is treated as a single employer under
section 414(b) or (c) of the Code or the regulations promulgated thereunder.
"Required Holder(s)" shall mean the holder or holders of greater than
50% of the aggregate principal amount of the Notes from time to time
outstanding.
"Responsible Officer" means the chief executive officer, the president
or any vice president of the General Partner, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, the chief financial officer or the
treasurer of the General Partner, or any other officer having substantially the
same authority and responsibility.
"Responsible Representatives" shall mean (a) in the case of any
transaction in which the value of any assets disposed of or received have a
value of less than $5,000,000 or in which payments made are less
than$5,000,000, the chief executive officer, chief financial officer or chief
operating officer of the Company, and (b) in the case of any other transaction,
the Board of Directors of the General Partner.
"Restricted Payment" shall mean (a) any payment or other distribution,
direct or indirect, in respect of any partnership interest in the Company,
except a distribution payable solely in additional partnership interests in the
Company, and (b) any payment, direct or indirect, on account of the redemption,
retirement, purchase or other acquisition of any partnership interest in the
Company including, without limitation, any Designated Repurchase; or, if the
Company is at any time reorganized as or changed (by merger, sale of assets or
otherwise) into a corporation, (i) any dividend or other distribution, direct
or indirect, on account of any shares of any class of stock of the Company now
or hereafter outstanding, except a dividend payable solely in shares of stock
of the Company, and (ii) any redemption, retirement, purchase or other
acquisition, direct or indirect, of any shares of any class of stock of the
Company, now or hereafter outstanding, or of any warrants, rights or options to
acquire any such shares, except to the extent that the consideration therefor
consists of shares of stock of the Company.
"Restricted Subsidiary" shall mean any Wholly-Owned Subsidiary other
than (a) any Designated Immaterial Subsidiary and (b) the Facilities Subsidiary
or any Subsidiary directly or indirectly owned by the Facilities Subsidiary,
provided that after the Mortgage Notes shall
-47-
<PAGE> 52
Plum Creek Timber Company, L.P. Senior Note Agreement
have been paid in full and retired, the Facilities Subsidiary and its
Subsidiaries shall become and be Restricted Subsidiaries.
"Revolving Credit Facility" shall mean any facility pursuant to which
the Company may obtain revolving credit, take-down credit, the issuance of
standby and payment letters of credit and back-up for the issuance of
commercial paper.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Significant Holder" shall mean (i) each Purchaser named in Schedule I
hereto, so long as it shall hold (or be committed under this Agreement to
purchase) any Note, or (ii) any other insurance company, bank, financial
institution, public or governmental retirement or pension fund or other similar
institutional holder of Notes, whether acting for itself or in a trust, agency
or other fiduciary capacity.
"Subsidiary" shall mean any corporation, partnership or other entity a
majority of (i) the total combined voting power of all classes of Voting Stock
of which or (ii) the outstanding equity interests of which shall, at the time
as of which any determination is being made, be owned by the Company either
directly or through Subsidiaries.
"Timber" shall mean standing trees not yet harvested.
"Timberlands" shall mean the timberlands owned by the Company as of
the date of closing and any timberlands acquired by the Company or any
Subsidiary after the date of closing.
"Transferee" shall mean any direct or indirect transferee of all or
any part of any Note purchased by any Purchaser under this Agreement.
"Voting Stock" shall mean, with respect to any corporation or other
entity, any shares of stock or other ownership interests of such corporation or
entity whose holders are entitled under ordinary circumstances to vote for the
election of directors of such corporation or to manage any such other entity
(irrespective of whether at the time stock or ownership interests of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Western Europe" shall mean Belgium, Denmark, France, Germany, Greece,
Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and the United
Kingdom.
"Wholly-Owned Subsidiary" shall mean any Subsidiary organized under
the laws of any state of the United States of America which conducts the major
portion of its business in the United States of America and all of the stock or
other ownership interests of every class of which, except director's qualifying
shares, and except in the case of the Facilities Subsidiary not more than 5% of
the outstanding Voting Stock shall, at the time as of which any determination
is being made, be owned by the Company either directly or through Wholly-Owned
Subsidiaries.
-48-
<PAGE> 53
Plum Creek Timber Company, L.P. Senior Note Agreement
11. MISCELLANEOUS
11A. NOTE PAYMENTS
The Company agrees that, so long as any Purchaser shall hold any Note,
it will make payments of principal thereof and premium, if any, and interest
thereon, which comply with the terms of this Agreement, by wire or electronic
funds transfer of immediately available funds for credit to such Purchaser's
account or accounts as specified in the Schedule I attached hereto, or such
other account or accounts in the United States as such Purchaser may designate
in writing, notwithstanding any contrary provision herein or in any Note with
respect to the place of payment. Each Purchaser agrees that, before disposing
of any Note, it will make a notation thereon (or on a schedule attached
thereto) of all principal payments previously made thereon and of the date to
which interest thereon has been paid. The Company agrees to afford the
benefits of this paragraph 11A to any Transferee which shall have made the same
agreement as the Purchasers have made in this paragraph 11A.
11B. EXPENSES
Whether or not the transactions contemplated by this Agreement shall
be consummated, the Company will pay and will indemnify and hold each Purchaser
and each holder of any Notes harmless in respect of all reasonable expenses
in connection with such transactions and in connection with any amendments or
waivers (whether or not the same become effective) under or in respect of this
Agreement or the Notes, including: (a) the cost and expenses of preparing and
reproducing this Agreement or the Notes, of furnishing all opinions by counsel
for the Company and all other opinions referred to herein (including any
opinions requested by Chapman and Cutler (or another firm selected by the
Purchasers and the other holders as Purchasers' special counsel) as to any
legal matter arising hereunder) and all certificates on behalf of the Company
or any of its Subsidiaries or Affiliates, and of the performance of and
compliance with all agreements and conditions contained herein on the part of
the Company to be performed or complied with, (b) the cost of delivering toeach
Purchaser's principal office, insured to its satisfaction, the Notes sold to it
hereunder and any Notes delivered to it upon any substitution of Notes pursuant
to paragraph 11E and of its delivering any Notes, insured to its satisfaction,
upon any such substitution, (c) the reasonable fees, expenses and disbursements
of Purchasers' special counsel in connection with such transactions and any
such amendments or waivers (whether or not such amendments or waivers become
effective), (d) the reasonable out-of-pocket expenses incurred by such
Purchaser in connection with such transactions (including the costs and
expenses incurred in connection with obtaining a private placement number) and
any such amendments or waivers and (e) the cost and expenses, including
attorneys' fees, incurred by each Purchaser or any Transferee in enforcing any
rights under this Agreement or the Notes or in responding to any subpoena or
any other legal process issued in connection with this Agreement or the
transactions contemplated hereby or thereby or by reason of any Purchaser or
any Transferee's having acquired any Note (as to any Person, other than under
circumstances in which such Person has contravened the understanding contained
in the second sentence of paragraph 9), including without limitation costs and
expenses incurred in any bankruptcy case. The Company shall have no obligation
to pay any
-49-
<PAGE> 54
Plum Creek Timber Company, L.P. Senior Note Agreement
legal fees incurred by any Purchaser or any other holder other than the
reasonable fees of special counsel for the Purchasers and the other holders.
The Company also will pay, and will indemnify and hold each Purchaser and each
holder of any Notes harmless from, all claims in respect of the fees, if any,
of brokers and finders (unless engaged by any Purchaser) and any and all
liabilities with respect to any and all taxes including interest and penalties
which may be payable in respect of the execution, delivery, filing or recording
of this Agreement, the issue of the Notes and any amendment or waiver under or
in respect of this Agreement or the Notes. In furtherance of the foregoing, on
the date of closing the Company will pay the fees and disbursements of Chapman
and Cutler, Purchasers' special counsel, which are reflected as unpaid in the
statement of Purchasers' special counsel delivered to the Company on or prior
to the date of closing. The obligations of the Company under this paragraph
11B shall survive the transfer of any Note or portion thereof or interest
therein by any Purchaser or any Transferee and the payment of any Note.
11C. CONSENT TO AMENDMENTS
This Agreement (including, without limitation, paragraph 5, paragraph
6 and clauses (iii) through (xvii) of paragraph 7A) may be amended, and the
Company may take any action herein prohibited, or omit to perform any act
herein required to be performed by it, if the Company shall obtain the written
consent to such amendment, action or omission to act, of the Required Holder(s)
except that, without the written consent of the holder or holders of all Notes
at the time outstanding, no amendment to this Agreement shall change the
maturity of any Note, or change the principal of, or the rate or time of
payment of any scheduled payment of principal pursuant to paragraph 4A(1) or
payment of interest or any premium payable with respect to, any Note, or alter
or amend the right of any Significant Holder to declare all of the Notes held
by such Significant Holder to be due and payable in accordance with the
provisions of paragraph 7A, or change the proportion of the principal amount of
the Notes required with respect to any consent. Each holder of any Note at the
time orthereafter outstanding shall be bound by any consent authorized by this
paragraph 11C, whether or not such Note shall have been marked to indicate such
consent, but any Notes issued thereafter may bear a notation referring to any
such consent. No course of dealing between the Company and the holder of any
Note nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As used herein
and in the Notes, the term "this Agreement" and references thereto shall mean
this Agreement as it may from time to time be amended or supplemented.
11D. SOLICITATION OF HOLDERS OF NOTES
The Company will not solicit, request or negotiate for or with respect
to any proposed waiver or amendment of any of the provisions of this Agreement
or the Notes unless each holder of any Note shall concurrently be informed
thereof in writing by the Company and shall be afforded the opportunity to
consider the same and shall be supplied by the Company with sufficient
information to enable it to make an informed decision with respect thereto.
Executed or true and correct copies of any waiver or consent effected pursuant
to the provisions of paragraph 11C shall be delivered by the Company to each
holder of outstanding Notes forthwith following the date on which the same
shall have been executed
-50-
<PAGE> 55
Plum Creek Timber Company, L.P. Senior Note Agreement
and delivered by the holder or holders of the requisite percentage of
outstanding Notes. In the event that the holder of a Note is a nominee for
another Person, any request for such amendment, waiver or consent shall be
delivered to both the nominee and such other Person, and, if acceptable to such
other Person, such amendment, waiver or consent shall be executed by such other
Person. The Company will not, directly or indirectly, pay or cause to be paid
any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, to any holder of any Note as consideration for or as an inducement
to the entering into by any such holder of any Note of any waiver or amendment
of any of the terms and provisions of this Agreement or the Notes unless such
remuneration is concurrently paid, on the same terms, ratably to each holder of
the then outstanding Notes.
11E. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES
The Notes are issuable as registered notes without coupons in minimum
denominations equal to the lesser of (a) $1,000,000 (except as may be necessary
to reflect any principal amount not evenly divisible by $1,000,000) and (b) the
aggregate principal amount of Notes purchased by each Purchaser hereunder (the
"Minimum Note Amount"). The Company shall keep at its principal office a
register in which the Company shall provide for the registration of Notes and
of transfers of Notes. In the event that the holder is a nominee for another
Person (and such fact is known to the Company), the name and address of such
other Person shall also be noted on the register. Upon surrender for
registration of transfer of any Note at the principal office of the Company,
the Company shall, at its expense, execute and deliver one or more new Notes of
like series and tenor and of a like aggregate principal amount, registered in
the name of such transferee or transferees, provided that no transfer shall be
made to any Transferee which does not acquire Notes in a principal amount equal
to not less than the lesser of the Minimum Note Amount or the entire principal
amount of the Notes owned by the transferor thereof, and no holder shall
transfer any Notes if thereafter suchholder retains ownership of Notes and the
aggregate principal amount retained is less than the Minimum Note Amount. At
the option of the holder of any Note, such Note may be exchanged for other
Notes of like series and tenor and of any authorized denominations, of a like
aggregate principal amount, upon surrender of the Note to be exchanged at the
principal office of the Company. Whenever any Notes are so surrendered for
exchange, the Company shall, at its expense, execute and deliver the Notes
which the holder making the exchange is entitled to receive. Every Note
surrendered for registration of transfer or exchange shall be duly endorsed, or
be accompanied by a written instrument of transfer duly executed, by the holder
of such Note or such holder's attorney duly authorized in writing. Any Note or
Notes issued in exchange for any Note or upon transfer thereof shall carry the
rights to unpaid interest and interest to accrue which were carried by the Note
so exchanged or transferred, so that neither gain nor loss of interest shall
result from any such transfer or exchange. Upon receipt of written notice from
the holder of any Note of the loss, theft, destruction or mutilation of such
Note and, in the case of any such loss, theft or destruction, upon receipt of
such holder's unsecured indemnity agreement, or in the case of any such
mutilation upon surrender and cancellation of such Note, the Company will make
and deliver a new Note, of like series and tenor, in lieu of the lost, stolen,
destroyed or mutilated Note.
-51-
<PAGE> 56
Plum Creek Timber Company, L.P. Senior Note Agreement
11F. PERSONS DEEMED OWNERS; PARTICIPATIONS
Prior to due presentment for registration of transfer, the Company may
treat the Person in whose name any Note is registered as the owner and holder
of such Note for the purpose of receiving payment of principal of and premium,
if any, and interest on such Note and for all other purposes whatsoever,
whether or not such Note shall be overdue, and the Company shall not be
affected by notice to the contrary. Any Purchaser may without the consent of
the Company sell participations in principal amounts of not less than the
Minimum Note Amount or, in the case of any sale by a holder holding Notes in an
aggregate principal amount less than the Minimum Note Amount, such aggregate
principal amount of Notes so held, to one or more Persons who agree to be bound
by the provisions of paragraph 11J in all or a portion of its rights in the
Note or Notes held by it.
11G. NON-RECOURSE NATURE OF LIABILITY
Notwithstanding anything to the contrary contained in this Agreement,
each Purchaser hereby acknowledges and agrees that neither the General Partner
nor any general partner or limited partner, stockholder, officer, employee,
servant, controlling Person, executive, director or agent, as such, of the
General Partner, nor any past, present or future general partner or limited
partner, as such, of the General Partner, shall have any liability to such
Purchaser or any Transferee (such liability, including such as may arise by
operation of law, being hereby expressly waived) for the payment of any sums
now or hereafter owing by the Company under this Agreement or under the Notes
or for the performance of any of the obligations of the Company contained
herein.
11H. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT
All representations and warranties contained herein or made in writing
by or on behalf of the Company inconnection herewith shall survive the
execution and delivery of this Agreement and the Notes, the transfer by any
Purchaser of any Note or portion thereof or interest therein and the payment of
any Note, and may be relied upon by any Transferee, regardless of any
investigation made at any time by or on behalf of any Purchaser or any
Transferee. All representations, warranties and covenants contained herein
made by any Purchaser or any holder shall survive the execution and delivery of
this Agreement and the Notes, and may be relied upon by the Company and its
successors and assigns. No holder of any Notes (including each Purchaser)
shall be responsible for the truth, correctness or performance of the
representations or warranties of any other holder (including any Transferee).
Subject to the preceding sentences, this Agreement and the Notes embody the
entire agreement and understanding between each Purchaser and the Company and
supersede all prior agreements and understandings relating to the subject
matter hereof.
11I. SUCCESSORS AND ASSIGNS
All covenants and other agreements in this Agreement contained by or
on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and
-52-
<PAGE> 57
Plum Creek Timber Company, L.P. Senior Note Agreement
assigns of the parties hereto (including, without limitation, any Transferee)
whether so expressed or not.
11J. DISCLOSURE TO OTHER PERSONS
Each Purchaser agrees to use its best efforts to keep any information
(other than information which has become public information) delivered or made
available by the Company or the General Partner to such Purchaser (including
any information obtained pursuant to paragraph 5A or 5B) in connection with or
pursuant to this Agreement which is proprietary in nature and clearly indicated
to be confidential information, confidential from any one other than Persons
employed or retained by such Purchaser who are or are expected to become
engaged in evaluating, approving, structuring or administering the Notes;
provided that nothing herein shall prevent any holder of any Notes from
disclosing such information to (i) such holder's trustees, directors, officers,
employees, agents and professional consultants, (ii) any other holder of any
Notes, (iii) any Person to whom such holder offers to sell such Note or any
part thereof which has agreed in writing to be bound by the provisions of this
paragraph 11J, (iv) any Person to whom such holder sells or offers to sell a
participation in all or any part of such Notes who has agreed in writing to be
bound by the provisions of this paragraph 11J, (v) any federal or state
regulatory authority having jurisdiction over such holder, (vi) the National
Association of Insurance Commissioners or any similar organization or (vii) any
other Person to whom such delivery or disclosure may be necessary or
appropriate (a) in compliance with any law, rule, regulation or order
applicable to such holder, (b) in response to any subpoena or other legal
process, (c) in connection with any litigation to which such holder is a party
or (d) in order to protect such holder's investment in such Note to the extent
reasonably required in connection with the exercise of any remedy hereunder.
11K. NOTICES
All written communications provided for hereunder shall be sent by
first class mail, if promptly confirmed byfacsimile transmission (to the extent
the recipient has provided a facsimile telephone number) and by telephone, or
nationwide overnight delivery service (with charges prepaid) and (i) if to any
Purchaser, addressed to such Purchaser at the address specified for such
communications in Schedule I attached hereto, or at such other address as such
Purchaser shall have specified to the Company in writing, (ii) if to any other
holder of any Note, addressed to such other holder at such address as such
other holder shall have specified to the Company in writing or, if any such
other holder shall not have so specified an address to the Company, then
addressed to such other holder in care of the last holder of such Note which
shall have so specified an address to the Company, and (iii) if to the Company,
addressed to it at 999 Third Avenue, Suite 2300, Seattle, Washington 98104, or
at such other address as the Company shall have specified to the holder of each
Note in writing; provided, however, that any such communication to the Company
may also, at the option of the holder of any Note, be delivered by any other
means either to the Company at its address specified above or to any officer of
the Company.
-53-
<PAGE> 58
Plum Creek Timber Company, L.P. Senior Note Agreement
11L. DESCRIPTIVE HEADINGS
The descriptive headings of the several paragraphs of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
11M. SUBSTITUTION OF PURCHASER
Each Purchaser shall have the right to substitute any one of its
affiliates as the purchaser of the Notes which such Purchaser has agreed to
purchase hereunder, by written notice to the Company, which notice shall be
signed by both such Purchaser and such affiliate, shall contain such
affiliate's agreement to be bound by this Agreement and shall contain a
confirmation by such affiliate of the accuracy with respect to it of the
representations set forth in paragraph 9. Upon receipt of such notice, wherever
the word "Purchaser" is used in this Agreement (other than in this paragraph
11M), such word shall be deemed to refer to such affiliate in lieu of such
Purchaser. In the event such affiliate is so substituted as a Purchaser
hereunder and such affiliate thereafter transfers to such Purchaser all of the
Notes then held by such affiliate, upon receipt by the Company of notice of
such transfer, wherever the word "Purchaser" is used in this Agreement (other
than in paragraph 11M), such word shall no longer be deemed to refer to such
affiliate, but shall refer to such Purchaser, and such Purchaser shall have all
the rights of an original holder of the Notes under this Agreement.
11N. SATISFACTION REQUIREMENT
If any agreement, certificate or other writing, or any action taken or
to be taken, is by the terms of this Agreement required to be satisfactory to
any Purchaser or to the Required Holder(s), the determination of such
satisfaction shall be made by such Purchaser or the Required Holder(s), as the
case may be, in the sole and exclusive judgment (exercised in good faith) of
the Person or Persons making such determination.
11O. GOVERNING LAW
THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE
RIGHTS OF THE PARTIES SHALL BEGOVERNED BY, THE LAW OF THE STATE OF NEW YORK.
11P. COUNTERPARTS
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart.
-54-
<PAGE> 59
Plum Creek Timber Company, L.P. Senior Note Agreement
The execution hereof by the Purchasers shall constitute a contract
among the Company and the Purchasers for the uses and purposes hereinabove set
forth.
PLUM CREEK TIMBER COMPANY, L.P.
By: Plum Creek Management Company,
L.P., its General Partner
By: /s/ Diane M. Irvine
----------------------------------
Diane M. Irvine
Its Vice President and Chief
Financial Officer
-55-
<PAGE> 60
Plum Creek Timber Company, L.P. Senior Note Agreement
NEW YORK LIFE INSURANCE COMPANY
By/s/ Lydia S. Sangree
-----------------------------------
Lydia S. Sangree
Its Investment Vice President
-56-
<PAGE> 61
Plum Creek Timber Company, L.P. Senior Note Agreement
THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA
By/s/ Joseph Y. Alouf
-----------------------------------
Joseph Y. Alouf
Its Vice President
-57-
<PAGE> 62
Plum Creek Timber Company, L.P. Senior Note Agreement
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By/s/ AB Kyle
---------------------------------------
Angela Brock-Kyle
Its Associate Director-Private Placements
-58-
<PAGE> 63
Plum Creek Timber Company, L.P. Senior Note Agreement
CONNECTICUT GENERAL LIFE INSURANCE
COMPANY
By: CIGNA Investments, Inc.
By/s/ Mary Stewart Law
-------------------------------------
Mary S. Law
Its Vice President
-59-
<PAGE> 64
Plum Creek Timber Company, L.P. Senior Note Agreement
CIGNA REINSURANCE COMPANY
By: CIGNA Investments, Inc.
By/s/ Mary Stewart Law
-----------------------------------
Mary S. Law
Its Vice President
-60-
<PAGE> 65
Plum Creek Timber Company, L.P. Senior Note Agreement
TRANSAMERICA LIFE INSURANCE AND
ANNUITY COMPANY
By/s/ John M. Casparian
---------------------------------
Its Investment Officer
-61-
<PAGE> 66
Plum Creek Timber Company, L.P. Senior Note Agreement
TRANSAMERICA OCCIDENTAL LIFE
INSURANCE COMPANY
By /s/ John M. Casparian
-------------------------------
Its Investment Officer
-62-
<PAGE> 67
Plum Creek Timber Company, L.P. Senior Note Agreement
AMERICAN GENERAL LIFE AND ACCIDENT
INSURANCE COMPANY
THE VARIABLE ANNUITY LIFE INSURANCE
COMPANY
By /s/ Julia S. Tucker
-------------------------------
Name: Julia S. Tucker
Title: Investment Officer
-63-
<PAGE> 68
Plum Creek Timber Company, L.P. Senior Note Agreement
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By /s/ Richard A. Strait
------------------------------
Richard A. Strait
Its Vice President
-64-
<PAGE> 69
Plum Creek Timber Company, L.P. Senior Note Agreement
THE MINNESOTA MUTUAL LIFE INSURANCE
COMPANY
By: MIMLIC Asset Management Company
By /s/ Kay L. Scow
---------------------------------------
Its Vice President
-65-
<PAGE> 70
Plum Creek Timber Company, L.P. Senior Note Agreement
FEDERATED MUTUAL INSURANCE COMPANY
By: MIMLIC Asset Management Company
By /s/ Marilyn Froelich
-------------------------------------
Its Vice President
-66-
<PAGE> 71
Plum Creek Timber Company, L.P. Senior Note Agreement
FARM BUREAU LIFE INSURANCE COMPANY
OF MICHIGAN
By: MIMLIC Asset Management Company
By /s/ Lynne M. Mills
----------------------------------------
Its Vice President
-67-
<PAGE> 72
Plum Creek Timber Company, L.P. Senior Note Agreement
FB ANNUITY COMPANY
By: MIMLIC Asset Management Company
By /s/ Guy de Lambert
------------------------------------
Its Vice President
-68-
<PAGE> 73
Plum Creek Timber Company, L.P. Senior Note Agreement
ALLSTATE LIFE INSURANCE COMPANY
By /s/ Patricia W. Wilson
---------------------------------
Name: Patricia W. Wilson
Its: Ass't. Vice President
By /s/ Steven M. Laude
---------------------------------
Name: Steven M. Laude
Its: Authorized Signatory
Authorized Signatories
-69-
<PAGE> 74
Plum Creek Timber Company, L.P. Senior Note Agreement
THE MUTUAL LIFE INSURANCE COMPANY OF
NEW YORK
By /s/ William D. Goodwin
------------------------------------
William D. Goodwin
Its Senior Managing Director
-70-
<PAGE> 75
Plum Creek Timber Company, L.P. Senior Note Agreement
THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
By /s/ Beatriz M. Cuervo
---------------------------------------
Beatriz M. Cuervo
Its Investment Officer
-71-
<PAGE> 76
Plum Creek Timber Company, L.P. Senior Note Agreement
THE EQUITABLE OF COLORADO, INC.
By /s/ Beatriz M. Cuervo
-------------------------------
Beatriz M. Cuervo
Its Investment Officer
-72-
<PAGE> 77
Plum Creek Timber Company, L.P. Senior Note Agreement
PROVIDENT LIFE AND ACCIDENT INSURANCE
COMPANY
By /s/ James T. Rogers
--------------------------------------
Its Vice President
-73-
<PAGE> 78
Plum Creek Timber Company, L.P. Senior Note Agreement
AMERICAN ENTERPRISE LIFE INSURANCE
COMPANY
By /s/ Lorraine R. Hart
--------------------------------
Lorraine R. Hart
Its Vice President, Investments
-74-
<PAGE> 79
Plum Creek Timber Company, L.P. Senior Note Agreement
IDS LIFE INSURANCE COMPANY
By /s/ Lorraine R. Hart
--------------------------------
Lorraine R. Hart
Its Vice President, Investments
-75-
<PAGE> 80
Plum Creek Timber Company, L.P. Senior Note Agreement
AMERICAN CENTURION LIFE ASSURANCE
COMPANY
By /s/ David M. Kuplic
--------------------------------
David M. Kuplic
Its Vice President - Investments
-76-
<PAGE> 81
Plum Creek Timber Company, L.P. Senior Note Agreement
NATIONWIDE LIFE INSURANCE COMPANY
By /s/ Michael D. Groseclose
--------------------------------
Michael D. Groseclose
Its Associate Vice President
Corporate Fixed-Income Securities
-77-
<PAGE> 82
Plum Creek Timber Company, L.P. Senior Note Agreement
PROVIDIAN LIFE AND HEALTH INSURANCE
COMPANY
By /s/ Jon L. Skaggs
--------------------------------------
Its Second Vice President - Investments
-78-
<PAGE> 83
Plum Creek Timber Company, L.P. Senior Note Agreement
THE UNION CENTRAL LIFE INSURANCE
COMPANY
By /s/ Joseph A. Tucker III
---------------------------------
Joseph A. Tucker III
Its Assistant Treasurer
-79-
<PAGE> 84
Plum Creek Timber Company, L.P. Senior Note Agreement
RGA REINSURANCE COMPANY
By: Guarantee Life Insurance Company,
Agent
By /s/ Robert M. Jergovic
---------------------------------------
Robert M. Jergovic, CFA
Its Vice President-Private Placements
-80-
<PAGE> 85
Plum Creek Timber Company, L.P. Senior Note Agreement
GUARANTEE LIFE INSURANCE COMPANY
By /s/ Robert M. Jergovic
---------------------------------------
Robert M. Jergovic, CFA
Its Vice President-Private Placements
-81-
<PAGE> 86
Plum Creek Timber Company, L.P. Senior Note Agreement
AMERITAS LIFE INSURANCE CORP.
by Ameritas Investment Advisors, Inc. as
Agent
By /s/ Patrick J. Henry
---------------------------------------
Patrick J. Henry
Its Vice President - Fixed Income
Securities
-82-
<PAGE> 87
Plum Creek Timber Company, L.P. Senior Note Agreement
WOODMEN ACCIDENT AND LIFE COMPANY
By /s/ A.M. McCray
-----------------------------------
Its Vice President and Asst. Treasurer
-83-
<PAGE> 88
Schedule I
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
New York Life Insurance SERIES A Series B Series C Series D
Company $6,000,000 -0- $14,000,000 -0-
51 Madison Avenue
New York, New York 10010
Attention: Investment Department,
Private Finance Group, Room 206
Telefacsimile: (212) 447-4122
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as (i) in
the case of the Series A Notes, "Plum Creek Timber Company, L.P., 7.74% Senior
Notes, Series A due 2006, PPN: 729237 A# 4 and principal, premium or interest,"
and (ii) in the case of the Series C Notes, "Plum Creek Timber Company, L.P.,
7.97% Senior Notes, Series C due 2011, PPN: 729237 B@ 5 and principal, premium
or interest") to:
Morgan Guaranty Trust Company of New York
New York, New York 10015
ABA #021-000-238
for the account of: New York Life Insurance Company
General Account Number 810-00-000
Notices
All notices with respect to payments and written confirmation of each such
payment, to be addressed:
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010-1603
Attention: Treasury Department, Securities Income Section, Room 209
Telefacsimile: (212) 447-4160
SCHEDULE I
(to Senior Note Agreement)
<PAGE> 89
All other notices and communications to be addressed as first provided above,
with a copy of any notices regarding defaults or Events of Default under this
operative document to:
New York Life Insurance Company
51 Madison Avenue
New York, New York 10010
Office of General Counsel
Investment Section, Room 1104
Telefacsimile: (212) 576-8340
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-5582869
I-2
<PAGE> 90
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
The Prudential Insurance SERIES A Series B Series C Series D
Company of America $10,000,000 $2,500,000 $2,000,000 $5,500,000
c/o Prudential Capital Group - Corporates
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
Attention: Managing Director
</TABLE>
Payments
All payments on account of Notes held by such purchaser shall be made by wire
transfer of immediately available funds for credit to:
Account No. 890-0304-391
The Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth (a) the name of the Company, (b) the due
date and application (as among principal, interest and Yield-Maintenance
Premium) of the payment being made and (c) a reference to (i) in the case of the
Series A Notes, "7.74% Notes due November 13, 2006, PPN #729237\A", (ii) in the
case of the Series B Notes, "7.87% Notes due November 13, 2008, PPN #729237\B",
(iii) in the case of the Series C Notes, "7.97% Notes due November 13, 2011, PPN
#729237\C" and (iv) in the case of the Series D Notes, "8.05% Notes due November
13, 2016, PPN #729237\D".
Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
Attention: Manager, Investment Operations Group
Telephone: (201) 802-5260
Telefacsimile: (201) 802-8055
I-3
<PAGE> 91
Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group - Corporates
Four Embarcadero Center
Suite 2700
San Francisco, California 94111
Attention: Managing Director
Telefacsimile: (415) 296-5661
Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (201) 802-6660
Telefacsimile: (201) 802-9425
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 22-1211670
I-4
<PAGE> 92
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
TEACHERS INSURANCE AND SERIES A Series B Series C Series D
ANNUITY ASSOCIATION OF -0- -0- $20,000,000 -0-
AMERICA (Two Notes: Each
730 Third Avenue $10,000,000)
New York, New York 10017-3263
</TABLE>
Payments
All payments on or in respect of the Series C Notes shall be made in immediately
available funds at the opening of business on the due date by electronic funds
transfer through the Automated Clearing House System (identifying each payment
as "Plum Creek Timber Company, L.P., 7.97% Senior Notes, Series C, due November
13, 2011, PPN: 729237 B@ 5, principal or interest") to:
For Note R-C-3 ($10,000,000):
Chase Manhattan Bank
ABA No. 021000021
New York, New York
Account of: Teachers Insurance and Annuity Association of America
Account Number 910-2-766475
On order of: Plum Creek Timber Company, L.P.
For Note R-C-4 ($10,000,000):
Citibank, N.A.
ABA No. 021000089
New York, New York
Account of: Teachers Insurance and Annuity Association of America
Account Number 4057-8501
On order of: Plum Creek Timber Company, L.P.
Notices
Contemporaneous with the above electronic funds transfer advice setting forth:
(1) the full name, private placement number, interest rate and maturity date of
the Series C Notes; (2) allocation of payment between principal, interest,
Yield-Maintenance Premium and any special payment; and (3) the name and address
of the bank from which such electronic funds transfer was sent, shall be
delivered, mailed or faxed to:
I-5
<PAGE> 93
Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, NY 10017
Attention: Securities Accounting Division
Telephone: (212) 916-4188
Telefacsimile: (212) 916-6955
All other notices and communications to be addressed as first provided above,
except directed to:
Attention: Securities Division, Private Placements
Telephone: (212) 916-5724 (Angela Brock-Kyle) or
(212) 490-9000 (general number)
Telefacsimile: (212) 916-6901
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-1624203
I-6
<PAGE> 94
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
Connecticut General Life SERIES A Series B Series C Series D
Insurance Company $5,000,000 -0- $3,000,000 $7,700,000
900 Cottage Grove Road (TWO NOTES: (TWO NOTES:
Hartford, Connecticut 06152-2307 $3,000,000 $3,988,141.21
ATTENTION: Private Securities $2,000,000) $3,711,858.79)
Division - S-307
FAX: 203-726-7203
</TABLE>
Payments
All payments on or in respect of the Notes to be by Federal Funds Wire Transfer
to:
Chase Manhattan Bank, N.A.
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA #021000021
OBI=[name of company; description of security; interest rate; maturity date;
PPN; due date and application (as among principal, premium and interest of
the payment being made); contact name and phone.]
Address for Notices Related to Payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, Connecticut 06152-2209
with a copy to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P. O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
Fax: 212-552-3107/1005
I-7
<PAGE> 95
Address for All Other Notices:
CIG & Co.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Fax: 860-726-7203
Name of Nominee in which Notes are to be issued: CIG & Co.
Taxpayer I.D. Number for CIG & Co.: 13-3574027
I-8
<PAGE> 96
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
SERIES A Series B Series C Series D
CIGNA Reinsurance Company -0- -0- $2,300,000 -0-
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Attention: Private Securities Division - S-307
Fax: 203-726-7203
</TABLE>
Payments
All payments on or in respect of the Notes to be by Federal Funds Wire Transfer
to:
Chase Manhattan Bank, N.A.
Chase NYC/CTR/
BNF=CIGNA Private Placements/AC=9009001802
ABA #021000021
OBI=[name of company; description of security; interest rate; maturity date;
PPN; due date and application (as among principal, premium and interest of
the payment being made); contact name and phone.]
Address for Notices Related to Payments:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Securities Processing S-309
900 Cottage Grove Road
Hartford, Connecticut 06152-2309
with a copy to:
Chase Manhattan Bank, N.A.
Private Placement Servicing
P. O. Box 1508
Bowling Green Station
New York, New York 10081
Attention: CIGNA Private Placements
Fax: 212-552-3107/1005
I-9
<PAGE> 97
Address for All Other Notices:
CIG & Co.
c/o CIGNA Investments, Inc.
Attention: Private Securities Division - S-307
900 Cottage Grove Road
Hartford, Connecticut 06152-2307
Fax: 860-726-7203
Name of Nominee in which Notes are to be issued: CIG & Co.
Taxpayer I.D. Number for CIG & Co.: 13-3574027
I-10
<PAGE> 98
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
Transamerica Life Insurance SERIES A Series B Series C Series D
and Annuity Company -0- $2,500,000 -0- $3,200,000
c/o Transamerica Investment Services
1150 South Olive Street, Suite 2700
Los Angeles, California 90015
Attention: John Casparian
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as (i) in
the case of the Series B Notes, "Plum Creek Timber Company, L.P., 7.87% Senior
Notes, Series B due 2008, PPN: 729237 B* 7 and principal or interest", and (ii)
in the case of the Series D Notes, "Plum Creek Timber Company, L.P., 8.05%
Senior Notes, Series D due 2016, PPN: 729237 B# 3 and principal or interest")
to:
For Series B Note ($2,500,000):
Federal Reserve Bank of Boston
Boston Safe Deposit & Trust
Boston, Massachusetts
ABA 011-001-234
DDA: 12-526-1
FFC: Cost Center 1253
Re: Mellon Securities
Ref: Transamerica Life Insurance and Annuity Company (FLEX)
Account # TRAF 1506102
Ref: PPN and Description
For Series D Note ($3,200,000):
Federal Reserve Bank of Boston
Boston Safe Deposit & Trust
Boston, Massachusetts
ABA 011-001-234
DDA: 12-526-1
FFC: Cost Center 1253
Re: Mellon Securities
Ref: Transamerica Life Insurance and Annuity Company (SS)
Account # TRAF 1506502
Ref: PPN and Description
I-11
<PAGE> 99
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment
and all account statements, to:
Transamerica Life Companies
P. O. Box 2101 - Securities Accounting
Los Angeles, California 90051-0101
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 95-6140222
I-12
<PAGE> 100
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
Transamerica Occidental Life SERIES A Series B Series C Series D
Insurance Company -0- -0- $12,300,000 -0-
c/o Transamerica Investment Services
1150 South Olive Street, Suite 2700
Los Angeles, California 90015
Attention: John Casparian
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P. 7.97% Senior Notes, Series C due 2011, PPN: 729237 B@
5 and principal or interest") to:
Federal Reserve Bank of Boston
Boston Safe Deposit & Trust
Boston, Massachusetts
ABA 011-001-234
Acct#: 12-526-1
FFC: Cost Center 1253
Transamerica Occidental Life Insurance Company
Account Segment: UNI
Account No. TRAF 1505102
Ref: PPN and Description
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment
and all account statements, to:
Transamerica Life Companies
P. O. Box 2101 - Securities Accounting
Los Angeles, California 90051-0101
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 95-1060502
I-13
<PAGE> 101
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
THE VARIABLE ANNUITY LIFE Series A Series B Series C Series D
INSURANCE COMPANY $10,000,000 -0- -0- -0-
c/o American General Corporation
2929 Allen Parkway
Houston, Texas 77019-2155
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A due 2006, PPN: 729237
A# 4 and principal, interest or premium") to:
State Street Bank and Trust Company
ABA #011000028
Boston, Massachusetts 02101
Re: The Variable Annuity Life Insurance Company
AC-0125-821-9
OBI=PPN Number and description of payment
Fund Number PA 54
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
The Variable Annuity Life Insurance Company and PA 54
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, MA 02171
Telefacsimile: (617) 985-4923
Duplicate payment notices and all other correspondences to:
The Variable Annuity Life Insurance Company
c/o American General Corporation
P. O. Box 3247
Houston, Texas 77253-3247
Attention: Investment Research Department, A37-01
Telefacsimile: (713) 831-1366
I-14
<PAGE> 102
Overnight Mailing Address:
2929 Allen Parkway
Houston, Texas 77019-2155
Telefacsimile: (713) 831-1366
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 74-1625348
I-15
<PAGE> 103
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
AMERICAN GENERAL LIFE AND Series A Series B Series C Series D
ACCIDENT INSURANCE COMPANY -0- $5,000,000 -0- -0-
c/o American General Corporation
2929 Allen Parkway, Suite 3701
Houston, Texas 77019-2155
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.87% Senior Notes, Series B due 2008, PPN: 729237
B* 7 and principal, interest or premium") to:
ABA #011000028
State Street Bank and Trust Company
Boston, Massachusetts 02101
Re: American General Life and Accident Insurance Company
AC-0125-934-0
OBI=PPN Number and description of payment
Fund Number PA 10
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
American General Life and Accident Insurance Company and PA 10
c/o State Street Bank and Trust Company
Insurance Services Custody (AH2)
1776 Heritage Drive
North Quincy, MA 02171
Telefacsimile: (617) 985-4923
Duplicate payment notices and all other correspondences:
American General Life and Accident Insurance Company
c/o American General Corporation
P.O. Box 3247
Houston, Texas 77253-3247
Attention Investment Research Department, A37-01
Telefacsimile: (713) 831-1366
I-16
<PAGE> 104
Overnight Mail Address:
2929 Allen Parkway
Houston, Texas 77019-2155
Telefacsimile: (713) 831-1366
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 62-0306330
I-17
<PAGE> 105
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
THE NORTHWESTERN MUTUAL Series A Series B Series C Series D
LIFE INSURANCE COMPANY -0- $5,000,000 $10,000,000 -0-
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Securities Department
Telefacsimile: (414) 299-7124
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as (i) in
the case of the Series B Notes, "Plum Creek Timber Company, L.P., 7.87% Senior
Notes, Series B due 2008, PPN: 729237 B* 7 and principal or interest," and (ii)
in the case of the Series C Notes, "Plum Creek Timber Company, L.P., 7.97%
Senior Notes, Senior C due 2011, PPN: 729237 B@ 5 and principal and interest")
to:
Bankers Trust Company (ABA #0210-01033)
16 Wall Street
Insurance Unit, 4th Floor
New York, New York 10005
for credit to: The Northwestern Mutual Life Insurance Company
Account Number 00-000-027
Notices
All notices and communications to be addressed as first provided above, except
notices with respect to payments and written confirmation of each such payment
to be addressed,
Attention: Treasurers Department/Securities Operations.
Telefacsimile: (414) 299-5714
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 39-0509570
I-18
<PAGE> 106
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
THE MINNESOTA MUTUAL LIFE Series A Series B Series C Series D
INSURANCE COMPANY $7,500,000 -0- -0- -0-
400 Robert Street North
St. Paul, Minnesota 55101
Attention: MIMLIC Asset Management Company
Telefacsimile: (612) 223-5959
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A due 2006 PPN: 729237 A#
4 and principal or interest") to:
First Bank National Association
Minneapolis, Minnesota
ABA #091000022
BNF The Minnesota Mutual Life Insurance Company
Account Number 1801-10-00600-4
(with sufficient information to identify the source and application of such
funds).
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-0417830
I-19
<PAGE> 107
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
FEDERATED MUTUAL INSURANCE Series A Series B Series C Series D
COMPANY $2,500,000 -0- -0- -0-
c/o MIMLIC Asset Management Company
400 North Robert Street
St. Paul, Minnesota 55101
Attention: Client Administrator
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A due 2006, PPN: 729237
A# 4 and principal or interest") to:
Norwest Bank, Minnesota
Minneapolis, Minnesota
ABA #091-000-019
For Credit to: Trust Department
Account Number: 0840245
For further credit to: Federated Mutual Insurance Company
Account Number: 12364600
Attention: Jim Kosse
Also, please reference sufficient information to identify the source and
application of such funds.
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 41-0417460
I-20
<PAGE> 108
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
FARM BUREAU LIFE INSURANCE Series A Series B Series C Series D
COMPANY OF MICHIGAN $1,250,000 -0- -0- -0-
c/o MIMLIC Asset Management
Company
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A due 2006, PPN: 729237
A# 4 and principal or interest") to:
Comerica Bank
Detroit, Michigan
ABA #072-000-096
For credit to: Trust Operation -- Fixed Income
Unit Cost Center 98530
Account Number 21585-98530
For further credit to: Farm Bureau Life Insurance Company of Michigan
Account Number: 84-550
Also, please reference sufficient information to identify the source and
application of such funds.
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 38-6053670
I-21
<PAGE> 109
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
FB ANNUITY COMPANY Series A Series B Series C Series D
c/o MIMLIC Asset Management $1,250,000 -0- -0- -0-
Company
400 Robert Street North
St. Paul, Minnesota 55101
Attention: Client Administrator
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A due 2006, PPN: 729237
A# 4 and principal or interest") to:
Comerica Bank
Detroit, Michigan
ABA #072-000-096
For credit to: Trust Operation -- Fixed Income
Unit Cost Center 98530
Account Number: 21585-98530
For further credit to: FB Annuity Company
Account Number: 84-553
Also, please reference sufficient information to identify the source and
application of such funds.
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 38-2315027
I-22
<PAGE> 110
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
ALLSTATE LIFE INSURANCE Series A Series B Series C Series D
COMPANY $10,000,000 -0- -0- -0-
3075 Sanders Road, Ste G3A (TWO NOTES:
Northbrook, Illinois 60062-7127 $6,000,000 AND
Attention: Private Placements $4,000,000)
Department
Telephone: (847) 402-4394
Telefacsimile: (847) 402-3092
</TABLE>
Payments
All payments on or in respect of the Notes to be made by Fedwire transfer of
immediately available funds (identifying each payment with name of the Issuer
(and the Credit, if any), the Private Placement Number preceded by "DPP" and the
payment as principal, interest or premium) in the exact format as follows:
BBK = Harris Trust and Savings Bank
ABA #071000288
BNF = Allstate Life Insurance Company
Collection Account #168-117-0
ORG = Plum Creek Timber Company, L.P.
OBI = DPP (PPN) - 729237 A# 4
Payment Due Date (MM/DD/YY)---
P ______ (enter "P" and the amount of principal being remitted,
for example, P5000000.00) --
I ______ (enter "I" and the amount of interest being remitted,
for example, I225000.00)
Notices
All notices of scheduled payments and written confirmation of such wire
transfer, to be sent to:
Allstate Insurance Company
Investment Operations--Private Placements
3075 Sanders Road, STE G4A
Northbrook, Illinois 60062-7127
Telephone: (847) 402-8709
Telefacsimile: (847) 402-7331
I-23
<PAGE> 111
All financial reports, compliance certificates and all other written
communications, including notice of prepayments to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 36-2554642
I-24
<PAGE> 112
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
THE MUTUAL LIFE INSURANCE Series A Series B Series C Series D
COMPANY OF NEW YORK -0- -0- $10,000,000 -0-
1740 Broadway
New York, New York 10019
Attention: MONY Capital Management Unit
Telefacsimile: (212) 708-2491
</TABLE>
Payments
All payments on or in respect of the $10,000,000 Note issued in the name of The
Mutual Life Insurance Company of New York to be by bank wire transfer of Federal
or other immediately available funds (identifying each payment as "Plum Creek
Timber Company, L.P., 7.97% Senior Notes, Series C due 2011, PPN: 729237 B@ 5
and principal or interest") to:
Chase Manhattan Bank ABA #021000021
for credit to: The Mutual Life Insurance Company of New York,
Security Remittance Account Number 321-023803
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
Glenpointe Marketing & Operations Center--MONY
Glenpointe Center West, 500 Frank W. Burr Blvd.
Teaneck, New Jersey 07666-6888
Attention: Securities Custody
Telefacsimile: (201) 907-6979
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-1632487
I-25
<PAGE> 113
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
THE EQUITABLE LIFE ASSURANCE Series A Series B Series C Series D
SOCIETY OF THE UNITED STATES -0- $5,750,000 -0- -0-
c/o Alliance Capital Management, L.P.
1345 Avenue of the Americas, 37th Floor
New York, New York 10105
</TABLE>
Payments
All payments on account of the Notes shall be made by bank wire transfer of
immediately available funds to:
The Chase Manhattan Bank, N.A.
110 West 52nd Street
New York, New York 10019
ABA # 021-00002-1
Account of: The Equitable Life Assurance Society of the United States
Account Number: 037-2-409417
On Order of: "Plum Creek Timber Company, L.P., 7.87% Senior Notes, Series B
due 2008"
PPN: 729237 B* 7
Contemporaneous with the above wire transfer, advice setting forth:
(a) the full name, interest rate and maturity date of the Notes;
(b) allocation and payment between principal and any special payment;
and
(c) name and address of Bank (or Trustee) from which wire transfer was
sent
Shall be delivered to:
The Equitable Life Assurance Society of the United States
c/o Alliance Capital Management, L.P.
135 West 50th Street - 5th Floor
New York, NY 10020
Attention: Treasury Services
I-26
<PAGE> 114
Notices
All notices with respect to prepayments, both scheduled and unscheduled, whether
partial or in full, and notice of maturity shall be delivered or mailed to:
The Equitable Life Assurance Society of the United States
c/o Alliance Capital Management, L.P.
135 West 50th Street, 5th Floor
New York, New York 10020
Attention: Treasury Services
All other communications which shall include, but not be limited to, financial
statements and certificates of compliance with financial covenants, as well as
notices of unscheduled prepayments shall be delivered or mailed to:
The Equitable Life Assurance Society of the United States
c/o Alliance Capital Management, L.P.
1345 Avenue of the Americas
New York, NY 10105
Attention: Fixed Income Credit
Research Division - 37th Floor
Beatriz M. Cuervo
(212) 969-1477 - TEL
(212) 969-1466 - FAX
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-5570651
I-27
<PAGE> 115
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
THE EQUITABLE OF COLORADO, INC. Series A Series B Series C Series D
c/o Alliance Capital Management, L.P. -0- $3,000,000 -0- -0-
1345 Avenue of the Americas, 37th Floor
New York, New York 10105
</TABLE>
Payments
All payments on account of the Notes shall be made by bank wire transfer of
immediately available funds to:
The Chase Manhattan Bank, N.A.
110 West 52nd Street
New York, New York 10019
ABA #021-00002-1
Account of: The Equitable of Colorado, Inc.
Account Number: 037-2-406389
On Order of: "Plum Creek Timber Company, L.P., 7.87% Senior Notes, Series B
due 2008"
PPN: 729237 B* 7
Notices
Contemporaneous with the above wire transfer, advice setting forth:
(a) the full name, interest rate and maturity date of the Notes;
(b) allocation and payment between principal and any special payment;
and
(c) name and address of Bank (or Trustee) from which wire transfer was
sent
Shall be delivered to:
The Equitable of Colorado, Inc.
c/o Alliance Capital Management, L.P.
135 West 50th Street - 5th Floor
New York, NY 10020
Attention: Treasury Services
I-28
<PAGE> 116
All notices with respect to prepayments, both scheduled and unscheduled, whether
partial or in full, and notice of maturity shall be delivered or mailed to:
The Equitable of Colorado, Inc.
c/o Alliance Capital Management, L.P.
135 West 50th Street, 5th Floor
New York, New York 10020
Attention: Treasury Services
All other communications which shall include, but not be limited to, financial
statements and certificates of compliance with financial covenants, as well as
notices of unscheduled prepayments shall be delivered or mailed to:
The Equitable of Colorado, Inc.
c/o Alliance Capital Management, L.P.
1345 Avenue of the Americas
New York, NY 10105
Attention: Fixed Income Credit
Research Division - 37th Floor
Beatriz M. Cuervo
(212) 969-1477 - TEL
(212) 969-1466 - FAX
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 13-319-8083
I-29
<PAGE> 117
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
PROVIDENT LIFE AND ACCIDENT SERIES A SERIES B SERIES C SERIES D
INSURANCE COMPANY -0- -0- -0- $8,600,000
One Fountain Square, 6th Floor
Chattanooga, Tennessee 37402
Attention: Private Placements/Investment Department
Telefacsimile: (615) 755-3351
Confirmation: (615) 755-1365
</TABLE>
All payments on account of the Notes shall be made by wire transfer of
immediately available funds to:
CUDD & CO.
c/o The Chase Manhattan Bank, N.A.
New York, New York
ABA No. 021 000 021
SSG Private Income Processing
A/C #900-9-000200
Custodial Account No. G06706
Please reference: Issuer (Plum Creek Timber Company,
L.P.), 8.05% Senior Notes, Series D due 2016), PPN (3 B# 3) P=$ I=$
Address for all communications with respect to payments and for all other
communications to:
Provident Companies, Inc.
Private Placements/Investment Department
One Fountain Square
Chattanooga, Tennessee 37402
Telephone: (423) 755-1365
Telefacsimile: (423) 755-3351
Name of Nominee in which Notes are to be issued: CUDD & CO.
Taxpayer Identification Number: 13-6022143
I-30
<PAGE> 118
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
AMERICAN ENTERPRISE LIFE SERIES A SERIES B SERIES C SERIES D
INSURANCE COMPANY $4,750,000 -0- -0- -0-
c/o American Express Financial
Corporation
3000 IDS Tower--10
Minneapolis, Minnesota 55440
Attention: Director, Senior Securities Research
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A, due 2006 PPN: 729237
A# 4 and principal or interest") to:
Norwest Bank Minneapolis, N.A. (ABA #091-000-019)
6th and Marquette Avenue
Minneapolis, Minnesota 55480
for credit to: American Express Trust Co.
Account # 0-38-500
for the benefit of: WRAP TWO & Co.
Notices
All notices of payments on or in respect of the Notes and written confirmation
of each such payment to:
WRAP TWO & Co.
c/o American Express Trust Co.
P. O. Box 1450 NW--9744
Minneapolis, Minnesota 55485
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: WRAP TWO & Co.
Taxpayer I.D. Number: 94-2786905
I-31
<PAGE> 119
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
SERIES A SERIES B SERIES C SERIES D
<S> <C> <C> <C> <C>
IDS LIFE INSURANCE COMPANY $1,000,000 -0- -0- -0-
c/o American Express Financial
Corporation
3000 IDS Tower--10
Minneapolis, Minnesota 55440
Attention: Director - Senior Securities Research
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A, due 2006 PPN: 729237
A# 4 and principal or interest") to:
Norwest Bank Minneapolis, N.A. (ABA #091 000 019)
6th and Marquette Avenue
Minneapolis, Minnesota 55480
for credit to: American Express Trust Co.
Account Number 00-38-500
for the benefit of: WRAP TWO & Co.
Notices
All notices of payment, on or in respect of the Notes and written confirmation
of each such payment to:
WRAP TWO & Co.
c/o American Express Trust Co.
P.O. Box 1450 NW-9744
Minneapolis, Minnesota 55485
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: WRAP TWO & Co.
Taxpayer I.D. Number: 41-0823832
I-32
<PAGE> 120
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
SERIES A SERIES B SERIES C SERIES D
<S> <C> <C> <C> <C>
AMERICAN CENTURION LIFE $500,000 -0- -0- -0-
ASSURANCE COMPANY
c/o American Express Financial Corporation
3000 IDS Tower--10
Minneapolis, Minnesota 55440
Attention: Director--Senior Securities Research, Research Department
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A, due 2006 PPN: 729237
A# 4 and principal or interest") to:
Chase NYC/Cust/American Centurion Life Assurance Company
ABA #021-000-021
Account GO5342
Notices
All notices of payments on or in respect of the Notes and written confirmation
of each such payment to:
Chase Manhattan Bank
Worldwide Insurance Securities Service
One Chase Manhattan Plaza, Floor 3B
New York, New York 10081
Attn: 3CMC-6th Floor
All notices and communications other than those in respect to payments to be
addressed as first provided above.
Name of Nominee in which Notes are to be issued: CUDD & Co.
Taxpayer I.D. Number 13-6022143
I-33
<PAGE> 121
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
Nationwide Life Insurance SERIES A SERIES B SERIES C SERIES D
Company $6,000,000 -0- -0- -0-
One Nationwide Plaza
Columbus, Ohio 43215-2220
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A due 2006, PPN: 729237
A# 4 and principal or interest") to:
The Bank of New York
ABA #021-000-018
BNF: IOC566
F/A/O Nationwide Life Insurance Company
Attention: P&I Department
Notices
All notices of payment on or in respect of the Notes and written confirmation of
each such payment to:
Nationwide Life Insurance Company
c/o The Bank of New York
P. O. Box 19266
Newark, New Jersey 07195
Attention: P&I Department
With a copy to:
Nationwide Life Insurance Company
One Nationwide Plaza (1-32-05)
Columbus, Ohio 43215-2220
Attention: Investment Accounting
I-34
<PAGE> 122
All notices and communications other than those in respect to payments to be
addressed:
Nationwide Life Insurance Company
One Nationwide Plaza (1-33-07)
Columbus, Ohio 43215-2220
Attention: Corporate Fixed-Income Securities
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 31-4156830
I-35
<PAGE> 123
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
Providian Life and Health SERIES A SERIES B SERIES C SERIES D
Insurance Company $5,000,000 -0- -0- -0-
c/o Providian Capital Management
400 West Market Street
P.O. Box 32830
Louisville, Kentucky 40202
Attention: Securities Department, 10th Floor
Telefacsimile: (502) 560-2030
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A due 2006, PPN: 729237
A# 4 and principal or interest") to:
Bankers - NYC
ABA No. 021-001-033
Account No. 99-911-145
for further credit to: Providian Life & Health Insurance Company
Account No. 099159
Notices
Contemporaneous with the above wire transfer, advice setting forth (1) the full
name, interest rate and maturity date of the bond or note; (2) allocation of
payment between principal and interest; and (3) name and address of bank from
which wire transfer was sent, should be mailed to:
Attention: Securities Processing - 11th Floor
Providian Life and Health Insurance Company
c/o Providian Capital Management
400 West Market Street
Louisville, Kentucky 40202
All other notices and communications to be addressed as first provided above.
Name of Nominee in which Notes are to be issued: KINSAT
I-36
<PAGE> 124
Taxpayer I.D. Number for Providian Life & Health Insurance Company: 43-0378030
Taxpayer I.D. Number for KINSAT: 13-2839318
I-37
<PAGE> 125
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
The Union Central Life SERIES A SERIES B SERIES C SERIES D
Insurance Company $3,000,000 -0- -0- -0-
c/o Carillon Advisors Inc.
1876 Waycross Road
Cincinnati, Ohio 45240
Attention: Mr. Gary Rodmaker
Telefacsimile: (513) 595-2843
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A due 2006, PPN: 729237
A# 4 and principal or interest") to:
Hare BNF/IOC 566
New York, New York
ABA #021-000-018
for credit to: The Union Central Life Insurance Company
Account # 367614
Attention: P&I Department
Subject: Plum Creek 7.74% Senior Notes, Series A due 2006
Notices
All notices with respect to payment shall be addressed to:
The Union Central Life Insurance Company
Post Office Box 179
Cincinnati, Ohio 45201
Attention: Treasury Department
Telefacsimile: (513) 595-2843
All notices with respect to all other communications to be addressed as first
provided above.
Name of Nominee in which Notes are to be issued: Hare & Co.
Taxpayer I.D. Number for Union Central Life: 31-0472910
Taxpayer I.D. Number for Hare & Co.: 13-6062916
I-38
<PAGE> 126
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
RGA Reinsurance Company SERIES A SERIES B SERIES C SERIES D
(GUARANTY LIFE INSURANCE COMPANY, -0- -0- $980,000 -0-
as agent)
660 Major Ridge Center Drive
St. Louis, Missouri 63141-8557
Attention: Carl Greiner
Telefacsimile: (314) 453-7464
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.97% Senior Notes, Series C due 2011, PPN: 729237
B@ 5 and principal or interest") to:
State Street Bank and Trust Company
ABA #0100 0002 8
DTC #997
State Street Portfolio #: EQ3I
DDA #2894 614 3
Contact Person: Mark Kelly (617) 985-6444
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 43-1235868
I-39
<PAGE> 127
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
GUARANTEE LIFE Series A Series B Series C Series D
INSURANCE COMPANY -0- -0- $420,000 -0-
One Guarantee Centre
8801 Indian Hills Drive
Omaha, Nebraska 68114-4066
Attention: Investment Division
Telefacsimile: (402) 361-7400
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.97% Senior Notes, Series C due 2011, PPN: 729237
B@ 5 and principal or interest") to:
State Street Bank and Trust Company
ABA #0100 0002 8
DTC #997
State Street Portfolio #: EQ3H
DDA #2894 614 3
Contact Person: Mark Kelly (617) 985-6444
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0179235
I-40
<PAGE> 128
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
AMERITAS LIFE INSURANCE CORP. Series A Series B Series C Series D
5900 "O" STREET -0- $1,250,000 -0- -0-
Lincoln, Nebraska 68510-2234
Attention: James Mikus
Telefacsimile: (402) 467-6970
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.87% Senior Notes, Series B due 2008,
PPN: 729237 B* 7 and principal or interest") to:
First Bank Nebraska, NA
ABA # 104-000-029
Ameritas Life Insurance Corp.
Account # 1-494-0070-0188
Re: Description of Note; Principal and Interest Breakdown with
sufficient information to identify the source and application of
such funds.
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above.
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0098400
I-41
<PAGE> 129
<TABLE>
<CAPTION>
NAME AND ADDRESS PRINCIPAL AMOUNT OF
OF PURCHASERS NOTES TO BE PURCHASED
<S> <C> <C> <C> <C>
Woodmen Accident and Life Series A Series B Series C Series D
Company $1,250,000 -0- -0- -0-
P.O. Box 82288
Lincoln, Nebraska 68501
Attention: Securities Division
Telefacsimile: (402) 437-4392
</TABLE>
Payments
All payments on or in respect of the Notes to be by bank wire transfer of
Federal or other immediately available funds (identifying each payment as "Plum
Creek Timber Company, L.P., 7.74% Senior Notes, Series A due 2006, PPN: 729237
A# 4 and principal or interest") to:
First Bank Nebraska, NA
13 and M Streets
Lincoln, Nebraska 68508
ABA #1040-000-29
for credit to:
Woodmen Accident and Life Company's General Fund
Account No. 1-494-0092-9092
Notices
All notices and communications, including notices with respect to payments and
written confirmation of each such payment, to be addressed as first provided
above; provided, however, all notices and communications delivered by overnight
courier shall be addressed as follows:
Woodmen Accident and Life Company
1526 K Street
Lincoln, Nebraska 68508
Attention: Securities Division
Name of Nominee in which Notes are to be issued: None
Taxpayer I.D. Number: 47-0339220
I-42
<PAGE> 130
PLUM CREEK TIMBER COMPANY, L.P.
____(1)% SENIOR NOTE, SERIES ___, DUE _____________(1)
NO. R-____
$_________ NOVEMBER ___, 1996
PPN: (3)
FOR VALUE RECEIVED, the undersigned, PLUM CREEK TIMBER COMPANY, L.P. (the
"Company"), a limited partnership duly organized under the Delaware Revised
Uniform Limited Partnership Act, hereby promises to pay to
_______________________________, or registered assigns, the principal sum of
__________________ DOLLARS on ________,(1) with interest (computed on the basis
of a 360-day year consisting of twelve 30-day months) (a) on the unpaid balance
thereof at the rate of _____(1)% per annum from the date hereof, payable on the
13th day of May and November in each year, commencing with the May 13 or
November 13 next succeeding the date hereof, until the principal hereof shall
have become due and payable, and (b) on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of premium and, to the
extent permitted by applicable law, any overdue payment of interest, payable
semiannually as aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of (i)
____(2)% or (ii) the rate of interest publicly announced by Morgan Guaranty
Trust Company of New York from time to time in New York City as its Prime Rate
plus 2.0%.
Payments of principal, premium, if any, and interest are to be made at
the main office of Morgan Guaranty Trust Company of New York in New York City or
at such other place as the holder hereof shall designate to the Company in
writing, in lawful money of the United States of America.
This Note is one of the Company's _____% Senior Notes, Series ___, due
_____________,(1) (the "Notes") issued pursuant to that certain Senior Note
Agreement, dated as of November 13, 1996 (the "Agreement"), between the Company
and the respective original purchasers of the Notes named in the Schedule I
attached thereto and is entitled to the benefits thereof. [As provided in the
Agreement, this Note is subject to prepayment, in whole or from time to time in
part, with such premium as is specified in the Agreement, and
- - ---------------------
(1) The Senior Notes will be issued in Series A, B, C and D, due November
13, 2006, November 13, 2008, November 13, 2011 and November 13, 2016,
respectively, and bearing interest at the rate per annum of 7.74%, 7.87%, 7.97%
and 8.05%, respectively.
(2) A rate equal to 1% over the interest rate borne by such series of
Senior Notes.
(3) Series A - 729237 A #4; Series B - 729237 B *7; Series C - 729237 B
@5; Series D - 729237 B #3.
EXHIBIT A
(to Senior Note Agreement)
<PAGE> 131
this Note is not otherwise subject to prepayment.](2) [As provided in the
Agreement, this Note is subject to certain scheduled prepayments of principal,
which the Company hereby agrees to make as provided in paragraph 4A(1) of the
Agreement, and in addition this Note is subject to prepayment, in whole or from
time to time in part, with such premium as is specified in the Agreement. This
Note is not otherwise subject to prepayment.](3)
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the registered
holder hereof or such holder's attorney duly authorized in writing, a new Note
for a like principal amount will be issued to, and registered in the name of,
the transferee. Prior to due presentment for registration of transfer, the
Company may treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes, and the
Company shall not be affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall occur and
be continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner and with the effect provided in the Agreement.
THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK, AND
THIS NOTE AND THE AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK.
PLUM CREEK TIMBER COMPANY, L.P.
By: Plum Creek Management Company,
L.P., its General Partner
By:
----------------------------------
Title
- - -------------
(2) To be included in Series A, B and C Notes.
(3) To be included in Series D Notes.
A-2
<PAGE> 132
PURCHASERS' SPECIAL COUNSEL'S OPINION
____________________, 1996
To the Purchasers listed on the
Schedule attached hereto:
Re: $200,000,000 Senior Notes, Series A, B, C and D
Due 2006-2016
of
Plum Creek Timber Company, L.P.
Ladies and Gentlemen:
We have acted as your special counsel in connection with your separate
purchases on the date hereof of $200,000,000 aggregate principal amount of the
Senior Notes, Series A, B, C and D due 2006-2016 (the "Notes") of Plum Creek
Timber Company, L.P., a Delaware limited partnership (the "Company"), issued
under and pursuant to the Senior Note Agreement dated as of November 13, 1996
(the "Note Agreement"), among the Company and each of you.
In that connection, we have examined the following:
(a) The Note Agreement;
(b) [charter documents of Company and General Partner];
(c) The opinion of James A. Kraft, Vice President, General Counsel
and Secretary of the Company, dated the date hereof and delivered
responsive to paragraph 3B of the Note Agreement;
(d) The Notes delivered on the date hereof;
(e) Such certificates of officers of the Company, its General
Partner and of public officials as we have deemed necessary to give the
opinions hereinafter expressed; and
(f) Such other documents and matters of law as we have deemed
necessary to give the opinions hereinafter expressed.
We believe that the opinion referred to in clause (c) above is
satisfactory in scope and form and that you are justified in relying thereon.
Our opinion as to matters referred to in paragraph 1 below is based solely upon
an examination of the Articles of Partnership of the
EXHIBIT B-1
(to Senior Note Agreement)
<PAGE> 133
Company and certificates of Company. We have also relied, as to certain factual
matters, upon appropriate certificates of public officials and officers of the
Company and its General Partner and upon representations of the Company and you
delivered in connection with the issuance and sale of the Notes.
Based upon the foregoing, we are of the opinion that:
1. The Company is a limited partnership, validly existing and in
good standing under the laws of the State of Delaware and has the power
and the authority to execute and deliver the Note Agreement and to issue
the Notes.
2. The Note Agreement has been duly authorized by all necessary
partnership action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and general principles of equity
(regardless of whether the application of such principles is considered
in a proceeding in equity or at law).
3. The Notes have been duly authorized by all necessary
partnership action on the part of the Company, and the Notes being
delivered on the date hereof have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting
creditors' rights generally, and general principles of equity (regardless
of whether the application of such principles is considered in a
proceeding in equity or at law).
4. The issuance and sale of the Notes and the execution and
delivery of the Agreement by the Vice President and Chief Financial
Officer of Plum Creek Management Company, L.P., the Company's general
partner, on behalf of the Company do not conflict with or result in a
breach of any provision of the Company's Amended and Restated Agreement
of Limited Partnership dated as of October 17, 1995.
5. The issuance, sale and delivery of the Notes under the
circumstances contemplated by the Note Agreement do not, under existing
law, require the registration of the Notes under the Securities Act of
1933, as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
Our opinion is limited to the laws of the State of New York, the Delaware
Revised Uniform Limited Partnership Act and the Federal laws of the United
States and we express no opinion on the laws of any other jurisdiction.
Respectfully submitted,
B-1-2
<PAGE> 134
_________________, 1996
To Each of the Purchasers
Listed on the Attached
Schedule of Purchasers
Re: Plum Creek Timber Company, L.P.
$200,000,000 Senior Notes Series A, B, C and D,
due 2006-2016
Dear Purchaser:
I am the Vice President, General Counsel and Secretary of Plum Creek
Management Company, L.P. (the "General Partner"), which serves as the general
partner of Plum Creek Timber Company, L.P., a Delaware limited partnership (the
"Company"). In such capacity I have acted as counsel to the Company and as such
I am familiar with transactions contemplated by the Senior Note Agreement, dated
as of November 13, 1996 (the "Note Agreement"), between the Company and the
purchasers listed in the attached Schedule of Purchasers (the "Purchasers").
Capitalized terms used in this opinion without definition have the respective
meanings specified in the Note Agreement.
In so acting, I have examined the following documents:
(a) the Notes; and
(b) the Note Agreement.
The Notes and the Note Agreement are sometimes herein collectively
referred to as the "Loan Documents". This opinion is being delivered to you
pursuant to paragraph 3B of the Note Agreement.
In such capacity, I have participated in the preparation of the Loan
Documents. For purposes of this opinion, I have (a) investigated such questions
of law, (b) examined such certificates of public officials and of officers of
the Company and other documents, as in my judgment are necessary or appropriate
to enable me to render the opinions expressed below, and (c) relied upon the
representations and warranties as to factual matters contained in or made
pursuant to the Loan Documents. In addition, I have, with your approval, assumed
(i) the genuineness of the signatures of Persons signing all Loan Documents in
connection with which this opinion is rendered on behalf of parties thereto
(other than Persons signing on behalf of the Company or the General Partner),
(ii) the authority of all Persons signing
EXHIBIT B-2
(to Senior Note Agreement)
<PAGE> 135
all documents on behalf of the parties thereto (other than Persons signing on
behalf of the Company or the General Partner), (iii) the authenticity of all
documents submitted to me as originals, (iv) the conformity to authentic
original documents of all documents submitted to me as certified, conformed or
photostatic copies, (v) that each of the parties to the Loan Documents other
than the Company has all requisite power and authority to execute, deliver and
perform the Loan Documents to which it is a party and (vi) the due
authorization, execution and delivery of the Loan Documents by all the parties
thereto other than the Company.
Based upon the foregoing, and subject to the further assumptions and
qualifications hereinafter set forth, I am of the opinion that:
1. The Company is a limited partnership duly organized, validly
existing and in good standing under the Delaware Revised Uniform Limited
Partnership Act and has all requisite partnership power and authority to
own and operate its properties, to conduct its business as currently
conducted, to execute and deliver the Loan Documents, to issue and sell
the Notes and to carry out the terms of the Note Agreement and the Notes.
The Company has been qualified or registered and is in good standing as a
foreign limited partnership for the transaction of business under the
laws of the States of Arkansas, Idaho, Louisiana, Montana, Texas and
Washington, which are the only jurisdictions in which the failure so to
qualify or register would be likely, in my reasonable judgment, to
subject the Company to any liability or disability which would be
material to the financial condition or operations of the Company or to
have a material adverse effect upon the ability of the Company to perform
its obligations under the Loan Documents.
2. The Note Agreement and the Notes have been duly authorized by
all necessary partnership action on the part of the Company. The Note
Agreement and the Notes have been duly executed and delivered on behalf
of the Company, and constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, subject to the qualifications that (a) such
enforceability may be limited by bankruptcy, insolvency, reorganization
and other similar laws of general applicability relating to or affecting
creditors' rights generally, (b) such enforceability may be limited by
public policy, and (c) the enforceability of equitable rights and
remedies is subject to equitable defenses and judicial discretion and
such enforceability may be limited by general equitable principles.
3. The Company is not in violation of any term of the Partnership
Agreement or, to my knowledge, of any term of any other agreement or
instrument to which it is a party or by which it or any of its properties
is bound or, to my knowledge, of any term of any applicable law,
ordinance, rule or regulation of any governmental authority or, to my
knowledge, of any term of any applicable order, judgment or decree of any
court, arbitrator or governmental authority, the consequences of which
violations, individually or in the aggregate, would be reasonably likely
to have a material adverse effect on its business, property or assets,
B-2-2
<PAGE> 136
condition or operations or on the ability of the Company to perform its
obligations under the Loan Documents. The execution, delivery and
performance by the Company of the Loan Documents will not result in any
violation of or be in conflict with or constitute a default under or
result in the creation of (or impose any obligation on the Company to
create) any Lien (other than the Liens required by paragraph 5C of the
Note Agreement) upon any of the properties of the Company pursuant to the
provisions of the Company's Partnership Agreement or (i) any other
agreement or instrument known to me (it being understood that all
agreements and instruments filed by the Company with the Securities and
Exchange Commission are known to me), to which the Company is a party or
by which the Company or any of its properties is bound, (ii) any term of
any applicable law, ordinance, rule or regulation of any governmental
authority, or (iii) to my knowledge any term of any applicable order,
judgment or decree of any court, arbitrator or governmental authority.
4. No consent, approval or authorization of, or declaration or
filing with, or the taking of any other action in respect of, any
commission, authority, governmental agency or body of the United States
of America or the State of Arkansas, Delaware, Idaho, Louisiana, Montana,
Texas or Washington is required for the valid execution, delivery and
performance by the Company of the Loan Documents or the valid offer,
issue, sale and delivery of the Notes pursuant to the Note Agreement
except such consents, approvals or authorizations as have been obtained
and such filings as may be required under state securities laws or Blue
Sky Laws in connection with the offer, issue, sale and delivery of the
Notes.
5. There are no legal or governmental proceedings to which the
Company is a party or to which any property or assets of the Company is
subject or which is pending or, to my knowledge, threatened against the
Company which questions the validity of the Loan Documents or any actions
pursuant thereto or which would be reasonably likely to result in any
material adverse change in the business, property or assets, condition or
operations of the Company.
6. The Company is not an "investment company" as defined under the
Investment Company Act of 1940, as amended, nor is the Company or the
issue and sale of the Notes by the Company subject to regulation
thereunder.
7. Based upon the representations of the Purchasers contained in
the Note Agreement and a letter dated November 13, 1996 from BA
Securities, Inc. to the Company, Andrews & Kurth, L.L.P., Perkins Coie
and Chapman and Cutler representing as to certain facts in connection
with the offer and sale of the Notes, the offer, issue, sale and delivery
of the Notes under the circumstances contemplated by the Note Agreement
constitute exempt transactions under the registration provisions of the
Securities Act of 1933, as amended, and neither the registration of the
Notes thereunder nor the qualification of an indenture in respect of the
Notes under the Trust Indenture Act of 1939, as amended, is required in
connection with such offer, issue, sale and delivery.
B-2-3
<PAGE> 137
8. Based upon the representation of the Company as to the use of
the proceeds of the Notes contained in the Note Agreement, the issue and
sale of the Notes do not violate Regulation G, T or X of the Board of
Governors of the Federal Reserve System.
The opinions expressed herein are based upon and limited exclusively to
the laws of the State of Washington, the Delaware Revised Uniform Limited
Partnership Act, and federal laws of the United States of America insofar as any
of such laws are applicable, and I render no opinion with respect to any other
laws, except that the opinions expressed in paragraphs 1, 2, 3 and 4 cover the
laws of the State of Delaware, New York, Arkansas, Idaho, Louisiana, Montana or
Texas, in each case, insofar as any such laws are applicable; provided that,
with respect to my opinions relating to the laws of Arkansas, Idaho, Louisiana,
Montana and Texas, please note that I am not licensed to practice law in those
states and such opinions are based solely upon a general review of the
partnership law and commercial law of those states and discussions with local
counsel in such states.
This opinion is solely for your benefit in connection with the
transactions contemplated by the Note Agreement and may not be relied upon by
any Person other than you or any transferee of any Note. This opinion is not to
be quoted in whole or in part or otherwise referred to (except in a list of
closing documents in connection with the transactions described herein), nor
shall it be filed with any governmental agency or other Person without my prior
written consent. I express no opinion with respect to any matter not expressly
set forth in this opinion.
Very truly yours,
------------------------------------
James A. Kraft, Vice President,
General Counsel and Secretary
B-2-4
<PAGE> 138
Liens
Mortgage, Security Agreement and Fixture Filings dated June 8, 1989
recorded in Flathead, Lake and Lincoln Counties, Montana as supplemented and
amended by Mortgage Recording Supplements and Security Agreement and Fixture
Filings dated January 1, 1991; and Deed of Trust, Security Agreement and Fixture
Filing dated June 8, 1989 recorded in Kittitas County, Washington; all of which
were executed by Plum Creek Manufacturing, Inc. in favor of Wells Fargo Bank,
National Association (as successor by merger to First Interstate Bank of
Washington, N.A.), as Trustee, to secure the indebtedness evidenced by the
Mortgage Note Agreement dated May 31, 1989 among Plum Creek Manufacturing, LP.
(as successor in interest to Plum Creek Manufacturing, Inc.) ("Manufacturing"),
Plum Creek Timber Company, L.P. as guarantor, and each of the purchasers of the
Mortgage Notes, as amended by (a) the Mortgage Note Agreement Amendment, Consent
and Waiver dated as of January 1, 1991, (b) the letter agreement dated April 22,
1993, (c) the Mortgage Note Agreement Amendment dated as of September 1, 1993,
(d) the Mortgage Note Agreement Amendment dated as of May 20, 1994, (e) the
Amendment to Mortgage Note Agreement dated as of June 15, 1995 and (f) the
Mortgage Note Agreements Amendment dated as of May 31, 1996 (as amended, the
"Mortgage Note Agreement"). As a result of Manufacturing's October 11, 1996 sale
of its sawmill near Colville, Washington, Manufacturing is required, pursuant to
the terms of the Mortgage Note Agreement, to grant to or secure for the benefit
of the Mortgage Note Agreement Trustee, a first mortgage lien on and first
priority perfected security interest in its sawmill in Huttig, Union County,
Arkansas, acquired as part of the Riverwood Assets.
EXHIBIT D
(to Senior Note Agreement)
<PAGE> 139
Plum Creek Timber Company, L.P.
Permitted Investments
1. Plum Creek Manufacturing, L.P. (98% interest)
2. Plum Creek Marketing, Inc. (96% interest)
3. Plum Creek Land Company (100% interest)
4. PCTC Limited Liability Company (100% interest, 99% direct and 1%
indirect)
5. For purposes of effecting the Company's 1031 tax deferred exchanges, PCTC
Limited Liability Company has made loans to the following purchasers of
real property from the Company, in the amounts listed below. Each of the
loans is evidenced by a Promissory Note secured by a Deed of Trust in
Favor of PCTC Limited Liability Company:
a. Jack McCann Co., Inc. ($229,059.00)
b. Jack McCann Co., Inc. ($300,945.00)
c. First South Properties, L.L.C. ($240,000.00)
d. Beaconsfield Associates II ($337,500.00)
e. Jeld-Wen, Inc. ($9,983,507.00)
6. In conjunction with the Company's in-woods chipping operations, the
Company has made loans or guaranteed loans to three of its contractors in
order that such contractors could purchase chipping equipment, in the
following amounts:
a. Knoles Fiber, L.L.C. (loan of $587,454.12)
b. Richards Logging, Inc. (loans of $541,636.00)
c. Joe A. McDougall and Robert Suhoversnik, dba M&S Logging
(guarantee of $568,516.00 promissory note)
EXHIBIT E
(to Senior Note Agreement)
<PAGE> 140
Environmental Notices
Environmental notices from Federal, State and Local Environmental
Agencies to the Company citing environmental violations that have not been
finally resolved and disposed of:
1. In June 1995, the Company received a Compliance Order ("Order") from
the Environmental Protection Agency ("EPA") under the Clean Air Act. The Order
alleges that the startup in 1990 of a boiler at the Company's Pablo sawmill did
not meet new source performance standards ("NSPS"). Work on the boiler project
commenced in March 1989, when NSPS did not apply to boilers of this size. Prior
to final startup of the boiler, however, new rules were proposed that, if
applicable, would have required meeting these standards. The EPA has taken the
position that the new rules applied, and is seeking compliance with NSPS. In
December 1995, the Company voluntarily installed a pollution control device and
an opacity monitor on the boiler at a cost of $700,000 without waiving any
defenses to the EPA claim. The Company believes it is in full compliance with
both the Order and NSPS. On March 12, 1996, the Department of Justice, on behalf
of the EPA, filed suit in federal court seeking civil penalties and injunctive
relief for the alleged violation of NSPS in accordance with the Clean Air Act
which contemplates civil penalties. The Company believes it has meritorious
defenses to the claim. However, due to the inherent nature of litigation, the
Company cannot predict the outcome of the enforcement case. If not resolved
earlier, it is likely that the matter will go to trial in 1997. The General
Partner believes, based upon available information and current EPA enforcement
policies, that the ultimate outcome of this action will not have a material
adverse effect on the Company's financial position, results of operations or
liquidity.
2. The Company has worked with the State of Washington Department of
Ecology ("DOE") concerning opacity above permitted levels associated with
emissions at the Arden Sawmill that may have occurred prior to the sale of the
mill described below. Prior to the sale of the Arden Sawmill, the Company
received a letter from DOE requesting information concerning such emissions. DOE
has not taken any other compliance actions with respect to this matter. As part
of the Newport Asset Sale, on October 11, 1996 the Company sold the Arden
Sawmill to Stimson Lumber Company, an Oregon corporation ("Stimson"), and will
be required to indemnify Stimson for any liabilities that arise relating to the
period when the Company owned the Arden Sawmill. However, based upon its past
experience with similar compliance issues, the Company believes that this matter
will not materially affect the Company's financial position, results of
operations or liquidity.
3. The State of Washington Department of Ecology ("DOE") alleged in March
1990 that a release or threatened release of a hazardous substance had occurred
in an area designated "The Old Landsburg Mine," which is owned by Palmer Coking
Coal Company ("Palmer") and Plum Creek. Plum Creek and other parties are
required to respond to the DOE regarding a high priority clean up of the site
under the model Toxics Control Act. The Plum Creek portion of the site was
leased to Palmer from 1978 through 1983 by Burlington Northern Railroad and its
successors for disposal of certain demolition debris. From 1991 to the present,
Plum Creek has participated on a Potentially Liable Party ("PLP") task force
which cooperated with the DOE and voluntarily conducted removal of
EXHIBIT F
(to Senior Note Agreement)
<PAGE> 141
barrels and fencing from the site. In 1992, Plum Creek participated in
negotiations regarding an Agreed Order and in planning for a Remedial
Investigation/Feasibility Study ("RI/FS"). From 1993 to the present, Plum Creek
has participated in the ongoing RI/FS. Plum Creek does not believe it will be
ultimately liable for disposal of barrels or hazardous waste at the site and is
vigorously defending its position. Plum Creek believes that it is an innocent
landowner and that any liability will ultimately be borne by the parties
responsible for the waste disposal. To the extent liability is assessed against
Plum Creek as a landowner, the Company believes that Palmer, by virtue of the
terms of the lease, and/or Burlington Northern Inc., by virtue of an indemnity
contained in the deed that transferred the property to Plum Creek, will be
responsible. It is not known at this time what the cost of ultimate cleanup will
be or what portion, if any, will be funded by Plum Creek.
F-2
<PAGE> 142
Other Subsidiaries
Plum Creek Land Company (100% interest)
PCTC Limited Liability Company (100% direct and indirect interest)
Plum Creek Foreign Sales Corporation (inactive Guam corporation) (100% interest
held by Plum Creek Marketing, Inc.)
Plum Creek Remanufacturing, Inc. (a Washington corporation) (100% interest held
by Plum Creek Marketing, Inc.)
Plum Creek Remanufacturing Joint Venture (50% general partner interest)
EXHIBIT 8C
(to Senior Note Agreement)
<PAGE> 143
Subsequent to December 31, 1995, neither the Company nor the Facilities
Subsidiary has incurred any material liabilities or obligations or entered into
any material transactions not in the ordinary course of business, other than the
Company's sale of the Newport Assets and acquisition of the Riverwood Assets,
including the financing thereof, all as described in the Placement Memorandum
dated October 1996.
Subsequent to December 31, 1995, there has not been any material adverse
change in the financial condition or operations of the Company or the Facilities
Subsidiary.
Subsequent to December 31, 1995, there have been the following Restricted
Payments declared, paid or made by the Company:
1. Fourth Quarter 1995 Distribution of Available Cash in the
amount of $25.9 million paid to Unitholders in the first quarter of 1996;
2. First Quarter 1996 Distribution of Available Cash in the amount
of $25.9 million paid to Unitholders in the second quarter of 1996;
3. Second Quarter 1996 Distribution of Available Cash in the
amount of $27.2 million paid to Unitholders in the third quarter of 1996;
4. Third Quarter 1996 Distribution of Available Cash in the amount
of $31.0 million payable to Unitholders on November 29, 1996.
EXHIBIT 8G
(to Senior Note Agreement)
<PAGE> 144
The Company's title to the timberlands it acquired during its formation
in 1989 includes the related hard rock mineral interests. However, the Company
did not obtain the hard rock mineral interest to most of the 865,000 acres of
timberland purchased in 1993 from Champion International Corporation. In
addition, the Company does not own oil and gas mineral interests to any of its
timberlands. The title to the Company's timberlands is subject to presently
existing easements, rights of way, flowage and flooding rights, servitudes,
cemeteries, camping sites, hunting and other leases, licenses and permits, none
of which materially adversely affect the value of the timberlands or materially
restrict the harvesting of timber or other operations of the Company.
EXHIBIT 8K
(to Senior Note Agreement)
<PAGE> 145
NONE
EXHIBIT 8T
(to Senior Note Agreement)
<PAGE> 146
April 5, 1993
Corporate Investment Policy
I. Objective
This policy provides guidelines for the management of the Company's cash.
It is essential that these assets be invested in a high quality portfolio which:
o Preserves principal
o Meets liquidity needs
o Allows for appropriate diversification of investments
o Delivers good yield in relationship to the guidelines and
market conditions
The Company is adverse to incurring market risk or credit risk, and will
generally sacrifice yield in the interest of safety. Care must always be taken
to insure that the Company's reported financial statements are never materially
affected by decreases in the market value of securities held.
II. Maturity or Put
Within the constraints provided throughout this document, or by addendum
to this document, the maximum maturity or put of any investment instrument will
be within two years from the purchase settlement date; however, the total
portfolio must have an average maturity of less than 12 months.
III. Permissible Investments
A. Investments will be made in U.S. dollars only.
B. The Company may own, purchase or acquire marketable direct obligations
in the following:
1. Obligations (fixed and floating rate) issued by, or
unconditionally guaranteed by the U.S. Treasury, or any agency thereof,
or issued by any political subdivision of any state or public agency.
2. Commercial paper rated as A-1 or better by Standard & Poor's,
and P-1 or better by Moody's (or equivalent).
EXHIBIT 10B(1)
(to Senior Note Agreement)
<PAGE> 147
3. Floating rate and fixed rate obligations of corporations, banks
and agencies including: medium term notes and bonds, deposit notes, and
euro dollar/yankee notes and bonds.
4. Certificates of deposit, bankers acceptances and time deposits
of commercial banks, domestic or foreign, whose short term credit ratings
are A-1/P-1 (or equivalent).
5. Repurchase agreements collateralized by U.S. Treasury and
agency securities.
6. Insurance company Funding Agreements, Investment Contracts, or
similar obligations.
7. Asset backed and mortgage backed securities.
8. Master Notes.
9. Taxable money market preferreds.
10. Tax exempt securities including municipal bonds/notes, money
market preferreds, and variable rate demand notes.
C. Issuing institutions shall be Corporations, Trusts, Partnerships, and
Banks domiciled in the U.S., Canada, Japan and Western Europe, or Insurance
Companies domiciled in the U.S.
IV. Credit Requirements
Safety shall always be a primary consideration in structuring the
Company's investment portfolio. Credit ratings should be tied to duration as
prescribed below in order to combine safety, liquidity and acceptable market
performance:
MINIMUM CREDIT RATING
DURATION S&P Moody's
6 months or less A- A3
6 - 18 months AA Aa2
18 months or more AAA Aaa
Original issue securities allowable under this policy with less than
twelve months to maturity may substitute the issuers, short term credit rating
if that rating is A-1/P-1 or better.
-2-
<PAGE> 148
V. Diversification
To diversify risk, no more than $2 million or 10% of the portfolio can be
invested with any one issuer. Exceptions are issues of the U.S. Treasury or
agency securities, insured or government collateralized issues and daily money
market funds.
-3-
<PAGE> 1
EXHIBIT 10.1
REVOLVING CREDIT AND BRIDGE LOAN
AGREEMENT
Dated as of October 17, 1996
among
PLUM CREEK TIMBER COMPANY, L.P.
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Table of Schedules and Exhibits..............................................vi
1. Definitions................................................................1
1.1 Defined Terms.......................................................1
1.2 Other Interpretive Provisions......................................32
1.3 Accounting Principles..............................................33
2. The Credits...............................................................34
2.1 Amounts and Terms of Revolving Commitments.........................34
2.2 Amounts and Terms of Bridge Commitments............................34
2.3 Loan Accounts......................................................34
2.4 Procedure for Borrowing Revolving Loans............................35
2.5 Procedure for Borrowing Bridge Loans...............................36
2.6 Conversion and Continuation Elections for Borrowings...............37
2.7 Voluntary Termination or Reduction of Commitments..................38
2.8 Optional Prepayments...............................................39
2.9 Mandatory Prepayments of Loans; Mandatory Commitment Reductions....39
2.10 Repayment.........................................................42
2.11 Interest..........................................................42
2.12 Swingline Loans...................................................43
2.13 Fees..............................................................45
2.14 Computation of Fees and Interest..................................46
2.15 Payments by the Company...........................................46
2.16 Payments by the Banks to the Agent................................47
2.17 Sharing of Payments, Etc..........................................48
2.18 Loan Tranches.....................................................49
3. The Letters Of Credit.....................................................50
3.1 The Letter of Credit Facility......................................50
3.2 Issuance, Amendment and Renewal of Letters of Credit...............51
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
3.3 Risk Participations, Drawings and Reimbursements...................54
3.4 Repayment of Participations........................................56
3.5 Role of the Issuing Bank...........................................56
3.6 Obligations Absolute...............................................57
3.7 Cash Collateral Pledge.............................................58
3.8 Letter of Credit Fees..............................................59
3.9 Uniform Customs and Practice.......................................59
4. Taxes, Yield Protection And Illegality....................................60
4.1 Taxes..............................................................60
4.2 Illegality.........................................................63
4.3 Increased Costs and Reduction of Return............................63
4.4 Funding Losses.....................................................64
4.5 Inability to Determine Rates.......................................65
4.6 Certificate of Bank................................................65
4.7 Survival...........................................................65
5. Conditions Precedent......................................................66
5.1 Conditions of Initial Credit Extensions............................66
5.2 Conditions to All Credit Extensions................................68
6. Representations And Warranties............................................69
6.1 Corporate Existence and Power......................................69
6.2 Authorization; No Contravention....................................69
6.3 Governmental Authorization.........................................70
6.4 Binding Effect.....................................................70
6.5 Litigation.........................................................70
6.6 No Default.........................................................71
6.7 ERISA Compliance...................................................71
6.8 Use of Proceeds; Margin Regulations................................73
6.9 Title to Properties................................................73
6.10 Taxes.............................................................73
6.11 Financial Condition...............................................73
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
6.12 Environmental Matters.............................................74
6.13 Regulated Entities................................................75
6.14 No Burdensome Restrictions........................................75
6.15 Solvency..........................................................75
6.16 Labor Relations...................................................75
6.17 Copyrights, Patents, Trademarks and Licenses, Etc.................75
6.18 Subsidiaries......................................................76
6.19 Partnership Interests.............................................76
6.20 Broker's, Transaction Fees........................................76
6.21 Insurance.........................................................76
6.22 Full Disclosure...................................................77
7. Affirmative Covenants.....................................................77
7.1 Financial Statements...............................................77
7.2 Certificates; Other Information....................................78
7.3 Notices............................................................79
7.4 Preservation of Partnership Existence, Etc.........................81
7.5 Maintenance of Property............................................81
7.6 Insurance..........................................................81
7.7 Payment of Obligations.............................................82
7.8 Compliance with Laws...............................................82
7.9 Inspection of Property and Books and Records.......................82
7.10 Environmental Laws................................................83
7.11 Use of Proceeds...................................................83
7.12 Solvency..........................................................83
8. Negative Covenants........................................................83
8.1 Limitation on Liens................................................83
8.2 Merger; Disposition of Assets......................................85
8.3 Harvesting Restrictions............................................88
8.4 Loans and Investments..............................................89
8.5 Limitation on Indebtedness.........................................90
8.6 Transactions with Affiliates.......................................93
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
8.7 Use of Proceeds....................................................93
8.8 Sale of Stock and Indebtedness of Subsidiaries.....................94
8.9 Certain Contracts..................................................94
8.10 Joint Ventures....................................................95
8.11 Compliance with ERISA.............................................95
8.12 Sale and Leaseback................................................96
8.13 Restricted Payments...............................................96
8.14 Change in Business................................................97
8.15 Issuance of Stock by Subsidiaries.................................97
8.16 Amendments........................................................97
8.17 Available Cash....................................................98
8.18 Interest Coverage Ratio...........................................98
9. Events Of Default.........................................................99
9.1 Event of Default...................................................99
9.2 Remedies..........................................................102
9.3 Rights Not Exclusive..............................................103
10. The Agent...............................................................103
10.1 Appointment and Authorization....................................103
10.2 Delegation of Duties.............................................104
10.3 Liability of Agent...............................................104
10.4 Reliance by Agent................................................104
10.5 Notice of Default................................................105
10.6 Credit Decision..................................................105
10.7 Indemnification of Agent.........................................106
10.8 Agent in Individual Capacity.....................................107
10.9 Successor Agent..................................................107
11. Miscellaneous...........................................................108
11.1 Amendments and Waivers...........................................108
11.2 Notices..........................................................109
11.3 No Waiver; Cumulative Remedies...................................110
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
11.4 Costs and Expenses...............................................110
11.5 Indemnity........................................................110
11.6 Marshalling; Payments Set Aside..................................111
11.7 Successors and Assigns...........................................111
11.8 Assignments, Participations, Etc.................................111
11.9 Set-off..........................................................115
11.10 Automatic Debits of Fees........................................115
11.11 Notification of Addresses, Lending Offices, Etc.................115
11.12 Counterparts....................................................115
11.13 Severability....................................................116
11.14 No Third Parties Benefited......................................116
11.15 Time............................................................116
11.16 Governing Law and Jurisdiction..................................116
11.17 Arbitration; Reference..........................................116
11.18 Entire Agreement................................................117
</TABLE>
v
<PAGE> 7
TABLE OF SCHEDULES AND EXHIBITS
Schedules
Schedule 1.1 -- Corporate Investment Policy
Schedule 2.1 -- Commitments
Schedule 6.7 -- Plans
Schedule 6.12 -- Environmental Matters
Schedule 6.18 -- Subsidiaries
Schedule 8.1 -- Permitted Liens
Schedule 8.4 -- Permitted Investments
Schedule 11.2 -- Addresses for Notices, Domestic and Offshore
Lending Offices
Exhibits
Exhibit A -- Notice of Borrowing
Exhibit B -- Notice of Conversion/Continuation
Exhibit C-1 -- Legal Opinion of Counsel for the Company
Exhibit C-2 -- Legal Opinion of Perkins Coie
Exhibit D -- Compliance Certificate
Exhibit E --Form of Cash Collateral Account Agreement
Exhibit F -- Form of Assignment and Acceptance Agreement
vi
<PAGE> 8
REVOLVING CREDIT AND BRIDGE LOAN AGREEMENT
This REVOLVING CREDIT AND BRIDGE LOAN AGREEMENT is entered into as of
October 17, 1996, among PLUM CREEK TIMBER COMPANY, L.P., a Delaware limited
partnership (the "Company"), the several financial institutions from time to
time party to this Agreement (collectively, the "Banks"; individually, a
"Bank"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a letter
of credit issuing bank and as agent for the Banks.
WHEREAS, the Banks have agreed to make available to the Company a bridge
loan and a revolving credit facility with a letter of credit subfacility upon
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, the parties agree as follows:
1. DEFINITIONS
1.1 DEFINED TERMS
In addition to the terms defined elsewhere in this Agreement, the
following terms have the following meanings:
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of 5% or more of
the equity of a Person shall for the purposes of this Agreement, be deemed to
control the other Person. Notwithstanding the foregoing, no Bank shall be deemed
an "Affiliate" of the Company or of any Subsidiary of the Company.
"Agent" means BofA in its capacity as agent for the Banks hereunder, and
any successor agent.
"Agent's Payment Office" means the address for payments set forth on
Schedule 11.2 in relation to the Agent or such other address as the Agent may
from time to time specify in accordance with Section 11.2.
"Agent-Related Persons" means BofA, the Arranger, and any successor agent
arising under Section 10.9 and any successor to BofA as letter of credit issuing
bank or Swingline Bank hereunder, together with their respective Affiliates, and
1
<PAGE> 9
the officers, directors, employees, agents and attorneys-in-fact of such Persons
and Affiliates.
"Aggregate Revolving Commitment" means the combined Revolving Commitments
of the Banks, in the initial amount of four hundred million dollars
($400,000,000), as such amount may be reduced from time to time pursuant to this
Agreement.
"Agreement" means this Agreement, as amended from time to time in
accordance with the terms hereof.
"Applicable Margin" means, in respect of all Loans outstanding on any date
(A) for the period from the Closing Date through the earlier of (i) the Equity
Closing and (ii) March 31, 1997, 0.5500% for Offshore Rate Loans and 0.0000% for
Base Rate Loans, (B) from the calendar day after the Equity Closing through
March 31, 1997, 0.4500% for Offshore Rate Loans and 0.0000% for Base Rate Loans,
and (C) from April 1, 1997, the percentage specified below opposite the Interest
Coverage Ratio (which ratio shall be calculated on a four quarter rolling basis
for the relevant fiscal quarter) calculated for the periods described below.
<TABLE>
<CAPTION>
================================================================================
INTEREST COVERAGE RATIO AT END OF APPLICABLE MARGIN
FISCAL QUARTER
- - --------------------------------------------------------------------------------
Offshore Rate Base Rate
- - --------------------------------------------------------------------------------
<S> <C> <C>
Greater than or equal to 4.0 0.3500% 0.0000%
- - --------------------------------------------------------------------------------
Less than 4.0 but greater than or equal to 3.7 0.4000% 0.0000%
- - --------------------------------------------------------------------------------
Less than 3.7 but greater than or equal to 3.4 0.4500% 0.0000%
- - --------------------------------------------------------------------------------
Less than 3.4 but greater than or equal to 3.1 0.5500% 0.0000%
- - --------------------------------------------------------------------------------
Less than 3.1 but greater than or equal to 2.8 0.6500% 0.0000%
- - --------------------------------------------------------------------------------
Less than 2.8 but greater than or equal to 2.5 0.8750% 0.0000%
- - --------------------------------------------------------------------------------
Less than 2.5 1.1250% 0.0000%
================================================================================
</TABLE>
2
<PAGE> 10
The Applicable Margin for each fiscal quarter commencing on and after April
1, 1997 shall be calculated in reliance on the financial reports delivered
pursuant to subsections 7.1(a) and 7.1(c) and the certificate delivered pursuant
to subsection 7.2(b) with respect to the fiscal quarter ending one fiscal
quarter before the fiscal quarter in question (e.g., June 30 financials
determine the Applicable Margin for the fiscal quarter beginning October 1). If
the Company fails to deliver such financial reports and certificate to the Agent
for any fiscal quarter by the beginning of the next succeeding fiscal quarter
(e.g., by October 1 for the fiscal quarter ending June 30), then the Applicable
Margin for the following fiscal quarter (e.g., October 1 through December 31)
shall equal the next higher Applicable Margin as set forth in the chart above
immediately below the previously effective Applicable Margin; thus if the
Applicable Margin had previously been 0.6500% for Offshore Rate Loans and
0.0000% for Base Rate Loans, a failure to deliver quarterly financials by the
first day of the next fiscal quarter would cause the Applicable Margin to be
0.8750%, 1.000% and 0.0000%, respectively, for the duration of that quarter. In
addition, if such financial reports and certificate when delivered indicate that
the Applicable Margin for such period should have been higher than the
Applicable Margin provided for in the previous sentence, then the Company shall
pay on the date of delivery of such financial reports and certificate an amount
equal to the positive difference, if any, between the interest that the Company
should have paid hereunder had the financial reports and certificate been
delivered on a timely basis over what the Company actually paid. The Applicable
Margin shall be adjusted automatically as to all Loans then outstanding (without
regard to the timing of Interest Periods) as of the effective date of any change
in the Applicable Margin.
"Arranger" means BA Securities, Inc., a Delaware corporation.
"Assignee" has the meaning specified in subsection 11.8(a).
"Assignment and Acceptance" has the meaning specified in subsection
11.8(a).
"Attorney Costs" means and includes all fees and disbursements of any law
firm or other external counsel, the allocated cost of internal legal services
and all disbursements of internal counsel.
"Available Cash" means, with respect to any calendar quarter, (i) the sum
of:
(a) the Company's net income (or net loss) (excluding gain on the sale of
any Capital Asset) for such quarter,
(b) the amount of depletion, depreciation, amortization and other noncash
charges utilized in determining net income of the Company for such quarter,
3
<PAGE> 11
(c) the amount of any reduction in reserves of the Company of the types
referred to in clause (ii)(d) below,
(d) proceeds received by the Company from the sale of Designated Acres, and
(e) any Cash from Capital Transactions received by the Company during such
quarter in specific contemplation that such Cash from Capital Transactions will
be used to refund or refinance any payment of Indebtedness of the type specified
in clause (ii)(a) below which was made in either of the two immediately
preceding quarters,
less (ii) the sum of:
(a) all payments of principal on Indebtedness made by the Company in such
quarter (excluding any payments of principal on Indebtedness made with Cash from
Capital Transactions received by the Company during such quarter or, to the
extent such Cash from Capital Transactions remains available, received by the
Company during the four immediately preceding quarters),
(b) capital expenditures made by the Company during such quarter
(excluding any capital expenditures for such quarter made with Cash from Capital
Transactions received by the Company during such quarter or, to the extent such
Cash from Capital Transactions remains available, received by the Company during
the four immediately preceding quarters, and capital expenditures which the
General Partner reasonably anticipates will be financed with Cash from Capital
Transactions within 90 days from the end of such quarter),
(c) the amount of any capital expenditures made by the Company in a prior
quarter which was anticipated would be financed from Cash from Capital
Transactions but which have not been financed from such source within 90 days
from the end of such quarter,
(d) the amount of any reserves of the Company established during such
quarter which are necessary or appropriate (1) to provide funds for the future
payment of items of the types specified in clauses (ii)(a) and (ii)(b) above,
(2) to provide additional working capital, (3) to provide funds for cash
distributions with respect to any one or more of the next four quarters, or (4)
to provide funds for the future payment of interest in an amount equal to the
interest to be accrued in the next quarter,
(e) the amount of any noncash items of income utilized in determining net
income of the Company for such quarter,
(f) the amount of any Investments (other than guarantees, contingent
liabilities or endorsements, except to the extent payments are actually made
under
4
<PAGE> 12
such guarantees, contingent liabilities or endorsements) made by the
Company during such quarter pursuant to subsections 8.4(a), (h) or (i) (or in
the case of any Subsidiary, Investments (other than guarantees, contingent
liabilities or endorsements, except to the extent payments are actually made
under such guarantees, contingent liabilities or endorsements) of similar type)
to the extent not included in capital expenditures or payments on principal on
Indebtedness made by the Company during such quarter (excluding any such
Investments for such quarter made with Cash from Capital Transactions received
by the Company during such quarter or, to the extent such Cash from Capital
Transactions remains available, received by the Company during the four
immediately preceding quarters, and Investments which the General Partner
reasonably anticipates will be financed with Cash from Capital Transactions
within 90 days from the end of such quarter), and
(g) the amount of any Investments (other than guarantees, contingent
liabilities or endorsements, except to the extent payments are actually made
under such guarantees, contingent liabilities or endorsements) made by the
Company in a prior quarter pursuant to subsections 8.4(a), (h) or (i) (or in the
case of any Subsidiary, Investments (other than guarantees, contingent
liabilities or endorsements, except to the extent payments are actually made
under such guarantees, contingent liabilities or endorsements) of similar type)
to the extent not included in capital expenditures made by the Company during
such quarter which was anticipated would be financed from Cash from Capital
Transactions but which have not been financed from such source within 90 days
from the end of such quarter.
Notwithstanding the foregoing, "Available Cash" shall not take into
account any reductions in reserves or disbursements made or reserves established
after commencement of the dissolution and liquidation of the Company. In
determining "Available Cash," (i) all items under clauses (i)(a), (b), (c), (d)
and (e) above and all items under clauses (ii)(a), (b), (c), (d), (e), (f) and
(g) above shall be calculated on a combined basis with any Subsidiary of the
Company whose income is accounted for on a consolidated or combined basis with
the Company and, in accordance therewith, "Available Cash" shall include a
percentage of each such item of each such Subsidiary equal to the Company's
percentage ownership interest in such Subsidiary, provided, however, that the
items under clauses (i)(a), (b), (c), (d) and (e) above shall only be included
in Available Cash to the extent that the General Partner determines such amount
to be legally available for dividends or distributions to the Company by such
Subsidiary; (ii) the amount of net income and the amount of depletion,
depreciation, amortization and other noncash charges utilized in determining net
income shall be determined, with respect to the Company, by the General Partner
in accordance with generally accepted accounting principals and, with respect to
any Subsidiary, by its Board of Directors (or by such other body or person which
has the ultimate management authority of such Subsidiary) in accordance with
generally accepted accounting principles; (iii) the
5
<PAGE> 13
net income of any Subsidiary shall be determined on an after-tax basis; (iv) the
amount of any reductions in, or additions to, reserves for purposes of clauses
(i)(c) and (ii)(d) above shall be determined, with respect to the Company, by
the General Partner in its reasonable good faith judgment and, with respect to
any Subsidiary, by its Board of Directors (or by such other body or person which
has the ultimate management authority of such Subsidiary) in its reasonable good
faith judgment; and (v) any determination of whether any capital expenditures or
Investments are financed, or anticipated to be financed, with Cash from Capital
Transactions for purposes of clause (ii)(b) or (ii)(f) above shall be made, with
respect to the Company, by the General Partner in its reasonable good faith
judgment and, with respect to any Subsidiary, by its Board of Directors (or by
such other body or person which has the ultimate management authority of such
Subsidiary) in its reasonable good faith judgment.
"Bank" has the meaning specified in the introductory clause hereto.
References to the "Banks" shall include BofA in its capacity as a Swingline Bank
and an Issuing Bank, for purposes of clarification only, to the extent that BofA
may have any rights or obligations in addition to those of the Banks due to its
status as a Swingline Bank or an Issuing Bank, its status as such will be
specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of:
(a) the rate of interest in effect for such day as publicly announced from
time to time by BofA in San Francisco, California, as its "reference rate." It
is a rate set by BofA based upon various factors including BofA's costs and
desired return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above, or below
such announced rate; and
(b) 0.50% per annum above the latest Federal Funds Rate.
Any change in the reference rate announced by BofA shall take effect at the
opening of business on the day specified in the public announcement of such
change.
"Base Rate Loan" means a Loan or an L/C Advance that bears interest based
on the Base Rate.
"BofA" means Bank of America National Trust and Savings Association, a
national banking association.
6
<PAGE> 14
"Board Foot" means a unit of measurement one foot square and one inch
thick.
"Borrowing" means a borrowing hereunder consisting of Loans of the same
Type made to the Company on the same day by the Banks, or a Swingline Loan or
Loans made to the Company on the same day by the Swingline Bank, in each case
pursuant to Article II, and, other than in the case of Base Rate Loans, having
the same Interest Period.
"Bridge Commitment" has the meaning specified in Section 2.2.
"Bridge Loan" has the meaning specified in Section 2.2 and may be an
Offshore Rate Loan or a Base Rate Loan.
"Bridge Termination Date" means April 17, 1998.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks in New York City or San Francisco are authorized or
required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or directive of
any central bank or other Governmental Authority, or any other law, rule or
regulation, whether or not having the force of law, in each case, regarding
capital adequacy of any bank or of any corporation controlling a bank.
"Capital Asset" means any asset on the Company's or any Subsidiary's
balance sheet, as the case may be, other than inventory, accounts receivable or
any other current asset and assets disposed of in connection with normal
retirements or replacements.
"Capital Expenditure Tranche" has the meaning specified in Section 2.18.
"Capital Expenditure Tranche Loan" means a Loan allocated by the Company to
the Capital Expenditure Tranche as provided in Section 2.18.
"Capital Lease" has the meaning specified in the definition of "Capital
Lease Obligations."
"Capital Lease Obligations" means all monetary obligations of the Company
or any of its Subsidiaries under any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease ("Capital Lease").
"Capital Transaction" means (i) borrowings and sales of debt securities
(other than for working capital purposes and other than for items purchased on
open
7
<PAGE> 15
account in the ordinary course of business) by the Company, (ii) sales of equity
interests by the Company and (iii) sales or other voluntary or involuntary
dispositions of any assets of the Company (other than (x) sales or other
dispositions of inventory in the ordinary course of business, (y) sales or other
dispositions of other current assets including receivables and accounts and (z)
sales or other dispositions of assets as a part of normal retirements or
replacements), in each case prior to the commencement of the dissolution and
liquidation of the Company, provided that in determining Cash from Capital
Transactions, items (i), (ii) and (iii) above shall include, with respect to
each Subsidiary of the Company whose income is accounted for on a consolidated
or combined basis with the Company, a percentage of each such item of such
Subsidiary equal to the Company's percentage ownership interest in such
Subsidiary.
"Cash Collateral Account Agreement" means an agreement or agreements
entered into between the Company and the Agent substantially in the form of
Exhibit E.
"Cash Collateralize" means to pledge and deposit with or deliver to the
Agent, for the benefit of (i) in the case of L/C Obligations, the Agent, the
Issuing Banks and the Banks, (ii) in the case of Offshore Rate Loans, the Agent
and the Banks, and (iii) in the case of Swingline Loans, the Agent, the
Swingline Bank and the Banks, in each case as collateral for the L/C
Obligations, the Loans or the Swingline Loans, as the case may be, cash or
deposit account balances pursuant to a Cash Collateral Account Agreement.
Derivatives of such term shall have corresponding meaning.
"Cash from Capital Transactions" means at any date, such amounts of cash
as are determined by the General Partner to be cash made available to the
Company from or by reason of a Capital Transaction.
"CERCLA" has the meaning specified in the definition of "Environmental
Laws."
"Closing Date" means the date on which all conditions precedent set forth
in Section 5.1 are satisfied or waived by all Banks.
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment," with respect to each Bank, means such Bank's Revolving
Commitment, such Bank's Bridge Commitment or both, as the case may be.
"Commitment Fee Percentage" means (A) for the period from the Closing Date
through the earlier of (i) the Equity Closing and (ii) March 31, 1997, 0.1750%,
(B) from the calendar day after the Equity Closing through March 31,
8
<PAGE> 16
1997, 0.1500% and (C) from April 1, 1997, the percentage specified below
opposite the Interest Coverage Ratio (which ratio shall be calculated on a
rolling four quarter basis for the relevant fiscal quarter) calculated for the
periods described below.
<TABLE>
<CAPTION>
================================================================================
INTEREST COVERAGE RATIO AT END OF FISCAL QUARTER COMMITMENT FEE
PERCENTAGE
- - --------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 4.0 0.1250%
- - --------------------------------------------------------------------------------
Less than 4.0 but greater than or equal to 3.7 0.1375%
- - --------------------------------------------------------------------------------
Less than 3.7 but greater than or equal to 3.4 0.1500%
- - --------------------------------------------------------------------------------
Less than 3.4 but greater than or equal to 3.1 0.1750%
- - --------------------------------------------------------------------------------
Less than 3.1 but greater than or equal to 2.8 0.2000%
- - --------------------------------------------------------------------------------
Less than 2.8 but greater than or equal to 2.5 0.2750%
- - --------------------------------------------------------------------------------
Less than 2.5 0.3250%
================================================================================
</TABLE>
The Commitment Fee Percentage for each fiscal quarter commencing on and
after April 1, 1997, shall be calculated in reliance on the financial reports
delivered pursuant to subsections 7.1(a) and 7.1(c) and the certificate
delivered pursuant to subsection 7.2(b) with respect to the fiscal quarter
before the fiscal quarter in question (e.g., June 30 financials determine the
Commitment Fee Percentage for the fiscal quarter beginning October 1). If the
Company fails to deliver such financial reports and certificate to the Agent for
any fiscal quarter by the beginning of the next succeeding fiscal quarter (e.g.,
by October 1 for the fiscal quarter ending June 30), then the Commitment Fee
Percentage for the following fiscal quarter (e.g., October 1 through December
31) shall equal the next higher Commitment Fee Percentage as set forth in the
chart above immediately below the previously effective Commitment Fee
Percentage; thus if the Commitment Fee Percentage had previously been 0.2000%, a
failure to deliver quarterly financials by the first day of the next fiscal
quarter would cause the Commitment Fee Percentage to be 0.2750% for the duration
of that quarter. In addition, if such financial reports and certificate when
delivered indicate that the Commitment Fee Percentage for such period should
have been higher than the Commitment Fee Percentage provided for in the previous
sentence, then the Company shall pay on the date of delivery of such financial
reports and certificate an amount equal to the positive difference, if any,
between the interest that the Company should have paid hereunder had the
financial reports and certificate been delivered on a timely basis over what the
Company actually paid.
9
<PAGE> 17
"Commitment Percentage" means, as to any Bank, the percentage equivalent of
the aggregate of such Bank's Revolving Commitment divided by the Aggregate
Revolving Commitment.
"Company's Knowledge" or "Knowledge of the Company" shall mean the actual
knowledge of (i) Rick R. Holley, President and Chief Executive Officer, Charles
P. Grenier, Executive Vice President, Diane M. Irvine, Vice President and Chief
Financial Officer, James A. Kraft, Vice President, General Counsel and
Secretary, Susanna N. Duke, Director, Law and Human Resources, William R. Brown,
Vice President, Resource Management, and Mitchell Leu, Environmental Engineer,
and any successor to the offices and officers, such persons being the principal
persons employed by the Company ultimately responsible for environmental
operations and compliance, ERISA and legal matters relating to the Company and
(ii) the Treasurer or any other person having the primary responsibility for the
day-to-day administration of, and dealings with the Agent and the Banks in
connection with, this Agreement.
"Contractual Obligations" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement to
which such Person is a party or by which it or any of its property is bound.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Conversion/Continuation Date" means any date on which, under Section 2.6,
the Company (a) converts Loans of one Type to another Type, or (b) continues as
Loans of the same Type, but with a new Interest Period, Loans having Interest
Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any Loan hereunder,
including any conversion or continuation thereof, and (b) the Issuance of any
Letter of Credit hereunder.
"Cunit" means 100 cubic feet of wood.
"Debt Proceeds" means the proceeds of Indebtedness permitted by subsection
8.5(i), net of customary expenses payable to Persons that are not Affiliates of
the Company.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
10
<PAGE> 18
"Designated Acres" means up to an aggregate of 200,000 acres owned by the
Company which (based on the good faith determination of the Responsible
Representatives that such acres have at the time such determination is made a
higher value as recreational, residential, grazing or agricultural property than
for timber production) may be reasonably designated by the General Partner at
the time of the sale thereof as constituting Designated Acres (such aggregate
number of acres to be determined over the term of existence of the Note
Agreements).
"Designated Immaterial Subsidiary" means any entity which would otherwise
be a Restricted Subsidiary and which at any time is designated by the Company as
a Designated Immaterial Subsidiary, provided that no such designation of any
entity as a Designated Immaterial Subsidiary shall be effective unless (i) at
the time of such designation, such entity does not own any shares of stock or
Indebtedness of any Restricted Subsidiary which is not simultaneously being
designated as a Designated Immaterial Subsidiary, (ii) immediately after giving
effect to such designation, (a) the Company could incur at least $1 of
additional Funded Debt pursuant to subsection 8.5(i), and (b) no condition or
event shall exist which constitutes an Event of Default or Material Default,
(iii) the Company is permitted to make the Investment in such entity resulting
from such designation pursuant to, and within the limitations specified in,
subsection 8.4(i), treating the aggregate book value (including equity in
retained earnings) of the Investments of the Company and its Subsidiaries in
such entity immediately prior to such designation as the cost of such
Investment, and provided, further, that if at any time all Designated Immaterial
Subsidiaries on a combined basis would be a "significant subsidiary" (assuming
the Company is the registrant) within the meaning of Regulation S-X (17 C.F.R.
Part 210) the Company shall designate one or more Designated Immaterial
Subsidiaries which are directly owned by the Company and its Restricted
Subsidiaries as Restricted Subsidiaries such that the condition in this proviso
is no longer applicable and the entities so designated shall no longer be
Designated Immaterial Subsidiaries. Any entity which has been designated a
Designated Immaterial Subsidiary shall not thereafter become a Restricted
Subsidiary except pursuant to a designation required by the last proviso in the
preceding sentence, and any Designated Immaterial Subsidiary which has been
designated a Restricted Subsidiary pursuant to the last proviso of the preceding
sentence shall not thereafter be redesignated as a Designated Immaterial
Subsidiary.
"Designated Repurchases" means and includes purchases, redemptions or other
acquisitions, in each case at a price not to exceed fair market value, of the
publicly traded limited partnership interests in the Company, which are retired
by the Company within six months of such purchase, redemption or other
acquisition.
"Dollars," "dollars" and "$" each mean lawful money of the United States.
11
<PAGE> 19
"Domestic Lending Office" means, with respect to each Bank and the
Swingline Bank, the office of that Bank and the Swingline Bank designated as
such in Schedule 11.2 or such other office of the Bank and the Swingline Bank as
it may from time to time specify to the Company and the Agent.
"EBITDA" means, for any period, for the Company and its Subsidiaries on a
combined basis, determined in accordance with GAAP, the sum of (a) the net
income (or net loss) for such period, plus (b) all amounts treated as expenses
for depreciation, depletion and interest and the amortization of intangibles of
any kind to the extent included in the determination of such net income (or
loss), plus (c) all adjustments arising by virtue of the conversion from average
cost accounting to a LIFO basis with respect to inventory to the extent included
in the determination of such net income, plus (d) all accrued taxes on or
measured by income to the extent included in the determination of such net
income (or loss), plus or minus, as applicable, (e) in connection with any
Timber previously acquired within such period, an amount equal to a good faith
estimate of such additional amounts as would be included in clauses (a), (b),
(c), or (d) above had such Timber been owned by the Company or one of its
Subsidiaries for the entirety of such period, as certified (in a certificate
containing such detail as the Required Banks may reasonably request) by a
Responsible Officer of the Company based upon such Responsible Officer's good
faith estimates of applicable revenues and expenses arising from such Timber and
assuming aggregate timber harvests in an amount that does not require
application of the proceeds thereof to the purchase of Timber or the repayment
of Qualified Debt under Section 8.3; provided, however, that net income (or
loss) shall be computed for purposes of computing EBITDA without giving effect
to extraordinary losses or extraordinary gains.
"Effective Amount" means (i) with respect to any Loans or Swingline Loans,
as the case may be, on any date, the aggregate outstanding principal amount
thereof after giving effect to any Borrowings and prepayments or repayments
thereof occurring on such date; and (ii) with respect to any outstanding L/C
Obligations on any date, the amount of such L/C Obligations on such date after
giving effect to any Issuances of Letters of Credit occurring on such date and
any other changes in the aggregate amount of the L/C Obligations as of such
date, including as a result of any reimbursements of outstanding unpaid drawings
under any Letters of Credit or any reductions in the maximum amount available
for drawing under Letters of Credit taking effect on such date.
"Eligible Assignee" means (i) a commercial bank organized under the laws of
the United States, or any state thereof, and having a combined capital and
surplus of at least $250,000,000; (ii) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $250,000,000,
provided that such
12
<PAGE> 20
bank is acting through a branch or agency located in the United States; and
(iii) a Person that is primarily engaged in the business of commercial banking
and that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a Person of which a
Bank is a Subsidiary, or (C) a Person of which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by such person, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety, land use, conservation, and timber
harvesting matters; including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know Act.
"Equity Closing" means the receipt by the Company after the Closing Date
of Equity Proceeds in one or more transactions totaling at least $100,000,000.
"Equity Proceeds" means the proceeds of the issuance of new limited
partnership interests by the Company, net of underwriting commissions and other
customary expenses payable to Persons that are not Affiliates of the Company.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or 414(c) of the Code.
13
<PAGE> 21
"ERISA Event" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by the Company or any ERISA
Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA); (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to
terminate, the treatment of a plan amendment as a termination under Section 4041
or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a
Qualified Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure
by the Company or any ERISA Affiliate to make required contributions to a
Qualified Plan or Multiemployer Plan; (f) an event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Qualified
Plan or Multiemployer Plan; (g) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate; (h) an application for a funding
waiver or an extension of any amortization period pursuant to Section 412 of the
Code with respect to any Plan; (i) a non-exempt prohibited transaction occurs
with respect to any Plan for which the Company may be directly or indirectly
liable; or (j) a violation of the applicable requirements of Section 404 or 405
of ERISA or the exclusive benefit rule under Section 401(a) of the Code by any
fiduciary or disqualified person with respect to any Plan for which the Company
may be directly or indirectly liable.
"Eurodollar Reserve Percentage" has the meaning specified in the definition
of "Offshore Rate".
"Event of Default" means any of the events or circumstances specified in
Section 9.1.
"Exchange Act" means the Securities and Exchange Act of 1934, as amended,
and regulations promulgated thereunder.
"Existing Credit Agreements" means the Amended and Restated Credit
Agreement and the Credit Agreement, each dated as of November 15, 1994 and by
and among the Company, the banks signatories thereto, ABN Amro Bank N.V. as
co-agent and BofA as agent for those banks.
"Facilities Subsidiary" means, collectively, Plum Creek Manufacturing,
L.P., a Delaware limited partnership, and Plum Creek Marketing, Inc., a Delaware
corporation.
"Facilities Subsidiary's Facility" means any facility pursuant to which the
Facilities Subsidiary may incur Indebtedness for purposes of making capital
improvements, additions to, or expansions of, property, plant and equipment of
the Facilities Subsidiary or its Subsidiaries.
14
<PAGE> 22
"Facilities Subsidiary's Revolving Credit Facility" means any facility
pursuant to which the Facilities Subsidiary may obtain revolving credit,
take-down credit, the issuance of standby and payment letters of credit and
backup for the issuance of commercial paper.
"FDIC" means the Federal Deposit Insurance Corporation, or any entity
succeeding to any of its principal functions.
"Federal Funds Rate" means, for any period, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate". If on
any relevant day the appropriate rate for such previous day is not yet published
in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day
will be the arithmetic mean as determined by the Agent of the rates for the last
transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York
time) on that day by each of three leading brokers of Federal funds transactions
in New York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"Form 1001" has the meaning specified in subsection 4.1(f).
"Form 4224" has the meaning specified in subsection 4.1(f).
"Funded Debt" means, without duplication, any Indebtedness payable more
than one year from the date of the creation thereof; provided that any
Indebtedness shall be treated as Funded Debt, regardless of its term, if such
Indebtedness is renewable at the option of the Company pursuant to the terms
thereof or of a revolving credit or similar agreement effective for more than
one year after the date of the creation of such Indebtedness, or may be payable
out of the proceeds of similar Indebtedness pursuant to the terms of such
Indebtedness or any such agreement.
"GAAP" means generally accepted accounting principles set forth from time
to time in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
15
<PAGE> 23
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"General Partner" means Plum Creek Management Company, L.P., a Delaware
limited partnership, the managing general partner of the Company, and any
successor managing general partner of the Company.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"Guarantee" means the guarantee in paragraph 7 of the Mortgage Note
Agreements.
"Hazardous Materials" means all those substances which are regulated by,
or which may form the basis of liability under, any Environmental Law, including
all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"Honor Date" has the meaning specified in subsection 3.3(b).
"Indebtedness" of any Person means, as of any date of determination,
without duplication, (a) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services, (b) all amounts owed by
such Person to banks or other Persons in respect of reimbursement obligations
under letters of credit, surety bonds, banker's acceptances and other similar
instruments guaranteeing payment or other performance of obligations by such
Person, (c) all indebtedness for borrowed money or for the deferred purchase
price of property or services secured by any Lien on any property owned by such
Person, to the extent attributable to such Person's interest in such property,
even though such Person has not assumed or become liable for the payment
thereof, (d) lease obligations of such Person which, in accordance with GAAP,
should be capitalized, (e) lease obligations of such Person under leases which
have a term (including any option to renew exercisable at the discretion of the
lessee thereunder) longer than 10 years or under leases under which the lessor,
pursuant to an agreement with such Person, has acquired the property
specifically for the purpose of leasing it to such Person, (f) obligations
payable out of the proceeds of production from property of such Person, even
though such Person has not assumed or become liable for the payment thereof, (g)
the Swap Termination Value with respect to Swap Contracts, and
16
<PAGE> 24
(h) any obligations of any other Person of the type described in the above
clauses (a) through (g), inclusive, which are guaranteed or in effect guaranteed
by such Person through any agreement (contingent or otherwise) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or otherwise),
or to maintain the solvency or any balance sheet or other financial condition of
the obligor of such obligation, or to make payment for any property, securities,
products, materials or supplies or for any transportation or services regardless
of the non-delivery or nonfurnishing thereof, in any such case if the purpose or
intent of such agreement is to provide assurance that such obligation will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected against loss in
respect thereof or to otherwise assure or hold harmless the holder of any
primary obligation against loss in respect thereof. The amount of any
obligations of the type described in clause (h) of this definition shall be
deemed equal to the stated or determinable amount of the primary obligation in
respect of which such obligation is made or, if not stated or if not
determinable, the maximum reasonably anticipated liability in respect thereof.
"Indemnified Person" has the meaning specified in subsection 11.5.
"Indemnified Liabilities" has the meaning specified in subsection 11.5.
"Independent Auditor" has the meaning specified in subsection 7.1(a).
"Insolvency Proceeding" means (a) any case, action or proceeding before
any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or
foreign law, including the Bankruptcy Code.
"Interest Coverage Ratio" means, as measured quarterly on the last day of
each fiscal quarter for the four fiscal quarter period then ending, the ratio of
(i)EBITDA;
to
(ii)the combined interest expense (including capitalized interest) of the
Company and its Subsidiaries for the four fiscal quarter period then ending
calculated in accordance with GAAP, plus interest expense that would have been
17
<PAGE> 25
payable during such four fiscal quarters had any Indebtedness incurred during
such period for the purpose of acquiring Timber and related assets been incurred
at the beginning of such period, based upon the interest rate applicable to such
Indebtedness at the end of such period.
"Interest Payment Date" means, (a) with respect to any Offshore Rate Loan,
the last day of each Interest Period applicable to such Loan, (b) with respect
to any Base Rate Loan, the last Business Day of each calendar quarter and each
date a Base Rate Loan is converted into another Type of Loan, and (c) with
respect to any Swingline Loan, the Business Day agreed upon by the Company and
the Swingline Bank, which will not be later than the fourteenth Business Day
following the Borrowing date thereof or, if sooner, the Revolving Termination
Date; provided, however, that if any Interest Period for an Offshore Rate Loan
exceeds 90 days or three months, respectively, the date which falls 90 days or
three months (as the case may be) after the beginning of such Interest Period
and after each Interest Payment Date thereafter shall also be an Interest
Payment Date.
"Interest Period" means, with respect to any Offshore Rate Loan, the
period commencing on the Business Day the Loan is disbursed or on the
Conversion/Continuation Date on which the Loan is converted into or continued as
an Offshore Rate Loan, and ending on the date that is one week or one, two,
three or six months thereafter, as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation, as the case may be;
provided that:
(i)if any Interest Period would otherwise end on a day which is not
a Business Day, that Interest Period shall be extended to the next
succeeding Business Day unless, in the case of an Offshore Rate Loan, the
result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on
the immediately preceding Business Day;
(ii)any Interest Period pertaining to an Offshore Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the
calendar month at the end of such Interest Period;
(iii)no Interest Period for any Revolving Loan shall extend beyond
the Revolving Termination Date;
(iv)no Interest Period for any Bridge Loan shall extend beyond the
Bridge Termination Date; and
18
<PAGE> 26
(v)no Interest Period for any Revolving Loan shall extend beyond the
third anniversary of the date hereof unless the Effective Amount of Base
Rate Loans and of Offshore Rate Loans having Interest Periods expiring on
or before such date is less than or equal to the amount by which the
Effective Amount of Loans and L/C Obligations exceeds $350,000,000.
"Investment Policy" means the Corporate Investment Policy of the Company,
as it existed on April 5, 1993 and as attached hereto as Schedule 1.1 (without
giving effect to any later amendments thereto).
"Investments" has the meaning specified in Section 8.4.
"Issuance Date" has the meaning specified in subsection 3.1(a).
"Issue" means, with respect to any Letter of Credit, to issue or to extend
the expiry of, or to renew or increase the amount of, such Letter of Credit; and
the terms "Issued," "Issuing" and "Issuance" have corresponding meanings.
"Issuing Bank" means BofA in its capacity as issuer of one or more Letters
of Credit hereunder, together with any replacement letter of credit issuer
arising under subsection 10.1(b) or Section 10.9.
"Joint Venture" means a partnership, joint venture or other similar legal
arrangement (whether created pursuant to contract or conducted through a
separate legal entity) now or hereafter formed by the Company or any of its
Restricted Subsidiaries with another Person in order to conduct a common venture
or enterprise with such Person.
"L/C Advance" means each Bank's participation in any L/C Borrowing in
accordance with its Commitment Percentage.
"L/C Amendment Application" means an application form for amendment of
outstanding standby letters of credit as shall at any time be in use at an
Issuing Bank, as such Issuing Bank shall require.
"L/C Application" means an application form for issuances of standby
letters of credit as shall at any time be in use at an Issuing Bank, as such
Issuing Bank shall require.
"L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the date when
made nor converted into a Borrowing of Revolving Loans under subsection 3.3(c).
"L/C Commitment" means the commitment of the Issuing Banks to Issue, and
the commitment of the Banks severally to participate in, Letters of Credit from
19
<PAGE> 27
time to time Issued or outstanding under Article III, in an aggregate amount not
to exceed on any date twenty million dollars ($20,000,000), as the same shall be
reduced as a result of a reduction in the L/C Commitment pursuant to Section
2.7; provided that the L/C Commitment is a part of the Aggregate Revolving
Commitment, rather than a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate undrawn
amount of all Letters of Credit then outstanding, plus (b) the amount of all
unreimbursed drawings under all Letters of Credit, including all outstanding L/C
Borrowings.
"L/C-Related Documents" means the Letters of Credit, the L/C Applications,
the L/C Amendment Applications and any other document relating to any Letter of
Credit, including any Issuing Bank's standard form documents for letter of
credit issuances.
"Lending Office" means, with respect to any Bank and the Swingline Bank,
the office or offices of the Bank and the Swingline Bank specified as its
"Lending Office" or "Domestic Lending Office" or "Offshore Lending Office," as
the case may be, opposite its name on Schedule 11.2, or such other office or
offices of the Bank and the Swingline Bank as it may from time to time notify
the Company and the Agent.
"Letters of Credit" means any standby letters of credit Issued by the
Issuing Bank pursuant to Article III.
"Letter of Credit Rate" means, for any period, a rate per annum equal to
(A) for the period from the Closing Date through the earlier of (i) the Equity
Closing and (ii) March 31, 1997, 0.5500%, (B) from the calendar day after the
Equity Closing through March 31, 1997, 0.4500%, and (C) from April 1, 1997, the
percentage specified below opposite the Interest Coverage Ratio (which ratio
shall be calculated on a rolling four quarter basis for the relevant fiscal
quarter) calculated for the periods described below.
<TABLE>
<CAPTION>
================================================================================
INTEREST COVERAGE RATIO AT END OF FISCAL QUARTER LETTER OF CREDIT
RATE
<S> <C>
- - --------------------------------------------------------------------------------
Greater than or equal to 4.0 0.3500%
- - --------------------------------------------------------------------------------
Less than 4.0 but greater than or equal to 3.7 0.4000%
- - --------------------------------------------------------------------------------
Less than 3.7 but greater than or equal to 3.4 0.4500%
- - --------------------------------------------------------------------------------
Less than 3.4 but greater than or equal to 3.1 0.5500%
================================================================================
</TABLE>
20
<PAGE> 28
<TABLE>
================================================================================
<S> <C>
Less than 3.1 but greater than or equal to 2.8 0.6500%
- - --------------------------------------------------------------------------------
Less than 2.8 but greater than or equal to 2.5 0.8750%
- - --------------------------------------------------------------------------------
Less than 2.5 1.1250%
================================================================================
</TABLE>
The Letter of Credit Rate for each fiscal quarter commencing on and after
April 1, 1997, shall be calculated in reliance on the financial reports
delivered pursuant to subsections 7.1(a) and 7.1(c) and the certificate
delivered pursuant to subsection 7.2(b) with respect to the fiscal quarter
before the fiscal quarter in question (e.g., June 30 financials determine the
Letter of Credit Rate for the fiscal quarter beginning October 1). If the
Company fails to deliver such financial reports and certificate to the Agent for
any fiscal quarter by the beginning of the next succeeding fiscal quarter (e.g.,
by October 1 for the fiscal quarter ending June 30), then the Letter of Credit
Rate for the following fiscal quarter (e.g., October 1 through December 31)
shall equal the next higher Letter of Credit Rate as set forth in the chart
above immediately below the previously effective Letter of Credit Rate; thus if
the Letter of Credit Rate had previously been 0.6500%, a failure to deliver
quarterly financials by the first day of the next fiscal quarter would cause the
Letter of Credit Rate to be 0.8750% for the duration of that quarter. In
addition, if such financial reports and certificate when delivered indicate that
the Letter of Credit Rate for such period should have been higher than the
Letter of Credit Rate provided for in the previous sentence, then the Company
shall pay on the date of delivery of such financial reports and certificate an
amount equal to the positive difference, if any, between the interest that the
Company should have paid hereunder had the financial reports and certificate
been delivered on a timely basis over what the Company actually paid.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien,
preference or priority or charge of any kind (including any agreement to give
any of the foregoing, any conditional sale or other title retention agreement,
any lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any jurisdiction).
"Loan" means an extension of credit by a Bank or the Swingline Bank, as
the case may be, to the Company under Article II or Article III, and may be a
Revolving Loan, a Bridge Loan, a Swingline Loan or an L/C Advance.
"Loan Documents" means this Agreement, the L/C-Related Documents, and all
documents delivered to the Agent in connection herewith and therewith.
"Majority Banks" means (a) at any time that Loans are outstanding, any
Banks holding at least 66-2/3% of the then aggregate unpaid principal amount of
the
21
<PAGE> 29
Loans, and (b) at any other time, Banks holding at least 66-2/3% of the
Revolving Commitments or, if the Revolving Commitments have been terminated or
expired, Banks that held at least 66-2/3% of the Revolving Commitments as in
effect immediately before such termination or expiration.
"Margin Stock" means "margin stock" as such term is defined in Regulation
G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, any of the operations, business, properties,
condition (financial or otherwise) or prospects of the Company or the Company
and its Subsidiaries taken as a whole; (b) a material impairment of the ability
of the Company to perform under any Loan Document and avoid any Event of
Default; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability of any Loan Document.
"Material Default" means any continuing Default as to which a written
notice of such Default (which notice has not been rescinded) shall have been
received by the Company or the General Partner from the Agent or any Bank, or
any continuing Event of Default.
"Maximum Pro Forma Annual Interest Charges" means, as of any date, the
highest total amount payable during any period of four consecutive fiscal
quarters, commencing with the fiscal quarter in which such date occurs and
ending with the fiscal quarter in which the Revolving Termination Date occurs,
by the Company and its Restricted Subsidiaries on a combined basis, after
eliminating all intercompany transactions, in respect of interest charges ((a)
including amortization of debt discount and expense and imputed interest on
Capital Lease Obligations and on other obligations included in Indebtedness
which do not have stated interest, (b) assuming, in the case of fluctuating
interest rates which cannot be determined in advance, that the rate in effect on
such date will remain in effect throughout such period, and (c) treating the
principal amount of all Indebtedness outstanding as of such date under a
revolving credit or similar agreement as maturing and becoming due and payable
on the scheduled maturity date thereof, without regard to any provision
permitting such maturity date to be extended) on all Indebtedness of the Company
and its Restricted Subsidiaries outstanding on such date (excluding the
Guarantee and the guarantees of the Facilities Subsidiary's Facility and the
Facilities Subsidiary's Revolving Credit Facility but including, to the extent
not already included, all other Indebtedness outstanding on such date which is
guaranteed or in effect guaranteed by the Company or any Restricted
Subsidiaries), after giving effect to any Indebtedness proposed to be created on
such date and to the concurrent retirement of any other Indebtedness.
"MCCF" means one thousand Cunits.
22
<PAGE> 30
"MMBF" means one million Board Feet.
"Mortgage Note Agreements" means the Mortgage Note Agreement, dated as of
May 31, 1989, providing for the issuance and sale by the Facilities Subsidiary
of its 11 1/8% First Mortgage Notes to the purchasers listed in the schedule of
purchasers attached thereto, as amended by (a) that certain Mortgage Note
Agreement Amendment, Consent and Waiver dated as of January 1, 1991, (b) that
certain letter agreement dated April 22, 1993, (c) that certain Mortgage Note
Agreement Amendment dated as of September 1, 1993, (d) that certain Mortgage
Note Agreement Amendment dated as of May 20, 1994, (e) that certain Amendment to
Mortgage Note Agreement dated as of June 15, 1995 and (f) that certain Mortgage
Note Agreements Amendment dated as of May 31, 1996.
"Mortgage Notes" means the 11 1/8% First Mortgage Notes of the Facilities
Subsidiary issued and sold pursuant to the Mortgage Note Agreements.
"Multiemployer Plan" means a "multiemployer plan" (within the meaning of
Section 4001(a)(3) of ERISA) and to which any ERISA Affiliate makes, is making,
or is obligated to make contributions or, during the preceding three calendar
years, has made, or been obligated to make, contributions.
"Net Proceeds" means proceeds in cash as and when received by the Person
making a sale of Property, net of: (a) the direct costs relating to such sale
excluding amounts payable to the Company or any Affiliate of the Company, (b)
sale, use or other transaction taxes paid or payable as a result thereof, and
(c) amounts required to be applied to repay principal, interest and prepayment
premiums and penalties on Indebtedness secured by a Lien on the asset which is
the subject of such disposition.
"1994 Notes" means the 8.73% Senior Notes due August 1, 2009 in the
aggregate principal amount of $150,000,000 issued and sold pursuant to the 1994
Senior Note Agreements.
"1994 Senior Note Agreements" means that certain Senior Note Agreement
dated as of August 1, 1994 providing for the issuance and sale by the Company of
the 1994 Senior Notes to the purchasers listed in the schedule of purchasers
attached thereto, as amended by (a) that certain Senior Note Agreement Amendment
dated as of October 15, 1995 and (b) that certain Senior Note Agreements
Amendment dated as of May 31, 1996.
"Notes" means those certain senior promissory notes in the aggregate
principal amount of $165,000,000 issued and sold pursuant to the Note
Agreements.
23
<PAGE> 31
"Note Agreements" means that certain Senior Note Agreement dated as of May
31, 1989, providing for the issuance and sale by the Company of the Notes to the
purchasers listed in the schedule of purchasers attached thereto, as amended by
(a) that certain Senior Note Agreement Amendment, Consent and Waiver dated as of
January 1, 1991, (b) that certain letter agreement dated April 22, 1993, (c)
that certain Senior Note Agreement Amendment dated as of September 1, 1993 (d)
that certain Senior Note Agreement Amendment dated as of May 20, 1994, and by
that certain Senior Note Agreements Amendment dated as of May 31, 1996.
"Notice of Borrowing" means a notice given by the Company to the Agent
pursuant to Sections 2.4, 2.5, or 2.12, as the case may be, in substantially the
form of Exhibit A.
"Notice of Conversion/Continuation" means a notice given by the Company to
the Agent pursuant to Section 2.6, in substantially the form of Exhibit B.
"Notice of Lien" means any "notice of lien" or similar document intended
to be filed or recorded with any court, registry, recorder's office, central
filing office or other Governmental Authority for the purpose of evidencing,
creating, perfecting or preserving the priority of a Lien securing obligations
owing to a Governmental Authority.
"Obligations" means all Loans, and other Indebtedness, advances, debts,
liabilities, obligations, covenants and duties owing by the Company to any Bank,
the Agent, the Issuing Banks, the Swingline Bank, or any other Person required
to be indemnified, that arises under any Loan Document, whether or not for the
payment of money, whether arising by reason of an extension of credit, loan,
guaranty, indemnification or in any other manner, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising and however acquired.
"Offshore Lending Office" means with respect to each Bank, the office of
such Bank designated as such in Schedule 11.2 or such other office of such Bank
as such Bank may from time to time specify to the Company and the Agent.
"Offshore Rate" means, for each Interest Period in respect of Offshore
Rate Loans comprising part of the same Borrowing, an interest rate per annum
(rounded upward to the nearest 1/16th of 1%) determined pursuant to the
following formula:
Offshore Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
24
<PAGE> 32
Where,
"Eurodollar Reserve Percentage" means for any day for any Interest
Period the reserve percentage (expressed as a decimal, rounded upward to
the nearest 1/100th of 1%) in effect for such day under regulations issued
from time to time by the Federal Reserve Board for determining the reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities") having a term comparable to
such Interest Period; and
"IBOR" means the rate of interest per annum determined by the Agent
as the rate at which dollar deposits in the approximate amount of BofA's
Offshore Rate Loan and having a maturity comparable to such Interest
Period would be offered by BofA's Grand Cayman Branch, Grand Cayman B.W.I.
(or such other office as may be designated for such purpose by BofA), to
major banks in the offshore dollar interbank market upon request of such
banks at approximately 11:00 a.m. (New York City time) two Business Days
prior to the commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all Offshore Rate
Loans then outstanding as of the effective date of any change in the Eurodollar
Reserve Percentage.
"Offshore Rate Loan" means any Loan that bears interest based on the
Offshore Rate.
"Operating Lease" means, as applied to any Person, any lease of Property
which is not a Capital Lease.
"Ordinary Course of Business" means, in respect of any transaction
involving the Company or any Subsidiary of the Company, the ordinary course of
such Person's business, as conducted by any such Person in accordance with past
practice and undertaken by such Person in good faith and not for purposes of
evading any covenant or restriction in any Loan Document.
"Organization Documents" means, for any corporation, the certificate or
articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such corporation,
any shareholder rights agreement, and all applicable resolutions of the board of
directors (or any committee thereof) of such corporation; and, for any limited
partnership, the certificate of limited partnership, the limited partnership
agreement, and all applicable partnership resolutions.
"Other Taxes" has the meaning specified in subsection 4.1(b).
25
<PAGE> 33
"Participant" has the meaning specified in subsection 11.8(d).
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Company, as in effect on the Closing Date, and as the
same may, from time to time, be amended, modified or supplemented in accordance
with the terms thereof.
"Partner Entities" means the General Partner, the PCMC General Partner and
the PC Advisory General Partner.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
"PC Advisory General Partner" means PC Advisory Corp. I, a Delaware
corporation, the managing general partner of the PCMC General Partner, and any
successor managing general partner of the PCMC General Partner.
"PCMC General Partner" means PC Advisory Partners I, L.P., a Delaware
limited partnership, the managing general partner of the General Partner, and
any successor managing general partner of the General Partner.
"Permitted Business" means any business engaged in by the Company or the
Facilities Subsidiary on the Closing Date, pulp and paper manufacturing and any
business substantially similar or related to any such business.
"Permitted Liens" has the meaning specified in Section 8.1.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture or
Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any ERISA Affiliate sponsors or maintains or to
which the Company or any ERISA Affiliate makes, is making or is obligated to
make contributions, and includes any Multiemployer Plan or Qualified Plan.
"Principal Repayment Proviso" means that for any period of calculation,
the aggregate amount of scheduled principal repayment on Indebtedness (x) shall
not include voluntary prepayments of Indebtedness except to the extent such
voluntary prepayments includes any amounts that would have been scheduled
principal repayments during such period, and (y) shall not include the amount of
any scheduled principal repayment to the extent the Company refinanced or
rescheduled such scheduled repayments and the scheduled principal repayments due
before the Revolving Termination Date under the refinancing or rescheduling
26
<PAGE> 34
have been or will be included in the calculation of the aggregate amount of
scheduled principal repayments for the periods in which they are due.
"Pro Forma Free Cash Flow" as of any date means (i) net income of the
Company and its Restricted Subsidiaries on a pro forma combined basis (excluding
(a) gain on the sale of any Capital Asset, (b) noncash items of income, and (c)
any distributions or other income received from, or equity of the Company or any
Restricted Subsidiary in the earnings of, any entity which is not a Restricted
Subsidiary) for the period of four consecutive fiscal quarters immediately prior
to such date (such period of four consecutive fiscal quarters being the
"Measurement Period"), determined in accordance with GAAP plus depreciation,
depletion, amortization and other noncash charges, interest expense on
Indebtedness and provision for income taxes, minus (ii) capital expenditures
made by the Company and its Restricted Subsidiaries during the Measurement
Period, to maintain their respective operations; provided, however, if (A) the
Company or a Restricted Subsidiary is acquiring a Restricted Subsidiary or
assets and (B) Pro Forma Free Cash Flow is being determined in connection
therewith, such Restricted Subsidiary shall be considered to have been a
Restricted Subsidiary during the entire Measurement Period and such assets shall
be considered to have been owned by the Company during the entire Measurement
Period if net income attributable to such Restricted Subsidiary or such assets
(as the case may be) for the entire Measurement Period is readily determinable
and confirmed pursuant to an audit or a certification prepared in good faith by
the Company's chief financial officer; further provided, however, that portion
of Pro Forma Free Cash Flow allocable to such Restricted Subsidiary or assets
shall be reduced on a pro rata basis to the extent Timber has been harvested by
such Restricted Subsidiary or from such assets during the Measurement Period at
a rate greater than the rate at which the Company has harvested Timber from its
Timberlands during the Measurement Period, as certified in good faith by the
chief financial officer of the Company; and finally provided, however, if Pro
Forma Free Cash Flow is being determined for any Measurement Period and a
Restricted Subsidiary or assets have been sold or otherwise disposed of at any
time during such Measurement Period by the Company or any Restricted Subsidiary,
such Restricted Subsidiary shall not be considered to have been a Restricted
Subsidiary during any part of such Measurement Period and such assets shall not
be considered to have been owned by the Company during any part of such
Measurement Period, and the net income that otherwise would have been
attributable to such Restricted Subsidiary or asset during such Measurement
Period shall be certified in good faith by the chief financial officer of the
Company.
"Pro Rata Share" means, with respect to the payment of principal or
interest on account of Revolving Loans, Bridge Loans, or L/C Advances, each
Bank's pro
27
<PAGE> 35
rata share of the outstanding principal balance of the Loans or L/C Advances
with respect to which such payment is being made.
"Property" means any estate or interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
"Qualified Debt" means, as to the Company, as of any date of
determination, without duplication, all outstanding indebtedness of the Company
for borrowed money, including Indebtedness represented by the Notes, the 1994
Senior Notes and this Agreement (including L/C Borrowings and Loans used to
repay L/C Borrowings, but excluding L/C Obligations with respect to undrawn
Letters of Credit).
"Qualified Plan" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any ERISA Affiliate sponsors, maintains, or to which it makes, is making or is
obligated to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding period covering at least five (5) plan years, but
excluding any Multiemployer Plan.
"Reportable Event" means, as to any Plan, (a) any of the events set forth
in Section 4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC, (b) a withdrawal from a Plan described in
Section 4063 of ERISA, or (c) a cessation of operations described in Section
4062(e) of ERISA.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.
"Responsible Officer" means the chief executive officer, the president or
any vice president of the General Partner, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, the chief financial officer or the
treasurer of the General Partner, or any other officer having substantially the
same authority and responsibility.
"Responsible Representatives" means (a) in the case of any transaction in
which the value of any assets disposed of or received have a value of less than
$5,000,000 or in which payments made are less than $5,000,000, the chief
executive officer, chief financial officer or chief operating officer of the
Company, and (b) in the case of any other transaction, the Board of Directors of
the PC Advisory General Partner.
28
<PAGE> 36
"Restricted Payment" means (a) any payment or other distribution, direct
or indirect, in respect of any partnership interest in the Company, except a
distribution payable solely in additional partnership interests in the Company,
and (b) any payment, direct or indirect, on account of the redemption,
retirement, purchase or other acquisition of any partnership interest in the
Company including, without limitation, any Designated Repurchases; or, if the
Company is at any time reorganized as or changed (by merger, sale of assets or
otherwise) into a corporation, (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of stock of the Company now or
hereafter outstanding, except a dividend payable solely in shares of stock of
the Company, and (ii) any redemption, retirement, purchase or other acquisition,
direct or indirect, of any shares of any class of stock of the Company, now or
hereafter outstanding, or of any warrants, rights or options to acquire any such
shares, except to the extent that the consideration therefor consists of shares
of stock of the Company.
"Restricted Subsidiary" means any Wholly-Owned Subsidiary other than (a)
any Designated Immaterial Subsidiary and (b) the Facilities Subsidiary or any
Subsidiary directly or indirectly owned by the Facilities Subsidiary, provided
that after the Mortgage Notes shall have been paid in full and retired, the
Facilities Subsidiary and its Subsidiaries shall become and be Restricted
Subsidiaries.
"Revolving Commitment," with respect to each Bank, has the meaning
specified in Section 2.1.
"Revolving Facility Tranche" has the meaning specified in Section 2.18.
"Revolving Facility Tranche Loan" means a Loan allocated by the Company to
the Revolving Facility Tranche as provided in Section 2.18.
"Revolving Loan" has the meaning specified in Section 2.1, and may be an
Offshore Rate Loan or a Base Rate Loan.
"Revolving Termination Date" means the earlier to occur of:
(a)October 17, 2001; and
(b)the date on which the Aggregate Revolving Commitment shall
terminate in accordance with the provisions of this Agreement.
"Riverwood Assets" means approximately 538,000 acres of timberlands
(approximately 432,000 acres in northern Louisiana and approximately 115,000 in
southern Arkansas), together with two mills and a plywood plant, to be purchased
by the Company from Riverwood International pursuant to the Riverwood Purchase
Agreement.
29
<PAGE> 37
"Riverwood Purchase Agreement" means the Asset Purchase Agreement dated
August 6, 1996, among Riverwood International Corporation, New River Timber,
LLC, and the Company.
"Riverwood Supply Agreement" means the Supply Agreement to be entered into
on or about October 18, 1996, between Riverwood International Corporation and
the Company.
"SEC" means the Securities and Exchange Commission, or any entity
succeeding to any of its principal functions.
"Solvent" means, as to any Person at any time, that (a) (i) in the case of
a Person that is not a partnership, the fair value of the Property of such
Person is greater than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities), and (ii) in the case of a
Person that is a partnership, the sum of (A) the fair value of the Property of
such Person plus (B) the sum of the excess of the fair value of each general
partner's non-partnership Property over such partner's non-partnership debts
(together, the "Applicable Property") is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities), as such value for purposes of both clauses (i) and (ii) is
established and liabilities evaluated for purposes of Section 101(31) of the
Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent
Transfer Act; (b) the present fair saleable value of the Property of such Person
(or, in the case of a partnership, the Applicable Property for such Person) is
not less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured; (c) such Person is
able to realize upon its Property and pay its debts and other liabilities
(including disputed, contingent and unliquidated liabilities) as they mature in
the normal course of business; (d) such Person does not intend to, and does not
believe that it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in business or a
transaction, for which such Person's Property would constitute unreasonably
small capital.
"Subsidiary" of a Person means any corporation, partnership or other
entity a majority of (i) the total combined voting power of all classes of
Voting Stock of which or (ii) the outstanding equity interests of which shall,
at the time of which any determination is being made, be owned by the Company
either directly or through Subsidiaries.
"Swap Contract" means any agreement, whether or not in writing, relating
to any transaction that is a rate swap, basis swap, forward rate transaction,
commodity swap, commodity option, equity or equity index swap or option, bond,
note or bill option, interest rate option, forward foreign exchange transaction,
cap, collar or
30
<PAGE> 38
floor transaction, currency swap, cross-currency rate swap, swaption, currency
option or any other, similar transaction (including any option to enter into any
of the foregoing) or any combination of the foregoing, and, unless the context
otherwise clearly requires, any master agreement relating to or governing any or
all of the foregoing.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined by the Company
(or, for purposes of subsection 9.1(e), by the Majority Banks) based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include any Bank).
"Swingline Bank" means BofA or its assignee under Section 11.8.
"Swingline Clean-Up Day" has the meaning specified in subsection
2.9(a)(iv).
"Swingline Commitment" has the meaning specified in Section 2.12.
"Swingline Loan" has the meaning specified in Section 2.12.
"Taxes" has the meaning specified in subsection 4.1(a).
"Timber" means standing trees not yet harvested.
"Timberlands" means the timberlands owned by the Company as of the Closing
Date and any timberlands acquired by the Company or any Subsidiary after the
Closing Date.
"Transferee" has the meaning specified in subsection 11.8(e).
"Type" means either an Offshore Rate Loan or a Base Rate Loan.
"UCC" means the Uniform Commercial Code as in effect in the State of
California.
"UCP" has the meaning specified in Section 3.9.
"Unfunded Pension Liabilities" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used by the Plan's
actuaries for funding the Plan pursuant to Section 412 of the Code for the
applicable plan year.
31
<PAGE> 39
"United States" and "U.S." each means the United States of America.
"Voting Stock" means, with respect to any corporation or other entity, any
shares of stock or other ownership interests of such corporation or entity whose
holders are entitled under ordinary circumstances to vote for the election of
directors of such corporation or to manage any such other entity (irrespective
of whether at the time stock or ownership interests of any other class or
classes shall have or might have voting power by reason of the happening of any
contingency).
"Wholly-Owned Subsidiary" means any Subsidiary organized under the laws of
any state of the United States which conducts the major portion of its business
in the United States, and all of the stock or other ownership interests of every
class of which, except director's qualifying shares, and except in the case of
the Facilities Subsidiary not more than 5% of the outstanding Voting Stock
shall, at the time as of which any determination is being made, be owned by the
Company either directly or through Wholly-Owned Subsidiaries.
"Withdrawal Liabilities" means, as of any determination date, the
aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA
if the Controlled Group made a complete withdrawal from all Multiemployer Plans
and any increase in contributions pursuant to Section 4243 of ERISA.
1.2 OTHER INTERPRETIVE PROVISIONS
(a)Defined Terms. Unless otherwise specified herein or therein, all terms
defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto. The meaning of
defined terms shall be equally applicable to the singular and plural forms of
the defined terms. Terms (including uncapitalized terms) not otherwise defined
herein and that are defined in the UCC shall have the meanings therein
described.
(b)The Agreement. The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; and subsection,
section, schedule and exhibit references are to this Agreement unless otherwise
specified.
(c)Certain Common Terms.
(i)The term "documents" includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced.
(ii)The term "including" is not limiting and means "including
without limitation."
32
<PAGE> 40
(d)Performance; Time. Whenever any performance obligation hereunder (other
than a payment obligation) shall be stated to be due or required to be satisfied
on a day other than a Business Day, such performance shall be made or satisfied
on the next succeeding Business Day. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding," and the
word "through" means "to and including". If any provision of this Agreement
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be interpreted to encompass any and
all means, direct or indirect, of taking, or not taking, such action.
(e)Contracts. Unless otherwise expressly provided herein, references to
agreements and other contractual instruments shall be deemed to include all
subsequent amendments and other modifications thereto, but only to the extent
such amendments and other modifications are not prohibited by the terms of any
Loan Document.
(f)Laws. References to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(g)Captions. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(h)Independence of Provisions. The parties acknowledge that this Agreement
and other Loan Documents may use several different limitations, tests or
measurements to regulate the same or similar matters, and that such limitations,
tests and measurements are cumulative and must each be performed, except as
expressly stated to the contrary in this Agreement.
(i)Interpretation. This Agreement is the result of negotiations among and
has been reviewed by counsel to the Agent, the Company and other parties, and is
the product of all parties hereto. Accordingly, this Agreement and the other
Loan Documents shall not be construed against the Banks or the Agent merely
because of the Agent's or Banks' involvement in the preparation of such
documents and agreements.
1.3 ACCOUNTING PRINCIPLES
(a)Unless the context otherwise clearly requires, all accounting terms not
expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP,
consistently applied.
33
<PAGE> 41
(b)References herein to "fiscal year" and "fiscal quarter" refer to such
fiscal periods of the Company.
2. THE CREDITS
2.1 AMOUNTS AND TERMS OF REVOLVING COMMITMENTS
Each Bank severally agrees, on the terms and conditions hereinafter set
forth, to make loans to the Company (each such loan, a "Revolving Loan") from
time to time on any Business Day from the Closing Date to the Revolving
Termination Date, in an aggregate amount not to exceed at any time outstanding
the amount set forth opposite the Bank's name in Schedule 2.1 under the heading
"Revolving Commitment" (such amount as the same may be reduced pursuant to
Section 2.7 or Section 2.9, or as a result of one or more assignments pursuant
to Section 11.8, the Bank's "Revolving Commitment"); provided, however, that,
after giving effect to any Borrowings, the Effective Amount of all Revolving
Loans, Swingline Loans, and L/C Obligations shall not at any time exceed the
Aggregate Revolving Commitment; and provided, further, that the Effective Amount
of the Revolving Loans of any Bank plus such Bank's Commitment Percentage of the
Effective Amount of all L/C Obligations and Swingline Loans shall not at any
time exceed such Bank's Revolving Commitment. Within the limits of each Bank's
Revolving Commitment, and subject to the other terms and conditions hereof,
until the Revolving Termination Date, the Company may borrow under this Section
2.1, prepay pursuant to Section 2.8 and reborrow pursuant to this Section 2.1.
2.2 AMOUNTS AND TERMS OF BRIDGE COMMITMENTS
Each Bank severally agrees, on the terms and conditions hereinafter set
forth, to make loans to the Company (collectively, the "Bridge Loans") on the
Closing Date, in an aggregate amount not to exceed the amount set forth opposite
the Bank's name in Schedule 2.1 under the heading "Bridge Commitment" (such
amount as the same may be reduced pursuant to Section 2.9, or as a result of one
or more assignments pursuant to Section 11.8, the Bank's "Bridge Commitment").
Amounts borrowed by the Company as Bridge Loans which are repaid or prepaid by
the Company may not be reborrowed. The Company may prepay Bridge Loans pursuant
to Section 2.8.
2.3 LOAN ACCOUNTS
The Loans made by each Bank (including the Swingline Bank) and the Letters
of Credit Issued by an Issuing Bank shall be evidenced by one or more loan
accounts maintained by such Bank or Issuing Bank, as the case may be, in the
ordinary course of business. The loan accounts or records maintained by the
Agent, the Swingline Bank, each Issuing Bank and each such Bank shall be
34
<PAGE> 42
conclusive absent manifest error of the amount of the Loans made by the Banks to
the Company and the Letters of Credit issued for the account of the Company, and
the interest and payments thereon. Any failure so to record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Company hereunder to pay any amount owing with respect to the Loans or any
Letter of Credit.
2.4 PROCEDURE FOR BORROWING REVOLVING LOANS
(a)Each Borrowing of Revolving Loans shall be made upon the Company's
irrevocable written notice delivered to the Agent in accordance with Section
11.2 in the form of a Notice of Borrowing (which notice must be received by the
Agent prior to 9:00 a.m. (San Francisco time)) (i) three Business Days prior to
the requested Borrowing date, in the case of Offshore Rate Loans; and (ii) on
the requested Borrowing date, in the case of Base Rate Loans, specifying:
(A)that the Borrowing comprises Revolving Loans;
(B)the amount of the Borrowing, which shall be in an aggregate
minimum principal amount of three million dollars ($3,000,000) except in the
case of Offshore Rate Loans with a proposed Interest Period of one week, in
which case the aggregate minimum principal amount shall be twelve million
dollars ($12,000,000) or, in either case, any multiple of five hundred thousand
dollars ($500,000) in excess thereof;
(C)the requested Borrowing date, which shall be a Business Day;
(D)whether the Borrowing is to comprise Offshore Rate Loans or Base
Rate Loans;
(E)the duration of the Interest Period applicable to the Borrowing
described in such notice. If the Notice of Borrowing shall fail to specify the
duration of the Interest Period for any Borrowing comprising Offshore Rate
Loans, such Interest Period shall be 90 days or three months, respectively; and
(F)with respect to any Borrowing after the date the Company gives
the notice regarding allocation of Loans pursuant to Section 2.18, whether the
Borrowing shall be allocated to the Revolving Facility Tranche or the Capital
Expenditure Tranche.
(b)Upon receipt of the Notice of Borrowing, the Agent will promptly notify
each Bank thereof and of the amount of such Bank's Commitment Percentage of the
Borrowing.
35
<PAGE> 43
(c)Each Bank will make the amount of its Commitment Percentage of the
Borrowing available to the Agent for the account of the Company at the Agent's
Payment Office by 12:00 noon (San Francisco time) on the Borrowing date
requested by the Company in funds immediately available to the Agent. The
proceeds of all such Revolving Loans will then be made available to the Company
by the Agent at such office by crediting the account of the Company on the books
of BofA with the aggregate of the amounts made available to the Agent by the
Banks and in like funds as received by the Agent, unless on the date of the
Borrowing all or any portion of the proceeds thereof shall then be required to
be applied to the repayment of any outstanding Swingline Loans pursuant to
Section 2.12 or the reimbursement of any outstanding drawings under Letters of
Credit pursuant to Section 3.3, in which case such proceeds or portion thereof
shall be applied to the repayment of such Swingline Loans or the reimbursement
of such Letter of Credit drawings, as the case may be.
(d)Unless the Majority Banks shall otherwise agree, during the existence
of a Default or an Event of Default, the Company may not elect to have a Loan
made as an Offshore Rate Loan.
(e)After giving effect to any Borrowing, there shall not be more than six
different Interest Periods in effect in respect of all Loans (other than
Swingline Loans) then outstanding.
2.5 PROCEDURE FOR BORROWING BRIDGE LOANS
(a)Three Business Days prior to the Closing Date, the Company shall
deliver irrevocable written notice to the Agent in accordance with Section 11.2
in the form of a Notice of Borrowing specifying:
(A)that the Borrowing comprises the Bridge Loans;
(B)whether the Borrowing is to comprise Offshore Rate Loans or Base
Rate Loans or a combination thereof; and
(C)the duration of the Interest Period applicable to the Borrowing
described in such notice. If the Notice of Borrowing shall fail to specify the
duration of the Interest Period for the Bridge Loans and the Borrowing comprises
Offshore Rate Loans, such Interest Period shall be three months.
(b)Upon receipt of the Notice of Borrowing, the Agent will promptly notify
each Bank thereof and of the amount of such Bank's Commitment Percentage of the
Borrowing.
(c)Each Bank will make the amount of its Commitment Percentage of the
Borrowing available to the Agent for the account of the Company at the Agent's
36
<PAGE> 44
Payment Office by 12:00 noon (San Francisco time) on the Closing Date in funds
immediately available to the Agent. The proceeds of the Bridge Loans will then
be made available to the Company by the Agent at such office by crediting the
account of the Company on the books of BofA with the aggregate of the amounts
made available to the Agent by the Banks and in like funds as received by the
Agent.
(d)Unless the Majority Banks shall otherwise agree, during the existence
of a Default or an Event of Default, the Company may not elect to have a Loan
made as an Offshore Rate Loan.
(e)After giving effect to any Borrowing, there shall not be more than six
different Interest Periods in effect in respect of all Loans (other than
Swingline Loans) then outstanding.
2.6 CONVERSION AND CONTINUATION ELECTIONS FOR BORROWINGS
(a)The Company may upon irrevocable written notice to the Agent in
accordance with subsection 2.6(b):
(i)elect to convert on any Business Day, any Base Rate Loans other
than Swingline Loans (or any part thereof in an amount not less than $3,000,000
except in the case of a conversion into an Offshore Rate Loans with a proposed
Interest Period of one week, which shall be in an amount not less than
$12,000,000, or that is in an integral multiple of $500,000 in excess thereof)
into Offshore Rate Loans;
(ii)elect to convert on the last day of the applicable Interest
Period any Offshore Rate Loans having Interest Periods maturing on such day (or
any part thereof in an amount not less than $3,000,000, or that is in an
integral multiple of $500,000 in excess thereof) into Base Rate Loans;
(iii)elect to continue on the last day of the applicable Interest
Period any Offshore Rate Loans having Interest Periods maturing on such day (or
any part thereof in an amount not less than $3,000,000 except in the case of a
continuation of an Offshore Rate Loans with a proposed Interest Period of one
week, which shall be in an amount not less than $12,000,000, or that is in an
integral multiple of $500,000 in excess thereof);
provided, that if the aggregate amount of Offshore Rate Loans in respect of any
Borrowing shall have been reduced, by payment, prepayment, or conversion of part
thereof to be less than $500,000, such Offshore Rate Loans shall automatically
convert into Base Rate Loans, and on and after such date the right of the
Company to continue such Loans as, and convert such Loans into, Offshore Rate
Loans shall terminate.
37
<PAGE> 45
(b)The Company shall deliver a Notice of Conversion/Continuation in
accordance with Section 11.2 to be received by the Agent not later than 9:00
a.m. (San Francisco time) (i) at least three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans; and (ii) on the Conversion/Continuation Date, if the
Loans are to be converted into Base Rate Loans, specifying:
(A)the proposed Conversion/Continuation Date;
(B)the aggregate amount of Loans to be converted or continued;
(C)the nature of the proposed conversion or continuation; and
(D)other than in the case of Base Rate Loans, the duration of the
requested Interest Period.
(c)If upon the expiration of any Interest Period applicable to Offshore
Rate Loans, the Company has failed to select timely a new Interest Period to be
applicable to such Offshore Rate Loans or if any Default or Event of Default
shall then exist, the Company shall be deemed to have elected to convert such
Offshore Rate Loans into Base Rate Loans effective as of the expiration date of
such current Interest Period.
(d)Upon receipt of a Notice of Conversion/Continuation, the Agent will
promptly notify each Bank thereof, or, if no timely notice is provided by the
Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made pro rata
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e)Unless the Majority Banks shall otherwise agree, during the existence
of a Default or Event of Default, the Company may not elect to have a Loan
converted into or continued as an Offshore Rate Loan.
(f)Notwithstanding any other provision contained in this Agreement, after
giving effect to any conversion or continuation of any Loans there shall not be
more than six different Interest Periods in effect in respect of all Loans
(other than Swingline Loans) then outstanding.
2.7 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS
The Company may, upon not less than five Business Days prior notice to the
Agent, terminate or permanently reduce the Aggregate Revolving Commitment (and,
to the extent provided in subsection 2.9(b), the L/C Commitment and the
Swingline Commitment) by an aggregate minimum amount of $5,000,000 or any
38
<PAGE> 46
multiple of $5,000,000 in excess thereof; provided that no such reduction or
termination shall be permitted if, after giving effect thereto and to any
prepayments of the Loans made on the effective date thereof, the Effective
Amount of Revolving Loans, Swingline Loans and L/C Obligations would exceed the
Aggregate Revolving Commitment then in effect. Once reduced in accordance with
this Section 2.7, the Aggregate Revolving Commitment may not be increased. Any
reduction of the Aggregate Revolving Commitment shall be applied to each Bank's
Revolving Commitment in accordance with such Bank's Commitment Percentage. All
accrued commitment fees to the effective date of any reduction or termination of
the Aggregate Revolving Commitment shall be paid on the effective date of such
reduction or termination.
2.8 OPTIONAL PREPAYMENTS
Subject to Section 4.4, the Company may, at any time or from time to time,
by written notice delivered to the Agent at least three Business Days prior to
the proposed prepayment date in the case of Offshore Rate Loans, on the proposed
prepayment date in the case of Base Rate Loans, and on the proposed prepayment
date (which notice must be received by the Agent not later than 9:00 a.m. (San
Francisco time)) in the case of Swingline Loans, (i) ratably prepay Bridge Loans
or Revolving Loans, in whole or in part, in minimum principal amounts of
$5,000,000 or any multiple of $1,000,000 in excess thereof, and (ii) prepay in
whole or in part Swingline Loans in minimum principal amounts of $250,000 or any
multiple of $100,000 in excess thereof, or in such other amounts with the
consent of the Swingline Bank. Such notice of prepayment shall specify (i) the
date and amount of such prepayment, (ii) whether such prepayment is of Base Rate
Loans or Offshore Rate Loans, or any combination thereof, and whether such Loans
constitute Bridge Loans, Swingline Loans, or Revolving Loans, and (iii) if
applicable, whether such prepayment is of a Revolving Facility Tranche Loan or a
Capital Expenditure Tranche Loan, or both. Such notice shall not thereafter be
revocable by the Company and the Agent will promptly notify (i) in the case of
Bridge Loans and Revolving Loans, each Bank thereof and of such Bank's Pro Rata
Share of such prepayment, and (ii) in the case of Swingline Loans, the Swingline
Bank thereof and of the amount of such prepayment. If such notice is given by
the Company, the Company shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein,
together with accrued interest to each such date on the amount prepaid and any
amounts required pursuant to Section 4.4.
2.9 MANDATORY PREPAYMENTS OF LOANS; MANDATORY COMMITMENT REDUCTIONS
(a)Mandatory Prepayments.
39
<PAGE> 47
(i)Asset Dispositions. If the Company or any of its Restricted
Subsidiaries shall at any time or from time to time make or agree to make a sale
of Properties permitted by subsection 8.2(i), or harvest excess Timber permitted
by Section 8.3, then (A) the Net Proceeds of such sale shall either be paid pro
rata by the Company as a prepayment of Qualified Debt or be reinvested in
accordance with subsection 8.2(i), or (B) the Net Proceeds from such excess
harvest shall either be paid pro-rata by the Company as a prepayment of
Qualified Debt or be reinvested in accordance with Section 8.3. Prepayments to
Banks under this subsection 2.9(a) shall be applied first to repay the
outstanding principal amount of the Bridge Loans, and second, following payment
in full of the Bridge Loans, to repay the outstanding principal amount of the
Revolving Loans.
(ii)Equity and Debt Issuance. The Company shall prepay the
outstanding principal balance of the Bridge Loans promptly upon, and in no event
later than three Business Days after, each receipt by the Company of Equity
Proceeds or Debt Proceeds in an amount equal to the lesser of such Equity
Proceeds or Debt Proceeds, as applicable, and the outstanding principal balance
of the Bridge Loans.
(iii)L/C Obligations. If on any date the Effective Amount of L/C
Obligations exceeds the L/C Commitment, the Company shall Cash Collateralize on
such date the outstanding Letters of Credit in an amount equal to the excess of
the Effective Amount of L/C Obligations over the L/C Commitment. Subject to
Section 4.4, if on any date after giving effect to any Cash Collateralization
made on such date pursuant to the preceding sentence, the Effective Amount of
all Revolving Loans, Swingline Loans, and L/C Obligations exceeds the Aggregate
Revolving Commitment, the Company shall immediately, and without notice or
demand, prepay the outstanding principal amount of the Revolving Loans,
Swingline Loans and L/C Advances by an amount equal to the applicable excess.
(iv)Swingline Loans. The Company shall be required to prepay
Swingline Loans (A) if following any reduction of the Swingline Commitment
pursuant to subsection 2.9(b) the Effective Amount of Swingline Loans would
exceed the Swingline Commitment as reduced, the Company shall prepay on the
reduction date the Swingline Loans in an amount equal to the amount of such
excess, and (B) so that for one Business Day during each successive two calendar
week period the aggregate principal amount of Swingline Loans shall be $0 (a
"Swingline Clean-Up Day"), the Company shall prepay on the Swingline Clean-Up
Day the outstanding principal amount of the Swingline Loans (which Swingline
Loans may not be reborrowed until such Swingline Clean-Up Day has ended).
(v)Revolving Loans. The Company shall prepay the Revolving Loans on
or before the third anniversary of the date hereof so as to cause the Effective
Amount of Revolving Loans not to exceed $350,000,000.
40
<PAGE> 48
(vi)Revolving Facility Tranche Loans. If the Company has given a
notice pursuant to Section 2.18 allocating all or a portion of the Loans to the
Revolving Facility Tranche, the Company shall cause, for a period of at least 45
consecutive days during the 12 calendar month period after the effective date of
such notice and during each successive 12 calendar month period prior to the
Revolving Termination Date, no L/C Obligations to be outstanding and the
aggregate principal amount of Revolving Facility Tranche Loans to be $0.
(b)Mandatory Commitment Reductions.
(i)The Aggregate Revolving Commitments shall be reduced from time to
time by the amount of any mandatory prepayment that would be required by
subsections 2.9(a)(i) if Revolving Loans were outstanding, whether or not any
Revolving Loans are outstanding at such time. Such reduction shall be applied
pro rata among the respective Revolving Commitments of the Banks and shall be
effective as of the earlier of the date that such prepayment is made or the date
by which such prepayment is (or would be) due and payable hereunder. All accrued
commitment fees to the effective date of any reduction or termination of the
Aggregate Revolving Commitment shall be paid on the effective date of such
reduction or termination.
(ii)No reduction in the Aggregate Revolving Commitment pursuant to
Section 2.7 or subsection 2.9(b)(i) shall reduce the L/C Commitment unless and
until the Aggregate Revolving Commitment has been reduced to $20,000,000;
thereafter, any reduction in the Aggregate Revolving Commitment pursuant to
Section 2.7 shall equally reduce the L/C Commitment.
(iii)At no time shall the Swingline Commitment exceed the Aggregate
Revolving Commitment, and any reduction of the Aggregate Revolving Commitment
which reduces the Aggregate Revolving Commitment below the then current amount
of the Swingline Commitment shall result in an automatic corresponding reduction
of the Swingline Commitment to the amount of the Aggregate Revolving Commitment,
as so reduced, without any action on the part of the Swingline Bank.
(iv)The Aggregate Revolving Commitment shall reduce on the third
anniversary of the date hereof to $350,000,000 if not previously reduced to or
below such amount. Such reduction shall be applied pro rata among the respective
Revolving Commitments of the Banks. All accrued commitment fees to the effective
date of such reduction of the Aggregate Revolving Commitment shall be paid on
the date of such reduction.
(c)General. Any prepayments of Loans pursuant to subsection 2.9(a) shall
be applied (within the allocation to Bridge Loans or Revolving Loans as
indicated in subsection 2.9(a)) first to any Base Rate Loans then outstanding,
second to Cash
41
<PAGE> 49
Collateralize or to prepay Swingline Loans as directed by the Swingline Bank in
its sole discretion, and third, at the Company's option, to Cash Collateralize
or to prepay in the inverse order of their stated maturity Offshore Rate Loans.
Subject to the foregoing and so long as no default or Event of Default shall
then exist, if applicable, any such prepayments shall be applied to Revolving
Facility Tranche Loans and Capital Expenditure Tranche Loans as directed by the
Company. The Company shall pay, together with each prepayment under this Section
2.9, accrued interest on the amount prepaid and any amounts required pursuant to
Section 4.4.
2.10 REPAYMENT
(a)The Company shall repay to the Banks in full on the Bridge Termination
Date the Effective Amount of all Bridge Loans.
(b)The Company shall repay to the Banks in full on the Revolving
Termination Date the Effective Amount of all Revolving Loans.
(c)The Company shall repay to the Swingline Bank in full on the Revolving
Termination Date the Effective Amount of all Swingline Loans.
2.11 INTEREST
(a)Subject to subsection 2.11(c): (i) each Loan (other than any Swingline
Loan) shall bear interest on the outstanding principal amount thereof from the
date when made until it becomes due at a rate per annum equal to the Offshore
Rate or the Base Rate, as the case may be, plus the Applicable Margin; and (ii)
each Swingline Loan shall bear interest on the principal amount thereof from the
date when made until it becomes due at a rate per annum equal to the Base Rate
plus the Applicable Margin or any other rate agreed to by the Swingline Bank in
its sole discretion.
(b)Interest on each Loan shall be paid in arrears on each Interest Payment
Date and in the case of a Swingline Loan bearing an interest rate other than the
Base Rate, on the date agreed to by the Swingline Bank in its sole discretion.
Interest shall also be paid on the date of any prepayment of Loans pursuant to
Section 2.8 and 2.9 for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the Agent at the request or with
the consent of the Majority Banks.
(c)While any Event of Default exists or after acceleration, the Company
shall pay interest (after as well as before entry of judgment thereon to the
extent permitted by law) on the principal amount of all Obligations due and
unpaid, at a rate per annum that is determined, in the case of Loans other than
Base Rate Loans, by adding 2% per annum to the Applicable Margin then in effect
for such Loans
42
<PAGE> 50
and, in the case of other Obligations, at a rate equal to the Base Rate plus 2%
per annum.
(d)Anything herein to the contrary notwithstanding, the obligations of the
Company hereunder shall be subject to the limitation that payments of interest
shall not be required, for any period for which interest is computed hereunder,
to the extent (but only to the extent) that contracting for or receiving such
payment by the respective Bank would be contrary to the provisions of any law
applicable to such Bank limiting the highest rate of interest which may be
lawfully contracted for, charged or received by such Bank, and in such event the
Company shall pay such Bank interest at the highest rate permitted by applicable
law.
2.12 SWINGLINE LOANS
(a)Subject to the terms and conditions hereof, the Swingline Bank
severally agrees to make a portion of the Aggregate Revolving Commitment
available to the Company by making swingline loans (individually, a "Swingline
Loan"; collectively, the "Swingline Loans") to the Company on any Business Day
during the period from the Closing Date to the Revolving Termination Date in
accordance with the procedures set forth in this Section in an aggregate
principal amount at any one time outstanding not to exceed $25,000,000,
notwithstanding the fact that such Swingline Loans, when aggregated with the
Swingline Bank's outstanding Loans, may exceed the Swingline Bank's Revolving
Commitment (the amount of such commitment of the Swingline Bank to make
Swingline Loans to the Company pursuant to this subsection 2.12(a), as the same
shall be reduced pursuant to subsection 2.9(b) or as a result of any assignment
pursuant to Section 11.8, the Swingline Bank's "Swingline Commitment");
provided, that at no time shall (i) the Effective Amount of all Revolving Loans,
Swingline Loans and L/C Obligations exceed the Aggregate Revolving Commitment,
or (ii) the Effective Amount of all Swingline Loans exceed the Swingline
Commitment. Additionally, no more than four Swingline Loans may be outstanding
at any one time. Within the foregoing limits, and subject to the other terms and
conditions hereof, the Company may borrow under this subsection 2.12(a), prepay
pursuant to subsection 2.8 and reborrow pursuant to this subsection 2.12(a).
The Company shall provide the Agent (with a copy to the Swingline Bank)
irrevocable written notice (including notice via facsimile confirmed immediately
by a telephone call) in the form of a Notice of Borrowing of any Swingline Loan
requested hereunder (which notice must be received by the Swingline Bank and the
Agent prior to 12:00 noon (San Francisco time) on the requested Borrowing date)
specifying (i) the amount to be borrowed, (ii) the requested Borrowing date,
which must be a Business Day, and (iii) with respect to any requested Swingline
Loan after the date the Company gives the notice regarding allocation of Loans
pursuant to Section 2.18, whether the requested
43
<PAGE> 51
Swingline Loan shall be allocated to the Revolving Facility Tranche or the
Capital Expenditure Tranche. Upon receipt of the Notice of Borrowing, the
Swingline Bank will immediately confirm with the Agent (by telephone or in
writing) that the Agent has received a copy of the Notice of Borrowing from the
Company and, if not, the Swingline Bank will provide the Agent with a copy
thereof. Unless the Swingline Bank has received notice prior to 2:00 p.m. on
such Borrowing date from the Agent (A) directing the Swingline Bank not to make
the requested Swingline Loan as a result of the limitations set forth in the
proviso set forth in the first sentence of subsection 2.12(a); or (B) that one
or more conditions specified in Article V are not then satisfied; then, subject
to the terms and conditions hereof, the Swingline Bank will, not later than 3:00
p.m. (San Francisco time) on the Borrowing date specified in such Notice, make
the amount of its Swingline Loan available to the Agent for the account of the
Company at the Agent's Payment Office in funds immediately available to the
Agent. The proceeds of such Swingline Loan will then promptly be made available
to the Company by the Agent crediting the account of the Company on the books of
BofA with the aggregate of the amounts made available to the Agent by the
Swingline Bank and in like funds as received by the Agent. Each Borrowing
pursuant to this Section shall be in an aggregate principal amount equal to two
hundred fifty thousand dollars ($250,000) or an integral multiple of one hundred
thousand dollars ($100,000) in excess thereof, unless otherwise agreed by the
Swingline Bank.
(b)If (i) any Swingline Loans shall remain outstanding at 9:00 a.m. (San
Francisco time) on the Business Day immediately prior to a Swingline Clean-Up
Day and by such time on such Business Day the Agent shall have received neither
(A) a Notice of Borrowing delivered pursuant to Section 2.4 requesting that
Revolving Loans be made pursuant to Section 2.1 on the Swingline Clean-Up Day in
an amount at least equal to the aggregate principal amount of such Swingline
Loans, nor (B) any other notice indicating the Company's intent to repay such
Swingline Loans with funds obtained from other sources, or (ii) any Swingline
Loans shall remain outstanding during the existence of a Default or Event of
Default and the Swingline Bank shall in its sole discretion notify the Agent
that the Swingline Bank desires that such Swingline Loans be converted into
Revolving Loans, then the Agent shall be deemed to have received a Notice of
Borrowing from the Company pursuant to Section 2.4 requesting that Base Rate
Loans be made pursuant to Section 2.1 on such Swingline Clean-Up Day (in the
case of the circumstances described in clause (i) above) or on the first
Business Day subsequent to the date of such notice from the Swingline Bank (in
the case of the circumstances described in clause (ii) above) in an amount equal
to the aggregate amount of such Swingline Loans, and the procedures set forth in
subsections 2.4(b) and 2.4(c) shall be followed in making such Base Rate Loans;
provided, that such Base Rate Loans shall be made notwithstanding the Company's
failure to comply with subsections 5.2(b) and 5.2(c); and provided, further,
that if a Borrowing of Revolving Loans becomes legally impracticable and if so
required by the Swingline
44
<PAGE> 52
Bank at the time such Revolving Loans are required to be made by the Banks in
accordance with this subsection 2.12(c), each Bank agrees that in lieu of making
Revolving Loans as described in this subsection 2.12(c), such Bank shall
purchase a participation from the Swingline Bank in the applicable Swingline
Loans in an amount equal to such Bank's Commitment Percentage of such Swingline
Loans, and the procedures set forth in subsections 11.8 shall be followed in
connection with the purchases of such participations. Upon such purchases of
participations, the prepayment requirements of subsection 2.9(a)(iii) shall be
deemed waived with respect to such Swingline Loans. The proceeds of such Base
Rate Loans, or participations purchased, shall be applied to repay such
Swingline Loans. A copy of each notice given by the Agent to the Banks pursuant
to this subsection 2.12(c) with respect to the making of Revolving Loans, or the
purchases of participations, shall be promptly delivered by the Agent to the
Company. Each Bank's obligation in accordance with this Agreement to make the
Revolving Loans, or purchase the participations, as contemplated by this
subsection 2.12(c), shall be absolute and unconditional and shall not be
affected by any circumstance, including (1) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against the
Swingline Bank, the Company or any other Person for any reason whatsoever; (2)
the occurrence or continuance of a Default, an Event of Default or a Material
Adverse Effect; or (3) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
2.13 FEES
In addition to certain fees described in Section 3.8:
(a)Agency and Participation Fees. The Company shall pay to BofA for BofA's
own account fees in the amounts and at the times set forth in a letter agreement
between the Company, BofA and the Arranger dated August 30, 1996. The foregoing
fees shall be non-refundable.
(b)Commitment Fees. The Company shall pay to the Agent for the account of
each Bank a commitment fee on the average daily unused portion of such Bank's
Revolving Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Agent, equal to the Commitment Fee Percentage. For
purposes of calculating utilization under this subsection, (i) the Aggregate
Revolving Commitment shall be deemed used to the extent of the Effective Amount
of all Revolving Loans and L/C Obligations, and (ii) with respect to the
Revolving Commitment of the Swingline Bank, the making of any Swingline Loan
shall not be considered a use of a portion of such Swingline Bank's Revolving
Commitment. Such commitment fee shall accrue from the Closing Date to the
Revolving Termination Date and shall be due and payable quarterly in arrears on
the last Business Day of each calendar quarter, commencing on the first such day
45
<PAGE> 53
after this Agreement is executed by the Company through the Revolving
Termination Date, with the final payment to be made on the Revolving Termination
Date; provided that, in connection with any reduction or termination of the
Aggregate Revolving Commitment pursuant to Section 2.7 or Section 2.9, the
accrued commitment fee calculated for the period ending on such date shall also
be paid on the date of such reduction or termination, with the next succeeding
quarterly payment being calculated on the basis of the period from the reduction
or termination date to such quarterly payment date. The commitment fees provided
in this subsection shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or more conditions in
Article V are not met.
2.14 COMPUTATION OF FEES AND INTEREST
(a)All computations of interest payable in respect of Base Rate Loans at
all times that the Base Rate is determined by BofA's "reference rate" shall be
made on the basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed. All other computations of fees and interest under this Agreement
shall be made on the basis of a 360-day year and actual days elapsed, which
results in more interest being paid than if computed on the basis of a 365-day
year. Interest and fees shall accrue during each period during which interest or
such fees are computed from the first day thereof to the last day thereof.
(b)The Agent will, with reasonable promptness, notify the Company and the
Banks of each determination of an Offshore Rate; provided that any failure to do
so shall not relieve the Company of any liability hereunder or provide the basis
for any claim against the Agent. Any change in the interest rate on a Loan
resulting from a change in the Applicable Margin, Reserve Percentage,
Eurocurrency Reserve Percentage, or the Assessment Rate shall become effective
as of the opening of business on the day on which such change in the Applicable
Margin, Reserve Percentage, Eurocurrency Reserve Percentage, or the Assessment
Rate becomes effective. The Agent will with reasonable promptness notify the
Company and the Banks of the effective date and the amount of each such change,
provided that any failure to do so shall not relieve the Company of any
liability hereunder or provide the basis for any claim against the Agent.
(c)Each determination of an interest rate by the Agent pursuant hereto
shall be conclusive and binding on the Company and the Banks in the absence of
manifest error.
2.15 PAYMENTS BY THE COMPANY
(a)All payments (including prepayments) to be made by the Company on
account of principal, interest, fees and other amounts required hereunder shall
be made without set-off, recoupment or counterclaim; shall, except as otherwise
46
<PAGE> 54
expressly provided herein, be made to the Agent for the ratable account of the
Banks at the Agent's Payment Office, and shall be made in dollars and in
immediately available funds, no later than 10:00 a.m. (San Francisco time) on
the date specified herein. The Agent will promptly distribute to each Bank its
Pro Rata Share (or other applicable share as expressly provided herein) of such
principal, interest, fees or other amounts, in like funds as received. Any
payment which is received by the Agent later than 10:00 a.m. (San Francisco
time) shall be deemed to have been received on the immediately succeeding
Business Day and any applicable interest or fee shall continue to accrue.
(b)Whenever any payment hereunder shall be stated to be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day, and such extension of time shall in such case be included in the
computation of interest or fees, as the case may be; subject to the provisions
set forth in the definition of "Interest Period" herein.
(c)Unless the Agent shall have received notice from the Company prior to
the date on which any payment is due to the Banks hereunder that the Company
will not make such payment in full as and when required hereunder, the Agent may
assume that the Company has made such payment in full to the Agent on such date
in immediately available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, cause to be distributed to each Bank on such
due date an amount equal to the amount then due such Bank. If and to the extent
the Company shall not have made such payment in full to the Agent, each Bank
shall repay to the Agent on demand such amount distributed to such Bank,
together with interest thereon for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the Federal Funds Rate as in effect for each such day.
2.16 PAYMENTS BY THE BANKS TO THE AGENT
(a)Unless the Agent shall have received notice from a Bank on the Closing
Date or, with respect to each Borrowing after the Closing Date, at least one
Business Day prior to the date of any proposed Borrowing, that such Bank will
not make available to the Agent as and when required hereunder for the account
of the Company the amount of that Bank's Commitment Percentage of the Borrowing,
the Agent may assume that each Bank has made such amount available to the Agent
in immediately available funds on the Borrowing date and the Agent may (but
shall not be so required), in reliance upon such assumption, make available to
the Company on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the Agent in immediately
available funds and the Agent in such circumstances has made available to the
Company such amount, that Bank shall on the next Business Day following the date
of such Borrowing make such amount available to the Agent, together with
interest at the
47
<PAGE> 55
Federal Funds Rate for and determined as of each day during such
period. A notice of the Agent submitted to any Bank with respect to amounts
owing under this subsection 2.16(a) shall be conclusive, absent manifest error.
If such amount is so made available, such payment to the Agent shall constitute
such Bank's Loan on the date of such Borrowing for all purposes of this
Agreement. If such amount is not made available to the Agent on the next
Business Day following the date of such Borrowing, the Agent shall notify the
Company of such failure to fund and, upon demand by the Agent, the Company shall
pay such amount to the Agent for the Agent's account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the interest rate applicable at the time to the Loans comprising
such Borrowing.
(b)The failure of any Bank to make any Loan on any date of borrowing shall
not relieve any other Bank of any obligation hereunder to make a Loan on the
date of such borrowing, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on the date of any
borrowing.
2.17 SHARING OF PAYMENTS, ETC.
If, other than as expressly provided elsewhere herein, any Bank shall
obtain on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Commitment Percentage of payments on account of the Loans obtained
by all the Banks, such Bank shall forthwith (a) notify the Agent of such fact,
and (b) purchase from the other Banks such participations in the Loans made by
them as shall be necessary to cause such purchasing Bank to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from the purchasing Bank, such
purchase shall to that extent be rescinded and each other Bank shall repay to
the purchasing Bank the purchase price paid therefor, together with an amount
equal to such paying Bank's proportionate share (according to the proportion of
(i) the amount of such paying Bank's required repayment to (ii) the total amount
so recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from another Bank
pursuant to this Section 2.17 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off, but subject
to Section 11.9) with respect to such participation as fully as if such Bank
were the direct creditor of the Company in the amount of such participation. The
Agent will keep records (which shall be conclusive and binding in the absence of
manifest error) of participations purchased pursuant to this Section 2.17 and
will in each case notify the Banks following any such purchases or repayments.
48
<PAGE> 56
2.18 LOAN TRANCHES
The Company may, at any time and from time to time, upon at least five
Business Days notice to the Agent, allocate all or a portion of Borrowings,
including with respect to Swingline Loans and L/C Obligations, to a revolving
credit facility tranche (the "Revolving Facility Tranche") or a capital
expenditure tranche (the "Capital Expenditure Tranche"), or both; provided that
(A)at no time shall the Effective Amount of all Revolving Loans and
Swingline Loans allocated to the Revolving Facility Tranche plus the Effective
Amount of all L/C Obligations exceed $15,000,000;
(B)at no time shall the Effective Amount of all Revolving Loans and
Swingline Loans allocated to the Capital Expenditure Tranche exceed $20,000,000;
(C)upon allocation to the Revolving Facility Tranche or the Capital
Expenditure Tranche, as case may be, Loans shall remain so allocated
notwithstanding any conversion or continuation of Loans pursuant to Section 2.4;
(D)the Company and each of the Banks agree that the establishment of the
Revolving Facility Tranche and the Capital Expenditure Tranche is intended to
assist the Company in its compliance with Section 8.5 and the corresponding
provisions of the Note Agreements, the 1994 Senior Note Agreements and the
Mortgage Note Agreements. Accordingly, neither the failure by the Company to
comply in any respect with this Section 2.18 nor the failure by the Agent or any
Bank to identify or remedy such noncompliance shall give rise to any liability
against the Agent or any Bank or any defense to compliance by the Company with
Section 8.5; and
(E)all Letters of Credit shall be deemed allocated to the Revolving
Facility Tranche.
Such notice of allocation shall specify (i) the effective date of such
allocation which shall not be a date earlier than the date of such notice, (ii)
the aggregate principal amount of Loans (identified by Type of Loan) and L/C
Obligations to be allocated to the Revolving Facility Tranche, the Capital
Expenditure Tranche, or both, as the case may be, and (iii) in the case of
allocations to the Capital Expenditure Tranche, the Company shall represent and
warrant that the proceeds of all Loans allocated thereto have been used solely
to finance capital improvements, expansions and additions to the Company's
property (including Timberlands), plant and equipment. The Agent will promptly
notify the Banks of such notice of allocation of Loans and L/C Obligations.
49
<PAGE> 57
THE LETTERS OF CREDIT
3.1 THE LETTER OF CREDIT FACILITY
(a)On the terms and conditions set forth herein, (i) each Issuing Bank
agrees, (A) from time to time on any Business Day during the period from the
Closing Date until 30 days before the Revolving Termination Date to issue
Letters of Credit for the account of the Company or the Facilities Subsidiary,
and to amend or renew Letters of Credit previously issued by it, in accordance
with subsections 3.2(c) and 3.2(d), and (B) to honor drafts under the Letters of
Credit; and (ii) the Banks severally agree to participate in Letters of Credit
Issued for the account of the Company or the Facilities Subsidiary; provided,
that the Issuing Banks shall not be obligated to Issue, and no Bank shall be
obligated to participate in, any Letter of Credit if as of the date of Issuance
of such Letter of Credit (the "Issuance Date") (1) the Effective Amount of all
Revolving Loans, Swingline Loans, and L/C Obligations exceeds the Aggregate
Revolving Commitment, (2) the Effective Amount of all Revolving Loans of such
Bank plus the participation of such Bank, if any, in the Effective Amount of all
Swingline Loans and L/C Obligations exceeds such Bank's Revolving Commitment, or
(3) the Effective Amount of L/C Obligations exceeds the L/C Commitment. Within
the foregoing limits, and subject to the other terms and conditions hereof, the
Company's ability to obtain Letters of Credit shall be fully revolving, and,
accordingly, the Company may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit which have expired or which have been drawn
upon and reimbursed. The Company shall be primarily liable for all obligations
hereunder and under the L/C-Related Documents with respect to any Letter of
Credit Issued for the account of the Facilities Subsidiary.
(b)Each of the Issuing Banks is under no obligation to Issue any Letter of
Credit if:
(i)any order, judgment or decree of any Governmental Authority or
arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank
from Issuing such Letter of Credit, or any Requirement of Law applicable to such
Issuing Bank or any request or directive (whether or not having the force of
law) from any Governmental Authority with jurisdiction over such Issuing Bank
shall prohibit, or request that such Issuing Bank refrain from, the Issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Issuing Bank with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which such Issuing Bank is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon such Issuing Bank any unreimbursed loss, cost or expense which was
not applicable on the Closing Date and which such Issuing Bank in good faith
deems material to it;
50
<PAGE> 58
(ii)such Issuing Bank has received written notice from any Bank, the
Agent or the Company, on or prior to the Business Day prior to the requested
date of Issuance of such Letter of Credit, that one or more of the applicable
conditions contained in Article V is not then satisfied;
(iii)the expiry date of any requested Letter of Credit is (A) more
than one year after the date of Issuance, unless the Majority Banks have
approved such expiry date in writing, or (B) after the Revolving Termination
Date, unless all of the Banks have approved such expiry date in writing;
(iv)the expiry date of any requested Letter of Credit is prior to
the maturity date of any financial obligation to be supported by the requested
Letter of Credit, unless such Letter of Credit is issued in connection with
worker's compensation or to secure self-insurance deductibles or certain
payments required in connection with export log yards, or all of the Banks have
approved such expiry date in writing;
(v)any requested Letter of Credit does not provide for drafts, or is
not otherwise in form and substance reasonably acceptable to such Issuing Bank,
or the Issuance of a Letter of Credit may violate any policies of such Issuing
Bank applicable to customers and credits of a type similar to the Company and
the transactions contemplated in this Agreement;
(vi)any standby Letter of Credit is for the purpose of supporting
the issuance of any letter of credit by any other Person;
(vii)such Letter of Credit is in a face amount less than $100,000 or
to be denominated in a currency other than Dollars; or
(viii)the requested Letter of Credit provides for payment thereunder
sooner than the Business Day following the presentation to such Issuing Bank of
the documentation required thereunder.
3.2 ISSUANCE, AMENDMENT AND RENEWAL OF LETTERS OF CREDIT
(a)Each Letter of Credit shall be issued upon the irrevocable written
request of the Company (or, if such Letter of Credit is to be for the account of
the Facilities Subsidiary, the joint and several irrevocable written request of
the Company and the applicable Facilities Subsidiary) received by an Issuing
Bank (with a copy sent by the Company to the Agent) at least five days (or such
shorter time as such Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of issuance. Each such request for
issuance of a Letter of Credit shall be made by an original writing or by
facsimile, confirmed immediately in an original writing, in the form of an L/C
Application, and shall specify in form and detail satisfactory to such Issuing
Bank:
51
<PAGE> 59
(i)the proposed date of issuance of the Letter of Credit (which
shall be a Business Day);
(ii)the face amount of the Letter of Credit;
(iii)the expiry date of the Letter of Credit;
(iv)the name and address of the beneficiary thereof;
(v)the documents to be presented by the beneficiary of the Letter of
Credit in case of any drawing thereunder;
(vi)the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; and
(vii)such other usual and customary matters as the Issuing Bank may
require.
(b)At least three Business Days prior to the Issuance of any Letter of
Credit or any amendment or renewal of a Letter of Credit, the Issuing Bank
issuing such Letter of Credit will confirm with the Agent (by telephone or in
writing) that the Agent has received a copy of the L/C Application or L/C
Amendment Application from the Company and, if not, such Issuing Bank will
provide the Agent with a copy thereof. Unless such Issuing Bank has received
notice on or before the Business Day immediately preceding the date such Issuing
Bank is to issue, amend or renew a requested Letter of Credit from the Agent (A)
directing such Issuing Bank not to issue, amend or renew such Letter of Credit
because such issuance amendment or renewal is not then permitted under
subsection 3.1(a) as a result of the limitations set forth in clauses (1)
through (3) thereof or subsection 3.1(b)(ii); or (B) that one or more conditions
specified in Article V are not then satisfied; then, subject to the terms and
conditions hereof, such Issuing Bank shall, on the requested date, issue a
Letter of Credit for the account of the Company or amend or renew a Letter of
Credit, as the case may be, in accordance with such Issuing Bank's usual and
customary business practices.
(c)From time to time while a Letter of Credit is outstanding and prior to
the Revolving Termination Date, an Issuing Bank shall, upon the written request
of the Company received by such Issuing Bank (with a copy sent by the Company to
the Agent) at least five days (or such shorter time as such Issuing Bank may
agree in a particular instance in its sole discretion) prior to the proposed
date of amendment, amend any Letter of Credit issued by it. Each such request
for amendment of a Letter of Credit shall be made by an original writing or by
facsimile, confirmed immediately in an original writing, made in the form of an
L/C Amendment Application and shall specify in form and detail satisfactory to
such Issuing Bank:
52
<PAGE> 60
(i)the Letter of Credit to be amended;
(ii)the proposed date of amendment of the Letter of Credit (which
shall be a Business Day);
(iii)the nature of the proposed amendment; and
(iv)such other usual and customary matters as such Issuing Bank may
require.
Such Issuing Bank shall be under no obligation to amend any Letter of Credit if:
(A) such Issuing Bank would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms of this Agreement; or (B) the
beneficiary of any such letter of Credit does not accept the proposed amendment
to the Letter of Credit. The Agent will promptly notify the Banks of the receipt
by it of any L/C Application or L/C Amendment Application.
(d)Each Issuing Bank and the Banks agree that, while a Letter of Credit is
outstanding and prior to the Revolving Termination Date, at the option of the
Company and upon the written request of the Company received by an Issuing Bank
(with a copy sent by the Company to the Agent) at least five days (or such
shorter time as such Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of notification of renewal, such Issuing
Bank shall be entitled to authorize the automatic renewal of any Letter of
Credit issued by it. Each such request for renewal of a Letter of Credit shall
be made by an original writing or by facsimile, confirmed immediately in an
original writing, in the form of an L/C Amendment Application, and shall specify
in form and detail satisfactory to such Issuing Bank:
(i)the Letter of Credit to be renewed;
(ii)the proposed date of notification of renewal of the Letter of
Credit (which shall be a Business Day);
(iii)the revised expiry date of the Letter of Credit; and
(iv)such other usual and customary matters as the Issuing Bank may
require.
Such Issuing Bank shall be under no obligation so to renew any Letter of Credit
if: (A) such Issuing Bank would have no obligation at such time to issue or
amend such Letter of Credit in its renewed form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed renewal of the Letter of Credit. If any outstanding Letter of
Credit shall provide that it shall be automatically renewed unless the
beneficiary thereof receives notice
53
<PAGE> 61
from such Issuing Bank that such Letter of Credit shall not be renewed, and if
at the time of renewal such Issuing Bank would be entitled to authorize the
automatic renewal of such Letter of Credit in accordance with this subsection
3.2(d) upon the request of the Company but such Issuing Bank shall not have
received any L/C Amendment Application from the Company with respect to such
renewal or other written direction by the Company with respect thereto, such
Issuing Bank shall nonetheless be permitted to allow such Letter of
Credit to renew, and the Company and the Banks hereby authorize such renewal,
and, accordingly, such Issuing Bank shall be deemed to have received an L/C
Amendment Application from the Company requesting such renewal.
(e)In connection with Letters of Credit that automatically renew or extend
their expiry date, each Issuing Bank may, at its election (or as required by the
Agent at the direction of the Majority Banks), deliver any notices of
termination or other communications to any Letter of Credit beneficiary or
transferee, and take any other action as necessary or appropriate, at any time
and from time to time, in order to cause the expiry date of such Letter of
Credit to be a date not later than the Revolving Termination Date.
(f)This Agreement shall control in the event of any conflict with any
L/C-Related Document (other than any Letter of Credit).
(g)Each Issuing Bank will also deliver to the Agent, concurrently or
promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
(h)Each Issuing Bank shall deliver to the Agent such reports with respect
to the Letters of Credit as the Agent may reasonably request from time to time.
3.3 RISK PARTICIPATIONS, DRAWINGS AND REIMBURSEMENTS
(a)Immediately upon the Issuance of each Letter of Credit, each Bank shall
be deemed to, and hereby irrevocably and unconditionally agrees to, purchase
from the Issuing Bank issuing such Letter of Credit a participation in such
Letter of Credit and each drawing thereunder in an amount equal to the product
of (i) the Commitment Percentage of such Bank, times (ii) the maximum amount
available to be drawn under such Letter of Credit and the amount of such
drawing, respectively. For purposes of Section 2.1, each Issuance of a Letter of
Credit shall be deemed to utilize the Revolving Commitment of each Bank by an
amount equal to the amount of such participation.
(b)In the event of any request for a drawing under a Letter of Credit by
the beneficiary or transferee thereof, the Issuing Bank which issued such Letter
of Credit will promptly notify the Company. The Company shall reimburse such
54
<PAGE> 62
Issuing Bank, directly or with the proceeds of a Loan, prior to 10:00 a.m. (San
Francisco time), on each date that any amount is paid by such Issuing Bank under
any Letter of Credit (each such date, an "Honor Date"), in an amount equal to
the amount so paid by such Issuing Bank. If the Company fails to reimburse such
Issuing Bank for the full amount of any drawing under any Letter of Credit by
10:00 a.m. (San Francisco time) on the Honor Date, such Issuing Bank will
promptly notify the Agent and the Agent will promptly notify each Bank thereof,
and the Company shall be deemed to have requested that Base Rate Loans be
made by the Banks to be disbursed on the Honor Date under such Letter of Credit,
subject to the aggregate amount of the un-utilized portion of the Aggregate
Revolving Commitment and subject to the conditions set forth in Section 5.2. Any
notice given by such Issuing Bank or the Agent pursuant to this subsection
3.3(b) may be oral if immediately confirmed in writing (including by facsimile);
provided that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
(c)Each Bank shall upon any notice pursuant to subsection 3.3(b) make
available to the Agent for the account of the relevant Issuing Bank an amount in
Dollars and in immediately available funds equal to its Commitment Percentage of
the amount of the drawing, whereupon the participating Banks shall (subject to
subsection 3.3(d)) each be deemed to have made a Loan consisting of a Base Rate
Loan to the Company in that amount. If any Bank so notified fails to make
available to the Agent for the account of such Issuing Bank the amount of such
Bank's Commitment Percentage of the amount of the drawing by no later than 12:00
noon (San Francisco time) on the Honor Date, then interest shall accrue on such
Bank's obligation to make such payment, from the Honor Date to the date such
Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in
effect from time to time during such period. The Agent will promptly give notice
of the occurrence of the Honor Date, but failure of the Agent to give any such
notice on the Honor Date or in sufficient time to enable any Bank to effect such
payment on such date shall not relieve such Bank from its obligations under this
Section 3.3.
(d)With respect to any unreimbursed drawing that is not converted into
Loans consisting of Base Rate Loans to the Company in whole or in part, because
of the Company's failure to satisfy the conditions set forth in Section 5.2 or
for any other reason, the Company shall be deemed to have incurred from the
relevant Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at a rate per annum equal to the Base Rate plus 2% per annum, and
each Bank's payment to such Issuing Bank pursuant to subsection 3.3(c) shall be
deemed payment in respect of its participation in such L/C Borrowing and shall
constitute an L/C Advance from such Bank in satisfaction of its participation
obligation under this Section 3.3.
55
<PAGE> 63
(e)Each Bank's obligation in accordance with this Agreement to make the
Loans or L/C Advances, as contemplated by this Section 3.3, as a result of a
drawing under a Letter of Credit, shall be absolute and unconditional and
without recourse to the relevant Issuing Bank and shall not be affected by any
circumstance, including (i) any set-off, counterclaim, recoupment, defense or
other right which such Bank may have against such Issuing Bank, the Company or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default, an Event of Default or a Material Adverse Effect; or (iii) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing; provided, however, that each Bank's obligation to make
Revolving Loans under this Section 3.3 is subject to the conditions set forth in
Section 5.2.
3.4 REPAYMENT OF PARTICIPATIONS
(a)Upon (and only upon) receipt by the Agent for the account of an Issuing
Bank of immediately available funds from the Company (i) in reimbursement of any
payment made by such Issuing Bank under the Letter of Credit with respect to
which any Bank has paid the Agent for the account of such Issuing Bank for such
Bank's participation in the Letter of Credit pursuant to Section 3.3 or (ii) in
payment of interest thereon, the Agent will pay to each Bank, in the same funds
as those received by the Agent for the account of such Issuing Bank, the amount
of such Bank's Commitment Percentage of such funds, and such Issuing Bank shall
receive the amount of the Commitment Percentage of such funds of any Bank that
did not so pay the Agent for the account of such Issuing Bank.
(b)If the Agent or an Issuing Bank is required at any time to return to
the Company, or to a trustee, receiver, liquidator, custodian, or any official
in any Insolvency Proceeding, any portion of the payments made by the Company to
the Agent for the account of such Issuing Bank pursuant to subsection 3.4(a) in
reimbursement of a payment made under the Letter of Credit or interest or fee
thereon, each Bank shall, on demand of the Agent, forthwith return to the Agent
or such Issuing Bank the amount of its Commitment Percentage of any amounts so
returned by the Agent or such Issuing Bank plus interest thereon from the date
such demand is made to the date such amounts are returned by such Bank to the
Agent or such Issuing Bank, at a rate per annum equal to the Federal Funds Rate
in effect from time to time.
3.5 ROLE OF THE ISSUING BANK
(a)Each Bank and the Company agree that, in paying any drawing under a
Letter of Credit, each of the Issuing Banks shall not have any responsibility to
obtain any document (other than any sight draft and certificates expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of
56
<PAGE> 64
any such document or the authority of the Person executing or delivering any
such document.
(b)No Agent-Related Person nor any of the respective correspondents,
participants or assignees of the Issuing Banks shall be liable to any Bank for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Banks (including the Majority Banks, as applicable); (ii)
any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c)The Company hereby assumes all risks of the acts or omissions of any
beneficiary or transferee with respect to its use of any Letter of Credit;
provided, however, that this assumption is not intended to, and shall not,
preclude the Company's pursuing such rights and remedies as it may have against
the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person nor any of the respective correspondents, participants or
assignees of an Issuing Bank, shall be liable or responsible for any of the
matters described in clauses (i) through (vii) of Section 3.6; provided,
however, anything in such clauses to the contrary notwithstanding, that the
Company may have a claim against an Issuing Bank, and such Issuing Bank may be
liable to the Company, to the extent, but only to the extent, of any direct, as
opposed to consequential or exemplary, damages suffered by the Company which the
Company proves were caused by such Issuing Bank's willful misconduct or gross
negligence or such Issuing Bank's willful or grossly negligent failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of a
sight draft and certificate(s) strictly complying with the terms and conditions
of a Letter of Credit. In furtherance and not in limitation of the foregoing:
(i) each Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary; and (ii) such Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason.
3.6 OBLIGATIONS ABSOLUTE
The obligations of the Company under this Agreement and any L/C-Related
Document to reimburse each Issuing Bank for a drawing under a Letter of Credit,
and to repay any L/C Borrowing and any drawing under a Letter of Credit
converted into Loans shall be unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement and each such other
L/C-Related Document under all circumstances, including the following:
57
<PAGE> 65
(i)any lack of validity or enforceability of this Agreement or any
L/C-Related Document;
(ii)any change in the time, manner or place of payment of, or in any other
term of, all or any of the obligations of the Company in respect of any Letter
of Credit or any other amendment or waiver of or any consent to departure from
all or any of the L/C-Related Documents;
(iii)the existence of any claim, set-off, defense or other right that the
Company may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the Issuing Banks or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by the
L/C-Related Documents or any unrelated transaction;
(iv)any draft, demand, certificate or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in any respect;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under any Letter of Credit;
(v)any payment by an Issuing Bank under any Letter of Credit against
presentation of a draft or certificate that does not strictly comply with the
terms of any Letter of Credit; or any payment made by such Issuing Bank under
any Letter of Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of any Letter of Credit, including any arising in connection with any
Insolvency Proceeding;
(vi)any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Company in respect of any
Letter of Credit; or
(vii)any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Company or a
guarantor.
3.7 CASH COLLATERAL PLEDGE
Upon (i) the request of the Agent, (A) if an Issuing Bank has honored any
full or partial drawing request on any Letter of Credit and such drawing has
resulted in an L/C Borrowing hereunder, or (B) if, as of the Revolving
Termination Date, any Letters of Credit may for any reason remain outstanding
and partially or wholly undrawn, or (ii) the occurrence of the circumstances
described in subsection 2.9 requiring the Company to Cash Collateralize Letters
of Credit, then, the Company
58
<PAGE> 66
shall immediately Cash Collateralize the L/C Obligations in an amount equal to
the L/C Obligations. The Company hereby grants to the Agent, for the benefit of
the Agent, the Issuing Banks and the Banks, a security interest in all such cash
and deposit account balances used to Cash Collateralize the Company's
obligations hereunder.
3.8 LETTER OF CREDIT FEES
(a)The Company shall pay to the Agent for the account of each of the Banks
a letter of credit fee with respect to the Letters of Credit on the average
daily maximum amount available to be drawn of the outstanding Letters of Credit,
computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter based upon Letters of Credit outstanding for that quarter as
calculated by the Agent, equal to the Letter of Credit Rate. Such letter of
credit fees shall be due and payable quarterly in arrears on the last Business
Day of each calendar quarter during which Letters of Credit are outstanding,
commencing on the first such quarterly date to occur after the Closing Date,
through the Revolving Termination Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the final payment to be made
on the Revolving Termination Date (or such later expiration date).
(b)The Company shall pay to the Agent for the account of each Issuing Bank
a letter of credit fronting fee per annum with respect to the outstanding
Letters of Credit issued by such Issuing Bank equal to 0.125% per annum of the
average daily maximum amount available to be drawn under such outstanding
Letters of Credit, computed on a quarterly basis in arrears on the last Business
Day of each calendar quarter based upon Letters of Credit issued by such Issuing
Bank outstanding for that quarter as calculated by the Agent. Such fronting fees
shall be calculated on the basis of a 360-day year and actual days elapsed and
shall be due and payable quarterly in arrears on the last Business Day of each
calendar quarter during which Letters of Credit are outstanding, commencing on
the first such quarterly date to occur after the Closing Date, through the
Revolving Termination Date (or such later date upon which the outstanding
Letters of Credit shall expire), with the final payment to be made on the
Revolving Termination Date (or such later expiration date).
(c)The Company shall pay to each Issuing Bank from time to time on demand
the normal issuance, presentation, amendment and other processing fees, and
other standard costs and charges, of such Issuing Bank relating to letters of
credit as from time to time in effect.
3.9 UNIFORM CUSTOMS AND PRACTICE
The Uniform Customs and Practice for Documentary Credits as published by
the International Chamber of Commerce ("UCP") most recently at the time of
59
<PAGE> 67
issuance of any Letter of Credit shall (unless otherwise expressly provided in
the Letters of Credit) apply to the Letters of Credit.
4. TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 TAXES
(a)Subject to subsection 4.1(g), any and all payments by the Company to
each Bank or the Agent under this Agreement shall be made free and clear of, and
without deduction or withholding for, any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Bank and the Agent, such taxes
(including income taxes or franchise taxes) as are imposed on or measured by
each Bank's net income by the jurisdiction under the laws of which such Bank or
the Agent, as the case may be, is organized or maintains a Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes").
(b)In addition, the Company shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or any
other Loan Documents (hereinafter referred to as "Other Taxes").
(c)Subject to subsection 4.1(g), the Company shall indemnify and hold
harmless each Bank and the Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 4.1) paid by the Bank or the Agent and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. Payment under this indemnification shall be made within 30
days from the date the Bank or the Agent makes written demand therefor. Each
Bank and the Agent, severally with respect to the amounts received by it from
the Company as indemnification under this subsection 4.1(c), agrees upon the
request of the Company and at the Company's expense, to use commercially
reasonable efforts to obtain a refund of any Taxes or Other Taxes for which it
received indemnification hereunder if such Taxes or Other Taxes were incorrectly
or illegally asserted.
(d)If the Company shall be required by law to deduct or withhold any Taxes
or Other Taxes from or in respect of any sum payable hereunder to any Bank or
the Agent, then, subject to subsection 4.1(g):
60
<PAGE> 68
(i)the sum payable shall be increased as necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 4.1) such Bank or the Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made;
(ii)the Company shall make such deductions; and
(iii)the Company shall pay the full amount deducted to the relevant
taxation authority or other authority in accordance with applicable law.
(e)Within 30 days after the date of any payment by the Company of Taxes or
Other Taxes, the Company shall furnish to the Agent the original or a certified
copy of a receipt evidencing payment thereof, or other evidence of payment
satisfactory to the Agent.
(f)Each Bank which is a foreign person (i.e., a person other than a United
States person for United States Federal income tax purposes) agrees that:
(i)it shall, no later than the Closing Date (or, in the case of a
Bank which becomes a party hereto pursuant to Section 11.8 after the Closing
Date, the date upon which the Bank becomes a party hereto) deliver to the
Company through the Agent two accurate and complete signed originals of Internal
Revenue Service Form 4224 or any successor thereto ("Form 4224"), or two
accurate and complete signed originals of Internal Revenue Service Form 1001 or
any successor thereto ("Form 1001"), as appropriate, in each case indicating
that the Bank is on the date of delivery thereof entitled to receive payments of
principal, interest and fees under this Agreement free from withholding of
United States Federal income tax;
(ii)if at any time the Bank makes any changes necessitating a new
Form 4224 or Form 1001, it shall with reasonable promptness deliver to the
Company through the Agent in replacement for, or in addition to, the forms
previously delivered by it hereunder, two accurate and complete signed originals
of Form 4224; or two accurate and complete signed originals of Form 1001, as
appropriate, in each case indicating that the Bank is on the date of delivery
thereof entitled to receive payments of principal, interest and fees under this
Agreement free from withholding of United States Federal income tax;
(iii)it shall, before or promptly after the occurrence of any event
(including the passing of time but excluding any event mentioned in (ii) above)
requiring a change in or renewal of the most recent Form 4224 or Form 1001
previously delivered by such Bank, deliver to the Company through the Agent two
accurate and complete original signed copies of Form 4224 or Form 1001 in
replacement for the forms previously delivered by the Bank; and
61
<PAGE> 69
(iv)it shall, promptly upon the Company's or the Agent's reasonable
request to that effect, deliver to the Company or the Agent (as the case may be)
such other forms or similar documentation as may be required from time to time
by any applicable law, treaty, rule or regulation in order to establish such
Bank's tax status for withholding purposes.
(g)The Company will not be required to pay any additional amounts in
respect of United States Federal income tax pursuant to subsection 4.1(d),
subsection 4.1(a) or subsection 4.1(c) to any Bank for the account of any
Lending Office of such Bank:
(i)if the obligation to pay such additional amounts would not have
arisen but for a failure by such Bank to comply with its obligations under
subsection 4.1(f) in respect of such Lending Office;
(ii)if such Bank shall have delivered to the Company a Form 4224 in
respect of such Lending Office pursuant to subsection 4.1(f), and such Bank
shall not at any time be entitled to exemption from deduction or withholding of
United States Federal income tax in respect of payments by the Company hereunder
for the account of such Lending Office for any reason other than a change in
United States law or regulations or in the official interpretation of such law
or regulations by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the date
of delivery of such Form 4224; or
(iii)if the Bank shall have delivered to the Company a Form 1001 in
respect of such Lending Office pursuant to subsection 4.1(f), and such Bank
shall not at any time be entitled to exemption from deduction or withholding of
United States Federal income tax in respect of payments by the Company hereunder
for the account of such Lending Office for any reason other than a change in
United States law or regulations or any applicable tax treaty or regulations or
in the official interpretation of any such law, treaty or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the date of delivery of such Form
1001.
(h)If, at any time, the Company requests any Bank to deliver any forms or
other documentation pursuant to subsection 4.1(f)(iv), then the Company shall,
on demand of such Bank through the Agent, reimburse such Bank for any costs and
expenses (including Attorney Costs) reasonably incurred by such Bank in the
preparation or delivery of such forms or other documentation.
(i)If the Company is required to pay additional amounts to any Bank or the
Agent pursuant to subsection 4.1(d), then such Bank shall use its reasonable
best efforts (consistent with legal and regulatory restrictions) to change the
jurisdiction of its Lending Office so as to eliminate any such additional
payment by the
62
<PAGE> 70
Company which may thereafter accrue if such change in the judgment of such Bank
is not otherwise disadvantageous to such Bank.
4.2 ILLEGALITY
(a)If any Bank shall determine that the introduction of any Requirement of
Law, or any change in any Requirement of Law or in the interpretation or
administration thereof, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for any Bank or its
Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank
to the Company through the Agent, the obligation of that Bank to make Offshore
Rate Loans shall be suspended until the Bank shall have notified the Agent and
the Company that the circumstances giving rise to such determination no longer
exist.
(b)If a Bank shall determine that it is unlawful to maintain any Offshore
Rate Loan, the Company shall prepay in full all Offshore Rate Loans of that Bank
then outstanding, together with interest accrued thereon, either on the last day
of the Interest Period thereof if the Bank may lawfully continue to maintain
such Offshore Rate Loans to such day, or immediately, if the Bank may not
lawfully continue to maintain such Offshore Rate Loans, together with any
amounts required to be paid in connection therewith pursuant to Section 4.4. If
the Company is required to so prepay any Offshore Rate Loan, then concurrently
with such prepayment, the Company may borrow from the affected Bank, in the
amount of such repayment, a Base Rate Loan.
(c)If the obligation of any Bank to make or maintain Offshore Rate Loans
has been so terminated or suspended, the Company may elect, by giving notice to
the Bank through the Agent that all Loans which would otherwise be made by the
Bank as Offshore Rate Loans shall be instead Base Rate Loans.
(d)Before giving any notice to the Agent under this Section, the affected
Bank shall designate a different Lending Office with respect to its Offshore
Rate Loans if such designation will avoid the need for giving such notice or
making such demand and will not, in the judgment of the Bank, be illegal or
otherwise disadvantageous to the Bank.
4.3 INCREASED COSTS AND REDUCTION OF RETURN
(a)If any Bank shall determine that, due to either (i) the introduction of
or any change after the date hereof (other than any change by way of imposition
of or increase in reserve requirements included in the calculation of the
Offshore Rate or in respect of the assessment rate payable by any Bank to the
FDIC for insuring U.S. deposits) in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of law),
there shall be any increase in
63
<PAGE> 71
the cost to such Bank of agreeing to make or making, funding or maintaining any
Offshore Rate Loans or participating in Letters of Credit, or, in the case of an
Issuing Bank, any increase in the cost to such Issuing Bank of agreeing to
issue, issuing or maintaining any Letter of Credit or of agreeing to make or
making, funding or maintaining any unpaid drawing under any Letter of Credit,
then the Company shall be liable for, and shall from time to time, upon demand
therefor by such Bank (with a copy of such demand to the Agent), pay to the
Agent for the account of such Bank, additional amounts as are sufficient to
compensate such Bank for such increased costs.
(b)If any Bank shall have determined that (i) the introduction of any
Capital Adequacy Regulation after the date hereof, (ii) any change in any
Capital Adequacy Regulation after the date hereof, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof after the date hereof, or (iv) compliance by the Bank (or
its Lending Office) or any corporation controlling the Bank, with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by the Bank or any corporation controlling the Bank
and (taking into consideration such Bank's or such corporation's policies with
respect to capital adequacy and such Bank's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Bridge Commitment, Revolving Commitment, loans, credits or obligations under
this Agreement, then, upon demand of such Bank (with a copy to the Agent), the
Company shall upon demand pay to the Bank, from time to time as specified by the
Bank, additional amounts sufficient to compensate the Bank for such increase.
4.4 FUNDING LOSSES
The Company agrees to reimburse each Bank and to hold each Bank harmless
from any loss or expense which the Bank may sustain or incur as a consequence
of:
(a)the failure of the Company to make any payment or mandatory prepayment
of principal of any Offshore Rate Loan (including payments made after any
acceleration thereof);
(b)the failure of the Company to borrow, continue or convert a Loan after
the Company has given (or is deemed to have given) a Notice of Borrowing or a
Notice of Conversion/Continuation;
(c)the failure of the Company to make any prepayment of any Loan after the
Company has given a notice in accordance with Section 2.8;
64
<PAGE> 72
(d)the prepayment (including pursuant to Section 2.8 or 2.9) of an
Offshore Rate Loan on a day which is not the last day of the Interest Period
with respect thereto; or
(e)the conversion pursuant to Section 2.6 of any Offshore Rate Loan to a
Base Rate Loan on a day that is not the last day of the respective Interest
Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans hereunder or from
fees payable to terminate the deposits from which such funds were obtained.
4.5 INABILITY TO DETERMINE RATES
If the Majority Banks shall have determined that for any reason adequate
and reasonable means do not exist for ascertaining the Offshore Rate for any
requested Interest Period with respect to a proposed Offshore Rate Loan or that
the Offshore Rate applicable pursuant to subsection 2.11(a) for any requested
Interest Period with respect to a proposed Offshore Rate Loan does not
adequately and fairly reflect the cost to such Banks of funding such Loan, the
Agent will forthwith give notice of such determination to the Company and each
Bank. Thereafter, the obligation of the Banks to make or maintain Offshore Rate
Loans, as the case may be, hereunder shall be suspended until the Agent upon the
instruction of the Majority Banks revokes such notice in writing. Upon receipt
of such notice, the Company may revoke any Notice of Borrowing or Notice of
Conversion/Continuation then submitted by it. If the Company does not revoke
such notice, the Banks shall make, convert or continue the Loans, as proposed by
the Company, in the amount specified in the applicable notice submitted by the
Company, but such Loans shall be made, converted or continued as Base Rate Loans
instead of Offshore Rate Loans.
4.6 CERTIFICATE OF BANK
Each Bank, if claiming reimbursement or compensation pursuant to this
Article IV, shall deliver to the Company, a certificate setting forth in
reasonable detail the amount payable to such Bank hereunder and such certificate
shall be conclusive and binding on the Company in the absence of manifest error.
4.7 SURVIVAL
The covenants, agreements and obligations of the Company in this Article
IV shall survive the payment of all other Obligations.
65
<PAGE> 73
CONDITIONS PRECEDENT
5.1 CONDITIONS OF INITIAL CREDIT EXTENSIONS
The obligation of each Bank to make its initial Credit Extension hereunder
is subject to the condition that the Agent shall have received on or before the
Closing Date all of the following, in form and substance satisfactory to the
Agent and, as to the items referenced in subsection 5.1(h) and (i), the Majority
Banks, and in sufficient copies for each Bank:
(a)Revolving Credit and Bridge Loan Agreement. This Agreement executed by
the Company, the Agent and each of the Banks;
(b)Resolutions; Incumbency.
(i)Copies of the resolutions of the board of directors of the PC
Advisory General Partner, as general partner of the PCMC General Partner, as
general partner of the General Partner, as general partner of the Company,
approving and authorizing the execution, delivery and performance by such
entities on behalf of the Company of this Agreement and the other Loan Documents
to be delivered hereunder, and authorizing the borrowing of the Loans, certified
as of the Closing Date by the Secretary or an Assistant Secretary of the PC
Advisory General Partner; and
(ii)A certificate of the Secretary or Assistant Secretary of the PC
Advisory General Partner certifying the names and true signatures of the duly
authorized officers of the General Partner, as general partner of the Company,
authorized to execute, deliver and perform, as applicable, this Agreement on
behalf of the Company, and all other Loan Documents to be delivered hereunder;
(c)Articles of Incorporation; By-laws; Partnership Documents and Good
Standing. Each of the following documents:
(i)the partnership certificate of each of the Company, the General
Partner, and the PCMC General Partner as in effect on the Closing Date,
certified by the Secretary of State (or similar, applicable Governmental
Authority) of the state of formation of such entities as of a recent date and by
the Secretary or Assistant Secretary of the PC Advisory General Partner as of
the Closing Date, and the partnership agreement of each of the Company, the
General Partner, and the PCMC General Partner as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of the PC Advisory General
Partner as of the Closing Date;
(ii)the articles or certificate of incorporation of the PC Advisory
General Partner as in effect on the Closing Date, certified by the Secretary of
State (or similar, applicable Governmental Authority) of the state of
incorporation of the PC
66
<PAGE> 74
Advisory General Partner as of a recent date and by the Secretary or Assistant
Secretary of the PC Advisory General Partner as of the Closing Date, and the
bylaws of the PC Advisory General Partner as in effect on the Closing Date,
certified by the Secretary or Assistant Secretary of the PC Advisory General
Partner as of the Closing Date; and
(iii)a good standing certificate for each of the Company, the
General Partner, the PCMC General Partner, and the PC Advisory General Partner
from the Secretary of State (or similar, applicable Governmental Authority) of
its state of incorporation or formation, as applicable and each state where the
Company is qualified to do business as a foreign corporation or limited
partnership, as applicable, as of a recent date, together with a bring down
certificate by facsimile, dated the Closing Date, provided, however, that if the
Company is unable to deliver on the Closing Date any such bring down certificate
(other than the bring down certificate from the state of incorporation or
formation of such Person) because bring down certificates are not readily
provided by the applicable Secretary of State, the Company shall not be required
to deliver such bring down certificate on the Closing Date but instead shall
deliver it to the Agent within five days of the Closing Date;
(d)Legal Opinions. An opinion of (i) James A. Kraft, Vice President,
General Counsel and Secretary of the Company and (ii) Perkins Coie, counsel to
the Company, each addressed to the Agent and the Banks and substantially in the
form of Exhibits C-1 and C-2, respectively;
(e)Payment of Fees. The Company shall have paid all accrued and unpaid
fees, costs and expenses to the extent then due and payable on the Closing Date,
together with Attorney Costs of BofA to the extent invoiced prior to or on the
Closing Date, together with such additional amounts of Attorney Costs as shall
constitute BofA's reasonable estimate of Attorney Costs incurred or to be
incurred through the closing proceedings, provided that such estimate shall not
thereafter preclude final settling of accounts between the Company and BofA;
including any such costs, fees and expenses arising under or referenced in
Sections 2.13, 4.1 and 11.4;
(f)Certificate. A certificate signed by a Responsible Officer, dated as of
the Closing Date, stating that:
(i)the representations and warranties contained in Article VI are
true and correct on and as of such date, as though made on and as of such date;
(ii)no Default or Event of Default exists or would result from the
initial Credit Extension;
67
<PAGE> 75
(iii)there has not occurred or existed since December 31, 1995 any
event or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect; and
(iv)the transactions contemplated by the Riverwood Purchase
Agreement have been or, upon application of the proceeds of the initial Loans
hereunder, will be consummated in accordance with the Riverwood Purchase
Agreement.
(g)Credit Agreements. Copies certified by a Responsible Officer of the
Note Agreements, the Mortgage Note Agreements, and the 1994 Senior Note
Agreements;
(h)Termination of Existing Credit Agreements. On or before the Closing
Date, the Company shall have terminated the commitments of the lenders under the
Existing Credit Agreements in accordance with their respective terms and either
repaid in full all amounts outstanding thereunder or irrevocably directed the
Agent to apply the initial proceeds of Loans hereunder toward such repayment in
full; and
(i)Other Documents. Such other approvals, opinions, documents or materials
as the Agent or the Majority Banks may reasonably request.
5.2 CONDITIONS TO ALL CREDIT EXTENSIONS
The obligation of each Bank and the Swingline Bank to make any Loans to be
made by it (including its initial Loan) or to continue or convert any Loan
pursuant to Section 2.6, and the obligation of each Issuing Bank to Issue any
Letter of Credit (including the initial Letter of Credit) is subject to the
satisfaction of the following conditions precedent on the relevant date of
Borrowing, Conversion/Continuation Date or Issuance Date:
(a)Notice, Application. As to any Loan, the Agent shall have received
(with, in the case of the initial Loan only, a copy for each Bank) a Notice of
Borrowing or a Notice of Conversion/Continuation, as applicable, or in the case
of any Issuance of any Letter of Credit, the relevant Issuing Bank and the Agent
shall have received an L/C Application or L/C Amendment Application, as required
under Section 3.2;
(b)Continuation of Representations and Warranties. The representations and
warranties made by the Company contained in Article VI shall be true and correct
on and as of such date of Borrowing or Conversion/Continuation Date with the
same effect as if made on and as of such date of Borrowing or
Conversion/Continuation Date (except to the extent such representations and
warranties specifically relate to an earlier date, in which case they shall be
true and correct as of such earlier date); and
68
<PAGE> 76
(c)No Existing Default. No Default or Event of Default shall exist or
shall result from such Credit Extension.
Each Notice of Borrowing, Notice of Conversion/Continuation and L/C
Application or L/C Amendment Application submitted by the Company hereunder
shall constitute a representation and warranty by the Company hereunder, as of
the date of each such notice, request or application and as of the date of each
Borrowing, each Conversion/Continuation Date, or Issuance Date, as applicable,
that the conditions in Section 5.2 are satisfied.
6. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that, both
before and after giving effect to the consummation of the transactions
contemplated by the Riverwood Purchase Agreement:
6.1 CORPORATE EXISTENCE AND POWER
(a)The Company, each of its Subsidiaries, and each of the Partner
Entities:
(i)is a limited partnership or corporation, duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
formation;
(ii)is duly qualified as a foreign partnership or corporation, as
applicable, and licensed and in good standing, under the laws of each
jurisdiction where its ownership, lease or operation of property or the conduct
of its business requires such qualification or license; and
(iii)is in compliance with all Requirements of Law except where
failure to so comply would not reasonably be expected to have a Material Adverse
Effect.
(b)The Company and each of its Subsidiaries has the power and authority
and all governmental licenses, authorizations, consents and approvals to own its
assets and carry on its business; and the Company and each of the Partner
Entities has the power and authority and all governmental licenses,
authorizations, consents and approvals to execute, deliver, and perform its
obligations under, the Loan Documents.
6.2 AUTHORIZATION; NO CONTRAVENTION
The execution, delivery and performance by the Company of this Agreement,
and any other Loan Document to which the Company is party, have been duly
authorized by all necessary corporate and partnership action on behalf of the PC
Advisory General Partner, as general partner of the PCMC General Partner, as
69
<PAGE> 77
general partner of the General Partner, as general partner of the Company, and
by all necessary partnership action on behalf of the Company, and do not and
will not:
(a)contravene the terms of the Organization Documents of any of the
Company or the Partner Entities;
(b)conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its Property is subject; or
(c)violate any Requirement of Law.
6.3 GOVERNMENTAL AUTHORIZATION
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, the Company, the Partner Entities or any of their Subsidiaries of the
Agreement or any other Loan Document.
6.4 BINDING EFFECT
This Agreement and each other Loan Document to which the Company is a
party constitute the legal, valid and binding obligations of the Company and the
Partner Entities, enforceable against the Company and the Partner Entities in
accordance with their respective terms except as enforceability may be limited
by applicable bankruptcy, insolvency or similar laws affecting the enforcement
of creditor's rights generally or by equitable principles relating to
enforceability.
6.5 LITIGATION
There are no actions, suits, proceedings, claims or disputes pending, or
to the Company's Knowledge and the knowledge of the Partner Entities, threatened
or contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Company, the Partner Entities or their Subsidiaries or
any of their respective Properties which:
(a)purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b)have a reasonable probability of success on the merits and which, if
determined adversely to the Company, the Partner Entities or their Subsidiaries,
would reasonably be expected to have a Material Adverse Effect. No injunction,
writ, temporary restraining order or any order of any nature has been issued by
any
70
<PAGE> 78
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
6.6 NO DEFAULT
No Default or Event of Default exists or would result from the incurring
of any Obligations by the Company. Neither the Company, the Partner Entities,
nor any of their Subsidiaries is in default under or with respect to any
Contractual Obligation in any respect which, individually or together with all
such defaults, would reasonably be expected to have a Material Adverse Effect or
that would, if such default had occurred after the Closing date, create an Event
of Default under subsection 9.1(e).
6.7 ERISA COMPLIANCE
(a)Schedule 6.7 lists all Plans and separately identifies Plans intended
to be Qualified Plans and Multiemployer Plans.
(b)Each Plan is in compliance in all material respects with the applicable
provisions of ERISA, the Code and other Federal or state law, including all
requirements under the Code or ERISA for filing reports (which are true and
correct in all material respects as of the date filed), and benefits have been
paid in accordance with the provisions of the Plan.
(c)Except as specifically disclosed in Schedule 6.7, each Qualified Plan
has been determined by the IRS to qualify under Section 401 of the Code, and the
trusts created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the Code, and to the Company's Knowledge nothing
has occurred which would cause the loss of such qualification or tax-exempt
status.
(d)Except as specifically disclosed in Schedule 6.7, there is no
outstanding liability under Title IV of ERISA (other than premiums due but not
delinquent under Section 4007 of ERISA) with respect to any Plan maintained or
sponsored by the Company or any ERISA Affiliate, nor with respect to any Plan to
which the Company or any ERISA Affiliate contributes or is obligated to
contribute, and which liability would reasonably be expected to have a Material
Adverse Effect.
(e)Except as specifically disclosed in Schedule 6.7, no Plan subject to
Title IV of ERISA has any Unfunded Pension Liability which would reasonably be
expected to have a Material Adverse Effect.
(f)Except as specifically disclosed in Schedule 6.7, the Company and its
ERISA Affiliates have not ever represented, promised or contracted (whether in
71
<PAGE> 79
oral or written form) to any current or former employee (either individually or
to employees as a group) that such current or former employee(s) would be
provided, at any cost to the Company or its ERISA Affiliates, with life
insurance or employee welfare plan benefits (within the meaning of section 3(1)
of ERISA) following retirement or termination of employment, other than benefits
mandated by applicable law, including but not limited to, continuation coverage
required to be provided under Section 4980B of the Code or Title I, Subtitle B,
Part 6 of ERISA, and which cost would reasonably be expected to have a Material
Adverse Effect. To the extent that the Company or its ERISA Affiliates have made
any such representation, promise or contract, they have expressly reserved the
right to amend or terminate such life insurance or employee welfare plan
benefits with respect to claims not yet incurred.
(g)The Company and its ERISA Affiliates have complied in all material
respects with the notice and continuation coverage requirements of Section 4980B
of the Code.
(h)Except as specifically disclosed in Schedule 6.7, no ERISA Event has
occurred or, to the Company's Knowledge is reasonably expected to occur with
respect to any Plan which would reasonably be expected to have a Material
Adverse Effect.
(i)There are no pending or, to the Company's Knowledge, threatened claims,
actions or lawsuits, other than routine claims for benefits in the usual and
ordinary course, asserted or instituted against (i) any Plan maintained or
sponsored by the Company or its assets, (ii) the Company or its ERISA Affiliates
with respect to any Qualified Plan, or (iii) any fiduciary with respect to any
Plan for which the Company or its ERISA Affiliates may be directly or indirectly
liable, through indemnification obligations or otherwise and which claim, action
or lawsuit would reasonably be expected to have a Material Adverse Effect. This
representation is not made with respect to any Multiemployer Plan.
(j)Except as specifically disclosed in Schedule 6.7, neither the Company
nor any ERISA Affiliate has incurred nor, to the Company's Knowledge, reasonably
expects to incur (i) any liability (and, to the Company's knowledge, no event
has occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan or (ii) any liability under Title IV of ERISA (other than
premiums due and not delinquent under Section 4007 of ERISA) with respect to a
Plan, and which liability would reasonably be expected to have a Material
Adverse Effect.
(k)Except as specifically disclosed in Schedule 6.7, neither the Company
nor any ERISA Affiliate has transferred any Unfunded Pension Liability to a
Person
72
<PAGE> 80
other than the Company or an ERISA Affiliate or otherwise engaged in a
transaction that is subject to Section 4069 or 4212(c) of ERISA.
(l)The Company has not engaged, directly or indirectly, in a non-exempt
prohibited transaction (as defined in Section 4975 of the Code or Section 406 of
ERISA) in connection with any Plan which would reasonably be expected to have a
Material Adverse Effect.
6.8 USE OF PROCEEDS; MARGIN REGULATIONS
The proceeds of the Loans are intended to be and shall be used solely for
the purposes set forth in and permitted by Section 7.11, and are intended to be
and shall be used in compliance with Section 8.7. Neither the Company, the
Partner Entities, nor any of their Subsidiaries is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
6.9 TITLE TO PROPERTIES
The Company and each of its Subsidiaries have good record and marketable
title in fee simple to, or valid leasehold interests in, all real Property
necessary or used in the ordinary conduct of their respective businesses, except
for such defects in title as would not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect. As of the Closing Date, the
Property of the Company and its Subsidiaries is subject to no Liens, other than
Permitted Liens.
6.10 TAXES
The Company, the Partner Entities and their Subsidiaries have filed all
Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their Properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no Notice of Lien has been filed or
recorded. There is no proposed tax assessment against the Company, the Partner
Entities or any of their Subsidiaries which would, if the assessment were made,
have a Material Adverse Effect.
6.11 FINANCIAL CONDITION
(a)The audited combined financial statements of financial condition of the
Company and its Subsidiaries dated December 31, 1995, and the related combined
statements of income and combined statement of cash flows for the fiscal year
ended on that date:
73
<PAGE> 81
(i)were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein;
(ii)fairly present the financial condition of the Company and its
Subsidiaries as of the date thereof and results of operations for the period
covered thereby; and
(iii)show all material Indebtedness and other liabilities, direct or
contingent of the Company and its combined Subsidiaries as of the date thereof,
including liabilities for taxes and material commitments.
(b)Since December 31, 1995, there has been no Material Adverse Effect.
6.12 ENVIRONMENTAL MATTERS
(a)Except as specifically disclosed in Schedule 6.12, the on-going
operations of the Company, the Partner Entities and each of their Subsidiaries
comply in all respects with all Environmental Laws, except such non-compliance
which would not (if enforced in accordance with applicable law) result in
liability in excess of $25,000,000 in the aggregate.
(b)Except as specifically disclosed in Schedule 6.12, the Company, the
Partner Entities and each of their Subsidiaries have obtained all licenses,
permits, authorizations and registrations required under any Environmental Law
("Environmental Permits") and necessary for their respective ordinary course
operations, all such Environmental Permits are in good standing, and the
Company, the Partner Entities and each of their Subsidiaries are in compliance
with all terms and conditions of such Environmental Permits except where the
failure to obtain, maintain in good standing or comply with such Environmental
Permits would not reasonably be expected to have a Material Adverse Effect.
(c)Except as specifically disclosed in Schedule 6.12, none of the Company,
the Partner Entities, any of their Subsidiaries or any of their respective
present Property or operations, is subject to any outstanding written order from
or agreement with any Governmental Authority, nor subject to any judicial or
docketed administrative proceeding, respecting any Environmental Law,
Environmental Claim or Hazardous Material arising out of a violation or alleged
violation of any Environmental Law.
(d)Except as specifically disclosed in Schedule 6.12, there are no
Hazardous Materials or other conditions or circumstances existing with respect
to any Property, or arising from operations prior to the Closing Date, of the
Company, the Partner Entities, or any of their Subsidiaries that would
reasonably be expected to give rise to Environmental Claims with a potential
liability of the Company and its Subsidiaries in excess of $25,000,000 in the
aggregate for any such condition,
74
<PAGE> 82
circumstance or Property. In addition, except as specifically disclosed in
Schedule 6.12 (i) neither the Company, the Partner Entities nor any of their
Subsidiaries has any underground storage tanks (x) that are not properly
registered or permitted under applicable Environmental Laws, or (y) that are
leaking or disposing of Hazardous Materials off-site, and (ii) the Company, the
Partner Entities and their Subsidiaries have notified all of their employees of
the existence, if any, of any health hazard arising from the conditions of their
employment and have met all notification requirements under Title III of CERCLA
and all other Environmental Laws.
6.13 REGULATED ENTITIES
None of the Company, the Partner Entities, any Person controlling the
Company or the Partner Entities, or any Subsidiary of the Company or the Partner
Entities, is (a) an "Investment Company" within the meaning of the Investment
Company Act of 1940; or (b) subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
any state public utilities code, or any other Federal or state statute or
regulation limiting its ability to incur Indebtedness.
6.14 NO BURDENSOME RESTRICTIONS
Neither the Company nor any of its Subsidiaries is a party to or bound by
any Contractual Obligation, or subject to any charter or corporate restriction,
or any Requirement of Law, which would reasonably be expected to have a Material
Adverse Effect.
6.15 SOLVENCY
The Company, the General Partner, the Facilities Subsidiary, and the
Restricted Subsidiaries are each Solvent.
6.16 LABOR RELATIONS
There are no material strikes, lockouts or other labor disputes against
the Company or any of its Subsidiaries, or, to the Company's Knowledge,
threatened against or affecting the Company or any of its Subsidiaries, and no
significant unfair labor practice complaint is pending against the Company or
any of its Subsidiaries or, to the Company's Knowledge, threatened against any
of them before any Governmental Authority.
6.17 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC.
The Company or its Subsidiaries own or are licensed or otherwise have the
right to use all of the patents, trademarks, service marks, trade names,
copyrights,
75
<PAGE> 83
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person. To the Company's Knowledge, no slogan or
other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by the Company or any
of its Subsidiaries infringes upon any rights held by any other Person; except
as specifically disclosed in Schedule 6.5, no claim or litigation regarding any
of the foregoing is pending or, to the Company's Knowledge, threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the Company's Knowledge,
proposed, which, in either case, would reasonably be expected to have a Material
Adverse Effect.
6.18 SUBSIDIARIES
The Company has no Subsidiaries other than those specifically disclosed in
part (a) of Schedule 6.18 hereto and has no equity investments in any other
corporation or entity other than those specifically disclosed in part (b) of
Schedule 6.18. Except as disclosed in part (a) of Schedule 6.18, the Company
owns 100% of the ownership interests of its Subsidiaries. The Facilities
Subsidiary has issued no rights, warrants or options to acquire or instruments
convertible into or exchangeable for any equity interest in the Facilities
Subsidiary.
6.19 PARTNERSHIP INTERESTS
The only general partner of the Company is the General Partner, which on
the Closing Date will own a 2% interest in the Company. The only general partner
of the General Partner is the PCMC General Partner. The only general partner of
the PCMC General Partner is the PC Advisory General Partner.
6.20 BROKER'S, TRANSACTION FEES
Neither the Company nor any of its Subsidiaries has any obligation to any
Person in respect of any finder's, broker's or investment banker's fee in
connection with the transactions contemplated hereby.
6.21 INSURANCE
The Properties of the Company and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the
Company, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar Properties in localities where the Company or such Subsidiary operates.
76
<PAGE> 84
6.22 Full Disclosure
None of the representations or warranties made by the Company, the General
Partners, or any of their Subsidiaries in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in each exhibit, report, written statement or certificate
furnished by or on behalf of the Company or any of its Subsidiaries in
connection with the Loan Documents, contains any untrue statement of a material
fact or omits any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
are made, not misleading as of the time when made or delivered.
7. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank shall have any
Bridge Commitment or Revolving Commitment hereunder, or the Swingline Bank shall
have any Swingline Commitment hereunder, or any Loan or other Obligation shall
remain unpaid or unsatisfied, or any Letter of Credit remains outstanding,
unless the Majority Banks waive compliance in writing:
7.1 FINANCIAL STATEMENTS
The Company shall deliver to the Agent in form and detail satisfactory to
the Agent and the Majority Banks, with sufficient copies for each Bank:
(a)as soon as available, but not later than 90 days after the end of each
fiscal year, a copy of the audited combined balance sheet of the Company as at
the end of such year and the related combined statements of income and
statements of cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, and accompanied by
the opinion of Coopers & Lybrand, or another nationally-recognized independent
public accounting firm ("Independent Auditor") which report shall state that
such combined financial statements present fairly the financial position for the
periods indicated in conformity with GAAP applied on a basis consistent with
prior years. Such opinion shall not be qualified or limited because of a
restricted or limited examination by Independent Auditor of any material portion
of the Company's or any Subsidiary's records and shall be delivered to the Agent
pursuant to a reliance agreement in favor of the Agent and Banks by such
Independent Auditor in form and substance satisfactory to the Agent and the
Majority Banks;
(b)as soon as available, but not later than 120 days after the end of each
fiscal year, a copy of an audited combining balance sheet of the Company and
each of its Subsidiaries as at the end of such fiscal year and the related
combining statements of income and statement of cash flows for such fiscal year,
all in
77
<PAGE> 85
reasonable detail certified by an appropriate Responsible Officer as having been
used in connection with the preparation of the financial statements referred to
in subsection (a) of this Section 7.1;
(c)as soon as available, but not later than 45 days after the end of each
of the first three fiscal quarters of each year, a copy of the unaudited
combined balance sheet of the Company and its combined Subsidiaries as of the
end of such quarter and the related combined statements of income and statement
of cash flows for the period commencing on the first day and ending on the last
day of such quarter, and certified by an appropriate Responsible Officer as
being complete and correct and fairly presenting, in accordance with GAAP, the
financial position and the results of operations of the Company and the
Subsidiaries;
(d)as soon as available, but not later than 45 days after the end of each
of the first three fiscal quarters of each year, a copy of the unaudited
combining balance sheets of the Company and each of its Subsidiaries, and the
related combining statements of income and statement of cash flows for such
quarter, all certified by an appropriate Responsible Officer of the Company as
having been used in connection with the preparation of the financial statements
referred to in subsection (c) of this Section 7.1;
(e)as soon as available, but not later than September 30 of each year, a
business plan which shall include consolidated five year pro-forma projections
of the Company's balance sheet, income statement and statement of cash flows,
accompanied byappropriate assumptions on which such projections are based.
7.2 CERTIFICATES; OTHER INFORMATION
The Company shall furnish to the Agent, with sufficient copies for each
Bank:
(a)concurrently with the delivery of the financial statements referred to
in subsection 7.1(a) above, a certificate of the Independent Auditor stating
that in making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such certificate;
(b)concurrently with the delivery of the financial statements referred to
in subsections 7.1(a) through (d) above, a certificate of a Responsible Officer
substantially in the form of Exhibit D (i) stating that, to the best of such
officer's knowledge, the Company, during such period, has observed and performed
all of its covenants and other agreements, and satisfied every condition
contained in this Agreement to be observed, performed or satisfied by it, and
that such officer has obtained no knowledge of any Default or Event of Default
except as specified (by applicable subsection reference) in such certificate,
(ii) stating the Applicable Margin to be in effect for the immediately following
fiscal quarter, and (iii) showing in detail the calculations supporting such
statement in respect of
78
<PAGE> 86
subsection 8.2(h), Section 8.3, subsection 8.4(i), Section 8.5 and Section 8.13,
and supporting the computation of the Interest Coverage Ratio;
(c)promptly after the same are sent, copies of all financial statements
and reports which the Company sends to its limited partners (excluding the Form
K-1s); and promptly after the same are filed, copies of all financial statements
and regular, periodical or special reports which the Company may make to, or
file with, the SEC or any successor or similar Governmental Authority; and
(d)promptly, such additional business, financial, corporate affairs and
other information as the Agent, at the request of any Bank, may from time to
time reasonably request.
7.3 NOTICES
The Company shall promptly upon becoming aware thereof notify the Agent
and each Bank:
(a)(i) of the occurrence of any Default or Event of Default, (ii) of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default, and (iii) of the occurrence or existence
of any event or circumstance that would cause the condition to Credit Extension
set forth in subsection 5.2(b) not to be satisfied if a Credit Extension were
requested on or after the date of such event or circumstance;
(b)of (i) any breach or non-performance of, or any default under, any
Contractual Obligation of the Company, the Partner Entities, or any of their
Subsidiaries which could result in a Material Adverse Effect; and (ii) any
dispute, litigation, investigation, proceeding or suspension which may exist at
any time between the Company, the Partner Entities, or any of their Subsidiaries
and any Governmental Authority which could reasonably be expected to result in a
Material Adverse Effect;
(c)of the commencement of, or any material development in, any litigation
or proceeding affecting the Company or any Subsidiary (i) which could reasonably
be expected to have a Material Adverse Effect, or (ii) in which the relief
sought is an injunction or other stay of the performance of this Agreement or
any Loan Document;
(d)upon, but in no event later than 10 days after, becoming aware of (i)
any and all enforcement, cleanup, removal or other governmental or regulatory
actions instituted, completed or threatened against the Company or any of its
Subsidiaries or any of their respective Properties pursuant to any applicable
Environmental Laws where, if adversely determined, the potential liability or
expense relating thereto could exceed $25,000,000 or the potential remedy with
respect thereto
79
<PAGE> 87
would otherwise reasonably be expected to have a Material Adverse Effect, (ii)
all other Environmental Claims which allege liability in excess of $25,000,000
or have the possibility of remedies that would, if adversely determined,
otherwise reasonably be expected to constitute a Material Adverse Effect, and
(iii) any environmental or similar condition on any real property adjoining or
in the vicinity of the property of the Company or any Subsidiary that would
reasonably be anticipated to cause such property or any part thereof to be
subject to any restrictions on the ownership, occupancy, transferability or use
of such property under any Environmental Laws where the net book value of such
property exceeds $25,000,000;
(e)of any other litigation or proceeding affecting the Company or any of
its Subsidiaries which the Company would be required to report to the SEC
pursuant to the Exchange Act, within four days after reporting the same to the
SEC;
(f)of any of the following ERISA events affecting the Company or any ERISA
Affiliate (but in no event more than 20 days after such event or, in the case of
an event relating to a Multiemployer Plan, no more than 30 days after the
Company obtains knowledge of the occurrence of such an event), together with
(except in the case of a Multiemployer Plan) a copy of any notice with respect
to such event that may be required to be filed with a Governmental Authority and
any notice delivered by a Governmental Authority to the Company or any ERISA
Affiliate with respect to such event:
(i)an ERISA Event which would reasonably be expected to have a
Material Adverse Effect;
(ii)the adoption of any new Qualified Plan that is subject to Title
IV of ERISA or section 412 of the Code that would reasonably be expected to
generate annual liabilities in excess of $10,000,000 by the Company or an ERISA
Affiliate;
(iii)the adoption of any amendment to a Qualified Plan that is
subject to Title IV of ERISA or section 412 of the Code that would reasonably be
expected to generate annual liabilities in excess of $10,000,000, if such
amendment results in a material increase in benefits or unfunded liabilities; or
(iv)the commencement of contributions by the Company or an ERISA
Affiliate to any Plan that is subject to Title IV of ERISA or section 412 of the
Code that would reasonably be expected to generate annual liabilities in excess
of $10,000,000;
(g)any Material Adverse Effect subsequent to the date of the most recent
audited financial statements of the Company delivered to the Banks pursuant to
subsection 7.1(a) or 5.1(g); and
80
<PAGE> 88
(h)of any material labor controversy resulting in or threatening to result
in any strike, work stoppage, boycott, shutdown or other labor disruption
against or involving the Company or any of its Subsidiaries.
Each notice pursuant to this Section shall be accompanied by a written
statement by a Responsible Officer of the Company setting forth details of the
occurrence referred to therein, and stating what action the Company proposes to
take with respect thereto and at what time. Each notice under subsection 7.3(a)
shall describe with particularity any and all clauses or provisions of this
Agreement or other Loan Document that have been breached or violated.
7.4 PRESERVATION OF PARTNERSHIP EXISTENCE, ETC.
The Company shall, except as permitted by Section 8.2, and shall cause
each of its Restricted Subsidiaries to:
(a)preserve and maintain in full force and effect its partnership or
corporate existence and good standing under the laws of its state or
jurisdiction of formation or incorporation;
(b)preserve and maintain in full force and effect all rights, privileges,
qualifications, permits, licenses and franchises necessary in the normal conduct
of its business;
(c)use its reasonable efforts, in the Ordinary Course of Business, to
preserve its business organization and preserve the goodwill and business of the
customers, suppliers and others having material business relations with it; and
(d)preserve or renew all of its registered trademarks, trade names and
service marks, the non-preservation of which would reasonably be expected to
have a Material Adverse Effect.
7.5 MAINTENANCE OF PROPERTY
The Company shall maintain, and shall cause each of its Subsidiaries to
maintain, and preserve all its Property which is used or useful in its business
in good working order and condition, ordinary wear and tear excepted.
7.6 INSURANCE
The Company shall maintain, and shall cause each of its Subsidiaries to
maintain, with financially sound and reputable independent insurers, insurance
with respect to its Properties and business against loss or damage of the kinds
customarily insured against by Persons engaged in the same or similar business,
of
81
<PAGE> 89
such types and in such amounts as are customarily carried under similar
circumstances by such other Persons.
7.7 PAYMENT OF OBLIGATIONS
The Company shall, and shall cause its Subsidiaries to, pay and discharge
as the same shall become due and payable, all their respective obligations and
liabilities, including:
(a)all tax liabilities, assessments and governmental charges or levies
upon it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company or such Subsidiary; and
(b)all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.
7.8 COMPLIANCE WITH LAWS
The Company shall comply, and shall cause each of its Subsidiaries to
comply with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor Standards
Act) the non-compliance with which would reasonably be expected to have a
Material Adverse Effect, except such as may be contested in good faith or as to
which a bona fide dispute may exist.
7.9 INSPECTION OF PROPERTY AND BOOKS AND RECORDS
The Company shall maintain and shall cause each of its Subsidiaries to
maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Company and such Subsidiaries. The Company shall permit, and shall cause each of
its Subsidiaries to permit, representatives and independent contractors of the
Agent or any Bank to visit and inspect any of their respective Properties, to
examine their respective corporate, financial and operating records, and make
copies thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and independent
public accountants, all at the expense of the Company and at such reasonable
times during normal business hours and as often as may be reasonably desired,
upon reasonable advance notice to the Company; provided, however, when an Event
of Default exists the Agent or any Bank may do any of the foregoing at the
expense of the Company such Properties at any time during normal business hours
and without advance notice.
82
<PAGE> 90
7.10 Environmental Laws
(a)The Company shall, and shall cause each of its Subsidiaries to, conduct
its operations and keep and maintain its Property in compliance with all
Environmental Laws, the non-compliance with which would reasonably be expected
to have a Material Adverse Effect.
(b)Upon the written request of the Agent or any Bank, the Company shall
submit and cause each of its Subsidiaries to submit, to the Agent and with
sufficient copies for each Bank, at the Company's sole cost and expense, at
reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue identified
in any notice or report required pursuant to subsection 7.3(d), that could,
individually or in the aggregate, result in liability in excess of $25,000,000.
7.11 USE OF PROCEEDS
The Company shall use the proceeds of the Loans solely as follows: (a) to
acquire the Riverwood Assets, (b) to refinance existing Indebtedness, (c) to pay
related fees and expenses, and (d) to finance working capital and other general
partnership purposes, including acquisitions, not in contravention of any
Requirement of Law or of any Loan Document.
7.12 SOLVENCY
The Company shall at all times be, and shall cause each of its Restricted
Subsidiaries to be, Solvent.
8. NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank shall
have any Bridge Commitment or Revolving Commitment hereunder, or the Swingline
Bank shall have any Swingline Commitment hereunder, or any Loan or other
Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall
remain outstanding, unless the Majority Banks waive compliance in writing:
8.1 LIMITATION ON LIENS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, directly or indirectly, make, create, incur, assume
or suffer to exist any Lien upon or with respect to any part of its Property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
83
<PAGE> 91
(a)Liens for taxes, fees, assessments or other governmental charges which
are not delinquent or remain payable without penalty, or to the extent that
non-payment thereof is permitted by Section 7.7;
(b)carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the Ordinary Course of Business
which are not delinquent or remain payable without penalty or unless such lien
is being contested in good faith by appropriate proceedings promptly instituted
and diligently conducted and if such accrual or other appropriate provision, if
any, as shall be required by GAAP shall have been made therefor;
(c)Liens (other than any Lien imposed by ERISA) incurred or deposits made
incidental to the conduct of its business or the ownership of its Property
including (i) pledges or deposits in connection with worker's compensation,
unemployment insurance and other social security legislation, (ii) deposits to
secure insurance, the performance of bids, tenders, contracts, leases, licenses,
franchises and statutory obligations, each in the Ordinary Course of Business,
and (iii) other obligations which were not incurred or made in connection with
the borrowing of money, the obtaining of advances or credit or the payment of
the deferred purchase price of property and which do not in the aggregate
materially detract from the value of its Property or materially impair the use
of such Property in the operation of its business;
(d)any attachment or judgment Lien, unless the judgment it secures shall
not, within 45 days after the entry thereof, have been discharged or execution
thereof stayed pending appeal, or shall not have been discharged within 45 days
after expiration of any such stay;
(e)easements, rights-of-way, restrictions, leases, sub-leases and other
similar charges or encumbrances incurred in the Ordinary Course of Business
which, in each case, and in the aggregate, do not materially interfere with the
ordinary conduct of the business of the Company or any Restricted Subsidiary;
(f)Liens on Property of any Restricted Subsidiary securing obligations of
such Restricted Subsidiary owing to the Company or another Restricted
Subsidiary;
(g)any Lien existing prior to the time of acquisition upon any Property
acquired by the Company or any Restricted Subsidiary after the Closing Date
through purchase, merger or consolidation or otherwise, whether or not assumed
by the Company or such Subsidiary, or placed upon Property at (or within 30 days
after) the later of the time of acquisition or the completion of construction by
the Company or any Restricted Subsidiary to secure all or a portion of (or to
secure Indebtedness incurred to pay all or a portion of) the purchase price
thereof, provided that (i) any such Lien does not encumber any other property of
the Company or such Restricted Subsidiary, (ii) the Indebtedness secured by such
Lien
84
<PAGE> 92
is not prohibited by the provisions of Section 8.5, (iii) the aggregate
principal amount of the Indebtedness secured by such Lien at no time exceeds 80%
of the cost to the Company and its Restricted Subsidiaries of the Property
subject to such Lien, and (iv) the aggregate outstanding principal amount
(without duplication) of the Indebtedness secured by all such Liens and the
Indebtedness of all Restricted Subsidiaries at no time (a) from June 30, 1996 to
June 8, 1999, exceeds $25,000,000, and (b) from June 9, 1999 to the Revolving
Termination Date, exceeds $50,000,000;
(h)Liens on the accounts, rights to payment for goods sold or services
rendered that are evidenced by chattel paper or instruments, and rights against
persons who guarantee payment or collection of the foregoing, and on the
Company's inventory and on the proceeds (as defined in the UCC in any applicable
jurisdiction) thereof securing the obligations of the Company permitted by
subsection 8.5(d) and any extension, renewal, refunding or refinancing thereof;
(i)any Lien existing on the Property of the Company or its Restricted
Subsidiaries on the Closing Date and set forth in Schedule 8.1 securing
Indebtedness outstanding on such date;
(j)any Lien renewing, extending, refunding or refinancing any Lien
permitted by subsection (i) of this Section, provided that the principal amount
secured is not increased and the Lien is not extended to other Property and
further provided that the maturity of the Lien is not extended beyond the
maturity date of the Indebtedness which, at the time the Lien was initially
placed upon the Property secured thereby, Responsible Representatives declare
would have been the maturity date of Indebtedness customary for the type of
Property being financed; and
(k)Liens, other than those set forth above, that secure amounts that in
the aggregate do not exceed $1,000,000.
8.2 MERGER; DISPOSITION OF ASSETS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, merge or consolidate with any Person or, directly or
indirectly, sell, lease or transfer or otherwise dispose of (whether in one or a
series of transactions) any Property (including accounts and notes receivable,
with or without recourse) or enter into any agreement to do any of the
foregoing, except that:
(a)any Restricted Subsidiary of the Company may merge with the Company
(provided that the Company shall be the continuing or surviving corporation) or
with any one or more other Restricted Subsidiaries;
85
<PAGE> 93
(b)any Restricted Subsidiary of the Company may sell, lease, transfer or
otherwise dispose of any of its assets to the Company or a Restricted
Subsidiary;
(c)any Restricted Subsidiary may merge or consolidate with any other
entity, provided that, immediately after giving effect to such merger or
consolidation (i) the continuing or surviving entity of such merger or
consolidation shall constitute a Restricted Subsidiary, (ii) no Event of Default
or Material Default shall exist, and (iii) following the merger, the entity
surviving the merger is not engaged in any business other than a Permitted
Business provided that, after giving effect on a pro forma basis to such merger
or consolidation, the gross revenue contribution of pulp and paper manufacturing
activities of the Company and its Subsidiaries on a combined basis for the 12
months preceding such merger or consolidation does not exceed 33% of the total
revenues of the Company and its Subsidiaries on a combined basis;
(d)the Company may merge or consolidate with, or sell or dispose of all or
substantially all of its assets to, any other entity, provided that (i) either
(x) the Company shall be the continuing or surviving entity (in the case of such
merger) or (y) the successor or acquiring entity shall be a solvent corporation
or partnership organized under the laws of any state of the United States and
shall expressly assume in writing all of the obligations of the Company under
this Agreement, the Note Agreements, the 1994 Senior Note Agreements and the
Mortgage Note Agreements, including all covenants herein and therein contained,
and such successor or acquiring corporation or partnership shall succeed to and
be substituted for the Company with the same effect as if it had been named
herein as a party hereto, provided, however, that no such sale shall release the
Company from any of its obligations and liabilities under this Agreement, the
Note Agreements, the 1994 Senior Note Agreements and the Mortgage Note
Agreements unless such sale is followed by the complete liquidation of the
Company and substantially all the assets of the Company immediately following
such sale are distributed in such liquidation, and (ii) immediately after such
merger or consolidation or such sale or other disposition, (x) no Event of
Default or Material Default shall exist, (y) the Company could incur at least $1
of additional Funded Debt pursuant to subsection 8.5(i), and (z) the entity
surviving the merger or consolidation or to which such assets have been
transferred is not engaged in any business other than a Permitted Business
provided that, after giving effect on a pro forma basis to such merger or
consolidation, the gross revenue contribution of pulp and paper manufacturing
activities of the merged or consolidated entity and its Subsidiaries on a
combined basis for the 12 months preceding such merger or consolidation does not
exceed 33% of total revenues of such merged or consolidated entity and its
Subsidiaries on a combined basis;
(e)the Company or any Restricted Subsidiary may make dispositions of
inventory in the Ordinary Course of Business;
86
<PAGE> 94
(f)the Company or any Restricted Subsidiary may sell Designated Acres (or
notes receivable arising from the sale of Designated Acres) for the fair value
thereof as reasonably determined in good faith by Responsible Representatives;
(g)the Company and its Restricted Subsidiaries may exchange Timberlands
with other Persons in the Ordinary Course of Business, provided that (i) the
fair value of the Timberlands plus any Net Proceeds received in such exchange
is, in the good faith judgment of the Responsible Representatives, not less than
the fair value of Timberlands exchanged plus any other consideration paid, (ii)
such exchange would not materially and adversely affect the business, Property,
condition or results of operations of the Company and its Restricted
Subsidiaries on a combined basis or of the Facilities Subsidiary or impair the
ability of the Company to perform its obligations hereunder and under the Note
Agreements, the 1994 Senior Note Agreements and the Mortgage Note Agreements,
and (iii) any Properties shall be deemed sold to the extent of Net Proceeds
received and such sales shall be allowed only to the extent otherwise permitted
by this Section 8.2;
(h)the Company and its Restricted Subsidiaries may sell Properties for
cash for not less than the fair value thereof as determined in good faith by the
Responsible Representatives, provided that the aggregate Net Proceeds of such
sales in any calendar year do not exceed an amount (the "Permitted Amount")
equal to (i) in calendar year 1996, $20,000,000 and (ii) in each calendar year
thereafter, the sum of (x) the Permitted Amount for the preceding calendar year
plus (y) an increase equal to the percentage increase, if any, in the consumer
price index for goods and services in the United States, as published by the
U.S. Bureau of Labor Statistics, or successor publication, for such preceding
calendar year, times such permitted amount; and
(i)the Company and its Restricted Subsidiaries may otherwise sell
Properties for cash in an amount not less than the fair value thereof as
determined in good faith by the Responsible Representatives, if and only if (i)
immediately after giving effect to such proposed sale, no condition or event
shall exist which constitutes an Event of Default or Material Default, (ii) the
Net Proceeds of any such sale (x) are applied, within 180 days after such sale
to repayment of Qualified Debt, with a percentage of such repayment being
applied to the Loans in an amount equal to or greater than the pro rata share of
the Loans as a percentage of the outstanding principal of other Qualified Debt,
or (y) are applied, within 180 days after such sale, to the purchase of
productive assets in the same line of business, provided that the Company shall
have notified the Agent promptly after its determination to so apply the Net
Proceeds, (iii) if the Net Proceeds of (x) any such sale exceed $50,000,000, and
if such Net Proceeds are not applied immediately as set forth in (ii)(x) or (y)
above, then the entire amount of such Net Proceeds are placed immediately upon
receipt thereof in an escrow or cash collateral account or accounts, pursuant to
an agreement or agreements in form and substance reasonably
<PAGE> 95
satisfactory to holders of greater than 50% of the outstanding principal balance
of the Qualified Debt, for the purpose of application in accordance with clause
(ii) above, and (y) all such Net Proceeds which are not then held in escrow or
cash collateral accounts pursuant to subclause (iii)(x) and which have not been
applied to the purchase of productive assets in the same line of business or
distributed to the holders of Qualified Debt for application to the repayment of
such Qualified Debt exceed $100,000,000 in the aggregate at any time, all such
Net Proceeds in excess of $100,000,000 are placed immediately upon receipt
thereof in an escrow or cash collateral account or accounts, pursuant to an
agreement or agreements in form and substance reasonably satisfactory to holders
of greater than 50% of the outstanding principal balance of the Qualified Debt,
for the purpose of application in accordance with clause (ii) above, and (iv)
immediately after giving effect to such sale (giving effect on a pro forma basis
to any proposed retirement of Qualified Debt out of proceeds thereof), the
Company could incur $1 of additional Funded Debt pursuant to subsection 8.5(i).
8.3 HARVESTING RESTRICTIONS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, in any calendar year, harvest Timber on the
Timberlands then owned by the Company in excess of the amount set forth for such
calendar year in the following table:
<TABLE>
<CAPTION>
================================================================================
CALENDAR YEAR MAXIMUM MCCF TO BE
HARVESTED
- - --------------------------------------------------------------------------------
<C> <C>
1996 (representing a carryover of 2,130 MCCF from 3,600 MCCF
prior years and an estimated 1996 harvest of 1,470
MCCF)
- - --------------------------------------------------------------------------------
1997-2000 1,970 MCCF
- - --------------------------------------------------------------------------------
2001-2009 1,910 MCCF
================================================================================
</TABLE>
plus, in each year, the amount, if any, by which the cumulative amount set forth
in the table above for the preceding years exceeds the cumulative amount
actually harvested in such years;
unless (a) the Net Proceeds from such excess harvest are either (i) applied,
within 180 days after any such excess harvest to repayment of Qualified Debt,
with a percentage of such repayment being applied to Loans in an amount equal to
or greater than the pro rata share of the Loans as a percentage of the
outstanding principal of other Qualified Debt or (ii) applied, within 180 days
after any such excess harvest, to purchase Timber (including Timber on
Timberlands purchased)
88
<PAGE> 96
having a fair value (in the good faith judgment of the Responsible
Representatives) not less than the fair value of the Timber subject to such
excess harvest, provided that the Company shall have notified the Agent promptly
after its determination to so apply the Net Proceeds. For purposes of computing
maximum harvest, Board Feet will be converted into Cunits at a ratio of 2.1 MCCF
for each MMBF.
8.4 LOANS AND INVESTMENTS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, make or commit to make or permit to remain
outstanding any loan or advance to, or guarantee, endorse or otherwise be or
become contingently liable, directly or indirectly, in connection with the
obligations, stock or dividends of, or own, purchase or acquire (or commit to
own, purchase or acquire) any stock, obligations or securities of, or any other
interest in (including, without limitation, the acquisition of all or
substantially all of the assets of a Person, or of any business or division of a
Person), or make or commit to make any capital contribution to, any Person (all
of the foregoing (but excluding any Designated Repurchases permitted by Section
8.13 hereof) being referred to herein as "Investments"), except that the Company
or any Restricted Subsidiary may:
(a)make Investments in the Facilities Subsidiary, provided that the
Company will not make or permit any Restricted Subsidiary to make any such
Investment (including any guaranty of obligations of the Facilities Subsidiary
otherwise permitted by this Section 8.4) unless (i) immediately after giving
effect to such Investment, no Event of Default or Default, or "Default" or
"Event of Default" as defined in the Mortgage Note Agreements, shall exist, (ii)
immediately prior to giving effect to such Investment, no Default or Event of
Default (other than an "Event of Default" as defined in the Mortgage Note
Agreements) shall exist, and (iii) immediately after giving effect to such
Investment, the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual
Interest Charges is not less than 2.5 to 1.0.
(b)own, purchase or acquire real or personal property to be used in the
Ordinary Course of Business;
(c)own, purchase or acquire investments of the type specified in, and in
accordance with the requirements and limitations of, the Investment Policy;
(d)continue to own Investments owned on the Closing Date as set forth on
Schedule 8.4;
(e)endorse negotiable instruments for collection in the Ordinary Course of
Business;
89
<PAGE> 97
(f)become and be obligated under the Guarantee and under the guarantees
permitted by subsections 8.5(f) and (h), and acquire and own subordinated
subrogation rights upon performance of such guarantees;
(g)make advances in the Ordinary Course of Business of the Company or any
Restricted Subsidiary, including deposits permitted under subsection 8.1(c),
advances to employees for travel, relocation and other employment related
expenses, advances to contractors performing services for the Company or such
Restricted Subsidiary, advances to owners of timber or timber properties to
acquire rights to harvest timber and other similar advances;
(h)make Investments in Restricted Subsidiaries, or any entity which
immediately after such Investment will be a Restricted Subsidiary; and
(i)make Investments not otherwise permitted by this Section 8.4 in
entities engaged solely in a Permitted Business, provided that (x) the aggregate
cumulative amount of such Investments, to the extent that such Investments are
attributable to pulp and paper manufacturing (as proportionately attributed by
multiplying the amount of an Investment by the percentage of revenues of the
Person in whom such Investment is made during the 12 months preceding such
Investment that are contributed by pulp and paper manufacturing), does not
exceed the sum of $50,000,000 (without giving effect to any write-down of such
Investments), and (y) the cumulative aggregate amount of all such Investments
including those subject to clause (x) at original cost (including the principal
amount of any obligations guaranteed to the extent such guarantees are not
otherwise permitted by this Section 8.4) outstanding from time to time made
pursuant to this subsection (i) between the closing date of the Note Agreements
and any date thereafter shall not exceed the greater of $30,000,000 or 60% of
the average annual Pro Forma Free Cash Flow for the two fiscal years preceding
such date.
8.5 LIMITATION ON INDEBTEDNESS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, create, incur, assume, suffer to exist, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a)Funded Debt represented by the Notes and the 1994 Notes and any
refinancing thereof so long as such refinancing does not increase the principal
amount thereof and is on terms no less favorable to the Company, and to the
rights of the Agent and the Banks hereunder, than those contained on the Closing
Date in the Notes and the 1994 Notes and the documentation relating thereto;
(b)Funded Debt which is unsecured and is incurred by the Company to
finance the making of capital improvements, expansions and additions to the
Company's property (including Timberlands), plant and equipment, provided that
90
<PAGE> 98
the aggregate outstanding principal amount of such Funded Debt shall at no time
exceed $20,000,000;
(c)Indebtedness of any Restricted Subsidiary owing to the Company or to a
Restricted Subsidiary;
(d)Indebtedness pursuant to a bank credit facility which is unsecured or
is secured by Liens permitted by subsection 8.1(h), not in excess of an
aggregate principal amount of $15,000,000 at any time outstanding, provided that
the Company shall not suffer to exist any Indebtedness permitted by this
subsection (d) on any day unless there shall have been a period of at least 45
consecutive days within the 12 months immediately preceding such day during
which the Company shall have been free from all Indebtedness permitted by this
subsection (d);
(e)Indebtedness represented by the Guarantee and any refinancing thereof
so long as such refinancing does not increase the principal amount thereof and
is on terms no less favorable to the Company, and to the rights of the Agent and
the Banks hereunder, than those contained on the Closing Date in the Guarantee
and the documentation relating thereto;
(f)the Company's guarantee of obligations incurred by the Facilities
Subsidiary pursuant to the Facilities Subsidiary's Revolving Credit Facility
(and any extension, renewal, refunding or refinancing thereof permitted by
clause (iv) of paragraph 6B(2) of the Mortgage Note Agreements), provided that
the aggregate outstanding principal amount of such Indebtedness shall at no time
exceed $20,000,000, and provided further that such guarantee shall be
subordinated to the Notes by subordination provisions substantially the same as
those contained in paragraph 7I of the Mortgage Note Agreements;
(g)the Company's guarantee of Funded Debt (and related obligations not
constituting Indebtedness) incurred by the Facilities Subsidiary to finance the
making of capital improvements, expansions and additions to the Facilities
Subsidiaries' Properties pursuant to the Facilities Subsidiary's Facility,
provided that such guarantee shall be subordinated to the Notes by subordination
provisions substantially the same as those contained in paragraph 7I of the
Mortgage Note Agreements, and provided, further, that the aggregate outstanding
principal amount of such Funded Debt shall at no time exceed $20,000,000;
(h)Funded Debt of the Company or any Restricted Subsidiary secured by a
Lien permitted by subsection 8.1(g), provided that immediately after the
acquisition of the Property subject to such Lien or upon which such Lien is
placed (or, if later, the incurrence of the Indebtedness secured by such Lien),
the Company could incur at least $1 of additional Funded Debt pursuant to
subsection (i) below;
91
<PAGE> 99
(i) Funded Debt of the Company (other than Funded Debt owing to a
Restricted Subsidiary) in addition to that otherwise permitted by the foregoing
subsections of this Section 8.5, including guarantees of Indebtedness to the
extent permitted by Section 8.4 and not otherwise permitted by the foregoing
subsections of this Section 8.5, provided that, on the date the Company becomes
liable with respect to any such additional Funded Debt and immediately after
giving effect thereto and to the concurrent retirement of any other Funded Debt,
the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest
Charges is not less than 2.25 to 1.00; and provided, further, that the aggregate
outstanding principal amount of such additional Funded Debt (but not including
Funded Debt incurred under this Agreement) shall not exceed (i) until the
Equity Closing, $150,000,000 and (ii) from the Equity Closing, $150,000,000 plus
any amount equal to the aggregate of Equity Proceeds received by the Company
from the Closing Date to such date of determination;
(j) from and after the time that the Facilities Subsidiary becomes a
Restricted Subsidiary, Indebtedness incurred by the Facilities Subsidiary
pursuant to the Facilities Subsidiary's Revolving Credit Facility (and any
extension, renewal, refunding or refinancing thereof, including any refunding or
refinancing in an amount in excess of the principal amount then outstanding
under the Facilities Subsidiary's Revolving Credit Facility) or any other
Indebtedness incurred by the Facilities Subsidiary pursuant to a bank credit
facility which is unsecured or is secured by Liens permitted by subsection
8.1(h), not in excess of an aggregate principal amount of $20,000,000 at any
time outstanding, provided that to the extent that the Facilities Subsidiary is
a Restricted Subsidiary, the Facilities Subsidiary shall not suffer to exist any
Indebtedness permitted by this subsection (j) on any day unless there shall have
been a period of at least 45 consecutive days within the 12 months immediately
preceding such day during which the Facilities Subsidiary shall have been free
from all Indebtedness permitted by this subsection (j);
(k) from and after the time that the Facilities Subsidiary or any
Designated Immaterial Subsidiary becomes a Restricted Subsidiary, Indebtedness
of the Facilities Subsidiary or any such Designated Immaterial Subsidiary
outstanding at the time the Facilities Subsidiary or such Designated Immaterial
Subsidiary becomes a Restricted Subsidiary, provided that (i) immediately after
the Facilities Subsidiary or any such Designated Immaterial Subsidiary becomes a
Restricted Subsidiary, the Company could incur at least $1 of additional Funded
Debt pursuant to subsection (i) above (the Facilities Subsidiary or any such
Designated Immaterial Subsidiary shall be deemed to be a Restricted Subsidiary
for the four consecutive fiscal quarters immediately prior to its becoming a
Restricted Subsidiary for purposes of determining Pro Forma Free Cash Flow), and
(ii) the aggregate amount (without duplication) of such Indebtedness and all
other
92
<PAGE> 100
Indebtedness, in each case, secured by Liens permitted by subsection
8.1(g) does not violate subclause (iv) to the proviso to such subsection (g);
and
(l) Indebtedness representing the Swap Termination Value of Swap
Contracts entered into in the ordinary course of business as bona fide hedging
transactions.
8.6 TRANSACTIONS WITH AFFILIATES
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to directly or indirectly engage in any transaction
(including, without limitation, the purchase, sale or exchange of assets or the
rendering of any service), with any Affiliate of the Company or of any such
Restricted Subsidiary, except in the Ordinary Course of Business and pursuant to
the reasonable requirements of the business of the Company or such Restricted
Subsidiary and upon fair and reasonable terms that are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than those which
might be obtained in an arm's-length transaction at the time from Persons not an
Affiliate of the Company or such Restricted Subsidiary.
8.7 USE OF PROCEEDS
(a) The Company shall not and shall not suffer or permit any of its
Subsidiaries to use any portion of the proceeds of the Loans or other Credit
Extension, directly or indirectly, (i) to purchase or carry Margin Stock, (ii)
to repay or otherwise refinance indebtedness of the Company or others incurred
to purchase or carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any security in any
transaction that is subject to Section 13 or 14 of the Exchange Act.
(b) The Company shall not and shall not suffer or permit any of its
Subsidiaries to use any portion of the proceed of the Loans or other Credit
Extension, directly or indirectly, (i) knowingly to purchase Ineligible
Securities from a Section 20 Subsidiary during any period in which such Section
20 Subsidiary makes a market in such Ineligible Securities, (ii) knowingly to
purchase during the underwriting or placement period Ineligible Securities being
underwritten or privately placed by a Section 20 Subsidiary, or (iii) to make
payments of principal or interest on Ineligible Securities underwritten or
privately placed by a Section 20 Subsidiary and issued by or for the benefit of
the Company or any Affiliate of the Company. As used in this Section, "Section
20 Subsidiary" means the Subsidiary of the bank holding company controlling any
Bank, which Subsidiary has been granted authority by the Federal Reserve Board
to underwrite and deal in certain Ineligible Securities; and "Ineligible
Securities" means securities which may not be underwritten or dealt in by member
banks of the Federal Reserve System under Section 16 of the Banking Act of 1933
(as U.S.C. Section 24, Seventh), as amended.
93
<PAGE> 101
(c) After the date the Company has notified the Agent that the Company
intends to allocate Loans to the Capital Expenditure Tranche and to qualify such
Capital Expenditure Tranche Loans as Indebtedness permitted under subsection
8.5(b), the Company shall not and shall not suffer any of its Subsidiaries to
use the proceeds of Capital Expenditure Tranche Loans for purposes other than to
finance capital improvements, expansions and additions to the Company's property
(including Timberlands), plant and equipment.
8.8 SALE OF STOCK AND INDEBTEDNESS OF SUBSIDIARIES
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, sell or otherwise dispose of, or part with control
of, any shares of stock or Indebtedness of any Subsidiary, except to the Company
or a Restricted Subsidiary, and except that all shares of stock and Indebtedness
of any Subsidiary (other than the Facilities Subsidiary) at the time owned by or
owed to the Company and its Restricted Subsidiaries may be sold as an entirety
for a cash consideration which represents the fair value (as determined in good
faith by the Responsible Representatives of the PC Advisory General Partner) at
the time of sale of the shares of stock and Indebtedness so sold, provided that
the assets of such Subsidiary do not include any assets which could not be
disposed of pursuant to the provisions of Section 8.2 unless the conditions to
the sale of such assets set forth in Section 8.2 are complied with, and further
provided that, at the time of such sale, such Subsidiary shall not own, directly
or indirectly, any shares of stock or Indebtedness of any other Subsidiary
(unless all of the shares of stock and Indebtedness of such other Subsidiary
owned, directly or indirectly, by the Company and its Subsidiaries are
simultaneously being sold as permitted by this Section 8.8).
8.9 CERTAIN CONTRACTS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to enter into or be a party to:
(a) any contract providing for the making of loans, advances or capital
contributions to any Person, or for the purchase of any Property from any
Person, in each case in order primarily to enable such Person to maintain
working capital, net worth or any other balance sheet condition or to pay debts,
dividends or expenses; or
(b) any contract for the purchase of materials, supplies or other property
or services if such contract (or any related document) requires that payment for
such materials, supplies or other property or services shall be made regardless
of whether or not delivery of such materials, supplies or other property or
services is ever made or tendered, provided that nothing in this subsection (b)
shall prevent the Company from (i) entering into (x) take-or-pay contracts in
the Ordinary Course of
94
<PAGE> 102
Business with the United States Forest Service, the Bureau of Land Management,
the Bureau of Indian Affairs, the Washington Department of Natural Resources or
similar state or federal governmental agencies or (y) the Riverwood Supply
Agreement, or (ii) making payments in satisfaction of contracts with such
Persons which contracts are deemed by the Responsible Representatives to be
disadvantageous to perform; or
(c) any contract to rent or lease (as lessee) any real or personal
property if such contract (or any related document) provides that the obligation
to make payments thereunder is absolute and unconditional under conditions not
customarily found in commercial leases then in general use or requires that the
lessee purchase or otherwise acquire securities or obligations of the lessor; or
(d) any contract for the sale or use of materials, supplies or other
property, or the rendering of services, if such contract (or any related
document) requires that payment for such materials, supplies or other property,
or the use thereof, or payment for such services, shall be subordinated to any
indebtedness (of the purchaser or user of such materials, supplies or other
property or the Person entitled to the benefit of such services) owed or to be
owed to any Person; or
(e) any other contract which in economic effect, is substantially
equivalent to a guarantee,
except as permitted by the provisions of subsection 8.4(a), (e), (f), (g),
(h) or (i).
8.10 JOINT VENTURES
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to enter into any Joint Venture, other than in Permitted
Businesses and so long as any such Joint Venture is not entered into for the
purposes of evading any covenant or restriction in any Loan Documents.
8.11 COMPLIANCE WITH ERISA
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, without the consent of the Majority Banks, (i) terminate any
Plan subject to Title IV of ERISA so as to result in any material (in the
opinion of the Majority Banks) liability to the Company or any ERISA Affiliate,
(ii) permit to exist any ERISA Event with respect to any Plan other than a
Multiemployer Plan, which presents the risk of a material (in the opinion of the
Majority Banks) liability to the Company, (iii) make a complete or partial
withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer
Plan so as to result in any material (in the opinion of the Majority Banks)
liability to the Company or any ERISA Affiliate, (iv) enter into any new Plan or
modify any existing Plan so as to increase its obligations thereunder which
could result in any material (in the opinion of the
95
<PAGE> 103
Majority Banks) increase in its liability with respect to such Plan, or (v)
permit the present value of all nonforfeitable accrued benefits under any
Qualified Plan (determined using the actuarial assumptions utilized by the
Plan's actuaries for funding the Plan pursuant to Section 412 of the Code)
materially (in the opinion of the Majority Banks) to exceed the fair market
value of Plan assets allocable to such benefits, all determined as of the most
recent valuation date for each such Plan.
8.12 SALE AND LEASEBACK
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, enter into any arrangement with any lender or
investor or to which such lender or investor is a party providing for the
leasing by the Company or any Restricted Subsidiary of real or personal property
which has been or is to be sold or transferred by the Company or any Restricted
Subsidiary to such lender or investor or to any Person to whom funds have been
or are to be advanced by such lender or investor on the security of such
property or rental obligations of the Company or any Restricted Subsidiary,
provided that this Section 8.12 shall not apply to any property sold pursuant to
subsection 8.2(h).
8.13 RESTRICTED PAYMENTS
The Company shall not and shall not permit or suffer any Subsidiary to
directly or indirectly pay, declare, order, make or set apart any sum for any
Restricted Payment, except that the Company may make, pay or set apart during
each calendar quarter one or more Restricted Payments if:
(a) such Restricted Payments are in an aggregate amount not exceeding the
amount by which Available Cash with respect to the immediately preceding
calendar quarter exceeds any amount contributed to Available Cash with respect
to such immediately preceding calendar quarter by any Subsidiary if and to the
extent that the payment of such amount as a dividend or distribution to the
Company has not been made and is not at the time permitted by the terms of such
Subsidiary's charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Subsidiary, provided
that in determining Available Cash with respect to such immediately preceding
calendar quarter, the Company will include in the amount of reserves established
during such quarter pursuant to clause (ii)(d) of the definition of Available
Cash an amount not less than (i) 50% of the aggregate amount of all interest in
respect of the Notes and the 1994 Notes to be paid on the interest date
immediately following such immediately preceding calendar quarter, (ii) 100% of
the aggregate amount of all interest in respect of the Loans to be paid on the
respective Interest Payment Dates for such Loans, (iii) 25% of the aggregate
amount of all principal in respect of the Notes and the 1994 Notes scheduled to
be paid (determined in accordance with the Principal Repayment Proviso) during
the 12 calendar months immediately
96
<PAGE> 104
following such immediately preceding calendar quarter, and (iv) for the final
four full calendar quarters preceding the Revolving Termination Date, 25% of the
average Effective Amount of Revolving Loans, Swingline Loans and L/C Obligations
outstanding at any time during such quarter of computation, and the Company will
not reduce the amount of the reserves so included, in determining Available Cash
for any calendar quarter subsequent to such immediately preceding calendar
quarter pursuant to clause (i)(c) of the definition of Available Cash, unless
and until (A) the amount of interest or principal in respect of which such
amount has been reserved has in fact been paid and (B) in the case of clause
(iv) of this subsection 8.13(a), the amount of the reserves so included exceeds
fifty percent (50%) of the Effective Amount of Revolving Loans, L/C Obligations
and Swingline Loans at the end of such quarter of computation; and
(b) immediately after giving effect to any such proposed action no
condition or event shall exist which constitutes an Event of Default or Material
Default.
The Company will not, in any event, directly or indirectly declare, order, pay
or make any Restricted Payment except in cash.
8.14 CHANGE IN BUSINESS
The Company shall not, and shall not permit any of its Subsidiaries to,
engage in any business other than a Permitted Business.
8.15 ISSUANCE OF STOCK BY SUBSIDIARIES
The Company covenants that it will not permit any Subsidiary to (either
directly, or indirectly by the issuance of rights or options for, or securities
convertible into, such shares) issue, sell or otherwise dispose of any shares of
any class of its stock or partnership or other ownership interests (other than
directors' qualifying shares) except to the Company or a Restricted Subsidiary,
and except to the extent that holders of minority interests may be entitled to
purchase stock by reason of preemptive rights.
8.16 AMENDMENTS
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to amend, modify, supplement, waive or otherwise modify any
provision of any agreement evidencing Funded Debt in excess of $35,000,000 which
amendment, modification, supplement or waiver would reasonably be expected to
impair the Agent's or the Banks' rights hereunder or the ability of the Company
to perform its obligations under any Loan Document.
97
<PAGE> 105
8.17 Available Cash
The Company shall not at any time permit Available Cash to be less than
zero. For purposes of this Section 8.17, in determining Available Cash with
respect to the immediately preceding calendar quarter, the Company will include
in the amount of reserves established during such quarter pursuant to clause
(ii)(d)(1) (with respect to principal on Indebtedness) and clause (ii)(d)(4) of
the definition of "Available Cash" an amount not less than (a) 50% of the
aggregate amount of all interest in respect of the Notes and the 1994 Notes to
be paid on the interest date immediately following such immediately preceding
calendar quarter, (b) 100% of the aggregate amount of all interest in respect of
the Loans to be paid on the respective Interest Payment Dates for such Loans,
(c) 25% of the aggregate amount of all principal in respect of the Notes and the
1994 Notes scheduled to be paid (determined in accordance with the Principal
Repayment Proviso) during the 12 calendar months immediately following such
immediately preceding calendar quarter, and (d) for the final four full calendar
quarters preceding the Revolving Termination Date, 25% of the average Effective
Amount of Revolving Loans, Swingline Loans and L/C Obligations outstanding at
any time during such quarter of computation, and the Company will not reduce the
amount of the reserves so included in determining Available Cash for any
calendar quarter subsequent to such immediately preceding calendar quarter
pursuant to clause (i)(c) of the definition of Available Cash, unless and until
(i) the amount of interest or principal in respect of which such amount has been
reserved has in fact been paid and (ii) in the case of clause (d) of this
Section 8.17, the amount of the reserves so included exceeds fifty percent (50%)
of the Effective Amount of Revolving Loans, L/C Obligations and Swingline Loans
at the end of such quarter of computation.
8.18 INTEREST COVERAGE RATIO
The Company shall not permit its Interest Coverage Ratio at the end of any
fiscal quarter ending during the periods set forth below to be equal to or less
than the values indicated below for such periods:
<TABLE>
<CAPTION>
Period Interest Coverage Ratio
------ -----------------------
<S> <C>
1 2.40
2 2.75
3 3.00
</TABLE>
Period 1 shall extend from the Closing Date until the end of the sixth
(6th) fiscal quarter ending after the Closing Date; Period 2 shall extend from
the end of Period 1 until the end of the twelfth (12th) fiscal quarter ending
after the Closing Date; and Period 3 shall extend from the end of Period 2 until
the Revolving Termination Date.
98
<PAGE> 106
9. EVENTS OF DEFAULT
9.1 EVENT OF DEFAULT
Any of the following shall constitute an "Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when and as required to be
paid herein, any amount of principal of any Loan or of any L/C Obligation, or
(ii) within 5 days after the same shall become due, any interest, fee or any
other amount payable hereunder or pursuant to any other Loan Document; or
(b) Representation or Warranty. Any representation or warranty by the
Company or any of its Subsidiaries made or deemed made herein, in any Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, its Responsible Representatives, any of its
Subsidiaries, or their respective Responsible Officers, furnished at any time
under this Agreement, or in or under any Loan Document, shall prove to have been
incorrect in any material respect on or as of the date made or deemed made; or
(c) Specific Defaults. The Company fails to perform or observe any term,
covenant or agreement contained in Sections 7.3 or 7.9 or Article VIII; or
(d) Other Defaults. The Company fails to perform or observe any other
term or covenant contained in this Agreement or any Loan Document, and such
default shall continue unremedied for a period of 20 days after the earlier of
(i) the date upon which a Responsible Officer or Responsible Representative of
the Company knew or should have known of such failure or (ii) the date upon
which written notice thereof is given to the Company by the Agent or any Bank;
or
(e) Cross-Default. (i) The Company or any of its Subsidiaries (A) fails
to make any payment in respect of any Indebtedness (other than in respect of
Swap Contracts) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $5,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise); or (B) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness, if the effect of such failure,
event or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee
or agent on behalf of such holder or holders or beneficiary or beneficiaries) to
cause such Indebtedness to be declared to be due and payable prior to its stated
maturity, or with respect to any contingent obligations, to become payable or
cash collateral in respect thereof to be demanded; or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (1) any event of default under
99
<PAGE> 107
such Swap Contract as to which the Company or any Subsidiary is the Defaulting
Party (as defined in such Swap Contract) or (2) any Termination Event (as so
defined) as to which the Company or any Subsidiary is an Affected Party (as so
defined), and, in either event, the Swap Termination Value owed by the Company
or such Subsidiary as a result thereof is greater than $5,000,000, or
(f) Insolvency; Voluntary Proceedings. The Company, any of its
Subsidiaries, or any Partner Entity (i) ceases or fails to be Solvent, or
generally fails to pay, or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with respect to
itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against the Company, the Facilities Subsidiary, any
Restricted Subsidiary of the Company, or any Partner Entity, or any writ,
judgment, warrant of attachment, execution or similar process, is issued or
levied against a substantial part of the Company's, any of its Restricted
Subsidiaries', any Partner Entities' or the Facilities Subsidiaries' Properties,
and any such proceeding or petition shall not be dismissed, or such writ,
judgment, warrant of attachment, execution or similar process shall not be
released, vacated or fully bonded within 60 days after commencement, filing or
levy; (ii) the Company, any Partner Entity, the Facilities Subsidiary, or any of
the Company's Restricted Subsidiaries admits the material allegations of a
petition against it in any Insolvency Proceeding, or an order for relief (or
similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or
(iii) the Company, any Partner Entity, any of the Company's Restricted
Subsidiaries, or the Facilities Subsidiary acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial portion
of its Property or business; or
(h) ERISA. (i) The Company or an ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any installment
payment with respect to its withdrawal liability under a Multiemployer Plan;
(ii) the Company or an ERISA Affiliate shall fail to satisfy its contribution
requirements under Section 412(c)(11) of the Code, whether or not it has sought
a waiver under Section 412(d) of the Code; (iii) of an ERISA Event
involving the withdrawal from a Plan of a "substantial employer" (as defined in
Section 4001(a)(2) or Section 4062(e) of ERISA), the withdrawing employer's
proportionate share of that Plan's Unfunded Pension Liabilities is more than
$10,000,000; (iv) in the case of an ERISA Event involving the complete or
partial withdrawal from a Multiemployer Plan, the withdrawing employer has
incurred a withdrawal liability in an aggregate amount exceeding $10,000,000;
(v) in the case
100
<PAGE> 108
of an ERISA Event not described in clause (iii) or (iv), the Unfunded Pension
Liabilities of the relevant Plan or Plans exceed $10,000,000; (vi) a Plan that
is intended to be qualified under Section 401(a) of the Code shall lose its
qualification, and the loss can reasonably be expected to impose on the Company
or its ERISA Affiliates liability (for additional taxes, to Plan participants,
or otherwise) in the aggregate amount of $10,000,000 or more; (vii) the
commencement or increase of contributions to, or the adoption of or the
amendment of a Plan by, the Company or an ERISA Affiliate which commencement,
increase or amendment shall result in a net increase in unfunded liabilities to
the Company and the ERISA Affiliates in excess of $10,000,000; (viii) the
Company or an ERISA Affiliate engages in or otherwise becomes liable for a
non-exempt prohibited transaction and the initial tax or additional tax under
section 4975 of the Code relating thereto might reasonably be expected to exceed
$10,000,000; (ix) a violation of section 404 or 405 of ERISA or the exclusive
benefit rule under section 401(a) of the Code if such violation might reasonably
be expected to expose Company or its ERISA Affiliates to monetary liability in
excess of $10,000,000; (x) any member of the Controlled Group is assessed a tax
under section 4980B of the Code in excess of $10,000,000; or (xi) the occurrence
of any combination of events listed in clauses (iii) through (x) that would
reasonably be expected to result in a net increase to the Company and its ERISA
Affiliates in aggregate Unfunded Pension Liabilities, unfunded liabilities, or
any combination thereof, in excess of $10,000,000; or
(i) Monetary Judgments. One or more non-interlocutory judgments, orders
or decrees shall be entered against the Company or any of its Subsidiaries
involving in the aggregate a liability (not fully covered by independent
third-party insurance) as to any single or related series of transactions,
incidents or conditions, of $25,000,000 or more, and the same shall remain
unsatisfied, unvacated and unstayed pending appeal for a period of 30 days after
the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or decree
shall be rendered against the Company or any of its Subsidiaries which does or
would reasonably be expected to have a Material Adverse Effect, and there shall
be any period of 10 consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(k) Auditors. The Agent or any Bank shall receive notice from the
Independent Auditor that the Agent and the Banks should no longer use or rely
upon any audit report or other financial data provided by the Independent
Auditor; or
(l) Adverse Change. One of the following has occurred and the Agent, at
the direction of the Majority Banks, shall so notify the Company: (i) a material
101
<PAGE> 109
adverse change in, or a material adverse effect upon, any of the operations,
business, properties, or condition (financial or otherwise) of the Company or
the Company and its Subsidiaries taken as a whole or as to any Restricted
Subsidiary which materially impairs the ability of the Company to perform under
any Loan Document and avoid any Event of Default, or (ii) a material adverse
effect upon the legality, validity, binding effect or enforceability of any Loan
Document; or
(m) Equity Issuance. The Company shall not have received aggregate Equity
Proceeds of at least $100,000,000 on or before April 17, 1998.
9.2 REMEDIES
If any Event of Default occurs, the Agent shall, at the request of, or
may, with the consent of, the Majority Banks,
(a) declare the Bridge Commitment and Revolving Commitment of each Bank
and the Swingline Commitment of the Swingline Bank to make Loans and any
obligation of the Issuing Banks to issue Letters of Credit to be terminated,
whereupon such Commitments and obligations shall forthwith be terminated;
(b) declare an amount equal to the maximum aggregate amount that is or at
any time thereafter may become available for drawing under any outstanding
Letters of Credit (whether or not any beneficiary shall have presented, or shall
be entitled at such time to present, the drafts or other documents required to
draw under such Letters of Credit) to be immediately due and payable, and
declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable; without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Company; and
(c) exercise on behalf of itself and the Banks all rights and remedies
available to it and the Banks under the Loan Documents or applicable law;
provided, however, that upon the occurrence of any event specified in paragraph
(f) or (g) of Section 9.1 above (in the case of clause (i) of paragraph (g) upon
the expiration of the 60-day period mentioned therein), the obligation of each
Bank and the Swingline Bank to make Loans and any obligation of the Issuing
Banks to Issue Letters of Credit shall automatically terminate and the unpaid
principal amount of all outstanding Loans and all interest and other amounts as
aforesaid shall automatically become due and payable without further act of the
Agent, the Issuing Banks, the Swingline Bank, or any Bank.
102
<PAGE> 110
9.3 RIGHTS NOT EXCLUSIVE
The rights provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
10. THE AGENT
10.1 APPOINTMENT AND AUTHORIZATION
(a) Each Bank and each Issuing Bank hereby irrevocably (subject to
Section 10.9) appoints, designates and authorizes the Agent to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto, including,
without limitation, to enter into Cash Collateral Account Agreements from time
to time in accordance with this Agreement, and to release funds to the Company
in accordance with Section 1(b) of the Cash Collateral Account Agreement and, if
applicable, pursuant to an Officer's Certificate substantially in the form
attached thereto as Exhibit A. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary relationship
with any Bank or any Issuing Bank, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the Agent.
Without limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter of
market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
(b) Each Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Agent may agree at the request of the
Majority Banks to act for such Issuing Bank with respect thereto; provided,
however, that each Issuing Bank shall have all of the benefits and immunities
(i) provided to the Agent in this Article X with respect to any acts taken or
omissions suffered by such Issuing Bank in connection with Letters of Credit
Issued by it or proposed to be Issued by it and the application and agreements
for letters of credit pertaining to the Letters of Credit as fully as if the
term "Agent," as used in this Article X,
103
<PAGE> 111
included such Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing Banks.
10.2 DELEGATION OF DUTIES
The Agent may execute any of its duties under this Agreement or any other
Loan Document by or through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining to such duties.
The Agent shall not be responsible for the negligence or misconduct of any agent
or attorney-in-fact that it selects with reasonable care.
10.3 LIABILITY OF AGENT
None of the Agent-Related Persons shall (i) be liable for any action taken
or omitted to be taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated hereby (except for
its own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Banks for any recital, statement, representation or
warranty made by the Company or any Subsidiary or Affiliate of the Company, or
any officer thereof, contained in this Agreement or in any other Loan Document,
or in any certificate, report, statement or other document referred to or
provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
Properties, books or records of the Company or any of the Company's Subsidiaries
or Affiliates.
10.4 RELIANCE BY AGENT
(a) The Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel to the Company), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or
any other Loan Document unless it shall first receive such advice or concurrence
of the Majority Banks as it deems appropriate and, if it so requests, it shall
first be indemnified to its satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases
104
<PAGE> 112
be fully protected in acting, or in refraining from acting, under this Agreement
or any ther Loan Document in accordance with a request or consent of the
Majority Banks and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions specified
in Section 5.1, each Bank that has executed this Agreement shall be deemed to
have consented to, approved or accepted or to be satisfied with, each document
or other matter either sent or made available by the Agent to such Bank for
consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank, unless an
officer of the Agent responsible for the transactions contemplated by the Loan
Documents shall have received notice from the Bank prior to the initial Credit
Extension specifying its objection thereto and either such objection shall not
have been withdrawn by notice to the Agent to that effect or the Bank shall not
have made available to the Agent the Bank's ratable portion of such Credit
Extension.
10.5 NOTICE OF DEFAULT
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, except with respect to defaults
in the payment of principal, interest and fees required to be paid to the Agent
for the account of the Banks, unless the Agent shall have received written
notice from a Bank or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". The Agent will notify the Banks of its receipt of any such notice. The
Agent shall take such action with respect to such Default or Event of Default as
may be requested by the Majority Banks in accordance with Article IX; provided,
however, that unless and until the Agent has received any such request, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Banks.
10.6 CREDIT DECISION
Each Bank expressly acknowledges that none of the Agent-Related Persons
has made any representation or warranty to it, and that no act by the Agent
hereinafter taken, including any review of the affairs of the Company and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Bank. Each Bank represents to the Agent that it
has, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company and
its Subsidiaries, and all applicable bank regulatory laws relating to the
transactions contemplated hereby,
105
<PAGE> 113
and made its own decision to enter into this Agreement and to extend credit to
the Company hereunder. Each Bank also represents that it will, independently and
without reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company.
Except for notices, reports and other documents expressly herein required to be
furnished to the Banks by the Agent, the Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Company which may come into the possession
of any of the Agent-Related Persons.
10.7 INDEMNIFICATION OF AGENT
Whether or not the transactions contemplated hereby are consummated, the
Banks shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Company and without limiting the obligation of
the Company to do so), pro rata from and against any and all Indemnified
Liabilities; provided, however, that no Bank shall be liable for the payment to
the Agent-Related Persons of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank shall reimburse the Agent upon
demand for its ratable share of any costs or out-of-pocket expenses (including
reasonable Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein,
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Company. Without limiting the generality of the foregoing, if the
Internal Revenue Service or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank hereunder
(because the appropriate form was not delivered, was not properly executed, or
because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Agent fully for all amounts
paid, directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, together with all costs and
expenses and attorneys' fees (including reasonable Attorney Costs). The
undertaking in this Section shall survive the
106
<PAGE> 114
payment of all Obligations hereunder and the resignation or replacement of the
Agent.
10.8 AGENT IN INDIVIDUAL CAPACITY
BofA and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Company and its Subsidiaries and Affiliates as though BofA
were not the Agent, Swingline Bank or an Issuing Bank hereunder and without
notice to or consent of the Banks. The Banks acknowledge that, pursuant to such
activities, BofA or its Affiliates may receive information regarding the Company
or its Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company or such Subsidiary) and acknowledge that the
Agent shall be under no obligation to provide such information to them. With
respect to its Loans and participation in Letters of Credit, BofA shall have the
same rights and powers under this Agreement as any other Bank and may exercise
the same as though it were not the Agent, and the terms "Bank" and "Banks" shall
include BofA in its individual capacity.
10.9 SUCCESSOR AGENT
The Agent may, and at the request of the Majority Banks shall, resign as
Agent upon 30 days' notice to the Banks. If the Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a successor
agent for the Banks. If no successor agent is appointed prior to the effective
date of the resignation of the Agent, the Agent may appoint, after consulting
with the Banks and the Company, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder, such successor agent
shall succeed to all the rights, powers and duties of the retiring Agent and the
term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any retiring
Agent's resignation hereunder as Agent, the provisions of this Article X and
Sections 11.4 and 11.5 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as the
Majority Banks appoint a successor agent as provided for above. Notwithstanding
the foregoing, however, BofA may not be removed as the Agent at the request of
the Majority Banks unless BofA shall also simultaneously be replaced as an
"Issuing Bank" hereunder pursuant to documentation in form and substance
satisfactory to BofA.
107
<PAGE> 115
11. MISCELLANEOUS
11.1 AMENDMENTS AND WAIVERS
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by the Company
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Banks, the Company and acknowledged by the Agent, and then such
waiver shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Banks, the Company and
acknowledged by the Agent, do any of the following:
(a) increase or extend the Bridge Commitment or Revolving Commitment of
any Bank or the Swingline Commitment of the Swingline Bank (or reinstate any
such Commitment terminated pursuant to subsection 9.2(a)), including, without
limitation, any amendment to or waiver of subsection 2.9(b) or any other
provision providing for a mandatory commitment reduction, or subject any Bank to
any additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Banks (or any of them) hereunder or
under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein on
any Loan, or (subject to clause (iii) below) of any fees or other amounts
payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate unpaid
principal amount of the Loans which shall be required for the Banks or any of
them to take any action hereunder; or
(e) amend this Section 11.1 or Section 2.17 or any provision providing for
consent or other action by all Banks;
and, provided further that (i) no amendment, waiver or consent shall, unless in
writing signed by the relevant Issuing Bank in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of such Issuing
Bank under this Agreement or any L/C-Related Document relating to any Letter of
Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent shall,
unless in writing and signed by the Agent in addition to the Majority Banks or
all the Banks, as the case may be, affect the rights or duties of the Agent
under this Agreement or any other Loan Document, (iii) no amendment, waiver or
consent shall, unless in writing and signed by the Swingline Bank in addition to
the Majority Banks or all the Banks, as the case may be, affect the rights or
duties of the Swingline Bank
108
<PAGE> 116
under this Agreement or any other Loan Document, and (iv) the fee letter between
the Company and BofA may be amended, or rights and privileges thereunder waived,
in a writing executed by the parties thereto.
11.2 NOTICES
(a) All notices, requests and other communications provided for hereunder
shall be in writing (including, unless the context expressly otherwise provides,
by facsimile transmission, provided that any matter transmitted by the Company
by facsimile (i) shall be immediately confirmed by a telephone call to the
recipient at the number specified on Schedule 11.2, and (ii) shall be followed
promptly by a hard copy original thereof) and mailed, faxed or delivered, to the
address or facsimile number specified for notices on Schedule 11.2; or, as
directed to the Company or the Agent, to such other address as shall be
designated by such party in a written notice to the other parties, and as
directed to each other party, at such other address as shall be designated by
such party in a written notice to the Company and the Agent.
(b) All such notices, requests and communications shall, when transmitted
by overnight delivery, or faxed, be effective when delivered for overnight
(next-day) delivery, or transmitted by facsimile machine, respectively, or if
mailed, upon the third Business Day after the date deposited into the U.S. mail,
or if delivered, upon delivery; except that, notwithstanding the foregoing,
notices pursuant to Article III to an Issuing Bank shall not be effective until
actually received by the Issuing Bank at the address specified for the "Issuing
Bank" on Schedule 11.2, and notices to the Company or the Agent shall not be
effective until actually received by the Company or the Agent, respectively.
(c) The Company acknowledges and agrees that any agreement of the Agent,
the Issuing Banks, and the Banks at Article II and Article III herein to receive
certain notices by telephone and facsimile is solely for the convenience and at
the request of the Company. The Agent, the Issuing Banks, and the Banks shall be
entitled to rely on the authority of any Person purporting to be a Person
authorized by the Company to give such notice and the Agent, the Issuing Banks
and the Banks shall not have any liability to the Company or other Person on
account of any action taken or not taken by the Agent, the Issuing Banks or the
Banks in reliance upon such telephonic or facsimile notice. The obligation of
the Company to repay the Loans and L/C Obligations shall not be affected in any
way or to any extent by any failure by the Agent, the Issuing Banks, and the
Banks to receive written confirmation of any telephonic or facsimile notice or
the receipt by the Agent, the Issuing Banks and the Banks of a confirmation
which is at variance with the terms understood by the Agent, the Issuing Banks,
and the Banks to be contained in the telephonic or facsimile notice.
109
<PAGE> 117
11.3 NO WAIVER; CUMULATIVE REMEDIES
No failure to exercise and no delay in exercising, on the part of the
Agent or any Bank, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
11.4 COSTS AND EXPENSES
The Company shall, whether or not the transactions contemplated hereby
shall be consummated:
(a) pay or reimburse BofA (including in its capacity as Agent) and the
Arranger within five Business Days after demand (subject to subsection 5.1(e))
for all reasonable costs and expenses incurred by BofA (including in its
capacity as Agent) or Arranger in connection with the development, preparation,
delivery, administration and execution of, and any amendment, supplement, waiver
or modification to (in each case, whether or not consummated), this Agreement,
any Loan Document and any other documents prepared in connection herewith or
therewith, the initial assignments by BofA of its Loans and Commitments
hereunder, and the consummation of the transactions contemplated hereby and
thereby, including expenses of outside experts, printing costs, and the
reasonable Attorney Costs incurred by BofA (including in its capacity as Agent)
or Arranger with respect thereto; provided, however, that this subsection (a)
shall not apply to any such costs and expenses incurred by BofA after any date
that BofA is no longer the Agent hereunder and after any such date any
references in this subsection (a) to BofA shall be deemed a reference to the
successor Agent; and
(b) pay or reimburse each Bank, the Agent, and the Arranger within five
Business Days after demand (subject to subsection 5.1(e)) for all costs and
expenses incurred by them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies (including in connection
with any "workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding) under this Agreement, any other
Loan Document, and any such other documents, including Attorney Costs and
appraisal (including the allocated cost of internal appraisal services), audit,
environmental inspection and review (including the allocated cost of such
internal services), and search and filing costs, fees and expenses, incurred by
the Agent, the Arranger and any Bank.
11.5 INDEMNITY
Whether or not the transactions contemplated hereby shall be consummated:
The Company shall pay, indemnify, and hold each Bank, the Agent, and each of
110
<PAGE> 118
their respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, claims, damages, penalties, actions,
judgments, suits, costs, charges, expenses or disbursements (including
reasonable Attorney Costs) of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, any Loan Documents, or the transactions contemplated hereby and
thereby, and with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to this
Agreement, or the Loans or the Letters of Credit or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
11.6 MARSHALLING; PAYMENTS SET ASIDE
Neither the Agent nor the Banks shall be under any obligation to marshall
any assets in favor of the Company or any other Person or against or in payment
of any or all of the Obligations. To the extent that the Company makes a payment
or payments to the Agent or the Banks, or the Agent or the Banks enforce their
Liens or exercise their rights of set-off, and such payment or payments or the
proceeds of such enforcement or set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Agent in its
discretion) to be repaid to a trustee, receiver or any other party in connection
with any Insolvency Proceeding, or otherwise, then (a) to the extent of such
recovery the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or set-off had not occurred, and (b) each Bank
severally agrees to pay to the Agent upon demand its ratable share of the total
amount so recovered from or repaid by the Agent.
11.7 SUCCESSORS AND ASSIGNS
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the Agent
and each Bank.
11.8 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) Any Bank may, with the written consent of the Company at all times
other than during the existence of an Event of Default and the Agent, which
consents shall not be unreasonably withheld or delayed, at any time assign and
delegate to
111
<PAGE> 119
one or more Eligible Assignees (each, an "Assignee") (provided that no written
consent of the Company or the Agent shall be required in connection with (i) any
assignment and delegation by a Bank to an Eligible Assignee that is an Affiliate
of such Bank or (ii) any assignment by BofA to an Eligible Assignee to reduce
the sum of its Bridge Loans (or if the Closing Date has not occurred, Bridge
Commitment) and Revolving Commitment to seventy-five million dollars
($75,000,000)) all, or any ratable part of all its interest in the Loans, its
Bridge Loans (or if the Closing Date has not occurred, Bridge Commitment), its
Revolving Commitment, the L/C Obligations and the other rights and obligations
of such Bank hereunder; provided, however, that (i) no assignment shall in any
event be less than $10,000,000 of the combined Bridge Loans (or if the Closing
Date has not occurred, Bridge Commitment) and Revolving Commitment of the
assigning Bank under this Agreement unless as a result of such assignment the
assigning Bank's rights and obligations hereunder shall be reduced to zero; (ii)
if a Bank assigns less than all of its rights and obligations hereunder, such
Bank's aggregate remaining Bridge Loans (or if the Closing Date has not
occurred, Bridge Commitment) and Revolving Commitment, after giving effect to
such assignment, shall not be less than $10,000,000; (iii) the Company and the
Agent may continue to deal solely and directly with such Bank in connection with
the interest so assigned to an Assignee until (A) written notice of such
assignment, together with payment instructions, addresses and related
information with respect to the Assignee, shall have been given to the Company
and the Agent by such Bank and the Assignee; (B) such Bank and its Assignee
shall have delivered to the Company and the Agent an Assignment and Acceptance
in the form of Exhibit F ("Assignment and Acceptance") and (C) the assignor Bank
or Assignee has paid to the Agent a processing fee in the amount of $3,500; and
(iv) no assignment of Bridge Loans (or if the Closing Date has not occurred,
Bridge Commitment), on one hand, or Revolving Commitment and Revolving Loans, on
the other hand, shall be effective, and shall instead be void and of no effect,
unless performed simultaneously with an assignment of an identical percentage of
the rights and obligations of the assigning Bank with respect to its Revolving
Loans and Revolving Commitment or its Bridge Loans or Bridge Commitment,
respectively, thereby causing each Bank at all times to hold identical
percentage of Bridge Loans and Revolving Loans. In connection with any
assignment by BofA, its Swingline Commitment may be in whole but not in part
included as part of the assignment transaction, and the Assignment and
Acceptance may be appropriately modified to include an assignment and delegation
of its Swingline Commitment and any outstanding Swingline Loans.
(b) From and after the date that the Agent notifies the assignor Bank that
it has received (and provided its consent with respect to) an executed
Assignment and Acceptance and payment of the above-referenced processing fee,
(i) the Assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, shall have the rights and obligations of a Bank under
the Loan Documents, and
112
<PAGE> 120
(ii) the assignor Bank shall, to the extent that rights and obligations
hereunder and under the other Loan Documents have been assigned by it pursuant
to such Assignment and Acceptance, relinquish its rights and be released from
its obligations under the Loan Documents.
(c) Immediately upon each Assignee's making its processing fee payment
under the Assignment and Acceptance, this Agreement shall be deemed to be
amended to the extent, but only to the extent, necessary to reflect the addition
of the Assignee and the resulting adjustment of the Bridge Commitment and
Revolving Commitment arising therefrom. The Bridge Commitment and Revolving
Commitment allocated to each Assignee shall reduce such Bridge Commitment and
Revolving Commitment of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks or other
Persons not Affiliates of the Company (a "Participant") participating interests
in any of the Loans, the Bridge Commitment or the Revolving Commitment of that
Bank and the other interests of that Bank (the "originating Bank") hereunder and
under the other Loan Documents; provided, however, that (i) the originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company, the Issuing Banks and the Agent shall continue
to deal solely and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and the other
Loan Documents, (iv) no such participation of Bridge Loans (or if the Closing
Date has not occurred, Bridge Commitment), on one hand, or Revolving Commitment
and Revolving Loans, on the other hand, shall be effective, and shall instead be
void and of no effect, unless performed simultaneously with a participation of
an identical percentage of the rights and obligations of the selling Bank with
respect to its Revolving Loans and Revolving Commitment or its Bridge Loans or
Bridge Commitment, respectively, thereby causing each Bank at all times to hold
identical beneficial interests in Bridge Loans and Revolving Loans. and (v) no
Bank shall transfer or grant any participating interest under which the
Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the
extent such amendment, consent or waiver would require unanimous consent of the
Banks as described in the first proviso to Section 11.1, or the right to grant
subparticipations in Loans or the Commitments except in strict compliance with
the immediately preceding clause (iv) applied mutatis mutandis to such
subparticipation. In the case of any such participation, the Participant shall
be entitled to the benefit of Sections 4.1, 4.3 and 11.5 as though it were also
a Bank hereunder, and if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in
113
<PAGE> 121
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as "confidential" by the Company and provided to it by the Company or any
Subsidiary of the Company, or by the Agent on such Company's or Subsidiary's
behalf, in connection with this Agreement or any Loan Document, and neither it
nor any of its Affiliates shall use any such information for any purpose or in
any manner other than pursuant to the terms contemplated by this Agreement;
provided, however, that any Bank may disclose such information (A) to the extent
that such information was or becomes generally available to the public other
than as a result of a disclosure by the Bank; (B) to the extent such information
was or becomes available to such Bank to whom it was furnished on a non-
confidential basis; (C) at the request or pursuant to any requirement of any
Governmental Authority to which the Bank is subject or in connection with an
examination of such Bank by any such authority; (D) pursuant to subpoena or
other court process; (E) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (F) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent, any
Bank or their respective Affiliates may be party; (G) to the extent reasonably
required in connection with the exercise of any remedy hereunder or under any
other Loan Document; (H) to such Bank's independent auditors and other
professional advisors and (I) to such Bank's Affiliates. Notwithstanding the
foregoing, the Company authorizes each Bank to disclose to any Participant or
Assignee (each, a "Transferee") and to any prospective Transferee, such
financial and other information in such Bank's possession concerning the Company
or its Subsidiaries which has been delivered to the Agent or the Banks pursuant
to this Agreement or which has been delivered to the Agent or the Banks by the
Company in connection with the Banks' credit evaluation of the Company prior to
entering into this Agreement; provided that, unless otherwise agreed by the
Company, such Transferee agrees in writing to such Bank to keep such information
confidential to the same extent required of the Banks hereunder.
(f) Notwithstanding any other provision contained in this Agreement or any
other Loan Document to the contrary, any Bank may assign all or any portion of
the Loans held by it to any Federal Reserve Bank or the United States Treasury
as collateral security pursuant to Regulation A of the Federal Reserve Board and
any Operating Circular issued by such Federal Reserve Bank, provided that any
payment in respect of such assigned Loans made by the Company to or for the
account of the assigning or pledging Bank in accordance with the terms of this
Agreement shall satisfy the Company's obligations hereunder in respect to such
assigned Loans to the extent of such payment. No such assignment shall release
the assigning Bank from its obligations hereunder.
114
<PAGE> 122
11.9 SET-OFF
In addition to any rights and remedies of the Banks provided by law, if an
Event of Default exists, each Bank is authorized at any time and from time to
time, without prior notice to the Company, any such notice being waived by the
Company to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held by, and other indebtedness at any time owing to, such Bank to or for the
credit or the account of the Company against any and all Obligations owing to
such Bank, now or hereafter existing, irrespective of whether or not the Agent
or such Bank shall have made demand under this Agreement or any Loan Document
and although such Obligations may be contingent or unmatured. Each Bank agrees
promptly to notify the Company and the Agent after any such set-off and
application made by such Bank; provided, however, that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of each Bank under this Section 11.9 are in addition to the other rights and
remedies (including other rights of set-off) which the Bank may have.
11.10 AUTOMATIC DEBITS OF FEES
With respect to any commitment fee, facility fee, letter of credit fee or
other fee, or any other cost or expense (including Attorney Costs) due and
payable to the Agent, the Issuing Banks, the Swingline Bank or BofA under the
Loan Documents, the Company hereby irrevocably authorizes BofA to debit any
deposit account of the Company with BofA in an amount such that the aggregate
amount debited from all such deposit accounts does not exceed such fee or other
cost or expense. If there are insufficient funds in such deposit accounts to
cover the amount of the fee or other cost or expense then due, such debits will
be reversed (in whole or in part, in BofA's sole discretion) and such amount not
debited shall be deemed to be unpaid. No such debit under this Section 11.10
shall be deemed a setoff.
11.11 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC.
Each Bank shall notify the Agent in writing of any changes in the address
to which notices to the Bank should be directed, of addresses of its Offshore
Lending Office, of payment instructions in respect of all payments to be made to
it hereunder and of such other administrative information as the Agent shall
reasonably request.
11.12 COUNTERPARTS
This Agreement may be executed by one or more of the parties to this
Agreement in any number of separate counterparts, each of which, when so
executed, shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same instrument. A set of
the copies
115
<PAGE> 123
of this Agreement signed by all the parties shall be lodged with the Company and
the Agent.
11.13 SEVERABILITY
The illegality or unenforceability of any provision of this Agreement or
any instrument or agreement required hereunder shall not in any way affect or
impair the legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
11.14 NO THIRD PARTIES BENEFITED
This Agreement is made and entered into for the sole protection and legal
benefit of the Company, the Banks, the Issuing Banks, the Swingline Bank, and
the Agent, and their permitted successors and assigns, and no other Person shall
be a direct or indirect legal beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any of the other
Loan Documents. Neither the Agent, the Swingline Bank, the Issuing Bank nor any
Bank shall have any obligation to any Person not a party to this Agreement or
other Loan Documents.
11.15 TIME
Time is of the essence as to each term or provision of this Agreement and
each of the other Loan Documents.
11.16 GOVERNING LAW AND JURISDICTION
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
11.17 ARBITRATION; REFERENCE
(a) Mandatory Arbitration. Any controversy or claim between or among the
parties, including but not limited to those arising out of or relating to this
Agreement or any agreements or instruments relating hereto or delivered in
connection herewith and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The arbitration
shall be conducted in accordance with the United States Arbitration Act (Title
9, U.S. Code), notwithstanding any choice of law provision in this Agreement,
and under the Commercial Rules of the American Arbitration Association ("AAA").
The arbitrator(s) shall give effect to applicable statutes of limitation in
determining any claim. Any controversy concerning whether an issue is arbitrable
shall be
116
<PAGE> 124
determined by the arbitrator(s). Judgment upon the arbitration award
may be entered in any court having jurisdiction. The institution and maintenance
of an action for judicial relief or pursuit of a provisional or ancillary remedy
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or claim to arbitration if any other party
contests such action for judicial relief.
(b) Judicial Reference. At the request of any party a controversy or claim
which is not submitted to arbitration as provided and limited in subparagraph
(a) shall be determined by a reference in accordance with California Code of
Civil Procedure Section 638 et seq. If such an election is made, the parties
shall designate to the court a referee or referees selected under the auspices
of the AAA in the same manner as arbitrators are selected in AAA-sponsored
proceedings. The presiding referee of the panel, or the referee if there is a
single referee, shall be an active attorney or retired judge. Judgment upon the
award rendered by such referee or referees shall be entered in the court in
which such proceeding was commenced in accordance with California Code of Civil
Procedure Sections 644 and 645.
(c) Provisional Remedies, Self-Help and Foreclosure. No provision of this
paragraph shall limit the right of any party to this Agreement to exercise
self-help remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or obtaining provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a remedy does
not waive the right of either party to resort to arbitration or reference.
11.18 ENTIRE AGREEMENT
This Agreement, together with the other Loan Documents, embodies the
entire agreement and understanding among the Company, the Banks, the Swingline
Bank, the Issuing Banks, and the Agent, and supersedes all prior or
contemporaneous Agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof, except for the fee
letter referenced in subsections 2.13(a) and (c), and any prior arrangements
made with respect to the payment by the Company of (or any indemnification for)
any fees, costs or expenses payable to or incurred (or to be incurred) by or on
behalf of the Agent or the Banks.
117
<PAGE> 125
<PAGE> 126
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in San Francisco, California by their proper and
duly authorized officers as of 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/ Diane M. Irvine
----------------------------------
Name: Diane M. Irvine
Title: Vice President and
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Agent
By:
----------------------------------
Name: Michael J. Balok
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as a Bank, as the Swingline Bank and as an
Issuing Bank
By:
----------------------------------
Name: Michael J. Balok
Title: Managing Director
S-1
<PAGE> 127
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in San Francisco, California by their proper and
duly authorized officers as of the day and year first above written.
PLUM CREEK TIMBER COMPANY, L.P.
By: Plum Creek Management Company, L.P.,
its general partner
By:
---------------------------------
Name: Diane Irvine
Title: Vice President and
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Agent
By: Michael Balok
---------------------------------
Name: Michael Balok
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as a Bank, as the Swingline Bank and as an
Issuing Bank
By: Michael Balok
---------------------------------
Name: Michael Balok
Title: Managing Director
S-1
<PAGE> 128
SCHEDULE 2.1
COMMITMENTS
<TABLE>
<CAPTION>
Revolving Bridge Commitment
Bank Commitment Commitment Percentage
================================================================================
<S> <C> <C> <C>
Bank of America National $400,000,000.00 $250,000,000.00 100.0000%
Trust and Savings
Association
================================================================================
</TABLE>
<PAGE> 1
EXHIBIT 10.2
AMENDED AND RESTATED REVOLVING
CREDIT AGREEMENT
Dated as of December 13, 1996
among
PLUM CREEK TIMBER COMPANY, L.P.
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
NATIONSBANK OF NORTH CAROLINA,
as Senior Co-Agent
and
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Table of Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2. The Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.1 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.2 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.3 Procedure for Borrowing Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.4 Conversion and Continuation Elections for Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.5 Voluntary Termination or Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.6 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.7 Mandatory Prepayments of Loans; Mandatory Commitment Reductions . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.8 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.9 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.10 Swingline Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.11 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
2.12 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.13 Payments by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
2.14 Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
2.15 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
2.16 Loan Tranches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
3. The Letters Of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.1 The Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
3.2 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.3 Risk Participations, Drawings and Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
3.4 Repayment of Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
3.5 Role of the Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
3.6 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
3.7 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
3.8 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
3.9 Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
4. Taxes, Yield Protection And Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
4.2 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.3 Increased Costs and Reduction of Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
4.4 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
4.5 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.6 Certificate of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
4.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.1 Conditions of Initial Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.2 Conditions to All Credit Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6. Representations And Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.1 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
6.2 Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.3 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6.4 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.6 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.7 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
6.8 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.9 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
6.13 Regulated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
6.14 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.16 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.17 Copyrights, Patents, Trademarks and Licenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.18 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.19 Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.20 Broker's, Transaction Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
6.22 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
7. Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
7.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
7.4 Preservation of Partnership Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.5 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.7 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
7.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.9 Inspection of Property and Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
7.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.12 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.1 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
8.2 Merger; Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
8.3 Harvesting Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
8.4 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
8.5 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
8.6 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
8.7 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
8.8 Sale of Stock and Indebtedness of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
8.9 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
8.10 Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
8.11 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
8.12 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
8.13 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
8.14 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
8.15 Issuance of Stock by Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
8.16 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
8.17 Available Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
8.18 Interest Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
9. Events Of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
9.1 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
9.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
9.3 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
10. The Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
10.1 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.3 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
10.6 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.7 Indemnification of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
10.8 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
10.9 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
10.10 Senior Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
11.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
11.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
11.5 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
11.6 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
11.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
11.8 Assignments, Participations, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
11.9 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
11.10 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
11.11 Notification of Addresses, Lending Offices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112
11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.14 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.15 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.16 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.17 Arbitration; Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
11.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
</TABLE>
v
<PAGE> 7
TABLE OF SCHEDULES AND EXHIBITS
Schedules
Schedule 1.1 -- Corporate Investment Policy
Schedule 2.1 -- Commitments
Schedule 6.7 -- Plans
Schedule 6.12 -- Environmental Matters
Schedule 6.18 -- Subsidiaries
Schedule 8.1 -- Permitted Liens
Schedule 8.4 -- Permitted Investments
Schedule 11.2 -- Addresses for Notices
Exhibits
Exhibit A -- Notice of Borrowing
Exhibit B -- Notice of Conversion/Continuation
Exhibit C-1 -- Legal Opinion of Counsel for the Company
Exhibit C-2 -- Legal Opinion of Perkins Coie
Exhibit D -- Compliance Certificate
Exhibit E --Form of Cash Collateral Account Agreement
Exhibit F -- Form of Assignment and Acceptance Agreement
vi
<PAGE> 8
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT
This AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT is entered into
as of December 13, 1996, among PLUM CREEK TIMBER COMPANY, L.P., a Delaware
limited partnership (the "Company"), the several financial institutions from
time to time party to this Agreement (collectively, the "Banks"; individually,
a "Bank"), NATIONSBANK, N.A., as senior co-agent for the Banks, and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a letter of credit issuing
bank and as agent for the Banks.
WHEREAS, the Company and Bank of America National Trust and Savings
Association entered into a Revolving Credit and Bridge Loan Agreement dated as
of October 17, 1996 (the "Existing Credit Agreement");
WHEREAS, the Banks have agreed to make available to the Company a
revolving credit facility with a letter of credit subfacility upon the terms
and conditions set forth in this Agreement;
WHEREAS, to give effect to the foregoing, the Company, the Banks, the
Senior Co-Agent and the Agent desire to amend and restate the Existing Credit
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties hereby amend and restate the
Existing Credit Agreement in its entirety as follows:
1. DEFINITIONS
1.1 DEFINED TERMS
In addition to the terms defined elsewhere in this Agreement, the
following terms have the following meanings:
"Affiliate" means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of 5% or more
of the equity of a Person shall for the purposes of this Agreement, be deemed
to control the other Person. Notwithstanding the foregoing, no Bank shall be
deemed an "Affiliate" of the Company or of any Subsidiary of the Company.
1
<PAGE> 9
"Agent" means BofA in its capacity as agent for the Banks hereunder,
and any successor agent.
"Agent's Payment Office" means the address for payments set forth on
Schedule 11.2 in relation to the Agent or such other address as the Agent may
from time to time specify in accordance with Section 11.2.
"Agent-Related Persons" means BofA, the Arranger, and any successor agent
arising under Section 10.9 and any successor to BofA as letter of credit
issuing bank or Swingline Bank hereunder, together with their respective
Affiliates, and the officers, directors, employees, agents and
attorneys-in-fact of such Persons and Affiliates.
"Aggregate Commitment" means the combined Revolving Commitments of the
Banks, in the initial amount of two hundred twenty-five million dollars
($225,000,000), as such amount may be reduced from time to time pursuant to
this Agreement.
"Agreement" means this Amended and Restated Revolving Credit Agreement,
as amended from time to time in accordance with the terms hereof.
"Applicable Margin" means, in respect of all Loans outstanding on any
date (A) for the period from the Closing Date through March 31, 1997, 0.4500%
for Offshore Rate Loans and 0.0000% for Base Rate Loans, and (B) from April 1,
1997, the percentage specified below opposite the Interest Coverage Ratio
(which ratio shall be calculated on a four quarter rolling basis for the
relevant fiscal quarter) calculated for the periods described below.
<TABLE>
<CAPTION>
INTEREST COVERAGE RATIO AT END OF FISCAL QUARTER APPLICABLE MARGIN
------------------------------------------------ -----------------
Offshore Rate Base Rate
------------- ---------
<S> <C> <C>
Greater than or equal to 4.0 0.3500% 0.0000%
Less than 4.0 but greater than or equal to 3.7 0.4000% 0.0000%
Less than 3.7 but greater than or equal to 3.4 0.4500% 0.0000%
Less than 3.4 but greater than or equal to 3.1 0.5500% 0.0000%
</TABLE>
2
<PAGE> 10
<TABLE>
<S> <C> <C>
Less than 3.1 but greater than or equal to 2.8 0.6500% 0.0000%
Less than 2.8 but greater than or equal to 2.5 0.8750% 0.0000%
Less than 2.5 1.1250% 0.0000%
</TABLE>
The Applicable Margin for each fiscal quarter commencing on and after
April 1, 1997 shall be calculated in reliance on the financial reports
delivered pursuant to subsections 7.1(a) and 7.1(c) and the certificate
delivered pursuant to subsection 7.2(b) with respect to the fiscal quarter
ending one fiscal quarter before the fiscal quarter in question (e.g., June 30
financials determine the Applicable Margin for the fiscal quarter beginning
October 1). If the Company fails to deliver such financial reports and
certificate to the Agent for any fiscal quarter by the beginning of the next
succeeding fiscal quarter (e.g., by October 1 for the fiscal quarter ending
June 30), then the Applicable Margin for the following fiscal quarter (e.g.,
October 1 through December 31) shall equal the next higher Applicable Margin as
set forth in the chart above immediately below the previously effective
Applicable Margin; thus if the Applicable Margin had previously been 0.6500%
for Offshore Rate Loans and 0.0000% for Base Rate Loans, a failure to deliver
quarterly financials by the first day of the next fiscal quarter would cause
the Applicable Margin to be 0.8750% and 0.0000%, respectively, for the duration
of that quarter. In addition, if such financial reports and certificate when
delivered indicate that the Applicable Margin for such period should have been
higher than the Applicable Margin provided for in the previous sentence, then
the Company shall pay on the date of delivery of such financial reports and
certificate an amount equal to the positive difference, if any, between the
interest that the Company should have paid hereunder had the financial reports
and certificate been delivered on a timely basis over what the Company actually
paid. The Applicable Margin shall be adjusted automatically as to all Loans
then outstanding (without regard to the timing of Interest Periods) as of the
effective date of any change in the Applicable Margin.
"Arranger" means BA Securities, Inc., a Delaware corporation.
"Assignee" has the meaning specified in subsection 11.8(a).
"Assignment and Acceptance" has the meaning specified in subsection
11.8(a).
3
<PAGE> 11
"Attorney Costs" means and includes all fees and disbursements of any
law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"Available Cash" means, with respect to any calendar quarter, (i) the
sum of:
(a) the Company's net income (or net loss) (excluding gain on the
sale of any Capital Asset) for such quarter,
(b) the amount of depletion, depreciation, amortization and other
noncash charges utilized in determining net income of the Company for such
quarter,
(c) the amount of any reduction in reserves of the Company of the
types referred to in clause (ii)(d) below,
(d) proceeds received by the Company from the sale of Designated
Acres, and
(e) any Cash from Capital Transactions received by the Company
during such quarter in specific contemplation that such Cash from Capital
Transactions will be used to refund or refinance any payment of Indebtedness of
the type specified in clause (ii)(a) below which was made in either of the two
immediately preceding quarters,
less (ii) the sum of:
(a) all payments of principal on Indebtedness made by the Company
in such quarter (excluding any payments of principal on Indebtedness made with
Cash from Capital Transactions received by the Company during such quarter or,
to the extent such Cash from Capital Transactions remains available, received
by the Company during the four immediately preceding quarters),
(b) capital expenditures made by the Company during such quarter
(excluding any capital expenditures for such quarter made with Cash from
Capital Transactions received by the Company during such quarter or, to the
extent such Cash from Capital Transactions remains available, received by the
Company during the four immediately preceding quarters, and capital
expenditures which the General Partner reasonably anticipates will be financed
with Cash from Capital Transactions within 90 days from the end of such
quarter),
(c) the amount of any capital expenditures made by the Company in
a prior quarter which was anticipated would be financed from Cash from Capital
Transactions but which have not been financed from such source within 90 days
from the end of such quarter,
4
<PAGE> 12
(d) the amount of any reserves of the Company established during
such quarter which are necessary or appropriate (1) to provide funds for the
future payment of items of the types specified in clauses (ii)(a) and (ii)(b)
above, (2) to provide additional working capital, (3) to provide funds for cash
distributions with respect to any one or more of the next four quarters, or (4)
to provide funds for the future payment of interest in an amount equal to the
interest to be accrued in the next quarter,
(e) the amount of any noncash items of income utilized in
determining net income of the Company for such quarter,
(f) the amount of any Investments (other than guarantees,
contingent liabilities or endorsements, except to the extent payments are
actually made under such guarantees, contingent liabilities or endorsements)
made by the Company during such quarter pursuant to subsections 8.4(a), (h) or
(i) (or in the case of any Subsidiary, Investments (other than guarantees,
contingent liabilities or endorsements, except to the extent payments are
actually made under such guarantees, contingent liabilities or endorsements) of
similar type) to the extent not included in capital expenditures or payments on
principal on Indebtedness made by the Company during such quarter (excluding
any such Investments for such quarter made with Cash from Capital Transactions
received by the Company during such quarter or, to the extent such Cash from
Capital Transactions remains available, received by the Company during the four
immediately preceding quarters, and Investments which the General Partner
reasonably anticipates will be financed with Cash from Capital Transactions
within 90 days from the end of such quarter), and
(g) the amount of any Investments (other than guarantees,
contingent liabilities or endorsements, except to the extent payments are
actually made under such guarantees, contingent liabilities or endorsements)
made by the Company in a prior quarter pursuant to subsections 8.4(a), (h) or
(i) (or in the case of any Subsidiary, Investments (other than guarantees,
contingent liabilities or endorsements, except to the extent payments are
actually made under such guarantees, contingent liabilities or endorsements) of
similar type) to the extent not included in capital expenditures made by the
Company during such quarter which was anticipated would be financed from Cash
from Capital Transactions but which have not been financed from such source
within 90 days from the end of such quarter.
Notwithstanding the foregoing, "Available Cash" shall not take into
account any reductions in reserves or disbursements made or reserves
established after commencement of the dissolution and liquidation of the
Company. In determining "Available Cash," (i) all items under clauses (i)(a),
(b), (c), (d) and (e) above and all items under clauses (ii)(a), (b), (c), (d),
(e), (f) and (g) above shall be calculated on a combined basis with any
Subsidiary of the Company whose income is
5
<PAGE> 13
accounted for on a consolidated or combined basis with the Company and, in
accordance therewith, "Available Cash" shall include a percentage of each such
item of each such Subsidiary equal to the Company's percentage ownership
interest in such Subsidiary, provided, however, that the items under clauses
(i)(a), (b), (c), (d) and (e) above shall only be included in Available Cash to
the extent that the General Partner determines such amount to be legally
available for dividends or distributions to the Company by such Subsidiary;
(ii) the amount of net income and the amount of depletion, depreciation,
amortization and other noncash charges utilized in determining net income shall
be determined, with respect to the Company, by the General Partner in
accordance with generally accepted accounting principals and, with respect to
any Subsidiary, by its Board of Directors (or by such other body or person
which has the ultimate management authority of such Subsidiary) in accordance
with generally accepted accounting principles; (iii) the net income of any
Subsidiary shall be determined on an after-tax basis; (iv) the amount of any
reductions in, or additions to, reserves for purposes of clauses (i)(c) and
(ii)(d) above shall be determined, with respect to the Company, by the General
Partner in its reasonable good faith judgment and, with respect to any
Subsidiary, by its Board of Directors (or by such other body or person which
has the ultimate management authority of such Subsidiary) in its reasonable
good faith judgment; and (v) any determination of whether any capital
expenditures or Investments are financed, or anticipated to be financed, with
Cash from Capital Transactions for purposes of clause (ii)(b) or (ii)(f) above
shall be made, with respect to the Company, by the General Partner in its
reasonable good faith judgment and, with respect to any Subsidiary, by its
Board of Directors (or by such other body or person which has the ultimate
management authority of such Subsidiary) in its reasonable good faith judgment.
"Bank" has the meaning specified in the introductory clause hereto.
References to the "Banks" shall include BofA in its capacity as a Swingline
Bank and an Issuing Bank, for purposes of clarification only, to the extent
that BofA may have any rights or obligations in addition to those of the Banks
due to its status as a Swingline Bank or an Issuing Bank, its status as such
will be specifically referenced.
"Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, et seq.).
"Base Rate" means, for any day, the higher of:
(a) the rate of interest in effect for such day as publicly
announced from time to time by BofA in San Francisco, California, as its
"reference rate." It is a rate set by BofA based upon various factors
including BofA's costs and desired return, general economic conditions and
other factors, and is used as a reference point for
6
<PAGE> 14
pricing some loans, which may be priced at, above, or below such announced
rate; and
(b) 0.50% per annum above the latest Federal Funds Rate.
Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public announcement of
such change.
"Base Rate Loan" means a Loan or an L/C Advance that bears interest
based on the Base Rate.
"BofA" means Bank of America National Trust and Savings Association, a
national banking association.
"Board Foot" means a unit of measurement one foot square and one inch
thick.
"Borrowing" means a borrowing hereunder consisting of Loans of the
same Type made to the Company on the same day by the Banks, or a Swingline Loan
or Loans made to the Company on the same day by the Swingline Bank, in each
case pursuant to Article II, and, other than in the case of Base Rate Loans,
having the same Interest Period.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York City or San Francisco are authorized
or required by law to close and, if the applicable Business Day relates to any
Offshore Rate Loan, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a
bank.
"Capital Asset" means any asset on the Company's or any Subsidiary's
balance sheet, as the case may be, other than inventory, accounts receivable or
any other current asset and assets disposed of in connection with normal
retirements or replacements.
"Capital Expenditure Tranche" has the meaning specified in Section
2.16.
"Capital Expenditure Tranche Loan" means a Loan allocated by the
Company to the Capital Expenditure Tranche as provided in Section 2.16.
7
<PAGE> 15
"Capital Lease" has the meaning specified in the definition of "Capital
Lease Obligations."
"Capital Lease Obligations" means all monetary obligations of the
Company or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, is classified as a capital lease ("Capital
Lease").
"Capital Transaction" means (i) borrowings and sales of debt
securities (other than for working capital purposes and other than for items
purchased on open account in the ordinary course of business) by the Company,
(ii) sales of equity interests by the Company and (iii) sales or other
voluntary or involuntary dispositions of any assets of the Company (other than
(x) sales or other dispositions of inventory in the ordinary course of
business, (y) sales or other dispositions of other current assets including
receivables and accounts and (z) sales or other dispositions of assets as a
part of normal retirements or replacements), in each case prior to the
commencement of the dissolution and liquidation of the Company, provided that
in determining Cash from Capital Transactions, items (i), (ii) and (iii) above
shall include, with respect to each Subsidiary of the Company whose income is
accounted for on a consolidated or combined basis with the Company, a
percentage of each such item of such Subsidiary equal to the Company's
percentage ownership interest in such Subsidiary.
"Cash Collateral Account Agreement" means an agreement or agreements
entered into between the Company and the Agent substantially in the form of
Exhibit E.
"Cash Collateralize" means to pledge and deposit with or deliver to
the Agent, for the benefit of (i) in the case of L/C Obligations, the Agent,
the Issuing Banks and the Banks, (ii) in the case of Offshore Rate Loans, the
Agent and the Banks, and (iii) in the case of Swingline Loans, the Agent, the
Swingline Bank and the Banks, in each case as collateral for the L/C
Obligations, the Loans or the Swingline Loans, as the case may be, cash or
deposit account balances pursuant to a Cash Collateral Account Agreement.
Derivatives of such term shall have corresponding meaning.
"Cash from Capital Transactions" means at any date, such amounts of
cash as are determined by the General Partner to be cash made available to the
Company from or by reason of a Capital Transaction.
"CERCLA" has the meaning specified in the definition of "Environmental
Laws."
"Closing Date" means the date on which all conditions precedent set
forth in Section 5.1 are satisfied or waived by all Banks.
8
<PAGE> 16
"Code" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"Commitment," with respect to each Bank, has the meaning specified in
Section 2.1.
"Commitment Fee Percentage" means (A) for the period from the Closing
Date through March 31, 1997, 0.1500% and (B) from April 1, 1997, the percentage
specified below opposite the Interest Coverage Ratio (which ratio shall be
calculated on a rolling four quarter basis for the relevant fiscal quarter)
calculated for the periods described below.
<TABLE>
<CAPTION>
INTEREST COVERAGE RATIO AT END OF FISCAL QUARTER COMMITMENT FEE PERCENTAGE
- - ------------------------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 4.0 0.1250%
- - ------------------------------------------------------------------------------------------------------
Less than 4.0 but greater than or equal to 3.7 0.1375%
- - ------------------------------------------------------------------------------------------------------
Less than 3.7 but greater than or equal to 3.4 0.1500%
- - ------------------------------------------------------------------------------------------------------
Less than 3.4 but greater than or equal to 3.1 0.1750%
- - ------------------------------------------------------------------------------------------------------
Less than 3.1 but greater than or equal to 2.8 0.2000%
- - ------------------------------------------------------------------------------------------------------
Less than 2.8 but greater than or equal to 2.5 0.2750%
- - ------------------------------------------------------------------------------------------------------
Less than 2.5 0.3250%
- - ------------------------------------------------------------------------------------------------------
</TABLE>
The Commitment Fee Percentage for each fiscal quarter commencing on
and after April 1, 1997, shall be calculated in reliance on the financial
reports delivered pursuant to subsections 7.1(a) and 7.1(c) and the certificate
delivered pursuant to subsection 7.2(b) with respect to the fiscal quarter
before the fiscal quarter in question (e.g., June 30 financials determine the
Commitment Fee Percentage for the fiscal quarter beginning October 1). If the
Company fails to deliver such financial reports and certificate to the Agent
for any fiscal quarter by the beginning of the next succeeding fiscal quarter
(e.g., by October 1 for the fiscal quarter ending June 30), then the Commitment
Fee Percentage for the following fiscal quarter (e.g., October 1 through
December 31) shall equal the next higher Commitment Fee Percentage as set forth
in the chart above immediately below the previously effective Commitment Fee
Percentage; thus if the Commitment Fee Percentage had previously been 0.2000%,
a failure to deliver quarterly financials by the first day of the next fiscal
quarter would cause the Commitment Fee Percentage to be 0.2750% for the
duration of that quarter. In addition, if such
9
<PAGE> 17
financial reports and certificate when delivered indicate that the Commitment
Fee Percentage for such period should have been higher than the Commitment Fee
Percentage provided for in the previous sentence, then the Company shall pay on
the date of delivery of such financial reports and certificate an amount equal
to the positive difference, if any, between the interest that the Company
should have paid hereunder had the financial reports and certificate been
delivered on a timely basis over what the Company actually paid.
"Commitment Percentage" means, as to any Bank, the percentage
equivalent of the aggregate of such Bank's Commitment divided by the Aggregate
Commitment.
"Company's Knowledge" or "Knowledge of the Company" shall mean the
actual knowledge of (i) Rick R. Holley, President and Chief Executive Officer,
Charles P. Grenier, Executive Vice President, Diane M. Irvine, Vice President
and Chief Financial Officer, James A. Kraft, Vice President, General Counsel
and Secretary, Susanna N. Duke, Director, Law and Human Resources, William R.
Brown, Vice President, Resource Management, and Mitchell Leu, Environmental
Engineer, and any successor to the offices and officers, such persons being the
principal persons employed by the Company ultimately responsible for
environmental operations and compliance, ERISA and legal matters relating to
the Company and (ii) the Treasurer or any other person having the primary
responsibility for the day-to-day administration of, and dealings with the
Agent and the Banks in connection with, this Agreement.
"Contractual Obligations" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or agreement
to which such Person is a party or by which it or any of its property is bound.
"Controlled Group" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with the
Company pursuant to Section 414(b), (c), (m) or (o) of the Code.
"Conversion/Continuation Date" means any date on which, under Section
2.4, the Company (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"Credit Extension" means and includes (a) the making of any Loan
hereunder, including any conversion or continuation thereof, and (b) the
Issuance of any Letter of Credit hereunder.
"Cunit" means 100 cubic feet of wood.
10
<PAGE> 18
"Debt Proceeds" means the proceeds of Indebtedness permitted by
subsection 8.5(i), net of customary expenses payable to Persons that are not
Affiliates of the Company.
"Default" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied
during such time) constitute an Event of Default.
"Designated Acres" means up to an aggregate of 200,000 acres owned by
the Company which (based on the good faith determination of the Responsible
Representatives that such acres have at the time such determination is made a
higher value as recreational, residential, grazing or agricultural property
than for timber production) may be reasonably designated by the General Partner
at the time of the sale thereof as constituting Designated Acres (such
aggregate number of acres to be determined over the term of existence of the
Note Agreements).
"Designated Immaterial Subsidiary" means any entity which would
otherwise be a Restricted Subsidiary and which at any time is designated by the
Company as a Designated Immaterial Subsidiary, provided that no such
designation of any entity as a Designated Immaterial Subsidiary shall be
effective unless (i) at the time of such designation, such entity does not own
any shares of stock or Indebtedness of any Restricted Subsidiary which is not
simultaneously being designated as a Designated Immaterial Subsidiary, (ii)
immediately after giving effect to such designation, (a) the Company could
incur at least $1 of additional Funded Debt pursuant to subsection 8.5(i), and
(b) no condition or event shall exist which constitutes an Event of Default or
Material Default, (iii) the Company is permitted to make the Investment in such
entity resulting from such designation pursuant to, and within the limitations
specified in, subsection 8.4(i), treating the aggregate book value (including
equity in retained earnings) of the Investments of the Company and its
Subsidiaries in such entity immediately prior to such designation as the cost
of such Investment, and provided, further, that if at any time all Designated
Immaterial Subsidiaries on a combined basis would be a "significant subsidiary"
(assuming the Company is the registrant) within the meaning of Regulation S-X
(17 C.F.R. Part 210) the Company shall designate one or more Designated
Immaterial Subsidiaries which are directly owned by the Company and its
Restricted Subsidiaries as Restricted Subsidiaries such that the condition in
this proviso is no longer applicable and the entities so designated shall no
longer be Designated Immaterial Subsidiaries. Any entity which has been
designated a Designated Immaterial Subsidiary shall not thereafter become a
Restricted Subsidiary except pursuant to a designation required by the last
proviso in the preceding sentence, and any Designated Immaterial Subsidiary
which has been designated a Restricted Subsidiary pursuant to the last proviso
of the preceding sentence shall not thereafter be redesignated as a Designated
Immaterial Subsidiary.
11
<PAGE> 19
"Designated Repurchases" means and includes purchases, redemptions or
other acquisitions, in each case at a price not to exceed fair market value, of
the publicly traded limited partnership interests in the Company, which are
retired by the Company within six months of such purchase, redemption or other
acquisition.
"Dollars," "dollars" and "$" each mean lawful money of the United
States.
"Domestic Lending Office" means, with respect to each Bank and the
Swingline Bank, the office of that Bank and the Swingline Bank designated as
such in Schedule 11.2 or such other office of the Bank and the Swingline Bank
as it may from time to time specify to the Company and the Agent.
"EBITDA" means, for any period, for the Company and its Subsidiaries
on a combined basis, determined in accordance with GAAP, the sum of (a) the net
income (or net loss) for such period, plus (b) all amounts treated as expenses
for depreciation, depletion and interest and the amortization of intangibles of
any kind to the extent included in the determination of such net income (or
loss), plus (c) all adjustments arising by virtue of the conversion from
average cost accounting to a LIFO basis with respect to inventory to the extent
included in the determination of such net income, plus (d) all accrued taxes on
or measured by income to the extent included in the determination of such net
income (or loss), plus or minus, as applicable, (e) in connection with any
Timber previously acquired within such period, an amount equal to a good faith
estimate of such additional amounts as would be included in clauses (a), (b),
(c), or (d) above had such Timber been owned by the Company or one of its
Subsidiaries for the entirety of such period, as certified (in a certificate
containing such detail as the Required Banks may reasonably request) by a
Responsible Officer of the Company based upon such Responsible Officer's good
faith estimates of applicable revenues and expenses arising from such Timber
and assuming aggregate timber harvests in an amount that does not require
application of the proceeds thereof to the purchase of Timber or the repayment
of Qualified Debt under Section 8.3; provided, however, that net income (or
loss) shall be computed for purposes of computing EBITDA without giving effect
to extraordinary losses or extraordinary gains.
"Effective Amount" means (i) with respect to any Loans or Swingline
Loans, as the case may be, on any date, the aggregate outstanding principal
amount thereof after giving effect to any Borrowings and prepayments or
repayments thereof occurring on such date; and (ii) with respect to any
outstanding L/C Obligations on any date, the amount of such L/C Obligations on
such date after giving effect to any Issuances of Letters of Credit occurring
on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements of
outstanding unpaid drawings under any Letters of Credit or any reductions in
the maximum amount available for drawing under Letters of Credit taking effect
on such date.
12
<PAGE> 20
"Eligible Assignee" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $250,000,000; (ii) a commercial bank organized under
the laws of any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political subdivision
of any such country, and having a combined capital and surplus of at least
$250,000,000, provided that such bank is acting through a branch or agency
located in the United States; and (iii) a Person that is primarily engaged in
the business of commercial banking and that is (A) a Subsidiary of a Bank, (B)
a Subsidiary of a Person of which a Bank is a Subsidiary, or (C) a Person of
which a Bank is a Subsidiary.
"Environmental Claims" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden
or non-sudden, accidental or non-accidental placement, spills, leaks,
discharges, emissions or releases) of any Hazardous Material at, in, or from
Property, whether or not owned by such person, or (b) any other circumstances
forming the basis of any violation, or alleged violation, of any Environmental
Law.
"Environmental Laws" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety, land use, conservation, and timber
harvesting matters; including, but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the
Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste
Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know Act.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b) or 414(c) of the Code.
13
<PAGE> 21
"ERISA Event" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by the Company or any ERISA
Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section 4001(a)(2)
of ERISA); (c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to
terminate, the treatment of a plan amendment as a termination under Section
4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to
terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA;
(e) a failure by the Company or any ERISA Affiliate to make required
contributions to a Qualified Plan or Multiemployer Plan; (f) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Qualified Plan or Multiemployer Plan; (g) the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Plan; (i) a non-exempt prohibited transaction occurs with respect to any Plan
for which the Company may be directly or indirectly liable; or (j) a violation
of the applicable requirements of Section 404 or 405 of ERISA or the exclusive
benefit rule under Section 401(a) of the Code by any fiduciary or disqualified
person with respect to any Plan for which the Company may be directly or
indirectly liable.
"Eurodollar Reserve Percentage" has the meaning specified in the
definition of "Offshore Rate".
"Event of Default" means any of the events or circumstances specified
in Section 9.1.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended, and regulations promulgated thereunder.
"Existing Credit Agreement" has the meaning specified in the recitals
hereto.
"Facilities Subsidiary" means, collectively, Plum Creek Manufacturing,
L.P., a Delaware limited partnership, and Plum Creek Marketing, Inc., a
Delaware corporation.
"Facilities Subsidiary's Facility" means any facility pursuant to
which the Facilities Subsidiary may incur Indebtedness for purposes of making
capital improvements, additions to, or expansions of, property, plant and
equipment of the Facilities Subsidiary or its Subsidiaries.
"Facilities Subsidiary's Revolving Credit Facility" means any facility
pursuant to which the Facilities Subsidiary may obtain revolving credit,
take-down
14
<PAGE> 22
credit, the issuance of standby and payment letters of credit and backup for
the issuance of commercial paper.
"FDIC" means the Federal Deposit Insurance Corporation, or any entity
succeeding to any of its principal functions.
"Federal Funds Rate" means, for any period, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30
p.m. Quotation") for such day under the caption "Federal Funds Effective Rate".
If on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal funds arranged prior to
9:00 a.m. (New York time) on that day by each of three leading brokers of
Federal funds transactions in New York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any entity succeeding to any of its principal functions.
"Form 1001" has the meaning specified in subsection 4.1(f).
"Form 4224" has the meaning specified in subsection 4.1(f).
"Funded Debt" means, without duplication, any Indebtedness payable
more than one year from the date of the creation thereof; provided that any
Indebtedness shall be treated as Funded Debt, regardless of its term, if such
Indebtedness is renewable at the option of the Company pursuant to the terms
thereof or of a revolving credit or similar agreement effective for more than
one year after the date of the creation of such Indebtedness, or may be payable
out of the proceeds of similar Indebtedness pursuant to the terms of such
Indebtedness or any such agreement.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies
with similar functions of comparable stature and authority within the
accounting profession), or in such other statements by such other entity as may
be in general
15
<PAGE> 23
use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"General Partner" means Plum Creek Management Company, L.P., a
Delaware limited partnership, the managing general partner of the Company, and
any successor managing general partner of the Company.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantee" means the guarantee in paragraph 7 of the Mortgage Note
Agreements.
"Hazardous Materials" means all those substances which are regulated
by, or which may form the basis of liability under, any Environmental Law,
including all substances identified under any Environmental Law as a pollutant,
contaminant, hazardous waste, hazardous constituent, special waste, hazardous
substance, hazardous material, or toxic substance, or petroleum or petroleum
derived substance or waste.
"Honor Date" has the meaning specified in subsection 3.3(b).
"Indebtedness" of any Person means, as of any date of determination,
without duplication, (a) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services, (b) all amounts owed
by such Person to banks or other Persons in respect of reimbursement
obligations under letters of credit, surety bonds, banker's acceptances and
other similar instruments guaranteeing payment or other performance of
obligations by such Person, (c) all indebtedness for borrowed money or for the
deferred purchase price of property or services secured by any Lien on any
property owned by such Person, to the extent attributable to such Person's
interest in such property, even though such Person has not assumed or become
liable for the payment thereof, (d) lease obligations of such Person which, in
accordance with GAAP, should be capitalized, (e) lease obligations of such
Person under leases which have a term (including any option to renew
exercisable at the discretion of the lessee thereunder) longer than 10 years or
under leases under which the lessor, pursuant to an agreement with such Person,
has acquired the property specifically for the purpose of leasing it to such
Person, (f) obligations payable out of the proceeds of production from property
of such Person, even though such Person has not assumed or become liable for
the payment thereof, (g) the Swap Termination Value with respect to Swap
Contracts, and (h) any obligations of any other Person of the type described in
the above
16
<PAGE> 24
clauses (a) through (g), inclusive, which are guaranteed or in effect
guaranteed by such Person through any agreement (contingent or otherwise) to
purchase, repurchase or otherwise acquire such obligation or any security
therefor, or to provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital contributions
or otherwise), or to maintain the solvency or any balance sheet or other
financial condition of the obligor of such obligation, or to make payment for
any property, securities, products, materials or supplies or for any
transportation or services regardless of the non-delivery or nonfurnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders of such
obligation will be protected against loss in respect thereof or to otherwise
assure or hold harmless the holder of any primary obligation against loss in
respect thereof. The amount of any obligations of the type described in clause
(h) of this definition shall be deemed equal to the stated or determinable
amount of the primary obligation in respect of which such obligation is made
or, if not stated or if not determinable, the maximum reasonably anticipated
liability in respect thereof.
"Indemnified Person" has the meaning specified in subsection 11.5.
"Indemnified Liabilities" has the meaning specified in subsection
11.5.
"Independent Auditor" has the meaning specified in subsection 7.1(a).
"Insolvency Proceeding" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or
foreign law, including the Bankruptcy Code.
"Interest Coverage Ratio" means, as measured quarterly on the last day
of each fiscal quarter for the four fiscal quarter period then ending, the
ratio of
(i)EBITDA;
to
(ii)the combined interest expense (including capitalized interest) of
the Company and its Subsidiaries for the four fiscal quarter period then ending
calculated in accordance with GAAP, plus interest expense that would have been
payable during such four fiscal quarters had any Indebtedness incurred during
such
17
<PAGE> 25
period for the purpose of acquiring Timber and related assets been incurred at
the beginning of such period, based upon the interest rate applicable to such
Indebtedness at the end of such period.
"Interest Payment Date" means, (a) with respect to any Offshore Rate
Loan, the last day of each Interest Period applicable to such Loan, (b) with
respect to any Base Rate Loan, the last Business Day of each calendar quarter
and each date a Base Rate Loan is converted into another Type of Loan, and (c)
with respect to any Swingline Loan, the Business Day agreed upon by the Company
and the Swingline Bank, which will not be later than the fourteenth Business
Day following the Borrowing date thereof or, if sooner, the Revolving
Termination Date; provided, however, that if any Interest Period for an
Offshore Rate Loan exceeds three months, the date which falls three months
after the beginning of such Interest Period and after each Interest Payment
Date thereafter shall also be an Interest Payment Date.
"Interest Period" means, with respect to any Offshore Rate Loan, the
period commencing on the Business Day the Loan is disbursed or on the
Conversion/Continuation Date on which the Loan is converted into or continued
as an Offshore Rate Loan, and ending on the date that is one week or one, two,
three or six months thereafter, as selected by the Company in its Notice of
Borrowing or Notice of Conversion/Continuation, as the case may be;
provided that:
(i) if any Interest Period would otherwise end on a day
which is not a Business Day, that Interest Period shall be extended to
the next succeeding Business Day unless, in the case of an Offshore
Rate Loan, the result of such extension would be to carry such
Interest Period into another calendar month, in which event such
Interest Period shall end on the immediately preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate
Loan that begins on the last Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest
Period; and
(iii) no Interest Period for any Revolving Loan shall
extend beyond the Revolving Termination Date.
"Investment Policy" means the Corporate Investment Policy of the
Company, as it existed on April 5, 1993 and as attached hereto as Schedule 1.1
(without giving effect to any later amendments thereto).
18
<PAGE> 26
"Investments" has the meaning specified in Section 8.4.
"Issuance Date" has the meaning specified in subsection 3.1(a).
"Issue" means, with respect to any Letter of Credit, to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding
meanings.
"Issuing Bank" means BofA in its capacity as issuer of one or more
Letters of Credit hereunder, together with any replacement letter of credit
issuer arising under subsection 10.1(b) or Section 10.9.
"Joint Venture" means a partnership, joint venture or other similar
legal arrangement (whether created pursuant to contract or conducted through a
separate legal entity) now or hereafter formed by the Company or any of its
Restricted Subsidiaries with another Person in order to conduct a common
venture or enterprise with such Person.
"L/C Advance" means each Bank's participation in any L/C Borrowing in
accordance with its Commitment Percentage.
"L/C Amendment Application" means an application form for amendment of
outstanding standby letters of credit as shall at any time be in use at an
Issuing Bank, as such Issuing Bank shall require.
"L/C Application" means an application form for issuances of standby
letters of credit as shall at any time be in use at an Issuing Bank, as such
Issuing Bank shall require.
"L/C Borrowing" means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the date
when made nor converted into a Borrowing of Revolving Loans under subsection
3.3(c).
"L/C Commitment" means the commitment of the Issuing Banks to Issue,
and the commitment of the Banks severally to participate in, Letters of Credit
from time to time Issued or outstanding under Article III, in an aggregate
amount not to exceed on any date twenty million dollars ($20,000,000), as the
same shall be reduced as a result of a reduction in the L/C Commitment pursuant
to Section 2.5; provided that the L/C Commitment is a part of the Aggregate
Commitment, rather than a separate, independent commitment.
"L/C Obligations" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the amount
of all unreimbursed drawings under all Letters of Credit, including all
outstanding L/C Borrowings.
19
<PAGE> 27
"L/C-Related Documents" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document relating to
any Letter of Credit, including any Issuing Bank's standard form documents for
letter of credit issuances.
"Lending Office" means, with respect to any Bank and the Swingline
Bank, the office or offices of the Bank and the Swingline Bank specified as its
"Lending Office" or "Domestic Lending Office" or "Offshore Lending Office," as
the case may be, opposite its name on Schedule 11.2, or such other office or
offices of the Bank and the Swingline Bank as it may from time to time notify
the Company and the Agent.
"Letters of Credit" means any standby letters of credit Issued by the
Issuing Bank pursuant to Article III.
"Letter of Credit Rate" means, for any period, a rate per annum equal
to (A) for the period from the Closing Date through March 31, 1997, 0.4500%,
and (B) from April 1, 1997, the percentage specified below opposite the
Interest Coverage Ratio (which ratio shall be calculated on a rolling four
quarter basis for the relevant fiscal quarter) calculated for the periods
described below.
<TABLE>
<CAPTION>
INTEREST COVERAGE RATIO AT END OF FISCAL QUARTER LETTER OF CREDIT RATE
- - ----------------------------------------------------------------------------------------------------
<S> <C>
Greater than or equal to 4.0 0.3500%
- - ----------------------------------------------------------------------------------------------------
Less than 4.0 but greater than or equal to 3.7 0.4000%
- - ----------------------------------------------------------------------------------------------------
Less than 3.7 but greater than or equal to 3.4 0.4500%
- - ----------------------------------------------------------------------------------------------------
Less than 3.4 but greater than or equal to 3.1 0.5500%
- - ----------------------------------------------------------------------------------------------------
Less than 3.1 but greater than or equal to 2.8 0.6500%
- - ----------------------------------------------------------------------------------------------------
Less than 2.8 but greater than or equal to 2.5 0.8750%
- - ----------------------------------------------------------------------------------------------------
Less than 2.5 1.1250%
- - ----------------------------------------------------------------------------------------------------
</TABLE>
The Letter of Credit Rate for each fiscal quarter commencing on and
after April 1, 1997, shall be calculated in reliance on the financial reports
delivered pursuant to subsections 7.1(a) and 7.1(c) and the certificate
delivered pursuant to subsection 7.2(b) with respect to the fiscal quarter
before the fiscal quarter in question (e.g., June 30 financials determine the
Letter of Credit Rate for the fiscal quarter beginning October 1). If the
Company fails to deliver such financial
20
<PAGE> 28
reports and certificate to the Agent for any fiscal quarter by the beginning of
the next succeeding fiscal quarter (e.g., by October 1 for the fiscal quarter
ending June 30), then the Letter of Credit Rate for the following fiscal
quarter (e.g., October 1 through December 31) shall equal the next higher
Letter of Credit Rate as set forth in the chart above immediately below the
previously effective Letter of Credit Rate; thus if the Letter of Credit Rate
had previously been 0.6500%, a failure to deliver quarterly financials by the
first day of the next fiscal quarter would cause the Letter of Credit Rate to
be 0.8750% for the duration of that quarter. In addition, if such financial
reports and certificate when delivered indicate that the Letter of Credit Rate
for such period should have been higher than the Letter of Credit Rate provided
for in the previous sentence, then the Company shall pay on the date of
delivery of such financial reports and certificate an amount equal to the
positive difference, if any, between the interest that the Company should have
paid hereunder had the financial reports and certificate been delivered on a
timely basis over what the Company actually paid.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien, preference or priority or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction).
"Loan" means an extension of credit by a Bank or the Swingline Bank,
as the case may be, to the Company under Article II or Article III, and may be
a Revolving Loan, a Swingline Loan or an L/C Advance.
"Loan Documents" means this Agreement, the L/C-Related Documents, and
all documents delivered to the Agent in connection herewith and therewith.
"Majority Banks" means (a) at any time that Loans are outstanding, any
Banks holding at least 66-2/3% of the then aggregate unpaid principal amount of
the Loans, and (b) at any other time, Banks holding at least 66-2/3% of the
Commitments or, if the Commitments have been terminated or expired, Banks that
held at least 66-2/3% of the Commitments as in effect immediately before such
termination or expiration.
"Margin Stock" means "margin stock" as such term is defined in
Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, any of the operations, business, properties,
condition (financial or otherwise) or prospects of the Company or the Company
and its Subsidiaries taken as a whole; (b) a material impairment of the ability
of the Company to perform under any Loan Document and avoid any Event of
Default; or
21
<PAGE> 29
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability of any Loan Document.
"Material Default" means any continuing Default as to which a written
notice of such Default (which notice has not been rescinded) shall have been
received by the Company or the General Partner from the Agent or any Bank, or
any continuing Event of Default.
"Maximum Pro Forma Annual Interest Charges" means, as of any date, the
highest total amount payable during any period of four consecutive fiscal
quarters, commencing with the fiscal quarter in which such date occurs and
ending with the fiscal quarter in which the Revolving Termination Date occurs,
by the Company and its Restricted Subsidiaries on a combined basis, after
eliminating all intercompany transactions, in respect of interest charges ((a)
including amortization of debt discount and expense and imputed interest on
Capital Lease Obligations and on other obligations included in Indebtedness
which do not have stated interest, (b) assuming, in the case of fluctuating
interest rates which cannot be determined in advance, that the rate in effect
on such date will remain in effect throughout such period, and (c) treating the
principal amount of all Indebtedness outstanding as of such date under a
revolving credit or similar agreement as maturing and becoming due and payable
on the scheduled maturity date thereof, without regard to any provision
permitting such maturity date to be extended) on all Indebtedness of the
Company and its Restricted Subsidiaries outstanding on such date (excluding the
Guarantee and the guarantees of the Facilities Subsidiary's Facility and the
Facilities Subsidiary's Revolving Credit Facility but including, to the extent
not already included, all other Indebtedness outstanding on such date which is
guaranteed or in effect guaranteed by the Company or any Restricted
Subsidiaries), after giving effect to any Indebtedness proposed to be created
on such date and to the concurrent retirement of any other Indebtedness.
"MCCF" means one thousand Cunits.
"MMBF" means one million Board Feet.
"Mortgage Note Agreements" means the Mortgage Note Agreement, dated as
of May 31, 1989, providing for the issuance and sale by the Facilities
Subsidiary of its 11 1/8% First Mortgage Notes to the purchasers listed in the
schedule of purchasers attached thereto, as amended by (a) that certain
Mortgage Note Agreement Amendment, Consent and Waiver dated as of January 1,
1991, (b) that certain letter agreement dated April 22, 1993, (c) that certain
Mortgage Note Agreement Amendment dated as of September 1, 1993, (d) that
certain Mortgage Note Agreement Amendment dated as of May 20, 1994, (e) that
certain Amendment to Mortgage Note Agreement dated as of June 15, 1995 and (f)
that certain Mortgage Note Agreements Amendment dated as of May 31, 1996.
22
<PAGE> 30
"Mortgage Notes" means the 11 1/8% First Mortgage Notes of the
Facilities Subsidiary issued and sold pursuant to the Mortgage Note Agreements.
"Multiemployer Plan" means a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA) and to which any ERISA Affiliate makes, is
making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.
"Net Proceeds" means proceeds in cash as and when received by the
Person making a sale of Property, net of: (a) the direct costs relating to such
sale excluding amounts payable to the Company or any Affiliate of the Company,
(b) sale, use or other transaction taxes paid or payable as a result thereof,
and (c) amounts required to be applied to repay principal, interest and
prepayment premiums and penalties on Indebtedness secured by a Lien on the
asset which is the subject of such disposition.
"1994 Notes" means the 8.73% Senior Notes due August 1, 2009 in the
aggregate principal amount of $150,000,000 issued and sold pursuant to the 1994
Senior Note Agreements.
"1994 Senior Note Agreements" means that certain Senior Note Agreement
dated as of August 1, 1994 providing for the issuance and sale by the Company
of the 1994 Senior Notes to the purchasers listed in the schedule of purchasers
attached thereto, as amended by (a) that certain Senior Note Agreement
Amendment dated as of October 15, 1995 and (b) that certain Senior Note
Agreements Amendment dated as of May 31, 1996.
"1996 Notes" means those certain senior promissory notes in the
aggregate principal amount of $200,000,000 issued and sold pursuant to the 1996
Senior Note Agreements.
"1996 Senior Note Agreement" means that certain Senior Note Agreement
dated as of November 13, 1996, providing for the issuance and sale by the
Company of the 1996 Notes to the purchasers listed in the schedule of
purchasers attached thereto.
"Notes" means those certain senior promissory notes in the aggregate
principal amount of $165,000,000 issued and sold pursuant to the Note
Agreements.
"Note Agreements" means that certain Senior Note Agreement dated as of
May 31, 1989, providing for the issuance and sale by the Company of the Notes
to the purchasers listed in the schedule of purchasers attached thereto, as
amended by (a) that certain Senior Note Agreement Amendment, Consent and Waiver
dated as of January 1, 1991, (b) that certain letter agreement dated April 22,
1993, (c) that
23
<PAGE> 31
certain Senior Note Agreement Amendment dated as of September 1, 1993 (d) that
certain Senior Note Agreement Amendment dated as of May 20, 1994, and by that
certain Senior Note Agreements Amendment dated as of May 31, 1996.
"Notice of Borrowing" means a notice given by the Company to the Agent
pursuant to Sections 2.3, or 2.10, as the case may be, in substantially the
form of Exhibit A.
"Notice of Conversion/Continuation" means a notice given by the
Company to the Agent pursuant to Section 2.4, in substantially the form of
Exhibit B.
"Notice of Lien" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's office,
central filing office or other Governmental Authority for the purpose of
evidencing, creating, perfecting or preserving the priority of a Lien securing
obligations owing to a Governmental Authority.
"Obligations" means all Loans, and other Indebtedness, advances,
debts, liabilities, obligations, covenants and duties owing by the Company to
any Bank, the Agent, the Senior Co-Agent, the Issuing Banks, the Swingline
Bank, or any other Person required to be indemnified, that arises under any
Loan Document, whether or not for the payment of money, whether arising by
reason of an extension of credit, loan, guaranty, indemnification or in any
other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired.
"Offshore Lending Office" means with respect to each Bank, the office
of such Bank designated as such in Schedule 11.2 or such other office of such
Bank as such Bank may from time to time specify to the Company and the Agent.
"Offshore Rate" means, for each Interest Period in respect of Offshore
Rate Loans comprising part of the same Borrowing, an interest rate per annum
(rounded upward to the nearest 1/16th of 1%) determined pursuant to the
following formula:
Offshore Rate = IBOR
------------------------------------
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve Percentage" means for any day for any
Interest Period the reserve percentage (expressed as a decimal,
rounded upward to the nearest 1/100th of 1%) in effect for such day
under regulations issued from time to time by the Federal Reserve
Board for determining the reserve
24
<PAGE> 32
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities") having a term comparable to
such Interest Period; and
"IBOR" means the rate of interest per annum determined by the
Agent as the rate at which dollar deposits in the approximate amount
of BofA's Offshore Rate Loan and having a maturity comparable to such
Interest Period would be offered by BofA's Grand Cayman Branch, Grand
Cayman B.W.I. (or such other office as may be designated for such
purpose by BofA), to major banks in the offshore dollar interbank
market upon request of such banks at approximately 11:00 a.m. (New
York City time) two Business Days prior to the commencement of such
Interest Period.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"Offshore Rate Loan" means any Loan that bears interest based on the
Offshore Rate.
"Operating Lease" means, as applied to any Person, any lease of
Property which is not a Capital Lease.
"Ordinary Course of Business" means, in respect of any transaction
involving the Company or any Subsidiary of the Company, the ordinary course of
such Person's business, as conducted by any such Person in accordance with past
practice and undertaken by such Person in good faith and not for purposes of
evading any covenant or restriction in any Loan Document.
"Organization Documents" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination or
instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable resolutions
of the board of directors (or any committee thereof) of such corporation; and,
for any limited partnership, the certificate of limited partnership, the
limited partnership agreement, and all applicable partnership resolutions.
"Other Taxes" has the meaning specified in subsection 4.1(b).
"Participant" has the meaning specified in subsection 11.8(d).
"Partnership Agreement" means the Amended and Restated Agreement of
Limited Partnership of the Company, as in effect on the Closing Date, and as
the
25
<PAGE> 33
same may, from time to time, be amended, modified or supplemented in accordance
with the terms thereof.
"Partner Entities" means the General Partner, the PCMC General Partner
and the PC Advisory General Partner.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
"PC Advisory General Partner" means PC Advisory Corp. I, a Delaware
corporation, the managing general partner of the PCMC General Partner, and any
successor managing general partner of the PCMC General Partner.
"PCMC General Partner" means PC Advisory Partners I, L.P., a Delaware
limited partnership, the managing general partner of the General Partner, and
any successor managing general partner of the General Partner.
"Permitted Business" means any business engaged in by the Company or
the Facilities Subsidiary on the Closing Date, pulp and paper manufacturing and
any business substantially similar or related to any such business.
"Permitted Liens" has the meaning specified in Section 8.1.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture or
Governmental Authority.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any ERISA Affiliate sponsors or maintains or to
which the Company or any ERISA Affiliate makes, is making or is obligated to
make contributions, and includes any Multiemployer Plan or Qualified Plan.
"Principal Repayment Proviso" means that for any period of
calculation, the aggregate amount of scheduled principal repayment on
Indebtedness (x) shall not include voluntary prepayments of Indebtedness except
to the extent such voluntary prepayments includes any amounts that would have
been scheduled principal repayments during such period, and (y) shall not
include the amount of any scheduled principal repayment to the extent the
Company refinanced or rescheduled such scheduled repayments and the scheduled
principal repayments due before the Revolving Termination Date under the
refinancing or rescheduling have been or will be included in the calculation of
the aggregate amount of scheduled principal repayments for the periods in which
they are due.
26
<PAGE> 34
"Pro Forma Free Cash Flow" as of any date means (i) net income of the
Company and its Restricted Subsidiaries on a pro forma combined basis
(excluding (a) gain on the sale of any Capital Asset, (b) noncash items of
income, and (c) any distributions or other income received from, or equity of
the Company or any Restricted Subsidiary in the earnings of, any entity which
is not a Restricted Subsidiary) for the period of four consecutive fiscal
quarters immediately prior to such date (such period of four consecutive fiscal
quarters being the "Measurement Period"), determined in accordance with GAAP
plus depreciation, depletion, amortization and other noncash charges, interest
expense on Indebtedness and provision for income taxes, minus (ii) capital
expenditures made by the Company and its Restricted Subsidiaries during the
Measurement Period, to maintain their respective operations; provided, however,
if (A) the Company or a Restricted Subsidiary is acquiring a Restricted
Subsidiary or assets and (B) Pro Forma Free Cash Flow is being determined in
connection therewith, such Restricted Subsidiary shall be considered to have
been a Restricted Subsidiary during the entire Measurement Period and such
assets shall be considered to have been owned by the Company during the entire
Measurement Period if net income attributable to such Restricted Subsidiary or
such assets (as the case may be) for the entire Measurement Period is readily
determinable and confirmed pursuant to an audit or a certification prepared in
good faith by the Company's chief financial officer; further provided, however,
that portion of Pro Forma Free Cash Flow allocable to such Restricted
Subsidiary or assets shall be reduced on a pro rata basis to the extent Timber
has been harvested by such Restricted Subsidiary or from such assets during the
Measurement Period at a rate greater than the rate at which the Company has
harvested Timber from its Timberlands during the Measurement Period, as
certified in good faith by the chief financial officer of the Company; and
finally provided, however, if Pro Forma Free Cash Flow is being determined for
any Measurement Period and a Restricted Subsidiary or assets have been sold or
otherwise disposed of at any time during such Measurement Period by the Company
or any Restricted Subsidiary, such Restricted Subsidiary shall not be
considered to have been a Restricted Subsidiary during any part of such
Measurement Period and such assets shall not be considered to have been owned
by the Company during any part of such Measurement Period, and the net income
that otherwise would have been attributable to such Restricted Subsidiary or
asset during such Measurement Period shall be certified in good faith by the
chief financial officer of the Company.
"Pro Rata Share" means, with respect to the payment of principal or
interest on account of Revolving Loans or L/C Advances, each Bank's pro rata
share of the outstanding principal balance of the Loans or L/C Advances with
respect to which such payment is being made.
"Property" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
27
<PAGE> 35
"Qualified Debt" means, as to the Company, as of any date of
determination, without duplication, all outstanding indebtedness of the Company
for borrowed money, including Indebtedness represented by the Notes, the 1994
Notes, the 1996 Notes, and this Agreement (including L/C Borrowings and Loans
used to repay L/C Borrowings, but excluding L/C Obligations with respect to
undrawn Letters of Credit).
"Qualified Plan" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any ERISA Affiliate sponsors, maintains, or to which it makes, is making or is
obligated to make contributions, or in the case of a multiple employer plan (as
described in Section 4064(a) of ERISA) has made contributions at any time
during the immediately preceding period covering at least five (5) plan years,
but excluding any Multiemployer Plan.
"Reportable Event" means, as to any Plan, (a) any of the events set
forth in Section 4043(c) of ERISA or the regulations thereunder, other than any
such event for which the 30-day notice requirement under ERISA has been waived
in regulations issued by the PBGC, (b) a withdrawal from a Plan described in
Section 4063 of ERISA, or (c) a cessation of operations described in Section
4062(e) of ERISA.
"Requirement of Law" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person
or any of its property or to which the Person or any of its property is
subject.
"Responsible Officer" means the chief executive officer, the president
or any vice president of the General Partner, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, the chief financial officer or the
treasurer of the General Partner, or any other officer having substantially the
same authority and responsibility.
"Responsible Representatives" means (a) in the case of any transaction
in which the value of any assets disposed of or received have a value of less
than $5,000,000 or in which payments made are less than $5,000,000, the chief
executive officer, chief financial officer or chief operating officer of the
Company, and (b) in the case of any other transaction, the Board of Directors
of the PC Advisory General Partner.
"Restricted Payment" means (a) any payment or other distribution,
direct or indirect, in respect of any partnership interest in the Company,
except a distribution payable solely in additional partnership interests in the
Company, and (b) any payment, direct or indirect, on account of the redemption,
retirement, purchase or other acquisition of any partnership interest in the
Company including, without
28
<PAGE> 36
limitation, any Designated Repurchases; or, if the Company is at any time
reorganized as or changed (by merger, sale of assets or otherwise) into a
corporation, (i) any dividend or other distribution, direct or indirect, on
account of any shares of any class of stock of the Company now or hereafter
outstanding, except a dividend payable solely in shares of stock of the
Company, and (ii) any redemption, retirement, purchase or other acquisition,
direct or indirect, of any shares of any class of stock of the Company, now or
hereafter outstanding, or of any warrants, rights or options to acquire any
such shares, except to the extent that the consideration therefor consists of
shares of stock of the Company.
"Restricted Subsidiary" means any Wholly-Owned Subsidiary other than
(a) any Designated Immaterial Subsidiary and (b) the Facilities Subsidiary or
any Subsidiary directly or indirectly owned by the Facilities Subsidiary,
provided that after the Mortgage Notes shall have been paid in full and
retired, the Facilities Subsidiary and its Subsidiaries shall become and be
Restricted Subsidiaries.
"Revolving Facility Tranche" has the meaning specified in Section
2.16.
"Revolving Facility Tranche Loan" means a Loan allocated by the
Company to the Revolving Facility Tranche as provided in Section 2.16.
"Revolving Loan" has the meaning specified in Section 2.1, and may be
an Offshore Rate Loan or a Base Rate Loan.
"Revolving Termination Date" means the earlier to occur of:
(a)December 13, 2001; and
(b)the date on which the Aggregate Commitment shall terminate
in accordance with the provisions of this Agreement.
"Riverwood Supply Agreement" means the Supply Agreement dated October
18, 1996, between Riverwood International Corporation and the Company.
"SEC" means the Securities and Exchange Commission, or any entity
succeeding to any of its principal functions.
"Senior Co-Agent" means NationsBank, N.A. in its capacity as Senior
Co-Agent for the Banks hereunder.
"Solvent" means, as to any Person at any time, that (a) (i) in the
case of a Person that is not a partnership, the fair value of the Property of
such Person is greater than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities), and (ii) in the case of a
Person that is a partnership, the sum of (A) the fair value of the Property of
such Person plus (B) the sum of the
29
<PAGE> 37
excess of the fair value of each general partner's non-partnership Property
over such partner's non-partnership debts (together, the "Applicable Property")
is greater than the amount of such Person's liabilities (including disputed,
contingent and unliquidated liabilities), as such value for purposes of both
clauses (i) and (ii) is established and liabilities evaluated for purposes of
Section 101(31) of the Bankruptcy Code and, in the alternative, for purposes of
the Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the
Property of such Person (or, in the case of a partnership, the Applicable
Property for such Person) is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured; (c) such Person is able to realize upon its Property and pay its
debts and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
Property would constitute unreasonably small capital.
"Subsidiary" of a Person means any corporation, partnership or other
entity a majority of (i) the total combined voting power of all classes of
Voting Stock of which or (ii) the outstanding equity interests of which shall,
at the time of which any determination is being made, be owned by the Company
either directly or through Subsidiaries.
"Swap Contract" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap or
option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or any
combination of the foregoing, and, unless the context otherwise clearly
requires, any master agreement relating to or governing any or all of the
foregoing.
"Swap Termination Value" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or after
the date such Swap Contracts have been closed out and termination value(s)
determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a) the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined by the Company
(or, for purposes of subsection 9.1(e), by the Majority Banks) based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include any Bank).
30
<PAGE> 38
"Swingline Bank" means BofA or its assignee under Section 11.8.
"Swingline Clean-Up Day" has the meaning specified in subsection
2.7(a)(iii).
"Swingline Commitment" has the meaning specified in Section 2.10.
"Swingline Loan" has the meaning specified in Section 2.10.
"Taxes" has the meaning specified in subsection 4.1(a).
"Timber" means standing trees not yet harvested.
"Timberlands" means the timberlands owned by the Company as of the
Closing Date and any timberlands acquired by the Company or any Subsidiary
after the Closing Date.
"Transferee" has the meaning specified in subsection 11.8(e).
"Type" means either an Offshore Rate Loan or a Base Rate Loan.
"UCC" means the Uniform Commercial Code as in effect in the State of
California.
"UCP" has the meaning specified in Section 3.9.
"Unfunded Pension Liabilities" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used by the Plan's
actuaries for funding the Plan pursuant to Section 412 of the Code for the
applicable plan year.
"United States" and "U.S." each means the United States of America.
"Voting Stock" means, with respect to any corporation or other entity,
any shares of stock or other ownership interests of such corporation or entity
whose holders are entitled under ordinary circumstances to vote for the
election of directors of such corporation or to manage any such other entity
(irrespective of whether at the time stock or ownership interests of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Wholly-Owned Subsidiary" means any Subsidiary organized under the
laws of any state of the United States which conducts the major portion of its
business in the United States, and all of the stock or other ownership
interests of every class of which, except director's qualifying shares, and
except in the case of the Facilities Subsidiary not more than 5% of the
outstanding Voting Stock shall, at the time as of which any determination is
being made, be owned by the Company either directly or through Wholly-Owned
Subsidiaries.
31
<PAGE> 39
"Withdrawal Liabilities" means, as of any determination date, the
aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA
if the Controlled Group made a complete withdrawal from all Multiemployer Plans
and any increase in contributions pursuant to Section 4243 of ERISA.
1.2 OTHER INTERPRETIVE PROVISIONS
(a) Defined Terms. Unless otherwise specified herein or therein,
all terms defined in this Agreement shall have the defined meanings when used
in any certificate or other document made or delivered pursuant hereto. The
meaning of defined terms shall be equally applicable to the singular and plural
forms of the defined terms. Terms (including uncapitalized terms) not
otherwise defined herein and that are defined in the UCC shall have the
meanings therein described.
(b) The Agreement. The words "hereof," "herein," "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
subsection, section, schedule and exhibit references are to this Agreement
unless otherwise specified.
(c) Certain Common Terms.
(i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(d) Performance; Time. Whenever any performance obligation
hereunder (other than a payment obligation) shall be stated to be due or
required to be satisfied on a day other than a Business Day, such performance
shall be made or satisfied on the next succeeding Business Day. In the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each
mean "to but excluding," and the word "through" means "to and including". If
any provision of this Agreement refers to any action taken or to be taken by
any Person, or which such Person is prohibited from taking, such provision
shall be interpreted to encompass any and all means, direct or indirect, of
taking, or not taking, such action.
(e) Contracts. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
32
<PAGE> 40
(f) Laws. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or regulation.
(g) Captions. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(h) Independence of Provisions. The parties acknowledge that this
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
(i) Interpretation. This Agreement is the result of negotiations
among and has been reviewed by counsel to the Agent, the Company and other
parties, and is the product of all parties hereto. Accordingly, this Agreement
and the other Loan Documents shall not be construed against the Banks, the
Senior Co-Agent or the Agent merely because of the Agent's, the Senior
Co-Agent's or Banks' involvement in the preparation of such documents and
agreements.
1.3 ACCOUNTING PRINCIPLES
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP, consistently applied.
(b) References herein to "fiscal year" and "fiscal quarter" refer
to such fiscal periods of the Company.
2. THE CREDITS
2.1 AMOUNTS AND TERMS OF COMMITMENTS
Each Bank severally agrees, on the terms and conditions hereinafter set
forth, to make loans to the Company (each such loan, a "Revolving Loan") from
time to time on any Business Day from the Closing Date to the Revolving
Termination Date, in an aggregate amount not to exceed at any time outstanding
the amount set forth opposite the Bank's name in Schedule 2.1 under the heading
"Commitment" (such amount as the same may be reduced pursuant to Section 2.5 or
Section 2.7, or as a result of one or more assignments pursuant to Section
11.8, the Bank's "Commitment"); provided, however, that, after giving effect to
any Borrowings, the Effective Amount of all Revolving Loans, Swingline Loans,
and L/C Obligations shall not at any time exceed the Aggregate Commitment; and
provided, further,
33
<PAGE> 41
that the Effective Amount of the Revolving Loans of any Bank plus such Bank's
Commitment Percentage of the Effective Amount of all L/C Obligations and
Swingline Loans shall not at any time exceed such Bank's Commitment. Within
the limits of each Bank's Commitment, and subject to the other terms and
conditions hereof, until the Revolving Termination Date, the Company may borrow
under this Section 2.1, prepay pursuant to Section 2.8 and reborrow pursuant to
this Section 2.1.
2.2 LOAN ACCOUNTS
The Loans made by each Bank (including the Swingline Bank) and the
Letters of Credit Issued by an Issuing Bank shall be evidenced by one or more
loan accounts maintained by such Bank or Issuing Bank, as the case may be, in
the ordinary course of business. The loan accounts or records maintained by
the Agent, the Swingline Bank, each Issuing Bank and each such Bank shall be
conclusive absent manifest error of the amount of the Loans made by the Banks
to the Company and the Letters of Credit issued for the account of the Company,
and the interest and payments thereon. Any failure so to record or any error
in doing so shall not, however, limit or otherwise affect the obligation of the
Company hereunder to pay any amount owing with respect to the Loans or any
Letter of Credit.
2.3 PROCEDURE FOR BORROWING REVOLVING LOANS
(a) Each Borrowing of Revolving Loans shall be made upon the
Company's irrevocable written notice delivered to the Agent in accordance with
Section 11.2 in the form of a Notice of Borrowing (which notice must be
received by the Agent prior to 9:00 a.m. (San Francisco time)) (i) three
Business Days prior to the requested Borrowing date, in the case of Offshore
Rate Loans; and (ii) on the requested Borrowing date, in the case of Base Rate
Loans, specifying:
(A) that the Borrowing comprises Revolving Loans;
(B) the amount of the Borrowing, which shall be in an
aggregate minimum principal amount of three million dollars ($3,000,000) except
in the case of Offshore Rate Loans with a proposed Interest Period of one week,
in which case the aggregate minimum principal amount shall be twelve million
dollars ($12,000,000) or, in either case, any multiple of five hundred thousand
dollars ($500,000) in excess thereof;
(C) the requested Borrowing date, which shall be a
Business Day;
(D) whether the Borrowing is to comprise Offshore Rate
Loans or Base Rate Loans;
34
<PAGE> 42
(E) the duration of the Interest Period applicable to the
Borrowing described in such notice. If the Notice of Borrowing shall fail to
specify the duration of the Interest Period for any Borrowing comprising
Offshore Rate Loans, such Interest Period shall be 90 days or three months,
respectively; and
(F) with respect to any Borrowing after the date the
Company gives the notice regarding allocation of Loans pursuant to Section
2.16, whether the Borrowing shall be allocated to the Revolving Facility
Tranche or the Capital Expenditure Tranche.
(b) Upon receipt of the Notice of Borrowing, the Agent will
promptly notify each Bank thereof and of the amount of such Bank's Commitment
Percentage of the Borrowing.
(c) Each Bank will make the amount of its Commitment Percentage of
the Borrowing available to the Agent for the account of the Company at the
Agent's Payment Office by 12:00 noon (San Francisco time) on the Borrowing date
requested by the Company in funds immediately available to the Agent. The
proceeds of all such Revolving Loans will then be made available to the Company
by the Agent at such office by crediting the account of the Company on the
books of BofA with the aggregate of the amounts made available to the Agent by
the Banks and in like funds as received by the Agent, unless on the date of the
Borrowing all or any portion of the proceeds thereof shall then be required to
be applied to the repayment of any outstanding Swingline Loans pursuant to
Section 2.10 or the reimbursement of any outstanding drawings under Letters of
Credit pursuant to Section 3.3, in which case such proceeds or portion thereof
shall be applied to the repayment of such Swingline Loans or the reimbursement
of such Letter of Credit drawings, as the case may be.
(d) Unless the Majority Banks shall otherwise agree, during the
existence of a Default or an Event of Default, the Company may not elect to
have a Loan made as an Offshore Rate Loan.
(e) After giving effect to any Borrowing, there shall not be more
than six different Interest Periods in effect in respect of all Loans (other
than Swingline Loans) then outstanding.
2.4 CONVERSION AND CONTINUATION ELECTIONS FOR BORROWINGS
(a) The Company may upon irrevocable written notice to the Agent
in accordance with subsection 2.4(b):
(i) elect to convert on any Business Day, any Base Rate
Loans other than Swingline Loans (or any part thereof in an amount not less
than $3,000,000 except in the case of a conversion into an Offshore Rate Loans
with a proposed Interest
35
<PAGE> 43
Period of one week, which shall be in an amount not less than $12,000,000, or
that is in an integral multiple of $500,000 in excess thereof) into Offshore
Rate Loans;
(ii) elect to convert on the last day of the applicable
Interest Period any Offshore Rate Loans having Interest Periods maturing on
such day (or any part thereof in an amount not less than $3,000,000, or that is
in an integral multiple of $500,000 in excess thereof) into Base Rate Loans;
(iii) elect to continue on the last day of the applicable
Interest Period any Offshore Rate Loans having Interest Periods maturing on
such day (or any part thereof in an amount not less than $3,000,000 except in
the case of a continuation of an Offshore Rate Loans with a proposed Interest
Period of one week, which shall be in an amount not less than $12,000,000, or
that is in an integral multiple of $500,000 in excess thereof);
provided, that if the aggregate amount of Offshore Rate Loans in respect of any
Borrowing shall have been reduced, by payment, prepayment, or conversion of
part thereof to be less than $500,000, such Offshore Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the
right of the Company to continue such Loans as, and convert such Loans into,
Offshore Rate Loans shall terminate.
(b) The Company shall deliver a Notice of Conversion/Continuation
in accordance with Section 11.2 to be received by the Agent not later than 9:00
a.m. (San Francisco time) (i) at least three Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or
continued as Offshore Rate Loans; and (ii) on the Conversion/Continuation Date,
if the Loans are to be converted into Base Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date;
(B) the aggregate amount of Loans to be converted or
continued;
(C) the nature of the proposed conversion or continuation;
and
(D) other than in the case of Base Rate Loans, the
duration of the requested Interest Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans, the Company has failed to select timely a new Interest
Period to be applicable to such Offshore Rate Loans or if any Default or Event
of Default shall then exist, the Company shall be deemed to have elected to
convert such Offshore Rate Loans into Base Rate Loans effective as of the
expiration date of such current Interest Period.
36
<PAGE> 44
(d) Upon receipt of a Notice of Conversion/Continuation, the Agent
will promptly notify each Bank thereof, or, if no timely notice is provided by
the Company, the Agent will promptly notify each Bank of the details of any
automatic conversion. All conversions and continuations shall be made pro rata
according to the respective outstanding principal amounts of the Loans with
respect to which the notice was given held by each Bank.
(e) Unless the Majority Banks shall otherwise agree, during the
existence of a Default or Event of Default, the Company may not elect to have a
Loan converted into or continued as an Offshore Rate Loan.
(f) Notwithstanding any other provision contained in this
Agreement, after giving effect to any conversion or continuation of any Loans
there shall not be more than six different Interest Periods in effect in
respect of all Loans (other than Swingline Loans) then outstanding.
2.5 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS
The Company may, upon not less than five Business Days prior notice to
the Agent, terminate or permanently reduce the Aggregate Commitment (and, to
the extent provided in subsection 2.7(b), the L/C Commitment and the Swingline
Commitment) by an aggregate minimum amount of $5,000,000 or any multiple of
$5,000,000 in excess thereof; provided that no such reduction or termination
shall be permitted if, after giving effect thereto and to any prepayments of
the Loans made on the effective date thereof, the Effective Amount of Revolving
Loans, Swingline Loans and L/C Obligations would exceed the Aggregate
Commitment then in effect. Once reduced in accordance with this Section 2.5,
the Aggregate Commitment may not be increased. Any reduction of the Aggregate
Commitment shall be applied to each Bank's Commitment in accordance with such
Bank's Commitment Percentage. All accrued commitment fees to the effective
date of any reduction or termination of the Aggregate Commitment shall be paid
on the effective date of such reduction or termination.
2.6 OPTIONAL PREPAYMENTS
Subject to Section 4.4, the Company may, at any time or from time to time,
by written notice delivered to the Agent at least three Business Days prior to
the proposed prepayment date in the case of Offshore Rate Loans, on the
proposed prepayment date in the case of Base Rate Loans, and on the proposed
prepayment date (which notice must be received by the Agent not later than 9:00
a.m. (San Francisco time)) in the case of Swingline Loans, (i) ratably prepay
Revolving Loans, in whole or in part, in minimum principal amounts of
$5,000,000 or any multiple of $1,000,000 in excess thereof, and (ii) prepay in
whole or in part Swingline Loans in minimum principal amounts of $250,000 or
any multiple of $100,000 in excess thereof, or in such other amounts with the
consent of the
37
<PAGE> 45
Swingline Bank. Such notice of prepayment shall specify (i) the date and
amount of such prepayment, (ii) whether such prepayment is of Base Rate Loans
or Offshore Rate Loans, or any combination thereof, and whether such Loans
constitute Swingline Loans or Revolving Loans, and (iii) if applicable, whether
such prepayment is of a Revolving Facility Tranche Loan or a Capital
Expenditure Tranche Loan, or both. Such notice shall not thereafter be
revocable by the Company and the Agent will promptly notify (i) in the case of
Revolving Loans, each Bank thereof and of such Bank's Pro Rata Share of such
prepayment, and (ii) in the case of Swingline Loans, the Swingline Bank thereof
and of the amount of such prepayment. If such notice is given by the Company,
the Company shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and any amounts
required pursuant to Section 4.4.
2.7 MANDATORY PREPAYMENTS OF LOANS; MANDATORY COMMITMENT REDUCTIONS
(a) Mandatory Prepayments.
(i) Asset Dispositions. If the Company or any of its
Restricted Subsidiaries shall at any time or from time to time make or agree to
make a sale of Properties permitted by subsection 8.2(i), or harvest excess
Timber permitted by Section 8.3, then (A) the Net Proceeds of such sale shall
either be paid pro rata by the Company as a prepayment of Qualified Debt or be
reinvested in accordance with subsection 8.2(i), or (B) the Net Proceeds from
such excess harvest shall either be paid pro-rata by the Company as a
prepayment of Qualified Debt or be reinvested in accordance with Section 8.3.
Prepayments to Banks under this subsection 2.7(a) shall be applied to repay the
outstanding principal amount of the Revolving Loans.
(ii) L/C Obligations. If on any date the Effective Amount of
L/C Obligations exceeds the L/C Commitment, the Company shall Cash
Collateralize on such date the outstanding Letters of Credit in an amount equal
to the excess of the Effective Amount of L/C Obligations over the L/C
Commitment. Subject to Section 4.4, if on any date after giving effect to any
Cash Collateralization made on such date pursuant to the preceding sentence,
the Effective Amount of all Revolving Loans, Swingline Loans, and L/C
Obligations exceeds the Aggregate Commitment, the Company shall immediately,
and without notice or demand, prepay the outstanding principal amount of the
Revolving Loans, Swingline Loans and L/C Advances by an amount equal to the
applicable excess.
(iii) Swingline Loans. The Company shall be required to
prepay Swingline Loans (A) if following any reduction of the Swingline
Commitment pursuant to subsection 2.7(b) the Effective Amount of Swingline
Loans would
38
<PAGE> 46
exceed the Swingline Commitment as reduced, the Company shall prepay on the
reduction date the Swingline Loans in an amount equal to the amount of such
excess, and (B) so that for one Business Day during each successive two
calendar week period the aggregate principal amount of Swingline Loans shall be
$0 (a "Swingline Clean-Up Day"), the Company shall prepay on the Swingline
Clean-Up Day the outstanding principal amount of the Swingline Loans (which
Swingline Loans may not be reborrowed until such Swingline Clean-Up Day has
ended).
(iv) Revolving Facility Tranche Loans. If the Company has
given a notice pursuant to Section 2.16 allocating all or a portion of the
Loans to the Revolving Facility Tranche, the Company shall cause, for a period
of at least 45 consecutive days during the 12 calendar month period after the
effective date of such notice and during each successive 12 calendar month
period prior to the Revolving Termination Date, no L/C Obligations to be
outstanding and the aggregate principal amount of Revolving Facility Tranche
Loans to be $0.
(b) Mandatory Commitment Reductions.
(i) The Aggregate Commitments shall be reduced from time to
time by the amount of any mandatory prepayment that would be required by
subsection 2.7(a)(i) if Revolving Loans were outstanding, whether or not any
Revolving Loans are outstanding at such time. Such reduction shall be applied
pro rata among the respective Commitments of the Banks and shall be effective
as of the earlier of the date that such prepayment is made or the date by which
such prepayment is (or would be) due and payable hereunder. All accrued
commitment fees to the effective date of any reduction or termination of the
Aggregate Commitment shall be paid on the effective date of such reduction or
termination.
(ii) No reduction in the Aggregate Commitment pursuant to
Section 2.5 or subsection 2.7(b)(i) shall reduce the L/C Commitment unless and
until the Aggregate Commitment has been reduced to $20,000,000; thereafter, any
reduction in the Aggregate Commitment pursuant to Section 2.5 shall equally
reduce the L/C Commitment.
(iii) At no time shall the Swingline Commitment exceed
the Aggregate Commitment, and any reduction of the Aggregate Commitment which
reduces the Aggregate Commitment below the then current amount of the Swingline
Commitment shall result in an automatic corresponding reduction of the
Swingline Commitment to the amount of the Aggregate Commitment, as so reduced,
without any action on the part of the Swingline Bank.
(c) General. Any prepayments of Loans pursuant to subsection
2.7(a) shall be applied first to any Base Rate Loans then outstanding, second
to Cash Collateralize or to prepay Swingline Loans as directed by the Swingline
Bank in its sole discretion, and third, at the Company's option, to Cash
Collateralize or to
39
<PAGE> 47
prepay in the inverse order of their stated maturity Offshore Rate Loans.
Subject to the foregoing and so long as no default or Event of Default shall
then exist, if applicable, any such prepayments shall be applied to Revolving
Facility Tranche Loans and Capital Expenditure Tranche Loans as directed by the
Company. The Company shall pay, together with each prepayment under this
Section 2.7, accrued interest on the amount prepaid and any amounts required
pursuant to Section 4.4.
2.8 REPAYMENT
(a) The Company shall repay to the Banks in full on the Revolving
Termination Date the Effective Amount of all Revolving Loans.
(b) The Company shall repay to the Swingline Bank in full on the
Revolving Termination Date the Effective Amount of all Swingline Loans.
2.9 INTEREST
(a) Subject to subsection 2.9(c): (i) each Loan (other than any
Swingline Loan) shall bear interest on the outstanding principal amount thereof
from the date when made until it becomes due at a rate per annum equal to the
Offshore Rate or the Base Rate, as the case may be, plus the Applicable Margin;
and (ii) each Swingline Loan shall bear interest on the principal amount
thereof from the date when made until it becomes due at a rate per annum equal
to the Base Rate plus the Applicable Margin or any other rate agreed to by the
Swingline Bank in its sole discretion.
(b) Interest on each Loan shall be paid in arrears on each
Interest Payment Date and in the case of a Swingline Loan bearing an interest
rate other than the Base Rate, on the date agreed to by the Swingline Bank in
its sole discretion. Interest shall also be paid on the date of any prepayment
of Loans pursuant to Section 2.6 and 2.7 for the portion of the Loans so
prepaid and upon payment (including prepayment) in full thereof and, during the
existence of any Event of Default, interest shall be paid on demand of the
Agent at the request or with the consent of the Majority Banks.
(c) While any Event of Default exists or after acceleration, the
Company shall pay interest (after as well as before entry of judgment thereon
to the extent permitted by law) on the principal amount of all Obligations due
and unpaid, at a rate per annum that is determined, in the case of Loans other
than Base Rate Loans, by adding 2% per annum to the Applicable Margin then in
effect for such Loans and, in the case of other Obligations, at a rate equal to
the Base Rate plus 2% per annum.
(d) Anything herein to the contrary notwithstanding, the
obligations of the Company hereunder shall be subject to the limitation that
payments of interest shall
40
<PAGE> 48
not be required, for any period for which interest is computed hereunder, to
the extent (but only to the extent) that contracting for or receiving such
payment by the respective Bank would be contrary to the provisions of any law
applicable to such Bank limiting the highest rate of interest which may be
lawfully contracted for, charged or received by such Bank, and in such event
the Company shall pay such Bank interest at the highest rate permitted by
applicable law.
2.10 SWINGLINE LOANS
(a) Subject to the terms and conditions hereof, the Swingline Bank
severally agrees to make a portion of the Aggregate Commitment available to the
Company by making swingline loans (individually, a "Swingline Loan";
collectively, the "Swingline Loans") to the Company on any Business Day during
the period from the Closing Date to the Revolving Termination Date in
accordance with the procedures set forth in this Section in an aggregate
principal amount at any one time outstanding not to exceed $25,000,000,
notwithstanding the fact that such Swingline Loans, when aggregated with the
Swingline Bank's outstanding Loans, may exceed the Swingline Bank's Commitment
(the amount of such commitment of the Swingline Bank to make Swingline Loans to
the Company pursuant to this subsection 2.10(a), as the same shall be reduced
pursuant to subsection 2.7(b) or as a result of any assignment pursuant to
Section 11.8, the Swingline Bank's "Swingline Commitment"); provided, that at
no time shall (i) the Effective Amount of all Revolving Loans, Swingline Loans
and L/C Obligations exceed the Aggregate Commitment, or (ii) the Effective
Amount of all Swingline Loans exceed the Swingline Commitment. Additionally,
no more than four Swingline Loans may be outstanding at any one time. Within
the foregoing limits, and subject to the other terms and conditions hereof, the
Company may borrow under this subsection 2.10(a), prepay pursuant to subsection
2.6 and reborrow pursuant to this subsection 2.10(a).
(b) The Company shall provide the Agent (with a copy to the
Swingline Bank) irrevocable written notice (including notice via facsimile
confirmed immediately by a telephone call) in the form of a Notice of Borrowing
of any Swingline Loan requested hereunder (which notice must be received by the
Swingline Bank and the Agent prior to 12:00 noon (San Francisco time) on the
requested Borrowing date) specifying (i) the amount to be borrowed, (ii) the
requested Borrowing date, which must be a Business Day, and (iii) with respect
to any requested Swingline Loan after the date the Company gives the notice
regarding allocation of Loans pursuant to Section 2.16, whether the requested
Swingline Loan shall be allocated to the Revolving Facility Tranche or the
Capital Expenditure Tranche. Upon receipt of the Notice of Borrowing, the
Swingline Bank will immediately confirm with the Agent (by telephone or in
writing) that the Agent has received a copy of the Notice of Borrowing from the
Company and, if not, the Swingline Bank will provide the Agent with a copy
thereof. Unless the
41
<PAGE> 49
Swingline Bank has received notice prior to 2:00 p.m. on such Borrowing date
from the Agent (A) directing the Swingline Bank not to make the requested
Swingline Loan as a result of the limitations set forth in the proviso set
forth in the first sentence of subsection 2.10(a); or (B) that one or more
conditions specified in Article V are not then satisfied; then, subject to the
terms and conditions hereof, the Swingline Bank will, not later than 3:00 p.m.
(San Francisco time) on the Borrowing date specified in such Notice, make the
amount of its Swingline Loan available to the Agent for the account of the
Company at the Agent's Payment Office in funds immediately available to the
Agent. The proceeds of such Swingline Loan will then promptly be made
available to the Company by the Agent crediting the account of the Company on
the books of BofA with the aggregate of the amounts made available to the Agent
by the Swingline Bank and in like funds as received by the Agent. Each
Borrowing pursuant to this Section shall be in an aggregate principal amount
equal to two hundred fifty thousand dollars ($250,000) or an integral multiple
of one hundred thousand dollars ($100,000) in excess thereof, unless otherwise
agreed by the Swingline Bank.
(c) If (i) any Swingline Loans shall remain outstanding at 9:00
a.m. (San Francisco time) on the Business Day immediately prior to a Swingline
Clean-Up Day and by such time on such Business Day the Agent shall have
received neither (A) a Notice of Borrowing delivered pursuant to Section 2.3
requesting that Revolving Loans be made pursuant to Section 2.1 on the
Swingline Clean-Up Day in an amount at least equal to the aggregate principal
amount of such Swingline Loans, nor (B) any other notice indicating the
Company's intent to repay such Swingline Loans with funds obtained from other
sources, or (ii) any Swingline Loans shall remain outstanding during the
existence of a Default or Event of Default and the Swingline Bank shall in its
sole discretion notify the Agent that the Swingline Bank desires that such
Swingline Loans be converted into Revolving Loans, then the Agent shall be
deemed to have received a Notice of Borrowing from the Company pursuant to
Section 2.3 requesting that Base Rate Loans be made pursuant to Section 2.1 on
such Swingline Clean-Up Day (in the case of the circumstances described in
clause (i) above) or on the first Business Day subsequent to the date of such
notice from the Swingline Bank (in the case of the circumstances described in
clause (ii) above) in an amount equal to the aggregate amount of such Swingline
Loans, and the procedures set forth in subsections 2.3(b) and 2.3(c) shall be
followed in making such Base Rate Loans; provided, that such Base Rate Loans
shall be made notwithstanding the Company's failure to comply with subsections
5.2(b) and 5.2(c); and provided, further, that if a Borrowing of Revolving
Loans becomes legally impracticable and if so required by the Swingline Bank at
the time such Revolving Loans are required to be made by the Banks in
accordance with this subsection 2.10(c), each Bank agrees that in lieu of
making Revolving Loans as described in this subsection 2.10(c), such Bank shall
purchase a participation from the Swingline Bank in the applicable Swingline
Loans in an amount equal to such Bank's Commitment Percentage of such Swingline
Loans,
42
<PAGE> 50
and the procedures set forth in subsections 11.8 shall be followed in
connection with the purchases of such participations. Upon such purchases of
participations, the prepayment requirements of subsection 2.7(a)(ii) shall be
deemed waived with respect to such Swingline Loans. The proceeds of such Base
Rate Loans, or participations purchased, shall be applied to repay such
Swingline Loans. A copy of each notice given by the Agent to the Banks
pursuant to this subsection 2.10(c) with respect to the making of Revolving
Loans, or the purchases of participations, shall be promptly delivered by the
Agent to the Company. Each Bank's obligation in accordance with this Agreement
to make the Revolving Loans, or purchase the participations, as contemplated by
this subsection 2.10(c), shall be absolute and unconditional and shall not be
affected by any circumstance, including (1) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against the
Swingline Bank, the Company or any other Person for any reason whatsoever; (2)
the occurrence or continuance of a Default, an Event of Default or a Material
Adverse Effect; or (3) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing.
2.11 FEES
In addition to certain fees described in Section 3.8:
(a) Agency Fees. The Company shall pay, to the extent not
previously paid, to BofA for BofA's own account fees in the amounts and at the
times set forth in a letter agreement between the Company, BofA and the
Arranger dated October 8, 1996. The foregoing fees shall be non-refundable.
(b) Commitment Fees. The Company shall pay to the Agent for the
account of each Bank a commitment fee on the average daily unused portion of
such Bank's Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Agent, equal to the Commitment Fee Percentage.
For purposes of calculating utilization under this subsection, (i) the
Aggregate Commitment shall be deemed used to the extent of the Effective Amount
of all Revolving Loans and L/C Obligations, and (ii) with respect to the
Commitment of the Swingline Bank, the making of any Swingline Loan shall not be
considered a use of a portion of such Swingline Bank's Commitment. Such
commitment fee shall accrue from the Closing Date to the Revolving Termination
Date and shall be due and payable quarterly in arrears on the last Business Day
of each calendar quarter, commencing on the first such day after this Agreement
is executed by the Company through the Revolving Termination Date, with the
final payment to be made on the Revolving Termination Date; provided that, in
connection with any reduction or termination of the Aggregate Commitment
pursuant to Section 2.5 or Section 2.7, the accrued commitment fee calculated
for the period ending on such date shall also be paid on the date of such
reduction or termination, with the next succeeding quarterly
43
<PAGE> 51
payment being calculated on the basis of the period from the reduction or
termination date to such quarterly payment date. The commitment fees provided
in this subsection shall accrue at all times after the above-mentioned
commencement date, including at any time during which one or more conditions in
Article V are not met.
2.12 COMPUTATION OF FEES AND INTEREST
(a) All computations of interest payable in respect of Base Rate
Loans at all times that the Base Rate is determined by BofA's "reference rate"
shall be made on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed. All other computations of fees and interest under
this Agreement shall be made on the basis of a 360-day year and actual days
elapsed, which results in more interest being paid than if computed on the
basis of a 365-day year. Interest and fees shall accrue during each period
during which interest or such fees are computed from the first day thereof to
the last day thereof.
(b) The Agent will, with reasonable promptness, notify the Company
and the Banks of each determination of an Offshore Rate; provided that any
failure to do so shall not relieve the Company of any liability hereunder or
provide the basis for any claim against the Agent. Any change in the interest
rate on a Loan resulting from a change in the Applicable Margin, Reserve
Percentage, Eurocurrency Reserve Percentage, or the Assessment Rate shall
become effective as of the opening of business on the day on which such change
in the Applicable Margin, Reserve Percentage, Eurocurrency Reserve Percentage,
or the Assessment Rate becomes effective. The Agent will with reasonable
promptness notify the Company and the Banks of the effective date and the
amount of each such change, provided that any failure to do so shall not
relieve the Company of any liability hereunder or provide the basis for any
claim against the Agent.
(c) Each determination of an interest rate by the Agent pursuant
hereto shall be conclusive and binding on the Company and the Banks in the
absence of manifest error.
2.13 PAYMENTS BY THE COMPANY
(a) All payments (including prepayments) to be made by the Company
on account of principal, interest, fees and other amounts required hereunder
shall be made without set-off, recoupment or counterclaim; shall, except as
otherwise expressly provided herein, be made to the Agent for the ratable
account of the Banks at the Agent's Payment Office, and shall be made in
dollars and in immediately available funds, no later than 10:00 a.m. (San
Francisco time) on the date specified herein. The Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such principal, interest, fees or other amounts,
in like funds as received. Any payment which is
44
<PAGE> 52
received by the Agent later than 10:00 a.m. (San Francisco time) shall be
deemed to have been received on the immediately succeeding Business Day and any
applicable interest or fee shall continue to accrue.
(b) Whenever any payment hereunder shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or fees, as the case may be; subject to
the provisions set forth in the definition of "Interest Period" herein.
(c) Unless the Agent shall have received notice from the Company
prior to the date on which any payment is due to the Banks hereunder that the
Company will not make such payment in full as and when required hereunder, the
Agent may assume that the Company has made such payment in full to the Agent on
such date in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, cause to be distributed to each
Bank on such due date an amount equal to the amount then due such Bank. If and
to the extent the Company shall not have made such payment in full to the
Agent, each Bank shall repay to the Agent on demand such amount distributed to
such Bank, together with interest thereon for each day from the date such
amount is distributed to such Bank until the date such Bank repays such amount
to the Agent, at the Federal Funds Rate as in effect for each such day.
2.14 PAYMENTS BY THE BANKS TO THE AGENT
(a) Unless the Agent shall have received notice from a Bank on the
Closing Date or, with respect to each Borrowing after the Closing Date, at
least one Business Day prior to the date of any proposed Borrowing, that such
Bank will not make available to the Agent as and when required hereunder for
the account of the Company the amount of that Bank's Commitment Percentage of
the Borrowing, the Agent may assume that each Bank has made such amount
available to the Agent in immediately available funds on the Borrowing date and
the Agent may (but shall not be so required), in reliance upon such assumption,
make available to the Company on such date a corresponding amount. If and to
the extent any Bank shall not have made its full amount available to the Agent
in immediately available funds and the Agent in such circumstances has made
available to the Company such amount, that Bank shall on the next Business Day
following the date of such Borrowing make such amount available to the Agent,
together with interest at the Federal Funds Rate for and determined as of each
day during such period. A notice of the Agent submitted to any Bank with
respect to amounts owing under this subsection 2.14(a) shall be conclusive,
absent manifest error. If such amount is so made available, such payment to
the Agent shall constitute such Bank's Loan on the date of such Borrowing for
all purposes of this Agreement. If such amount is not made available to the
Agent on the next Business Day following the date of
45
<PAGE> 53
such Borrowing, the Agent shall notify the Company of such failure to fund and,
upon demand by the Agent, the Company shall pay such amount to the Agent for
the Agent's account, together with interest thereon for each day elapsed since
the date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any date of
borrowing shall not relieve any other Bank of any obligation hereunder to make
a Loan on the date of such borrowing, but no Bank shall be responsible for the
failure of any other Bank to make the Loan to be made by such other Bank on the
date of any borrowing.
2.15 SHARING OF PAYMENTS, ETC.
If, other than as expressly provided elsewhere herein, any Bank
shall obtain on account of the Loans made by it any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Commitment Percentage of payments on account of the Loans
obtained by all the Banks, such Bank shall forthwith (a) notify the Agent of
such fact, and (b) purchase from the other Banks such participations in the
Loans made by them as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of them; provided, however, that if all or
any portion of such excess payment is thereafter recovered from the purchasing
Bank, such purchase shall to that extent be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price paid therefor, together with an
amount equal to such paying Bank's proportionate share (according to the
proportion of (i) the amount of such paying Bank's required repayment to (ii)
the total amount so recovered from the purchasing Bank) of any interest or
other amount paid or payable by the purchasing Bank in respect of the total
amount so recovered. The Company agrees that any Bank so purchasing a
participation from another Bank pursuant to this Section 2.15 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 11.9) with respect to such
participation as fully as if such Bank were the direct creditor of the Company
in the amount of such participation. The Agent will keep records (which shall
be conclusive and binding in the absence of manifest error) of participations
purchased pursuant to this Section 2.15 and will in each case notify the Banks
following any such purchases or repayments.
2.16 LOAN TRANCHES
The Company may, at any time and from time to time, upon at least
five Business Days notice to the Agent, allocate all or a portion of
Borrowings, including with respect to Swingline Loans and L/C Obligations, to a
revolving
46
<PAGE> 54
credit facility tranche (the "Revolving Facility Tranche") or a capital
expenditure tranche (the "Capital Expenditure Tranche"), or both; provided that
(A) at no time shall the Effective Amount of all Revolving Loans
and Swingline Loans allocated to the Revolving Facility Tranche plus the
Effective Amount of all L/C Obligations exceed $15,000,000;
(B) at no time shall the Effective Amount of all Revolving Loans
and Swingline Loans allocated to the Capital Expenditure Tranche exceed
$20,000,000;
(C) upon allocation to the Revolving Facility Tranche or the
Capital Expenditure Tranche, as case may be, Loans shall remain so allocated
notwithstanding any conversion or continuation of Loans pursuant to Section
2.3;
(D) the Company and each of the Banks agree that the establishment
of the Revolving Facility Tranche and the Capital Expenditure Tranche is
intended to assist the Company in its compliance with Section 8.5 and the
corresponding provisions of the Note Agreements, the 1994 Senior Note
Agreements and the Mortgage Note Agreements. Accordingly, neither the failure
by the Company to comply in any respect with this Section 2.16 nor the failure
by the Agent or any Bank to identify or remedy such noncompliance shall give
rise to any liability against the Agent or any Bank or any defense to
compliance by the Company with Section 8.5; and
(E) all Letters of Credit shall be deemed allocated to the
Revolving Facility Tranche.
Such notice of allocation shall specify (i) the effective date of
such allocation which shall not be a date earlier than the date of such notice,
(ii) the aggregate principal amount of Loans (identified by Type of Loan) and
L/C Obligations to be allocated to the Revolving Facility Tranche, the Capital
Expenditure Tranche, or both, as the case may be, and (iii) in the case of
allocations to the Capital Expenditure Tranche, the Company shall represent and
warrant that the proceeds of all Loans allocated thereto have been used solely
to finance capital improvements, expansions and additions to the Company's
property (including Timberlands), plant and equipment. The Agent will promptly
notify the Banks of such notice of allocation of Loans and L/C Obligations.
3. THE LETTERS OF CREDIT
3.1 THE LETTER OF CREDIT FACILITY
(a) On the terms and conditions set forth herein, (i) each Issuing
Bank agrees, (A) from time to time on any Business Day during the period from
the Closing Date until 30 days before the Revolving Termination Date to issue
Letters of Credit
47
<PAGE> 55
for the account of the Company or the Facilities Subsidiary, and to amend or
renew Letters of Credit previously issued by it, in accordance with subsections
3.2(c) and 3.2(d), and (B) to honor drafts under the Letters of Credit; and
(ii) the Banks severally agree to participate in Letters of Credit Issued for
the account of the Company or the Facilities Subsidiary; provided, that the
Issuing Banks shall not be obligated to Issue, and no Bank shall be obligated
to participate in, any Letter of Credit if as of the date of Issuance of such
Letter of Credit (the "Issuance Date") (1) the Effective Amount of all
Revolving Loans, Swingline Loans, and L/C Obligations exceeds the Aggregate
Commitment, (2) the Effective Amount of all Revolving Loans of such Bank plus
the participation of such Bank, if any, in the Effective Amount of all
Swingline Loans and L/C Obligations exceeds such Bank's Commitment, or (3) the
Effective Amount of L/C Obligations exceeds the L/C Commitment. Within the
foregoing limits, and subject to the other terms and conditions hereof, the
Company's ability to obtain Letters of Credit shall be fully revolving, and,
accordingly, the Company may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit which have expired or which have been drawn
upon and reimbursed. The Company shall be primarily liable for all obligations
hereunder and under the L/C-Related Documents with respect to any Letter of
Credit Issued for the account of the Facilities Subsidiary.
(b) Each of the Issuing Banks is under no obligation to Issue any
Letter of Credit if:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall by its terms purport to enjoin or restrain such
Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to such Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over
such Issuing Bank shall prohibit, or request that such Issuing Bank refrain
from, the Issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Issuing Bank with respect to such Letter
of Credit any restriction, reserve or capital requirement (for which such
Issuing Bank is not otherwise compensated hereunder) not in effect on the
Closing Date, or shall impose upon such Issuing Bank any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which such
Issuing Bank in good faith deems material to it;
(ii) such Issuing Bank has received written notice from
any Bank, the Agent or the Company, on or prior to the Business Day prior to
the requested date of Issuance of such Letter of Credit, that one or more of
the applicable conditions contained in Article V is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is
(A) more than one year after the date of Issuance, unless the Majority Banks
have approved such
48
<PAGE> 56
expiry date in writing, or (B) after the Revolving Termination Date, unless all
of the Banks have approved such expiry date in writing;
(iv) the expiry date of any requested Letter of Credit is
prior to the maturity date of any financial obligation to be supported by the
requested Letter of Credit, unless such Letter of Credit is issued in
connection with worker's compensation or to secure self- insurance deductibles
or certain payments required in connection with export log yards, or all of the
Banks have approved such expiry date in writing;
(v) any requested Letter of Credit does not provide for
drafts, or is not otherwise in form and substance reasonably acceptable to such
Issuing Bank, or the Issuance of a Letter of Credit may violate any policies of
such Issuing Bank applicable to customers and credits of a type similar to the
Company and the transactions contemplated in this Agreement;
(vi) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person;
(vii) such Letter of Credit is in a face amount less than
$100,000 or to be denominated in a currency other than Dollars; or
(viii) the requested Letter of Credit provides for payment
thereunder sooner than the Business Day following the presentation to such
Issuing Bank of the documentation required thereunder.
3.2 ISSUANCE, AMENDMENT AND RENEWAL OF LETTERS OF CREDIT
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Company (or, if such Letter of Credit is to be for the
account of the Facilities Subsidiary, the joint and several irrevocable written
request of the Company and the applicable Facilities Subsidiary) received by an
Issuing Bank (with a copy sent by the Company to the Agent) at least five days
(or such shorter time as such Issuing Bank may agree in a particular instance
in its sole discretion) prior to the proposed date of issuance. Each such
request for issuance of a Letter of Credit shall be made by an original writing
or by facsimile, confirmed immediately in an original writing, in the form of
an L/C Application, and shall specify in form and detail satisfactory to such
Issuing Bank:
(i) the proposed date of issuance of the Letter of Credit
(which shall be a Business Day);
(ii) the face amount of the Letter of Credit;
(iii) the expiry date of the Letter of Credit;
49
<PAGE> 57
(iv) the name and address of the beneficiary thereof;
(v) the documents to be presented by the beneficiary of
the Letter of Credit in case of any drawing thereunder;
(vi) the full text of any certificate to be presented by
the beneficiary in case of any drawing thereunder; and
(vii) such other usual and customary matters as the Issuing
Bank may require.
(b) At least three Business Days prior to the Issuance of any
Letter of Credit or any amendment or renewal of a Letter of Credit, the Issuing
Bank issuing such Letter of Credit will confirm with the Agent (by telephone or
in writing) that the Agent has received a copy of the L/C Application or L/C
Amendment Application from the Company and, if not, such Issuing Bank will
provide the Agent with a copy thereof. Unless such Issuing Bank has received
notice on or before the Business Day immediately preceding the date such
Issuing Bank is to issue, amend or renew a requested Letter of Credit from the
Agent (A) directing such Issuing Bank not to issue, amend or renew such Letter
of Credit because such issuance amendment or renewal is not then permitted
under subsection 3.1(a) as a result of the limitations set forth in clauses (1)
through (3) thereof or subsection 3.1(b)(ii); or (B) that one or more
conditions specified in Article V are not then satisfied; then, subject to the
terms and conditions hereof, such Issuing Bank shall, on the requested date,
issue a Letter of Credit for the account of the Company or amend or renew a
Letter of Credit, as the case may be, in accordance with such Issuing Bank's
usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, an Issuing Bank shall, upon the
written request of the Company received by such Issuing Bank (with a copy sent
by the Company to the Agent) at least five days (or such shorter time as such
Issuing Bank may agree in a particular instance in its sole discretion) prior
to the proposed date of amendment, amend any Letter of Credit issued by it.
Each such request for amendment of a Letter of Credit shall be made by an
original writing or by facsimile, confirmed immediately in an original writing,
made in the form of an L/C Amendment Application and shall specify in form and
detail satisfactory to such Issuing Bank:
(i) the Letter of Credit to be amended;
(ii) the proposed date of amendment of the Letter of
Credit (which shall be a Business Day);
(iii) the nature of the proposed amendment; and
50
<PAGE> 58
(iv) such other usual and customary matters as such
Issuing Bank may require.
Such Issuing Bank shall be under no obligation to amend any Letter of Credit
if: (A) such Issuing Bank would have no obligation at such time to issue such
Letter of Credit in its amended form under the terms of this Agreement; or (B)
the beneficiary of any such letter of Credit does not accept the proposed
amendment to the Letter of Credit. The Agent will promptly notify the Banks of
the receipt by it of any L/C Application or L/C Amendment Application.
(d) Each Issuing Bank and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Revolving Termination Date, at the
option of the Company and upon the written request of the Company received by
an Issuing Bank (with a copy sent by the Company to the Agent) at least five
days (or such shorter time as such Issuing Bank may agree in a particular
instance in its sole discretion) prior to the proposed date of notification of
renewal, such Issuing Bank shall be entitled to authorize the automatic renewal
of any Letter of Credit issued by it. Each such request for renewal of a
Letter of Credit shall be made by an original writing or by facsimile,
confirmed immediately in an original writing, in the form of an L/C Amendment
Application, and shall specify in form and detail satisfactory to such Issuing
Bank:
(i) the Letter of Credit to be renewed;
(ii) the proposed date of notification of renewal of the
Letter of Credit (which shall be a Business Day);
(iii) the revised expiry date of the Letter of Credit; and
(iv) such other usual and customary matters as the Issuing
Bank may require.
Such Issuing Bank shall be under no obligation so to renew any Letter of Credit
if: (A) such Issuing Bank would have no obligation at such time to issue or
amend such Letter of Credit in its renewed form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed renewal of the Letter of Credit. If any outstanding Letter of
Credit shall provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from such Issuing Bank that such Letter of
Credit shall not be renewed, and if at the time of renewal such Issuing Bank
would be entitled to authorize the automatic renewal of such Letter of Credit
in accordance with this subsection 3.2(d) upon the request of the Company but
such Issuing Bank shall not have received any L/C Amendment Application from
the Company with respect to such renewal or other written direction by the
Company with respect thereto, such Issuing Bank shall nonetheless be permitted
to allow such Letter of Credit to renew, and the Company
51
<PAGE> 59
and the Banks hereby authorize such renewal, and, accordingly, such Issuing
Bank shall be deemed to have received an L/C Amendment Application from the
Company requesting such renewal.
(e) In connection with Letters of Credit that automatically renew
or extend their expiry date, each Issuing Bank may, at its election (or as
required by the Agent at the direction of the Majority Banks), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the Revolving
Termination Date.
(f) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
(g) Each Issuing Bank will also deliver to the Agent, concurrently
or promptly following its delivery of a Letter of Credit, or amendment to or
renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and
complete copy of each such Letter of Credit or amendment to or renewal of a
Letter of Credit.
(h) Each Issuing Bank shall deliver to the Agent such reports with
respect to the Letters of Credit as the Agent may reasonably request from time
to time.
3.3 RISK PARTICIPATIONS, DRAWINGS AND REIMBURSEMENTS
(a) Immediately upon the Issuance of each Letter of Credit, each
Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Bank issuing such Letter of Credit a participation in
such Letter of Credit and each drawing thereunder in an amount equal to the
product of (i) the Commitment Percentage of such Bank, times (ii) the maximum
amount available to be drawn under such Letter of Credit and the amount of such
drawing, respectively. For purposes of Section 2.1, each Issuance of a Letter
of Credit shall be deemed to utilize the Commitment of each Bank by an amount
equal to the amount of such participation.
(b) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank which issued
such Letter of Credit will promptly notify the Company. The Company shall
reimburse such Issuing Bank, directly or with the proceeds of a Loan, prior to
10:00 a.m. (San Francisco time), on each date that any amount is paid by such
Issuing Bank under any Letter of Credit (each such date, an "Honor Date"), in
an amount equal to the amount so paid by such Issuing Bank. If the Company
fails to reimburse such Issuing Bank for the full amount of any drawing under
any Letter of Credit by 10:00 a.m. (San Francisco time) on the Honor Date, such
Issuing Bank will promptly notify the Agent and the Agent will promptly notify
each Bank thereof,
52
<PAGE> 60
and the Company shall be deemed to have requested that Base Rate Loans be made
by the Banks to be disbursed on the Honor Date under such Letter of Credit,
subject to the aggregate amount of the un-utilized portion of the Aggregate
Commitment and subject to the conditions set forth in Section 5.2. Any notice
given by such Issuing Bank or the Agent pursuant to this subsection 3.3(b) may
be oral if immediately confirmed in writing (including by facsimile); provided
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
(c) Each Bank shall upon any notice pursuant to subsection 3.3(b)
make available to the Agent for the account of the relevant Issuing Bank an
amount in Dollars and in immediately available funds equal to its Commitment
Percentage of the amount of the drawing, whereupon the participating Banks
shall (subject to subsection 3.3(d)) each be deemed to have made a Loan
consisting of a Base Rate Loan to the Company in that amount. If any Bank so
notified fails to make available to the Agent for the account of such Issuing
Bank the amount of such Bank's Commitment Percentage of the amount of the
drawing by no later than 12:00 noon (San Francisco time) on the Honor Date,
then interest shall accrue on such Bank's obligation to make such payment, from
the Honor Date to the date such Bank makes such payment, at a rate per annum
equal to the Federal Funds Rate in effect from time to time during such period.
The Agent will promptly give notice of the occurrence of the Honor Date, but
failure of the Agent to give any such notice on the Honor Date or in sufficient
time to enable any Bank to effect such payment on such date shall not relieve
such Bank from its obligations under this Section 3.3.
(d) With respect to any unreimbursed drawing that is not converted
into Loans consisting of Base Rate Loans to the Company in whole or in part,
because of the Company's failure to satisfy the conditions set forth in Section
5.2 or for any other reason, the Company shall be deemed to have incurred from
the relevant Issuing Bank an L/C Borrowing in the amount of such drawing, which
L/C Borrowing shall be due and payable on demand (together with interest) and
shall bear interest at a rate per annum equal to the Base Rate plus 2% per
annum, and each Bank's payment to such Issuing Bank pursuant to subsection
3.3(c) shall be deemed payment in respect of its participation in such L/C
Borrowing and shall constitute an L/C Advance from such Bank in satisfaction of
its participation obligation under this Section 3.3.
(e) Each Bank's obligation in accordance with this Agreement to
make the Loans or L/C Advances, as contemplated by this Section 3.3, as a
result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the relevant Issuing Bank and shall not
be affected by any circumstance, including (i) any set-off, counterclaim,
recoupment, defense or other right which such Bank may have against such
Issuing Bank, the Company or any
53
<PAGE> 61
other Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default, an Event of Default or a Material Adverse Effect; or (iii) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; provided, however, that each Bank's obligation to make Revolving
Loans under this Section 3.3 is subject to the conditions set forth in Section
5.2.
3.4 REPAYMENT OF PARTICIPATIONS
(a) Upon (and only upon) receipt by the Agent for the account of
an Issuing Bank of immediately available funds from the Company (i) in
reimbursement of any payment made by such Issuing Bank under the Letter of
Credit with respect to which any Bank has paid the Agent for the account of
such Issuing Bank for such Bank's participation in the Letter of Credit
pursuant to Section 3.3 or (ii) in payment of interest thereon, the Agent will
pay to each Bank, in the same funds as those received by the Agent for the
account of such Issuing Bank, the amount of such Bank's Commitment Percentage
of such funds, and such Issuing Bank shall receive the amount of the Commitment
Percentage of such funds of any Bank that did not so pay the Agent for the
account of such Issuing Bank.
(b) If the Agent or an Issuing Bank is required at any time to
return to the Company, or to a trustee, receiver, liquidator, custodian, or any
official in any Insolvency Proceeding, any portion of the payments made by the
Company to the Agent for the account of such Issuing Bank pursuant to
subsection 3.4(a) in reimbursement of a payment made under the Letter of Credit
or interest or fee thereon, each Bank shall, on demand of the Agent, forthwith
return to the Agent or such Issuing Bank the amount of its Commitment
Percentage of any amounts so returned by the Agent or such Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Bank to the Agent or such Issuing Bank, at a rate per annum
equal to the Federal Funds Rate in effect from time to time.
3.5 ROLE OF THE ISSUING BANK
(a) Each Bank and the Company agree that, in paying any drawing
under a Letter of Credit, each of the Issuing Banks shall not have any
responsibility to obtain any document (other than any sight draft and
certificates expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.
(b) No Agent-Related Person, the Senior Co-Agent, nor any of the
respective correspondents, participants or assignees of the Issuing Banks shall
be liable to any Bank for: (i) any action taken or omitted in connection
herewith at the request or with the approval of the Banks (including the
Majority Banks, as applicable); (ii) any action taken or omitted in the absence
of gross negligence or willful
54
<PAGE> 62
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Company hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; provided, however, that this assumption is not intended to, and shall
not, preclude the Company's pursuing such rights and remedies as it may have
against the beneficiary or transferee at law or under any other agreement. No
Agent-Related Person, the Senior Co- Agent, nor any of the respective
correspondents, participants or assignees of an Issuing Bank, shall be liable
or responsible for any of the matters described in clauses (i) through (vii) of
Section 3.6; provided, however, anything in such clauses to the contrary
notwithstanding, that the Company may have a claim against an Issuing Bank, and
such Issuing Bank may be liable to the Company, to the extent, but only to the
extent, of any direct, as opposed to consequential or exemplary, damages
suffered by the Company which the Company proves were caused by such Issuing
Bank's willful misconduct or gross negligence or such Issuing Bank's willful or
grossly negligent failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing: (i) each Issuing Bank may
accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary; and (ii) such Issuing Bank shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.
3.6 OBLIGATIONS ABSOLUTE
The obligations of the Company under this Agreement and any
L/C-Related Document to reimburse each Issuing Bank for a drawing under a
Letter of Credit, and to repay any L/C Borrowing and any drawing under a Letter
of Credit converted into Loans shall be unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement and each
such other L/C-Related Document under all circumstances, including the
following:
(i) any lack of validity or enforceability of this Agreement or
any L/C-Related Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Company in respect of
any Letter of Credit or any other amendment or waiver of or any consent to
departure from all or any of the L/C-Related Documents;
55
<PAGE> 63
(iii) the existence of any claim, set-off, defense or other right
that the Company may have at any time against any beneficiary or any transferee
of any Letter of Credit (or any Person for whom any such beneficiary or any
such transferee may be acting), the Issuing Banks or any other Person, whether
in connection with this Agreement, the transactions contemplated hereby or by
the L/C-Related Documents or any unrelated transaction;
(iv) any draft, demand, certificate or other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect; or any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any Letter of Credit;
(v) any payment by an Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of any Letter of Credit; or any payment made by such Issuing
Bank under any Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of any Letter of Credit, including any arising in connection
with any Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral, or
any release or amendment or waiver of or consent to departure from any other
guarantee, for all or any of the obligations of the Company in respect of any
Letter of Credit; or
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that might
otherwise constitute a defense available to, or a discharge of, the Company or
a guarantor.
3.7 CASH COLLATERAL PLEDGE
Upon (i) the request of the Agent, (A) if an Issuing Bank has honored
any full or partial drawing request on any Letter of Credit and such drawing
has resulted in an L/C Borrowing hereunder, or (B) if, as of the Revolving
Termination Date, any Letters of Credit may for any reason remain outstanding
and partially or wholly undrawn, or (ii) the occurrence of the circumstances
described in subsection 2.7(a) requiring the Company to Cash Collateralize
Letters of Credit, then, the Company shall immediately Cash Collateralize the
L/C Obligations in an amount equal to the L/C Obligations. The Company hereby
grants to the Agent, for the benefit of the Agent, the Issuing Banks and the
Banks, a security interest in all such cash and deposit account balances used
to Cash Collateralize the Company's obligations hereunder.
56
<PAGE> 64
3.8 Letter of Credit Fees
(a) The Company shall pay to the Agent for the account of each of
the Banks a letter of credit fee with respect to the Letters of Credit on the
average daily maximum amount available to be drawn of the outstanding Letters
of Credit, computed on a quarterly basis in arrears on the last Business Day of
each calendar quarter based upon Letters of Credit outstanding for that quarter
as calculated by the Agent, equal to the Letter of Credit Rate. Such letter of
credit fees shall be due and payable quarterly in arrears on the last Business
Day of each calendar quarter during which Letters of Credit are outstanding,
commencing on the first such quarterly date to occur after the Closing Date,
through the Revolving Termination Date (or such later date upon which the
outstanding Letters of Credit shall expire), with the final payment to be made
on the Revolving Termination Date (or such later expiration date).
(b) The Company shall pay to the Agent for the account of each
Issuing Bank a letter of credit fronting fee per annum with respect to the
outstanding Letters of Credit issued by such Issuing Bank equal to 0.125% per
annum of the average daily maximum amount available to be drawn under such
outstanding Letters of Credit, computed on a quarterly basis in arrears on the
last Business Day of each calendar quarter based upon Letters of Credit issued
by such Issuing Bank outstanding for that quarter as calculated by the Agent.
Such fronting fees shall be calculated on the basis of a 360-day year and
actual days elapsed and shall be due and payable quarterly in arrears on the
last Business Day of each calendar quarter during which Letters of Credit are
outstanding, commencing on the first such quarterly date to occur after the
Closing Date, through the Revolving Termination Date (or such later date upon
which the outstanding Letters of Credit shall expire), with the final payment
to be made on the Revolving Termination Date (or such later expiration date).
(c) The Company shall pay to each Issuing Bank from time to time
on demand the normal issuance, presentation, amendment and other processing
fees, and other standard costs and charges, of such Issuing Bank relating to
letters of credit as from time to time in effect.
3.9 UNIFORM CUSTOMS AND PRACTICE
The Uniform Customs and Practice for Documentary Credits as published
by the International Chamber of Commerce ("UCP") most recently at the time of
issuance of any Letter of Credit shall (unless otherwise expressly provided in
the Letters of Credit) apply to the Letters of Credit.
57
<PAGE> 65
4. Taxes, Yield Protection And Illegality
4.1 TAXES
(a) Subject to subsection 4.1(g), any and all payments by the
Company to each Bank or the Agent under this Agreement shall be made free and
clear of, and without deduction or withholding for, any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Bank and the
Agent, such taxes (including income taxes or franchise taxes) as are imposed on
or measured by each Bank's net income by the jurisdiction under the laws of
which such Bank or the Agent, as the case may be, is organized or maintains a
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes").
(b) In addition, the Company shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents (hereinafter referred to as "Other Taxes").
(c) Subject to subsection 4.1(g), the Company shall indemnify and
hold harmless each Bank and the Agent for the full amount of Taxes or Other
Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 4.1) paid by the Bank or the Agent and any
liability (including penalties, interest, additions to tax and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. Payment under this indemnification
shall be made within 30 days from the date the Bank or the Agent makes written
demand therefor. Each Bank and the Agent, severally with respect to the
amounts received by it from the Company as indemnification under this
subsection 4.1(c), agrees upon the request of the Company and at the Company's
expense, to use commercially reasonable efforts to obtain a refund of any Taxes
or Other Taxes for which it received indemnification hereunder if such Taxes or
Other Taxes were incorrectly or illegally asserted.
(d) If the Company shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or the Agent, then, subject to subsection 4.1(g):
(i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 4.1) such Bank or the Agent, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions been made;
58
<PAGE> 66
(ii) the Company shall make such deductions; and
(iii) the Company shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(e) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(f) Each Bank which is a foreign person (i.e., a person other than
a United States person for United States Federal income tax purposes) agrees
that:
(i) it shall, no later than the Closing Date (or, in the
case of a Bank which becomes a party hereto pursuant to Section 11.8 after the
Closing Date, the date upon which the Bank becomes a party hereto) deliver to
the Company through the Agent two accurate and complete signed originals of
Internal Revenue Service Form 4224 or any successor thereto ("Form 4224"), or
two accurate and complete signed originals of Internal Revenue Service Form
1001 or any successor thereto ("Form 1001"), as appropriate, in each case
indicating that the Bank is on the date of delivery thereof entitled to receive
payments of principal, interest and fees under this Agreement free from
withholding of United States Federal income tax;
(ii) if at any time the Bank makes any changes
necessitating a new Form 4224 or Form 1001, it shall with reasonable promptness
deliver to the Company through the Agent in replacement for, or in addition to,
the forms previously delivered by it hereunder, two accurate and complete
signed originals of Form 4224; or two accurate and complete signed originals of
Form 1001, as appropriate, in each case indicating that the Bank is on the date
of delivery thereof entitled to receive payments of principal, interest and
fees under this Agreement free from withholding of United States Federal income
tax;
(iii) it shall, before or promptly after the occurrence of
any event (including the passing of time but excluding any event mentioned in
(ii) above) requiring a change in or renewal of the most recent Form 4224 or
Form 1001 previously delivered by such Bank, deliver to the Company through the
Agent two accurate and complete original signed copies of Form 4224 or Form
1001 in replacement for the forms previously delivered by the Bank; and
(iv) it shall, promptly upon the Company's or the Agent's
reasonable request to that effect, deliver to the Company or the Agent (as the
case may be) such other forms or similar documentation as may be required from
time to time by any applicable law, treaty, rule or regulation in order to
establish such Bank's tax status for withholding purposes.
59
<PAGE> 67
(g) The Company will not be required to pay any additional amounts
in respect of United States Federal income tax pursuant to subsection 4.1(d),
subsection 4.1(a) or subsection 4.1(c) to any Bank for the account of any
Lending Office of such Bank:
(i) if the obligation to pay such additional amounts
would not have arisen but for a failure by such Bank to comply with its
obligations under subsection 4.1(f) in respect of such Lending Office;
(ii) if such Bank shall have delivered to the Company a
Form 4224 in respect of such Lending Office pursuant to subsection 4.1(f), and
such Bank shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by the
Company hereunder for the account of such Lending Office for any reason other
than a change in United States law or regulations or in the official
interpretation of such law or regulations by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form 4224; or
(iii) if the Bank shall have delivered to the Company a
Form 1001 in respect of such Lending Office pursuant to subsection 4.1(f), and
such Bank shall not at any time be entitled to exemption from deduction or
withholding of United States Federal income tax in respect of payments by the
Company hereunder for the account of such Lending Office for any reason other
than a change in United States law or regulations or any applicable tax treaty
or regulations or in the official interpretation of any such law, treaty or
regulations by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the date
of delivery of such Form 1001.
(h) If, at any time, the Company requests any Bank to deliver any
forms or other documentation pursuant to subsection 4.1(f)(iv), then the
Company shall, on demand of such Bank through the Agent, reimburse such Bank
for any costs and expenses (including Attorney Costs) reasonably incurred by
such Bank in the preparation or delivery of such forms or other documentation.
(i) If the Company is required to pay additional amounts to any
Bank or the Agent pursuant to subsection 4.1(d), then such Bank shall use its
reasonable best efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue if such change in
the judgment of such Bank is not otherwise disadvantageous to such Bank.
60
<PAGE> 68
4.2 ILLEGALITY
(a) If any Bank shall determine that the introduction of any
Requirement of Law, or any change in any Requirement of Law or in the
interpretation or administration thereof, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its Lending Office to make Offshore Rate Loans, then, on notice
thereof by the Bank to the Company through the Agent, the obligation of that
Bank to make Offshore Rate Loans shall be suspended until the Bank shall have
notified the Agent and the Company that the circumstances giving rise to such
determination no longer exist.
(b) If a Bank shall determine that it is unlawful to maintain any
Offshore Rate Loan, the Company shall prepay in full all Offshore Rate Loans of
that Bank then outstanding, together with interest accrued thereon, either on
the last day of the Interest Period thereof if the Bank may lawfully continue
to maintain such Offshore Rate Loans to such day, or immediately, if the Bank
may not lawfully continue to maintain such Offshore Rate Loans, together with
any amounts required to be paid in connection therewith pursuant to Section
4.4. If the Company is required to so prepay any Offshore Rate Loan, then
concurrently with such prepayment, the Company may borrow from the affected
Bank, in the amount of such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore
Rate Loans has been so terminated or suspended, the Company may elect, by
giving notice to the Bank through the Agent that all Loans which would
otherwise be made by the Bank as Offshore Rate Loans shall be instead Base Rate
Loans.
(d) Before giving any notice to the Agent under this Section, the
affected Bank shall designate a different Lending Office with respect to its
Offshore Rate Loans if such designation will avoid the need for giving such
notice or making such demand and will not, in the judgment of the Bank, be
illegal or otherwise disadvantageous to the Bank.
4.3 INCREASED COSTS AND REDUCTION OF RETURN
(a) If any Bank shall determine that, due to either (i) the
introduction of or any change after the date hereof (other than any change by
way of imposition of or increase in reserve requirements included in the
calculation of the Offshore Rate or in respect of the assessment rate payable
by any Bank to the FDIC for insuring U.S. deposits) in or in the interpretation
of any law or regulation or (ii) the compliance with any guideline or request
from any central bank or other Governmental Authority (whether or not having
the force of law), there shall be any increase in the cost to such Bank of
agreeing to make or making, funding or maintaining any Offshore Rate Loans or
participating in Letters of Credit, or, in the case of an Issuing Bank, any
increase in the cost to such Issuing Bank of agreeing to issue,
61
<PAGE> 69
issuing or maintaining any Letter of Credit or of agreeing to make or making,
funding or maintaining any unpaid drawing under any Letter of Credit, then the
Company shall be liable for, and shall from time to time, upon demand therefor
by such Bank (with a copy of such demand to the Agent), pay to the Agent for
the account of such Bank, additional amounts as are sufficient to compensate
such Bank for such increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation after the date hereof, (ii) any change in any
Capital Adequacy Regulation after the date hereof, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof after the date hereof, or (iv) compliance by the Bank
(or its Lending Office) or any corporation controlling the Bank, with any
Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation
controlling the Bank and (taking into consideration such Bank's or such
corporation's policies with respect to capital adequacy and such Bank's desired
return on capital) determines that the amount of such capital is increased as a
consequence of its Commitment, loans, credits or obligations under this
Agreement, then, upon demand of such Bank (with a copy to the Agent), the
Company shall upon demand pay to the Bank, from time to time as specified by
the Bank, additional amounts sufficient to compensate the Bank for such
increase.
4.4 FUNDING LOSSES
The Company agrees to reimburse each Bank and to hold each Bank
harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Company to make any payment or mandatory
prepayment of principal of any Offshore Rate Loan (including payments made
after any acceleration thereof);
(b) the failure of the Company to borrow, continue or convert a
Loan after the Company has given (or is deemed to have given) a Notice of
Borrowing or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment of any Loan
after the Company has given a notice in accordance with Section 2.6;
(d) the prepayment (including pursuant to Section 2.6 or 2.7) of
an Offshore Rate Loan on a day which is not the last day of the Interest Period
with respect thereto; or
(e) the conversion pursuant to Section 2.4 of any Offshore Rate
Loan to a Base Rate Loan on a day that is not the last day of the respective
Interest Period;
62
<PAGE> 70
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans hereunder or from
fees payable to terminate the deposits from which such funds were obtained.
4.5 INABILITY TO DETERMINE RATES
If the Majority Banks shall have determined that for any reason
adequate and reasonable means do not exist for ascertaining the Offshore Rate
for any requested Interest Period with respect to a proposed Offshore Rate Loan
or that the Offshore Rate applicable pursuant to subsection 2.9(a) for any
requested Interest Period with respect to a proposed Offshore Rate Loan does
not adequately and fairly reflect the cost to such Banks of funding such Loan,
the Agent will forthwith give notice of such determination to the Company and
each Bank. Thereafter, the obligation of the Banks to make or maintain
Offshore Rate Loans, as the case may be, hereunder shall be suspended until the
Agent upon the instruction of the Majority Banks revokes such notice in
writing. Upon receipt of such notice, the Company may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Company does not revoke such notice, the Banks shall make, convert or continue
the Loans, as proposed by the Company, in the amount specified in the
applicable notice submitted by the Company, but such Loans shall be made,
converted or continued as Base Rate Loans instead of Offshore Rate Loans.
4.6 CERTIFICATE OF BANK
Each Bank, if claiming reimbursement or compensation pursuant to this
Article IV, shall deliver to the Company, a certificate setting forth in
reasonable detail the amount payable to such Bank hereunder and such
certificate shall be conclusive and binding on the Company in the absence of
manifest error.
4.7 SURVIVAL
The covenants, agreements and obligations of the Company in this
Article IV shall survive the payment of all other Obligations.
5. CONDITIONS PRECEDENT
5.1 CONDITIONS OF INITIAL CREDIT EXTENSIONS
The obligation of each Bank to make its initial Credit Extension
hereunder is subject to the condition that the Agent shall have received on or
before the Closing Date all of the following, in form and substance
satisfactory to the Agent and, as to the items referenced in subsection 5.1(h)
and (i), the Majority Banks, and in sufficient copies for each Bank:
63
<PAGE> 71
(a) Revolving Credit Agreement. This Agreement executed by the
Company, the Agent, the Senior Co-Agent and each of the Banks;
(b) Resolutions; Incumbency.
(i) Copies of the resolutions of the board of directors
of the PC Advisory General Partner, as general partner of the PCMC General
Partner, as general partner of the General Partner, as general partner of the
Company, approving and authorizing the execution, delivery and performance by
such entities on behalf of the Company of this Agreement and the other Loan
Documents to be delivered hereunder, and authorizing the borrowing of the
Loans, certified as of the Closing Date by the Secretary or an Assistant
Secretary of the PC Advisory General Partner; and
(ii) A certificate of the Secretary or Assistant Secretary
of the PC Advisory General Partner certifying that the certificate delivered at
the closing of the Existing Credit Agreement with respect to the names and true
signatures of the duly authorized officers of the General Partner, as general
partner of the Company, authorized to execute, deliver and perform, as
applicable, this Agreement on behalf of the Company, and all other Loan
Documents to be delivered hereunder, remains in each case true and correct as
of the Closing Date;
(c) Articles of Incorporation; By-laws; Partnership Documents and
Good Standing. Each of the following documents:
(i) the partnership certificate of each of the Company,
the General Partner, and the PCMC General Partner as in effect on the Closing
Date, certified by the Secretary of State (or similar, applicable Governmental
Authority) of the state of formation of such entities as of a recent date, and
a certificate of the Secretary or Assistant Secretary of the PC Advisory
General Partner confirming that the certified copies of the partnership
agreement of each of the Company, the General Partner, and the PCMC General
Partner delivered at the closing of the Existing Credit Agreement remain true,
correct, and complete as of the Closing Date;
(ii) a certificate of the Secretary or Assistant Secretary
of the PC Advisory General Partner confirming that the certified copies of the
articles or certificate of incorporation of the PC Advisory General Partner and
the bylaws of the PC Advisory General Partner delivered at the closing of the
Existing Credit Agreement remain true, correct, and complete as of the Closing
Date; and
(iii) a good standing certificate for each of the Company,
the General Partner, the PCMC General Partner, and the PC Advisory General
Partner from the Secretary of State (or similar, applicable Governmental
Authority) of its state of incorporation or formation, as applicable as of a
recent date;
64
<PAGE> 72
(d) Legal Opinions. An opinion of (i) James A. Kraft, Vice
President, General Counsel and Secretary of the Company and (ii) Perkins Coie,
counsel to the Company, each addressed to the Agent and the Banks and
substantially in the form of Exhibits C-1 and C-2, respectively;
(e) Payment of Fees. The Company shall have paid all accrued and
unpaid fees, costs and expenses to the extent then due and payable on the
Closing Date, together with Attorney Costs of BofA to the extent invoiced prior
to or on the Closing Date, together with such additional amounts of Attorney
Costs as shall constitute BofA's reasonable estimate of Attorney Costs incurred
or to be incurred through the closing proceedings, provided that such estimate
shall not thereafter preclude final settling of accounts between the Company
and BofA; including any such costs, fees and expenses arising under or
referenced in Sections 2.11, 4.1 and 11.4;
(f) Certificate. A certificate signed by a Responsible Officer,
dated as of the Closing Date, stating that:
(i) the representations and warranties contained in
Article VI are true and correct on and as of such date, as though made on and
as of such date;
(ii) no Default or Event of Default exists or would result
from the initial Credit Extension; and
(iii) there has not occurred or existed since December 31,
1995 any event or circumstance that has resulted or could reasonably be
expected to result in a Material Adverse Effect;
(g) Credit Agreements. A certificate of a Responsible Officer
attaching a true, correct, and complete copy of the 1996 Senior Note Agreement
and confirming that the certified copies of the Note Agreements, the Mortgage
Note Agreements, and the 1994 Senior Note Agreements delivered at the closing
of the Existing Credit Agreement remain true, correct, and complete as of the
Closing Date;
(h) Repayment of Existing Loans. On the Closing Date, the Company
shall have repaid in full all amounts outstanding under the Existing Credit
Agreement, including accrued interest and fees not yet due, or have irrevocably
directed the Agent to apply the initial proceeds of Loans hereunder toward such
repayment in full; and
(i) Other Documents. Such other approvals, opinions, documents or
materials as the Agent or the Majority Banks may reasonably request.
65
<PAGE> 73
5.2 CONDITIONS TO ALL CREDIT EXTENSIONS
The obligation of each Bank and the Swingline Bank to make any Loans
to be made by it (including its initial Loan) or to continue or convert any
Loan pursuant to Section 2.4, and the obligation of each Issuing Bank to Issue
any Letter of Credit (including the initial Letter of Credit) is subject to the
satisfaction of the following conditions precedent on the relevant date of
Borrowing, Conversion/Continuation Date or Issuance Date:
(a) Notice, Application. As to any Loan, the Agent shall have
received (with, in the case of the initial Loan only, a copy for each Bank) a
Notice of Borrowing or a Notice of Conversion/Continuation, as applicable, or
in the case of any Issuance of any Letter of Credit, the relevant Issuing Bank
and the Agent shall have received an L/C Application or L/C Amendment
Application, as required under Section 3.2;
(b) Continuation of Representations and Warranties. The
representations and warranties made by the Company contained in Article VI
shall be true and correct on and as of such date of Borrowing or
Conversion/Continuation Date with the same effect as if made on and as of such
date of Borrowing or Conversion/Continuation Date (except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they shall be true and correct as of such earlier date); and
(c) No Existing Default. No Default or Event of Default shall
exist or shall result from such Credit Extension.
Each Notice of Borrowing, Notice of Conversion/Continuation and L/C
Application or L/C Amendment Application submitted by the Company hereunder
shall constitute a representation and warranty by the Company hereunder, as of
the date of each such notice, request or application and as of the date of each
Borrowing, each Conversion/Continuation Date, or Issuance Date, as applicable,
that the conditions in Section 5.2 are satisfied.
6. REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Bank that:
6.1 CORPORATE EXISTENCE AND POWER
(a) The Company, each of its Subsidiaries, and each of the Partner
Entities:
(i) is a limited partnership or corporation, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation;
66
<PAGE> 74
(ii) is duly qualified as a foreign partnership or
corporation, as applicable, and licensed and in good standing, under the laws
of each jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification or license; and
(iii) is in compliance with all Requirements of Law except
where failure to so comply would not reasonably be expected to have a Material
Adverse Effect.
(b) The Company and each of its Subsidiaries has the power and
authority and all governmental licenses, authorizations, consents and approvals
to own its assets and carry on its business; and the Company and each of the
Partner Entities has the power and authority and all governmental licenses,
authorizations, consents and approvals to execute, deliver, and perform its
obligations under, the Loan Documents.
6.2 AUTHORIZATION; NO CONTRAVENTION
The execution, delivery and performance by the Company of this
Agreement, and any other Loan Document to which the Company is party, have been
duly authorized by all necessary corporate and partnership action on behalf of
the PC Advisory General Partner, as general partner of the PCMC General
Partner, as general partner of the General Partner, as general partner of the
Company, and by all necessary partnership action on behalf of the Company, and
do not and will not:
(a) contravene the terms of the Organization Documents of any of
the Company or the Partner Entities;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its Property is
subject; or
(c) violate any Requirement of Law.
6.3 GOVERNMENTAL AUTHORIZATION
No approval, consent, exemption, authorization, or other action by, or
notice to, or filing with, any Governmental Authority is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, the Company, the Partner Entities or any of their Subsidiaries of the
Agreement or any other Loan Document.
67
<PAGE> 75
6.4 Binding Effect
This Agreement and each other Loan Document to which the Company is a
party constitute the legal, valid and binding obligations of the Company and
the Partner Entities, enforceable against the Company and the Partner Entities
in accordance with their respective terms except as enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditor's rights generally or by equitable principles relating
to enforceability.
6.5 LITIGATION
There are no actions, suits, proceedings, claims or disputes pending,
or to the Company's Knowledge and the knowledge of the Partner Entities,
threatened or contemplated, at law, in equity, in arbitration or before any
Governmental Authority, against the Company, the Partner Entities or their
Subsidiaries or any of their respective Properties which:
(a) purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby or thereby; or
(b) have a reasonable probability of success on the merits and
which, if determined adversely to the Company, the Partner Entities or their
Subsidiaries, would reasonably be expected to have a Material Adverse Effect.
No injunction, writ, temporary restraining order or any order of any nature has
been issued by any court or other Governmental Authority purporting to enjoin
or restrain the execution, delivery or performance of this Agreement or any
other Loan Document, or directing that the transactions provided for herein or
therein not be consummated as herein or therein provided.
6.6 NO DEFAULT
No Default or Event of Default exists or would result from the
incurring of any Obligations by the Company. Neither the Company, the Partner
Entities, nor any of their Subsidiaries is in default under or with respect to
any Contractual Obligation in any respect which, individually or together with
all such defaults, would reasonably be expected to have a Material Adverse
Effect or that would, if such default had occurred after the Closing date,
create an Event of Default under subsection 9.1(e).
6.7 ERISA COMPLIANCE
(a) Schedule 6.7 lists all Plans and separately identifies Plans
intended to be Qualified Plans and Multiemployer Plans.
68
<PAGE> 76
(b) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state law,
including all requirements under the Code or ERISA for filing reports (which
are true and correct in all material respects as of the date filed), and
benefits have been paid in accordance with the provisions of the Plan.
(c) Except as specifically disclosed in Schedule 6.7, each
Qualified Plan has been determined by the IRS to qualify under Section 401 of
the Code, and the trusts created thereunder have been determined to be exempt
from tax under the provisions of Section 501 of the Code, and to the Company's
Knowledge nothing has occurred which would cause the loss of such qualification
or tax-exempt status.
(d) Except as specifically disclosed in Schedule 6.7, there is no
outstanding liability under Title IV of ERISA (other than premiums due but not
delinquent under Section 4007 of ERISA) with respect to any Plan maintained or
sponsored by the Company or any ERISA Affiliate, nor with respect to any Plan
to which the Company or any ERISA Affiliate contributes or is obligated to
contribute, and which liability would reasonably be expected to have a Material
Adverse Effect.
(e) Except as specifically disclosed in Schedule 6.7, no Plan
subject to Title IV of ERISA has any Unfunded Pension Liability which would
reasonably be expected to have a Material Adverse Effect.
(f) Except as specifically disclosed in Schedule 6.7, the Company
and its ERISA Affiliates have not ever represented, promised or contracted
(whether in oral or written form) to any current or former employee (either
individually or to employees as a group) that such current or former
employee(s) would be provided, at any cost to the Company or its ERISA
Affiliates, with life insurance or employee welfare plan benefits (within the
meaning of section 3(1) of ERISA) following retirement or termination of
employment, other than benefits mandated by applicable law, including but not
limited to, continuation coverage required to be provided under Section 4980B
of the Code or Title I, Subtitle B, Part 6 of ERISA, and which cost would
reasonably be expected to have a Material Adverse Effect. To the extent that
the Company or its ERISA Affiliates have made any such representation, promise
or contract, they have expressly reserved the right to amend or terminate such
life insurance or employee welfare plan benefits with respect to claims not yet
incurred.
(g) The Company and its ERISA Affiliates have complied in all
material respects with the notice and continuation coverage requirements of
Section 4980B of the Code.
(h) Except as specifically disclosed in Schedule 6.7, no ERISA
Event has occurred or, to the Company's Knowledge is reasonably expected to
occur with
69
<PAGE> 77
respect to any Plan which would reasonably be expected to have a Material
Adverse Effect.
(i) There are no pending or, to the Company's Knowledge,
threatened claims, actions or lawsuits, other than routine claims for benefits
in the usual and ordinary course, asserted or instituted against (i) any Plan
maintained or sponsored by the Company or its assets, (ii) the Company or its
ERISA Affiliates with respect to any Qualified Plan, or (iii) any fiduciary
with respect to any Plan for which the Company or its ERISA Affiliates may be
directly or indirectly liable, through indemnification obligations or otherwise
and which claim, action or lawsuit would reasonably be expected to have a
Material Adverse Effect. This representation is not made with respect to any
Multiemployer Plan.
(j) Except as specifically disclosed in Schedule 6.7, neither the
Company nor any ERISA Affiliate has incurred nor, to the Company's Knowledge,
reasonably expects to incur (i) any liability (and, to the Company's knowledge,
no event has occurred which, with the giving of notice under Section 4219 of
ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with
respect to a Multiemployer Plan or (ii) any liability under Title IV of ERISA
(other than premiums due and not delinquent under Section 4007 of ERISA) with
respect to a Plan, and which liability would reasonably be expected to have a
Material Adverse Effect.
(k) Except as specifically disclosed in Schedule 6.7, neither the
Company nor any ERISA Affiliate has transferred any Unfunded Pension Liability
to a Person other than the Company or an ERISA Affiliate or otherwise engaged
in a transaction that is subject to Section 4069 or 4212(c) of ERISA.
(l) The Company has not engaged, directly or indirectly, in a
non-exempt prohibited transaction (as defined in Section 4975 of the Code or
Section 406 of ERISA) in connection with any Plan which would reasonably be
expected to have a Material Adverse Effect.
6.8 USE OF PROCEEDS; MARGIN REGULATIONS
The proceeds of the Loans are intended to be and shall be used solely
for the purposes set forth in and permitted by Section 7.11, and are intended
to be and shall be used in compliance with Section 8.7. Neither the Company,
the Partner Entities, nor any of their Subsidiaries is generally engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
70
<PAGE> 78
6.9 TITLE TO PROPERTIES
The Company and each of its Subsidiaries have good record and
marketable title in fee simple to, or valid leasehold interests in, all real
Property necessary or used in the ordinary conduct of their respective
businesses, except for such defects in title as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
As of the Closing Date, the Property of the Company and its Subsidiaries is
subject to no Liens, other than Permitted Liens.
6.10 TAXES
The Company, the Partner Entities and their Subsidiaries have filed
all Federal and other material tax returns and reports required to be filed,
and have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their Properties, income or
assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no Notice of Lien has been filed or
recorded. There is no proposed tax assessment against the Company, the Partner
Entities or any of their Subsidiaries which would, if the assessment were made,
have a Material Adverse Effect.
6.11 FINANCIAL CONDITION
(a) The audited combined financial statements of financial
condition of the Company and its Subsidiaries dated December 31, 1995, and the
related combined statements of income and combined statement of cash flows for
the fiscal year ended on that date:
(i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein;
(ii) fairly present the financial condition of the Company
and its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) show all material Indebtedness and other liabilities,
direct or contingent of the Company and its combined Subsidiaries as of the
date thereof, including liabilities for taxes and material commitments.
(b) Since December 31, 1995, there has been no Material Adverse
Effect.
71
<PAGE> 79
6.12 ENVIRONMENTAL MATTERS
(a) Except as specifically disclosed in Schedule 6.12, the
on-going operations of the Company, the Partner Entities and each of their
Subsidiaries comply in all respects with all Environmental Laws, except such
non-compliance which would not (if enforced in accordance with applicable law)
result in liability in excess of $25,000,000 in the aggregate.
(b) Except as specifically disclosed in Schedule 6.12, the
Company, the Partner Entities and each of their Subsidiaries have obtained all
licenses, permits, authorizations and registrations required under any
Environmental Law ("Environmental Permits") and necessary for their respective
ordinary course operations, all such Environmental Permits are in good
standing, and the Company, the Partner Entities and each of their Subsidiaries
are in compliance with all terms and conditions of such Environmental Permits
except where the failure to obtain, maintain in good standing or comply with
such Environmental Permits would not reasonably be expected to have a Material
Adverse Effect.
(c) Except as specifically disclosed in Schedule 6.12, none of the
Company, the Partner Entities, any of their Subsidiaries or any of their
respective present Property or operations, is subject to any outstanding
written order from or agreement with any Governmental Authority, nor subject to
any judicial or docketed administrative proceeding, respecting any
Environmental Law, Environmental Claim or Hazardous Material arising out of a
violation or alleged violation of any Environmental Law.
(d) Except as specifically disclosed in Schedule 6.12, there are
no Hazardous Materials or other conditions or circumstances existing with
respect to any Property, or arising from operations prior to the Closing Date,
of the Company, the Partner Entities, or any of their Subsidiaries that would
reasonably be expected to give rise to Environmental Claims with a potential
liability of the Company and its Subsidiaries in excess of $25,000,000 in the
aggregate for any such condition, circumstance or Property. In addition,
except as specifically disclosed in Schedule 6.12 (i) neither the Company, the
Partner Entities nor any of their Subsidiaries has any underground storage
tanks (x) that are not properly registered or permitted under applicable
Environmental Laws, or (y) that are leaking or disposing of Hazardous Materials
off-site, and (ii) the Company, the Partner Entities and their Subsidiaries
have notified all of their employees of the existence, if any, of any health
hazard arising from the conditions of their employment and have met all
notification requirements under Title III of CERCLA and all other Environmental
Laws.
72
<PAGE> 80
6.13 REGULATED ENTITIES
None of the Company, the Partner Entities, any Person controlling the
Company or the Partner Entities, or any Subsidiary of the Company or the
Partner Entities, is (a) an "Investment Company" within the meaning of the
Investment Company Act of 1940; or (b) subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code, or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.
6.14 NO BURDENSOME RESTRICTIONS
Neither the Company nor any of its Subsidiaries is a party to or bound
by any Contractual Obligation, or subject to any charter or corporate
restriction, or any Requirement of Law, which would reasonably be expected to
have a Material Adverse Effect.
6.15 SOLVENCY
The Company, the General Partner, the Facilities Subsidiary, and the
Restricted Subsidiaries are each Solvent.
6.16 LABOR RELATIONS
There are no material strikes, lockouts or other labor disputes
against the Company or any of its Subsidiaries, or, to the Company's Knowledge,
threatened against or affecting the Company or any of its Subsidiaries, and no
significant unfair labor practice complaint is pending against the Company or
any of its Subsidiaries or, to the Company's Knowledge, threatened against any
of them before any Governmental Authority.
6.17 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC.
The Company or its Subsidiaries own or are licensed or otherwise have
the right to use all of the patents, trademarks, service marks, trade names,
copyrights, contractual franchises, authorizations and other rights that are
reasonably necessary for the operation of their respective businesses, without
conflict with the rights of any other Person. To the Company's Knowledge, no
slogan or other advertising device, product, process, method, substance, part
or other material now employed, or now contemplated to be employed, by the
Company or any of its Subsidiaries infringes upon any rights held by any other
Person; except as specifically disclosed in Schedule 6.5, no claim or
litigation regarding any of the foregoing is pending or, to the Company's
Knowledge, threatened, and no patent, invention, device, application, principle
or any statute, law, rule, regulation, standard or code is
73
<PAGE> 81
pending or, to the Company's Knowledge, proposed, which, in either case, would
reasonably be expected to have a Material Adverse Effect.
6.18 SUBSIDIARIES
The Company has no Subsidiaries other than those specifically
disclosed in part (a) of Schedule 6.18 hereto and has no equity investments in
any other corporation or entity other than those specifically disclosed in part
(b) of Schedule 6.18. Except as disclosed in part (a) of Schedule 6.18, the
Company owns 100% of the ownership interests of its Subsidiaries. The
Facilities Subsidiary has issued no rights, warrants or options to acquire or
instruments convertible into or exchangeable for any equity interest in the
Facilities Subsidiary.
6.19 PARTNERSHIP INTERESTS
The only general partner of the Company is the General Partner, which
on the Closing Date will own a 2% interest in the Company. The only general
partner of the General Partner is the PCMC General Partner. The only general
partner of the PCMC General Partner is the PC Advisory General Partner.
6.20 BROKER'S, TRANSACTION FEES
Neither the Company nor any of its Subsidiaries has any obligation to
any Person in respect of any finder's, broker's or investment banker's fee in
connection with the transactions contemplated hereby.
6.21 INSURANCE
The Properties of the Company and its Subsidiaries are insured with
financially sound and reputable insurance companies not Affiliates of the
Company, in such amounts, with such deductibles and covering such risks as are
customarily carried by companies engaged in similar businesses and owning
similar Properties in localities where the Company or such Subsidiary operates.
6.22 FULL DISCLOSURE
None of the representations or warranties made by the Company, the
General Partners, or any of their Subsidiaries in the Loan Documents as of the
date such representations and warranties are made or deemed made, and none of
the statements contained in each exhibit, report, written statement or
certificate furnished by or on behalf of the Company or any of its Subsidiaries
in connection with the Loan Documents, contains any untrue statement of a
material fact or omits any material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or
delivered.
74
<PAGE> 82
7. AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Bank shall have
any Commitment hereunder, or the Swingline Bank shall have any Swingline
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied, or any Letter of Credit remains outstanding, unless the Majority
Banks waive compliance in writing:
7.1 FINANCIAL STATEMENTS
The Company shall deliver to the Agent in form and detail satisfactory
to the Agent and the Majority Banks, with sufficient copies for each Bank:
(a) as soon as available, but not later than 90 days after the end
of each fiscal year, a copy of the audited combined balance sheet of the
Company as at the end of such year and the related combined statements of
income and statements of cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, and
accompanied by the opinion of Coopers & Lybrand, or another
nationally-recognized independent public accounting firm ("Independent
Auditor") which report shall state that such combined financial statements
present fairly the financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years. Such opinion shall
not be qualified or limited because of a restricted or limited examination by
Independent Auditor of any material portion of the Company's or any
Subsidiary's records and shall be delivered to the Agent pursuant to a reliance
agreement in favor of the Agent and Banks by such Independent Auditor in form
and substance satisfactory to the Agent and the Majority Banks;
(b) as soon as available, but not later than 120 days after the
end of each fiscal year, a copy of an audited combining balance sheet of the
Company and each of its Subsidiaries as at the end of such fiscal year and the
related combining statements of income and statement of cash flows for such
fiscal year, all in reasonable detail certified by an appropriate Responsible
Officer as having been used in connection with the preparation of the financial
statements referred to in subsection (a) of this Section 7.1;
(c) as soon as available, but not later than 45 days after the end
of each of the first three fiscal quarters of each year, a copy of the
unaudited combined balance sheet of the Company and its combined Subsidiaries
as of the end of such quarter and the related combined statements of income and
statement of cash flows for the period commencing on the first day and ending
on the last day of such quarter, and certified by an appropriate Responsible
Officer as being complete and correct and fairly presenting, in accordance with
GAAP, the financial position and the results of operations of the Company and
the Subsidiaries;
75
<PAGE> 83
(d) as soon as available, but not later than 45 days after the end
of each of the first three fiscal quarters of each year, a copy of the
unaudited combining balance sheets of the Company and each of its Subsidiaries,
and the related combining statements of income and statement of cash flows for
such quarter, all certified by an appropriate Responsible Officer of the
Company as having been used in connection with the preparation of the financial
statements referred to in subsection (c) of this Section 7.1;
(e) as soon as available, but not later than September 30 of each
year, a business plan which shall include consolidated five year pro-forma
projections of the Company's balance sheet, income statement and statement of
cash flows, accompanied by appropriate assumptions on which such projections
are based.
7.2 CERTIFICATES; OTHER INFORMATION
The Company shall furnish to the Agent, with sufficient copies for
each Bank:
(a) concurrently with the delivery of the financial statements
referred to in subsection 7.1(a) above, a certificate of the Independent
Auditor stating that in making the examination necessary therefor no knowledge
was obtained of any Default or Event of Default, except as specified in such
certificate;
(b) concurrently with the delivery of the financial statements
referred to in subsections 7.1(a) through (d) above, a certificate of a
Responsible Officer substantially in the form of Exhibit D (i) stating that, to
the best of such officer's knowledge, the Company, during such period, has
observed and performed all of its covenants and other agreements, and satisfied
every condition contained in this Agreement to be observed, performed or
satisfied by it, and that such officer has obtained no knowledge of any Default
or Event of Default except as specified (by applicable subsection reference) in
such certificate, (ii) stating the Applicable Margin to be in effect for the
immediately following fiscal quarter, and (iii) showing in detail the
calculations supporting such statement in respect of subsection 8.2(h), Section
8.3, subsection 8.4(i), Section 8.5 and Section 8.13, and supporting the
computation of the Interest Coverage Ratio;
(c) promptly after the same are sent, copies of all financial
statements and reports which the Company sends to its limited partners
(excluding the Form K-1s); and promptly after the same are filed, copies of all
financial statements and regular, periodical or special reports which the
Company may make to, or file with, the SEC or any successor or similar
Governmental Authority; and
(d) promptly, such additional business, financial, corporate
affairs and other information as the Agent, at the request of any Bank, may
from time to time reasonably request.
76
<PAGE> 84
7.3 NOTICES
The Company shall promptly upon becoming aware thereof notify the
Agent and each Bank:
(a) (i) of the occurrence of any Default or Event of Default, (ii)
of the occurrence or existence of any event or circumstance that foreseeably
will become a Default or Event of Default, and (iii) of the occurrence or
existence of any event or circumstance that would cause the condition to Credit
Extension set forth in subsection 5.2(b) not to be satisfied if a Credit
Extension were requested on or after the date of such event or circumstance;
(b) of (i) any breach or non-performance of, or any default under,
any Contractual Obligation of the Company, the Partner Entities, or any of
their Subsidiaries which could result in a Material Adverse Effect; and (ii)
any dispute, litigation, investigation, proceeding or suspension which may
exist at any time between the Company, the Partner Entities, or any of their
Subsidiaries and any Governmental Authority which could reasonably be expected
to result in a Material Adverse Effect;
(c) of the commencement of, or any material development in, any
litigation or proceeding affecting the Company or any Subsidiary (i) which
could reasonably be expected to have a Material Adverse Effect, or (ii) in
which the relief sought is an injunction or other stay of the performance of
this Agreement or any Loan Document;
(d) upon, but in no event later than 10 days after, becoming aware
of (i) any and all enforcement, cleanup, removal or other governmental or
regulatory actions instituted, completed or threatened against the Company or
any of its Subsidiaries or any of their respective Properties pursuant to any
applicable Environmental Laws where, if adversely determined, the potential
liability or expense relating thereto could exceed $25,000,000 or the potential
remedy with respect thereto would otherwise reasonably be expected to have a
Material Adverse Effect, (ii) all other Environmental Claims which allege
liability in excess of $25,000,000 or have the possibility of remedies that
would, if adversely determined, otherwise reasonably be expected to constitute
a Material Adverse Effect, and (iii) any environmental or similar condition on
any real property adjoining or in the vicinity of the property of the Company
or any Subsidiary that would reasonably be anticipated to cause such property
or any part thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use of such property under any Environmental Laws
where the net book value of such property exceeds $25,000,000;
77
<PAGE> 85
(e) of any other litigation or proceeding affecting the Company or
any of its Subsidiaries which the Company would be required to report to the
SEC pursuant to the Exchange Act, within four days after reporting the same to
the SEC;
(f) of any of the following ERISA events affecting the Company or
any ERISA Affiliate (but in no event more than 20 days after such event or, in
the case of an event relating to a Multiemployer Plan, no more than 30 days
after the Company obtains knowledge of the occurrence of such an event),
together with (except in the case of a Multiemployer Plan) a copy of any notice
with respect to such event that may be required to be filed with a Governmental
Authority and any notice delivered by a Governmental Authority to the Company
or any ERISA Affiliate with respect to such event:
(i) an ERISA Event which would reasonably be expected to
have a Material Adverse Effect;
(ii) the adoption of any new Qualified Plan that is
subject to Title IV of ERISA or section 412 of the Code that would reasonably
be expected to generate annual liabilities in excess of $10,000,000 by the
Company or an ERISA Affiliate;
(iii) the adoption of any amendment to a Qualified Plan
that is subject to Title IV of ERISA or section 412 of the Code that would
reasonably be expected to generate annual liabilities in excess of $10,000,000,
if such amendment results in a material increase in benefits or unfunded
liabilities; or
(iv) the commencement of contributions by the Company or
an ERISA Affiliate to any Plan that is subject to Title IV of ERISA or section
412 of the Code that would reasonably be expected to generate annual
liabilities in excess of $10,000,000;
(g) any Material Adverse Effect subsequent to the date of the most
recent audited financial statements of the Company delivered to the Banks
pursuant to subsection 7.1(a) or 5.1(g); and
(h) of any material labor controversy resulting in or threatening
to result in any strike, work stoppage, boycott, shutdown or other labor
disruption against or involving the Company or any of its Subsidiaries.
Each notice pursuant to this Section shall be accompanied by a written
statement by a Responsible Officer of the Company setting forth details of the
occurrence referred to therein, and stating what action the Company proposes to
take with respect thereto and at what time. Each notice under subsection
7.3(a) shall describe with particularity any and all clauses or provisions of
this Agreement or other Loan Document that have been breached or violated.
78
<PAGE> 86
7.4 PRESERVATION OF PARTNERSHIP EXISTENCE, ETC.
The Company shall, except as permitted by Section 8.2, and shall cause
each of its Restricted Subsidiaries to:
(a) preserve and maintain in full force and effect its partnership
or corporate existence and good standing under the laws of its state or
jurisdiction of formation or incorporation;
(b) preserve and maintain in full force and effect all rights,
privileges, qualifications, permits, licenses and franchises necessary in the
normal conduct of its business;
(c) use its reasonable efforts, in the Ordinary Course of
Business, to preserve its business organization and preserve the goodwill and
business of the customers, suppliers and others having material business
relations with it; and
(d) preserve or renew all of its registered trademarks, trade
names and service marks, the non-preservation of which would reasonably be
expected to have a Material Adverse Effect.
7.5 MAINTENANCE OF PROPERTY
The Company shall maintain, and shall cause each of its Subsidiaries
to maintain, and preserve all its Property which is used or useful in its
business in good working order and condition, ordinary wear and tear excepted.
7.6 INSURANCE
The Company shall maintain, and shall cause each of its Subsidiaries
to maintain, with financially sound and reputable independent insurers,
insurance with respect to its Properties and business against loss or damage of
the kinds customarily insured against by Persons engaged in the same or similar
business, of such types and in such amounts as are customarily carried under
similar circumstances by such other Persons.
7.7 PAYMENT OF OBLIGATIONS
The Company shall, and shall cause its Subsidiaries to, pay and
discharge as the same shall become due and payable, all their respective
obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Company or such Subsidiary; and
79
<PAGE> 87
(b) all Indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness.
7.8 COMPLIANCE WITH LAWS
The Company shall comply, and shall cause each of its Subsidiaries to
comply with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor
Standards Act) the non-compliance with which would reasonably be expected to
have a Material Adverse Effect, except such as may be contested in good faith
or as to which a bona fide dispute may exist.
7.9 INSPECTION OF PROPERTY AND BOOKS AND RECORDS
The Company shall maintain and shall cause each of its Subsidiaries to
maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Company and such Subsidiaries. The Company shall permit, and shall cause each
of its Subsidiaries to permit, representatives and independent contractors of
the Agent or any Bank to visit and inspect any of their respective Properties,
to examine their respective corporate, financial and operating records, and
make copies thereof or abstracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective directors, officers, and
independent public accountants, all at the expense of the Company and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Company; provided, however, when
an Event of Default exists the Agent or any Bank may do any of the foregoing at
the expense of the Company such Properties at any time during normal business
hours and without advance notice.
7.10 ENVIRONMENTAL LAWS
(a) The Company shall, and shall cause each of its Subsidiaries
to, conduct its operations and keep and maintain its Property in compliance
with all Environmental Laws, the non-compliance with which would reasonably be
expected to have a Material Adverse Effect.
(b) Upon the written request of the Agent or any Bank, the Company
shall submit and cause each of its Subsidiaries to submit, to the Agent and
with sufficient copies for each Bank, at the Company's sole cost and expense,
at reasonable intervals, a report providing an update of the status of any
environmental, health or safety compliance, hazard or liability issue
identified in any notice or report required pursuant to subsection 7.3(d), that
could, individually or in the aggregate, result in liability in excess of
$25,000,000.
80
<PAGE> 88
7.11 USE OF PROCEEDS
The Company shall use the proceeds of the Loans solely as follows: (a)
to refinance existing Indebtedness, (b) to pay related fees and expenses, and
(c) to finance working capital and other general partnership purposes,
including acquisitions, not in contravention of any Requirement of Law or of
any Loan Document.
7.12 SOLVENCY
The Company shall at all times be, and shall cause each of its
Restricted Subsidiaries to be, Solvent.
8. NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Bank
shall have any Commitment hereunder, or the Swingline Bank shall have any
Swingline Commitment hereunder, or any Loan or other Obligation shall remain
unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, unless
the Majority Banks waive compliance in writing:
8.1 LIMITATION ON LIENS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, directly or indirectly, make, create, incur, assume
or suffer to exist any Lien upon or with respect to any part of its Property,
whether now owned or hereafter acquired, other than the following ("Permitted
Liens"):
(a) Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, or to the
extent that non-payment thereof is permitted by Section 7.7;
(b) carriers', warehousemen's, mechanics', landlords',
materialmen's, repairmen's or other similar Liens arising in the Ordinary
Course of Business which are not delinquent or remain payable without penalty
or unless such lien is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and if such accrual or other
appropriate provision, if any, as shall be required by GAAP shall have been
made therefor;
(c) Liens (other than any Lien imposed by ERISA) incurred or
deposits made incidental to the conduct of its business or the ownership of its
Property including (i) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation,
(ii) deposits to secure insurance, the performance of bids, tenders, contracts,
leases, licenses, franchises and statutory
81
<PAGE> 89
obligations, each in the Ordinary Course of Business, and (iii) other
obligations which were not incurred or made in connection with the borrowing of
money, the obtaining of advances or credit or the payment of the deferred
purchase price of property and which do not in the aggregate materially detract
from the value of its Property or materially impair the use of such Property in
the operation of its business;
(d) any attachment or judgment Lien, unless the judgment it
secures shall not, within 45 days after the entry thereof, have been discharged
or execution thereof stayed pending appeal, or shall not have been discharged
within 45 days after expiration of any such stay;
(e) easements, rights-of-way, restrictions, leases, sub-leases and
other similar charges or encumbrances incurred in the Ordinary Course of
Business which, in each case, and in the aggregate, do not materially interfere
with the ordinary conduct of the business of the Company or any Restricted
Subsidiary;
(f) Liens on Property of any Restricted Subsidiary securing
obligations of such Restricted Subsidiary owing to the Company or another
Restricted Subsidiary;
(g) any Lien existing prior to the time of acquisition upon any
Property acquired by the Company or any Restricted Subsidiary after the Closing
Date through purchase, merger or consolidation or otherwise, whether or not
assumed by the Company or such Subsidiary, or placed upon Property at (or
within 30 days after) the later of the time of acquisition or the completion of
construction by the Company or any Restricted Subsidiary to secure all or a
portion of (or to secure Indebtedness incurred to pay all or a portion of) the
purchase price thereof, provided that (i) any such Lien does not encumber any
other property of the Company or such Restricted Subsidiary, (ii) the
Indebtedness secured by such Lien is not prohibited by the provisions of
Section 8.5, (iii) the aggregate principal amount of the Indebtedness secured
by such Lien at no time exceeds 80% of the cost to the Company and its
Restricted Subsidiaries of the Property subject to such Lien, and (iv) the
aggregate outstanding principal amount (without duplication) of the
Indebtedness secured by all such Liens and the Indebtedness of all Restricted
Subsidiaries at no time (a) from June 30, 1996 to June 8, 1999, exceeds
$25,000,000, and (b) from June 9, 1999 to the Revolving Termination Date,
exceeds $50,000,000;
(h) Liens on the accounts, rights to payment for goods sold or
services rendered that are evidenced by chattel paper or instruments, and
rights against persons who guarantee payment or collection of the foregoing,
and on the Company's inventory and on the proceeds (as defined in the UCC in
any applicable jurisdiction) thereof securing the obligations of the Company
permitted by subsection 8.5(d) and any extension, renewal, refunding or
refinancing thereof;
82
<PAGE> 90
(i) any Lien existing on the Property of the Company or its
Restricted Subsidiaries on the Closing Date and set forth in Schedule 8.1
securing Indebtedness outstanding on such date;
(j) any Lien renewing, extending, refunding or refinancing any
Lien permitted by subsection (i) of this Section, provided that the principal
amount secured is not increased and the Lien is not extended to other Property
and further provided that the maturity of the Lien is not extended beyond the
maturity date of the Indebtedness which, at the time the Lien was initially
placed upon the Property secured thereby, Responsible Representatives declare
would have been the maturity date of Indebtedness customary for the type of
Property being financed; and
(k) Liens, other than those set forth above, that secure amounts
that in the aggregate do not exceed $1,000,000.
8.2 MERGER; DISPOSITION OF ASSETS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, merge or consolidate with any Person or, directly
or indirectly, sell, lease or transfer or otherwise dispose of (whether in one
or a series of transactions) any Property (including accounts and notes
receivable, with or without recourse) or enter into any agreement to do any of
the foregoing, except that:
(a) any Restricted Subsidiary of the Company may merge with the
Company (provided that the Company shall be the continuing or surviving
corporation) or with any one or more other Restricted Subsidiaries;
(b) any Restricted Subsidiary of the Company may sell, lease,
transfer or otherwise dispose of any of its assets to the Company or a
Restricted Subsidiary;
(c) any Restricted Subsidiary may merge or consolidate with any
other entity, provided that, immediately after giving effect to such merger or
consolidation (i) the continuing or surviving entity of such merger or
consolidation shall constitute a Restricted Subsidiary, (ii) no Event of
Default or Material Default shall exist, and (iii) following the merger, the
entity surviving the merger is not engaged in any business other than a
Permitted Business provided that, after giving effect on a pro forma basis to
such merger or consolidation, the gross revenue contribution of pulp and paper
manufacturing activities of the Company and its Subsidiaries on a combined
basis for the 12 months preceding such merger or consolidation does not exceed
33% of the total revenues of the Company and its Subsidiaries on a combined
basis;
(d) the Company may merge or consolidate with, or sell or dispose
of all or substantially all of its assets to, any other entity, provided that
(i) either (x) the
83
<PAGE> 91
Company shall be the continuing or surviving entity (in the case of such
merger) or (y) the successor or acquiring entity shall be a solvent corporation
or partnership organized under the laws of any state of the United States and
shall expressly assume in writing all of the obligations of the Company under
this Agreement, the Note Agreements, the 1994 Senior Note Agreements and the
Mortgage Note Agreements, including all covenants herein and therein contained,
and such successor or acquiring corporation or partnership shall succeed to and
be substituted for the Company with the same effect as if it had been named
herein as a party hereto, provided, however, that no such sale shall release
the Company from any of its obligations and liabilities under this Agreement,
the Note Agreements, the 1994 Senior Note Agreements and the Mortgage Note
Agreements unless such sale is followed by the complete liquidation of the
Company and substantially all the assets of the Company immediately following
such sale are distributed in such liquidation, and (ii) immediately after such
merger or consolidation or such sale or other disposition, (x) no Event of
Default or Material Default shall exist, (y) the Company could incur at least
$1 of additional Funded Debt pursuant to subsection 8.5(i), and (z) the entity
surviving the merger or consolidation or to which such assets have been
transferred is not engaged in any business other than a Permitted Business
provided that, after giving effect on a pro forma basis to such merger or
consolidation, the gross revenue contribution of pulp and paper manufacturing
activities of the merged or consolidated entity and its Subsidiaries on a
combined basis for the 12 months preceding such merger or consolidation does
not exceed 33% of total revenues of such merged or consolidated entity and its
Subsidiaries on a combined basis;
(e) the Company or any Restricted Subsidiary may make dispositions
of inventory in the Ordinary Course of Business;
(f) the Company or any Restricted Subsidiary may sell Designated
Acres (or notes receivable arising from the sale of Designated Acres) for the
fair value thereof as reasonably determined in good faith by Responsible
Representatives;
(g) the Company and its Restricted Subsidiaries may exchange
Timberlands with other Persons in the Ordinary Course of Business, provided
that (i) the fair value of the Timberlands plus any Net Proceeds received in
such exchange is, in the good faith judgment of the Responsible
Representatives, not less than the fair value of Timberlands exchanged plus any
other consideration paid, (ii) such exchange would not materially and adversely
affect the business, Property, condition or results of operations of the
Company and its Restricted Subsidiaries on a combined basis or of the
Facilities Subsidiary or impair the ability of the Company to perform its
obligations hereunder and under the Note Agreements, the 1994 Senior Note
Agreements and the Mortgage Note Agreements, and (iii) any Properties shall be
deemed sold to the extent of Net Proceeds received and such sales shall be
allowed only to the extent otherwise permitted by this Section 8.2;
84
<PAGE> 92
(h) the Company and its Restricted Subsidiaries may sell
Properties for cash for not less than the fair value thereof as determined in
good faith by the Responsible Representatives, provided that the aggregate Net
Proceeds of such sales in any calendar year do not exceed $20,000,000; and
(i) the Company and its Restricted Subsidiaries may otherwise sell
Properties for cash in an amount not less than the fair value thereof as
determined in good faith by the Responsible Representatives, if and only if (i)
immediately after giving effect to such proposed sale, no condition or event
shall exist which constitutes an Event of Default or Material Default, (ii) the
Net Proceeds of any such sale (x) are applied, within 180 days after such sale
to repayment of Qualified Debt, with a percentage of such repayment being
applied to the Loans in an amount equal to or greater than the pro rata share
of the Loans as a percentage of the outstanding principal of other Qualified
Debt, or (y) are applied, within 180 days after such sale, to the purchase of
productive assets in the same line of business, provided that the Company shall
have notified the Agent promptly after its determination to so apply the Net
Proceeds, (iii) if (x) the Net Proceeds of any such sale exceed $50,000,000,
and if such Net Proceeds are not applied immediately as set forth in (ii)(x) or
(y) above, then the entire amount of such Net Proceeds are placed immediately
upon receipt thereof in an escrow or cash collateral account or accounts,
pursuant to an agreement or agreements in form and substance reasonably
satisfactory to holders of greater than 50% of the outstanding principal
balance of the Qualified Debt, for the purpose of application in accordance
with clause (ii) above, and (y) all such Net Proceeds which are not then held
in escrow or cash collateral accounts pursuant to subclause (iii)(x) and which
have not been applied to the purchase of productive assets in the same line of
business or distributed to the holders of Qualified Debt for application to the
repayment of such Qualified Debt exceed $100,000,000 in the aggregate at any
time, all such Net Proceeds in excess of $100,000,000 are placed immediately
upon receipt thereof in an escrow or cash collateral account or accounts,
pursuant to an agreement or agreements in form and substance reasonably
satisfactory to holders of greater than 50% of the outstanding principal
balance of the Qualified Debt, for the purpose of application in accordance
with clause (ii) above, and (iv) immediately after giving effect to such sale
(giving effect on a pro forma basis to any proposed retirement of Qualified
Debt out of proceeds thereof), the Company could incur $1 of additional Funded
Debt pursuant to subsection 8.5(i).
8.3 HARVESTING RESTRICTIONS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, in any calendar year, harvest Timber on the
Timberlands then owned by the Company in excess of the amount set forth for
such calendar year in the following table:
85
<PAGE> 93
<TABLE>
<CAPTION>
Calendar Year Maximum MCCF To Be Harvested
- - -----------------------------------------------------------------------------------------------------
<S> <C>
1996 (representing a carryover of 2,130 MCCF from prior years 3,600 MCCF
and 1,470 MCCF for 1996)
- - -----------------------------------------------------------------------------------------------------
1997-2000 1,970 MCCF
- - -----------------------------------------------------------------------------------------------------
2001-2009 1,910 MCCF
- - -----------------------------------------------------------------------------------------------------
</TABLE>
plus, in each year, the amount, if any, by which the cumulative amount set
forth in the table above for the preceding years exceeds the cumulative amount
actually harvested in such years;
unless (a) the Net Proceeds from such excess harvest are either (i) applied,
within 180 days after any such excess harvest to repayment of Qualified Debt,
with a percentage of such repayment being applied to Loans in an amount equal
to or greater than the pro rata share of the Loans as a percentage of the
outstanding principal of other Qualified Debt or (ii) applied, within 180 days
after any such excess harvest, to purchase Timber (including Timber on
Timberlands purchased) having a fair value (in the good faith judgment of the
Responsible Representatives) not less than the fair value of the Timber subject
to such excess harvest, provided that the Company shall have notified the Agent
promptly after its determination to so apply the Net Proceeds. For purposes of
computing maximum harvest, Board Feet will be converted into Cunits at a ratio
of 2.1 MCCF for each MMBF.
8.4 LOANS AND INVESTMENTS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, make or commit to make or permit to remain
outstanding any loan or advance to, or guarantee, endorse or otherwise be or
become contingently liable, directly or indirectly, in connection with the
obligations, stock or dividends of, or own, purchase or acquire (or commit to
own, purchase or acquire) any stock, obligations or securities of, or any other
interest in (including, without limitation, the acquisition of all or
substantially all of the assets of a Person, or of any business or division of
a Person), or make or commit to make any capital contribution to, any Person
(all of the foregoing (but excluding any Designated Repurchases permitted by
Section 8.13 hereof) being referred to herein as "Investments"), except that
the Company or any Restricted Subsidiary may:
(a) make Investments in the Facilities Subsidiary, provided that
the Company will not make or permit any Restricted Subsidiary to make any such
Investment (including any guaranty of obligations of the Facilities Subsidiary
otherwise permitted by this Section 8.4) unless (i) immediately after giving
effect to such Investment, no Event of Default or Default, or "Default" or
"Event of Default" as defined in the Mortgage Note Agreements, shall exist,
(ii) immediately prior to giving effect to such Investment, no Default or Event
of Default (other than an "Event of Default" as defined in the Mortgage Note
Agreements) shall exist, and (iii) immediately after giving effect to such
86
<PAGE> 94
Investment, the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual
Interest Charges is not less than 2.5 to 1.0.
(b) own, purchase or acquire real or personal property to be used
in the Ordinary Course of Business;
(c) own, purchase or acquire investments of the type specified in,
and in accordance with the requirements and limitations of, the Investment
Policy;
(d) continue to own Investments owned on the Closing Date as set
forth on Schedule 8.4;
(e) endorse negotiable instruments for collection in the Ordinary
Course of Business;
(f) become and be obligated under the Guarantee and under the
guarantees permitted by subsections 8.5(f) and (h), and acquire and own
subordinated subrogation rights upon performance of such guarantees;
(g) make advances in the Ordinary Course of Business of the
Company or any Restricted Subsidiary, including deposits permitted under
subsection 8.1(c), advances to employees for travel, relocation and other
employment related expenses, advances to contractors performing services for
the Company or such Restricted Subsidiary, advances to owners of timber or
timber properties to acquire rights to harvest timber and other similar
advances;
(h) make Investments in Restricted Subsidiaries, or any entity
which immediately after such Investment will be a Restricted Subsidiary; and
(i) make Investments not otherwise permitted by this Section 8.4
in entities engaged solely in a Permitted Business, provided that (x) the
aggregate cumulative amount of such Investments, to the extent that such
Investments are attributable to pulp and paper manufacturing (as
proportionately attributed by multiplying the amount of an Investment by the
percentage of revenues of the Person in whom such Investment is made during the
12 months preceding such Investment that are contributed by pulp and paper
manufacturing), does not exceed the sum of $50,000,000 (without giving effect
to any write-down of such Investments), and (y) the cumulative aggregate amount
of all such Investments including those subject to clause (x) at original cost
(including the principal amount of any obligations guaranteed to the extent
such guarantees are not otherwise permitted by this
87
<PAGE> 95
Section 8.4) outstanding from time to time made pursuant to this subsection (i)
between the closing date of the Note Agreements and any date thereafter shall
not exceed the greater of $30,000,000 or 60% of the average annual Pro Forma
Free Cash Flow for the two fiscal years preceding such date.
8.5 LIMITATION ON INDEBTEDNESS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, create, incur, assume, suffer to exist, or
otherwise become or remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) Funded Debt represented by the Notes, the 1994 Notes, and the
1996 Notes and any refinancing thereof so long as such refinancing does not
increase the principal amount thereof and is on terms no less favorable to the
Company, and to the rights of the Agent and the Banks hereunder, than those
contained on the Closing Date in the Notes, the 1994 Notes, and the 1996 Notes
and the documentation relating thereto;
(b) Funded Debt which is unsecured and is incurred by the Company
to finance the making of capital improvements, expansions and additions to the
Company's property (including Timberlands), plant and equipment, provided that
the aggregate outstanding principal amount of such Funded Debt shall at no time
exceed $20,000,000;
(c) Indebtedness of any Restricted Subsidiary owing to the Company
or to a Restricted Subsidiary;
(d) Indebtedness pursuant to a bank credit facility which is
unsecured or is secured by Liens permitted by subsection 8.1(h), not in excess
of an aggregate principal amount of $15,000,000 at any time outstanding,
provided that the Company shall not suffer to exist any Indebtedness permitted
by this subsection (d) on any day unless there shall have been a period of at
least 45 consecutive days within the 12 months immediately preceding such day
during which the Company shall have been free from all Indebtedness permitted
by this subsection (d);
(e) Indebtedness represented by the Guarantee and any refinancing
thereof so long as such refinancing does not increase the principal amount
thereof and is on terms no less favorable to the Company, and to the rights of
the Agent and the Banks hereunder, than those contained on the Closing Date in
the Guarantee and the documentation relating thereto;
(f) the Company's guarantee of obligations incurred by the
Facilities Subsidiary pursuant to the Facilities Subsidiary's Revolving Credit
Facility (and any extension, renewal, refunding or refinancing thereof
permitted by clause (iv) of
88
<PAGE> 96
paragraph 6B(2) of the Mortgage Note Agreements), provided that the aggregate
outstanding principal amount of such Indebtedness shall at no time exceed
$20,000,000, and provided further that such guarantee shall be subordinated to
the Notes by subordination provisions substantially the same as those contained
in paragraph 7I of the Mortgage Note Agreements;
(g) the Company's guarantee of Funded Debt (and related
obligations not constituting Indebtedness) incurred by the Facilities
Subsidiary to finance the making of capital improvements, expansions and
additions to the Facilities Subsidiaries' Properties pursuant to the Facilities
Subsidiary's Facility, provided that such guarantee shall be subordinated to
the Notes by subordination provisions substantially the same as those contained
in paragraph 7I of the Mortgage Note Agreements, and provided, further, that
the aggregate outstanding principal amount of such Funded Debt shall at no time
exceed $20,000,000;
(h) Funded Debt of the Company or any Restricted Subsidiary
secured by a Lien permitted by subsection 8.1(g), provided that immediately
after the acquisition of the Property subject to such Lien or upon which such
Lien is placed (or, if later, the incurrence of the Indebtedness secured by
such Lien), the Company could incur at least $1 of additional Funded Debt
pursuant to subsection (i) below;
(i) Funded Debt of the Company (other than Funded Debt owing to a
Restricted Subsidiary) in addition to that otherwise permitted by the foregoing
subsections of this Section 8.5, including guarantees of Indebtedness to the
extent permitted by Section 8.4 and not otherwise permitted by the foregoing
subsections of this Section 8.5, provided that, on the date the Company becomes
liable with respect to any such additional Funded Debt and immediately after
giving effect thereto and to the concurrent retirement of any other Funded
Debt, the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual
Interest Charges is not less than 2.25 to 1.00; and provided, further, that the
aggregate outstanding principal amount of such additional Funded Debt (but not
including Funded Debt incurred under this Agreement) shall not exceed
$300,000,000;
(j) from and after the time that the Facilities Subsidiary becomes
a Restricted Subsidiary, Indebtedness incurred by the Facilities Subsidiary
pursuant to the Facilities Subsidiary's Revolving Credit Facility (and any
extension, renewal, refunding or refinancing thereof, including any refunding
or refinancing in an amount in excess of the principal amount then outstanding
under the Facilities Subsidiary's Revolving Credit Facility) or any other
Indebtedness incurred by the Facilities Subsidiary pursuant to a bank credit
facility which is unsecured or is secured by Liens permitted by subsection
8.1(h), not in excess of an aggregate principal amount of $20,000,000 at any
time outstanding, provided that to the extent that the Facilities Subsidiary is
a Restricted Subsidiary, the Facilities Subsidiary shall not suffer to exist
any Indebtedness permitted by this
89
<PAGE> 97
subsection (j) on any day unless there shall have been a period of at least 45
consecutive days within the 12 months immediately preceding such day during
which the Facilities Subsidiary shall have been free from all Indebtedness
permitted by this subsection (j);
(k) from and after the time that the Facilities Subsidiary or any
Designated Immaterial Subsidiary becomes a Restricted Subsidiary, Indebtedness
of the Facilities Subsidiary or any such Designated Immaterial Subsidiary
outstanding at the time the
90
<PAGE> 98
Facilities Subsidiary or such Designated Immaterial Subsidiary becomes a
Restricted Subsidiary, provided that (i) immediately after the Facilities
Subsidiary or any such Designated Immaterial Subsidiary becomes a Restricted
Subsidiary, the Company could incur at least $1 of additional Funded Debt
pursuant to subsection (i) above (the Facilities Subsidiary or any such
Designated Immaterial Subsidiary shall be deemed to be a Restricted Subsidiary
for the four consecutive fiscal quarters immediately prior to its becoming a
Restricted Subsidiary for purposes of determining Pro Forma Free Cash Flow),
and (ii) the aggregate amount (without duplication) of such Indebtedness and
all other Indebtedness, in each case, secured by Liens permitted by subsection
8.1(g) does not violate subclause (iv) to the proviso to such subsection (g);
and
(l) Indebtedness representing the Swap Termination Value of Swap
Contracts entered into in the ordinary course of business as bona fide hedging
transactions.
8.6 TRANSACTIONS WITH AFFILIATES
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to directly or indirectly engage in any transaction
(including, without limitation, the purchase, sale or exchange of assets or the
rendering of any service), with any Affiliate of the Company or of any such
Restricted Subsidiary, except in the Ordinary Course of Business and pursuant
to the reasonable requirements of the business of the Company or such
Restricted Subsidiary and upon fair and reasonable terms that are no less
favorable to the Company or such Restricted Subsidiary, as the case may be,
than those which might be obtained in an arm's-length transaction at the time
from Persons not an Affiliate of the Company or such Restricted Subsidiary.
8.7 USE OF PROCEEDS
(a) The Company shall not and shall not suffer or permit any of
its Subsidiaries to use any portion of the proceeds of the Loans or other
Credit Extension, directly or indirectly, (i) to purchase or carry Margin
Stock, (ii) to repay or otherwise refinance indebtedness of the Company or
others incurred to purchase or carry Margin Stock, (iii) to extend credit for
the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14 of the Exchange
Act.
91
<PAGE> 99
(b) The Company shall not and shall not suffer or permit any of
its Subsidiaries to use any portion of the proceed of the Loans or other Credit
Extension, directly or indirectly, (i) knowingly to purchase Ineligible
Securities from a Section 20 Subsidiary during any period in which such Section
20 Subsidiary makes a market in such Ineligible Securities, (ii) knowingly to
purchase during the underwriting or placement period Ineligible Securities
being underwritten or privately placed by a Section 20 Subsidiary, or (iii) to
make payments of principal or interest on Ineligible Securities underwritten or
privately placed by a Section 20 Subsidiary and issued by or for the benefit of
the Company or any Affiliate of the Company. As used in this Section, "Section
20 Subsidiary" means the Subsidiary of the bank holding company controlling any
Bank, which Subsidiary has been granted authority by the Federal Reserve Board
to underwrite and deal in certain Ineligible Securities; and "Ineligible
Securities" means securities which may not be underwritten or dealt in by
member banks of the Federal Reserve System under Section 16 of the Banking Act
of 1933 (as U.S.C. Section 24, Seventh), as amended.
(c) After the date the Company has notified the Agent that the
Company intends to allocate Loans to the Capital Expenditure Tranche and to
qualify such Capital Expenditure Tranche Loans as Indebtedness permitted under
subsection 8.5(b), the Company shall not and shall not suffer any of its
Subsidiaries to use the proceeds of Capital Expenditure Tranche Loans for
purposes other than to finance capital improvements, expansions and additions
to the Company's property (including Timberlands), plant and equipment.
8.8 SALE OF STOCK AND INDEBTEDNESS OF SUBSIDIARIES
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, sell or otherwise dispose of, or part with control
of, any shares of stock or Indebtedness of any Subsidiary, except to the
Company or a Restricted Subsidiary, and except that all shares of stock and
Indebtedness of any Subsidiary (other than the Facilities Subsidiary) at the
time owned by or owed to the Company and its Restricted Subsidiaries may be
sold as an entirety for a cash consideration which represents the fair value
(as determined in good faith by the Responsible Representatives of the PC
Advisory General Partner) at the time of sale of the shares of stock and
Indebtedness so sold, provided that the assets of such Subsidiary do not
include any assets which could not be disposed of pursuant to the provisions of
Section 8.2 unless the conditions to the sale of such assets set forth in
Section 8.2 are complied with, and further provided that, at the time of such
sale, such Subsidiary shall not own, directly or indirectly, any shares of
stock or Indebtedness of any other Subsidiary (unless all of the shares of
stock and Indebtedness of such other Subsidiary owned, directly or indirectly,
by the Company and its Subsidiaries are simultaneously being sold as permitted
by this Section 8.8).
8.9 CERTAIN CONTRACTS
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to enter into or be a party to:
(a) any contract providing for the making of loans, advances or
capital contributions to any Person, or for the purchase of any Property from
any Person, in each case in order primarily to enable such Person to maintain
working capital, net worth or any other balance sheet condition or to pay
debts, dividends or expenses; or
(b) any contract for the purchase of materials, supplies or other
property or services if such contract (or any related document) requires that
payment for such materials, supplies or other property or services shall be
made regardless of whether or not delivery of such materials, supplies or other
property or services is ever made or tendered, provided that nothing in this
subsection (b) shall prevent the Company from (i) entering into (x) take-or-pay
contracts in the Ordinary Course of Business with the United States Forest
Service, the Bureau of Land Management, the Bureau of Indian Affairs, the
Washington Department of Natural Resources or similar state or federal
governmental agencies or (y) the Riverwood Supply Agreement, or (ii) making
payments in satisfaction of contracts with such Persons which contracts are
deemed by the Responsible Representatives to be disadvantageous to perform; or
(c) any contract to rent or lease (as lessee) any real or personal
property if such contract (or any related document) provides that the
obligation to make payments thereunder is absolute and unconditional under
conditions not customarily found in commercial leases then in general use or
requires that the lessee purchase or otherwise acquire securities or
obligations of the lessor; or
(d) any contract for the sale or use of materials, supplies or
other property, or the rendering of services, if such contract (or any related
document) requires that payment for such materials, supplies or other property,
or the use thereof, or payment for such services, shall be subordinated to any
indebtedness (of the purchaser or user of such materials, supplies or other
property or the Person entitled to the benefit of such services) owed or to be
owed to any Person; or
(e) any other contract which in economic effect, is substantially
equivalent to a guarantee,
except as permitted by the provisions of subsection 8.4(a), (e), (f), (g), (h)
or (i).
92
<PAGE> 100
8.10 JOINT VENTURES
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to enter into any Joint Venture, other than in
Permitted Businesses and so long as any such Joint Venture is not entered into
for the purposes of evading any covenant or restriction in any Loan Documents.
8.11 COMPLIANCE WITH ERISA
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to, without the consent of the Majority Banks, (i) terminate any
Plan subject to Title IV of ERISA so as to result in any material (in the
opinion of the Majority Banks) liability to the Company or any ERISA Affiliate,
(ii) permit to exist any ERISA Event with respect to any Plan other than a
Multiemployer Plan, which presents the risk of a material (in the opinion of
the Majority Banks) liability to the Company, (iii) make a complete or partial
withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer
Plan so as to result in any material (in the opinion of the Majority Banks)
liability to the Company or any ERISA Affiliate, (iv) enter into any new Plan
or modify any existing Plan so as to increase its obligations thereunder which
could result in any material (in the opinion of the Majority Banks) increase in
its liability with respect to such Plan, or (v) permit the present value of all
nonforfeitable accrued benefits under any Qualified Plan (determined using the
actuarial assumptions utilized by the Plan's actuaries for funding the Plan
pursuant to Section 412 of the Code) materially (in the opinion of the Majority
Banks) to exceed the fair market value of Plan assets allocable to such
benefits, all determined as of the most recent valuation date for each such
Plan.
8.12 SALE AND LEASEBACK
The Company shall not, and shall not suffer or permit any of its
Restricted Subsidiaries to, enter into any arrangement with any lender or
investor or to which such lender or investor is a party providing for the
leasing by the Company or any Restricted Subsidiary of real or personal
property which has been or is to be sold or transferred by the Company or any
Restricted Subsidiary to such lender or investor or to any Person to whom funds
have been or are to be advanced by such lender or investor on the security of
such property or rental obligations of the Company or any Restricted
Subsidiary, provided that this Section 8.12 shall not apply to any property
sold pursuant to subsection 8.2(h).
8.13 RESTRICTED PAYMENTS
The Company shall not and shall not permit or suffer any Subsidiary to
directly or indirectly pay, declare, order, make or set apart any sum for any
Restricted Payment, except that the Company may make, pay or set apart during
each calendar quarter one or more Restricted Payments if:
93
<PAGE> 101
(a) such Restricted Payments are in an aggregate amount not
exceeding the amount by which Available Cash with respect to the immediately
preceding calendar quarter exceeds any amount contributed to Available Cash
with respect to such immediately preceding calendar quarter by any Subsidiary
if and to the extent that the payment of such amount as a dividend or
distribution to the Company has not been made and is not at the time permitted
by the terms of such Subsidiary's charter or any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
such Subsidiary, provided that in determining Available Cash with respect to
such immediately preceding calendar quarter, the Company will include in the
amount of reserves established during such quarter pursuant to clause (ii)(d)
of the definition of Available Cash an amount not less than (i) 50% of the
aggregate amount of all interest in respect of the Notes and the 1994 Notes to
be paid on the interest date immediately following such immediately preceding
calendar quarter, (ii) 100% of the aggregate amount of all interest in respect
of the Loans to be paid on the respective Interest Payment Dates for such
Loans, (iii) 25% of the aggregate amount of all principal in respect of the
Notes and the 1994 Notes scheduled to be paid (determined in accordance with
the Principal Repayment Proviso) during the 12 calendar months immediately
following such immediately preceding calendar quarter, and (iv) for the final
four full calendar quarters preceding the Revolving Termination Date, 25% of
the average Effective Amount of Revolving Loans, Swingline Loans and L/C
Obligations outstanding at any time during such quarter of computation, and the
Company will not reduce the amount of the reserves so included, in determining
Available Cash for any calendar quarter subsequent to such immediately
preceding calendar quarter pursuant to clause (i)(c) of the definition of
Available Cash, unless and until (A) the amount of interest or principal in
respect of which such amount has been reserved has in fact been paid and (B) in
the case of clause (iv) of this subsection 8.13(a), the amount of the reserves
so included exceeds fifty percent (50%) of the Effective Amount of Revolving
Loans, L/C Obligations and Swingline Loans at the end of such quarter of
computation; and
(b) immediately after giving effect to any such proposed action no
condition or event shall exist which constitutes an Event of Default or
Material Default.
The Company will not, in any event, directly or indirectly declare, order, pay
or make any Restricted Payment except in cash.
8.14 CHANGE IN BUSINESS
The Company shall not, and shall not permit any of its Subsidiaries
to, engage in any business other than a Permitted Business.
94
<PAGE> 102
8.15 Issuance of Stock by Subsidiaries
The Company covenants that it will not permit any Subsidiary to
(either directly, or indirectly by the issuance of rights or options for, or
securities convertible into, such shares) issue, sell or otherwise dispose of
any shares of any class of its stock or partnership or other ownership
interests (other than directors' qualifying shares) except to the Company or a
Restricted Subsidiary, and except to the extent that holders of minority
interests may be entitled to purchase stock by reason of preemptive rights.
8.16 AMENDMENTS
The Company shall not, and shall not suffer or permit any of its
Subsidiaries to amend, modify, supplement, waive or otherwise modify any
provision of any agreement evidencing Funded Debt in excess of $35,000,000
which amendment, modification, supplement or waiver would reasonably be
expected to impair the Agent's or the Banks' rights hereunder or the ability of
the Company to perform its obligations under any Loan Document.
8.17 AVAILABLE CASH
The Company shall not at any time permit Available Cash to be less
than zero. For purposes of this Section 8.17, in determining Available Cash
with respect to the immediately preceding calendar quarter, the Company will
include in the amount of reserves established during such quarter pursuant to
clause (ii)(d)(1) (with respect to principal on Indebtedness) and clause
(ii)(d)(4) of the definition of "Available Cash" an amount not less than (a)
50% of the aggregate amount of all interest in respect of the Notes and the
1994 Notes to be paid on the interest date immediately following such
immediately preceding calendar quarter, (b) 100% of the aggregate amount of all
interest in respect of the Loans to be paid on the respective Interest Payment
Dates for such Loans, (c) 25% of the aggregate amount of all principal in
respect of the Notes and the 1994 Notes scheduled to be paid (determined in
accordance with the Principal Repayment Proviso) during the 12 calendar months
immediately following such immediately preceding calendar quarter, and (d) for
the final four full calendar quarters preceding the Revolving Termination Date,
25% of the average Effective Amount of Revolving Loans, Swingline Loans and L/C
Obligations outstanding at any time during such quarter of computation, and the
Company will not reduce the amount of the reserves so included in determining
Available Cash for any calendar quarter subsequent to such immediately
preceding calendar quarter pursuant to clause (i)(c) of the definition of
Available Cash, unless and until (i) the amount of interest or principal in
respect of which such amount has been reserved has in fact been paid and (ii)
in the case of clause (d) of this Section 8.17, the amount of the reserves so
included exceeds fifty
95
<PAGE> 103
percent (50%) of the Effective Amount of Revolving Loans, L/C Obligations and
Swingline Loans at the end of such quarter of computation.
8.18 INTEREST COVERAGE RATIO
The Company shall not permit its Interest Coverage Ratio at the end of
any fiscal quarter ending during the periods set forth below to be equal to or
less than the values indicated below for such periods:
<TABLE>
<CAPTION>
Period Interest Coverage Ratio
------ -----------------------
<S> <C>
1 2.40
2 2.75
3 3.00
</TABLE>
Period 1 shall extend from the Closing Date until the end of the sixth (6th)
fiscal quarter ending after the Closing Date; Period 2 shall extend from the
end of Period 1 until the end of the twelfth (12th) fiscal quarter ending after
the Closing Date; and Period 3 shall extend from the end of Period 2 until the
Revolving Termination Date.
9. EVENTS OF DEFAULT
9.1 EVENT OF DEFAULT
Any of the following shall constitute an "Event of Default":
(a) Non-Payment. The Company fails to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan or of any L/C
Obligation, or (ii) within 5 days after the same shall become due, any
interest, fee or any other amount payable hereunder or pursuant to any other
Loan Document; or
(b) Representation or Warranty. Any representation or warranty by
the Company or any of its Subsidiaries made or deemed made herein, in any Loan
Document, or which is contained in any certificate, document or financial or
other statement by the Company, its Responsible Representatives, any of its
Subsidiaries, or their respective Responsible Officers, furnished at any time
under this Agreement, or in or under any Loan Document, shall prove to have
been incorrect in any material respect on or as of the date made or deemed
made; or
(c) Specific Defaults. The Company fails to perform or observe
any term, covenant or agreement contained in Sections 7.3 or 7.9 or Article
VIII; or
(d) Other Defaults. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any Loan Document, and
such default shall continue unremedied for a period of 20 days after the
earlier of (i) the date
96
<PAGE> 104
upon which a Responsible Officer or Responsible Representative of the Company
knew or should have known of such failure or (ii) the date upon which written
notice thereof is given to the Company by the Agent or any Bank; or
(e) Cross-Default. (i) The Company or any of its Subsidiaries (A)
fails to make any payment in respect of any Indebtedness (other than in respect
of Swap Contracts) having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $5,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise); or (B) fails to perform or observe any other condition
or covenant, or any other event shall occur or condition exist, under any
agreement or instrument relating to any such Indebtedness, if the effect of
such failure, event or condition is to cause, or to permit the holder or
holders of such Indebtedness or beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause such Indebtedness to be declared to be
due and payable prior to its stated maturity, or with respect to any contingent
obligations, to become payable or cash collateral in respect thereof to be
demanded; or (ii) there occurs under any Swap Contract an Early Termination
Date (as defined in such Swap Contract) resulting from (1) any event of default
under such Swap Contract as to which the Company or any Subsidiary is the
Defaulting Party (as defined in such Swap Contract) or (2) any Termination
Event (as so defined) as to which the Company or any Subsidiary is an Affected
Party (as so defined), and, in either event, the Swap Termination Value owed by
the Company or such Subsidiary as a result thereof is greater than $5,000,000,
or
(f) Insolvency; Voluntary Proceedings. The Company, any of its
Subsidiaries, or any Partner Entity (i) ceases or fails to be Solvent, or
generally fails to pay, or admits in writing its inability to pay, its debts as
they become due, subject to applicable grace periods, if any, whether at stated
maturity or otherwise; (ii) voluntarily ceases to conduct its business in the
ordinary course; (iii) commences any Insolvency Proceeding with respect to
itself; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
(g) Involuntary Proceedings. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company, the Facilities
Subsidiary, any Restricted Subsidiary of the Company, or any Partner Entity, or
any writ, judgment, warrant of attachment, execution or similar process, is
issued or levied against a substantial part of the Company's, any of its
Restricted Subsidiaries', any Partner Entities' or the Facilities Subsidiaries'
Properties, and any such proceeding or petition shall not be dismissed, or such
writ, judgment, warrant of attachment, execution or similar process shall not
be released, vacated or fully bonded within 60 days after commencement, filing
or levy; (ii) the Company, any Partner Entity, the Facilities Subsidiary, or
any of the Company's Restricted Subsidiaries admits the material
97
<PAGE> 105
allegations of a petition against it in any Insolvency Proceeding, or an order
for relief (or similar order under non-U.S. law) is ordered in any Insolvency
Proceeding; or (iii) the Company, any Partner Entity, any of the Company's
Restricted Subsidiaries, or the Facilities Subsidiary acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for itself
or a substantial portion of its Property or business; or
(h) ERISA. (i) The Company or an ERISA Affiliate shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under a
Multiemployer Plan; (ii) the Company or an ERISA Affiliate shall fail to
satisfy its contribution requirements under Section 412(c)(11) of the Code,
whether or not it has sought a waiver under Section 412(d) of the Code; (iii)
in the case of an ERISA Event involving the withdrawal from a Plan of a
"substantial employer" (as defined in Section 4001(a)(2) or Section 4062(e) of
ERISA), the withdrawing employer's proportionate share of that Plan's Unfunded
Pension Liabilities is more than $10,000,000; (iv) in the case of an ERISA
Event involving the complete or partial withdrawal from a Multiemployer Plan,
the withdrawing employer has incurred a withdrawal liability in an aggregate
amount exceeding $10,000,000; (v) in the case of an ERISA Event not described
in clause (iii) or (iv), the Unfunded Pension Liabilities of the relevant Plan
or Plans exceed $10,000,000; (vi) a Plan that is intended to be qualified under
Section 401(a) of the Code shall lose its qualification, and the loss can
reasonably be expected to impose on the Company or its ERISA Affiliates
liability (for additional taxes, to Plan participants, or otherwise) in the
aggregate amount of $10,000,000 or more; (vii) the commencement or increase of
contributions to, or the adoption of or the amendment of a Plan by, the Company
or an ERISA Affiliate which commencement, increase or amendment shall result in
a net increase in unfunded liabilities to the Company and the ERISA Affiliates
in excess of $10,000,000; (viii) the Company or an ERISA Affiliate engages in
or otherwise becomes liable for a non-exempt prohibited transaction and the
initial tax or additional tax under section 4975 of the Code relating thereto
might reasonably be expected to exceed $10,000,000; (ix) a violation of section
404 or 405 of ERISA or the exclusive benefit rule under section 401(a) of the
Code if such violation might reasonably be expected to expose Company or its
ERISA Affiliates to monetary liability in excess of $10,000,000; (x) any member
of the Controlled Group is assessed a tax under section 4980B of the Code in
excess of $10,000,000; or (xi) the occurrence of any combination of events
listed in clauses (iii) through (x) that would reasonably be expected to result
in a net increase to the Company and its ERISA Affiliates in aggregate Unfunded
Pension Liabilities, unfunded liabilities, or any combination thereof, in
excess of $10,000,000; or
98
<PAGE> 106
(i) Monetary Judgments. One or more non-interlocutory judgments,
orders or decrees shall be entered against the Company or any of its
Subsidiaries involving in the aggregate a liability (not fully covered by
independent third-party insurance) as to any single or related series of
transactions, incidents or conditions, of $25,000,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of
30 days after the entry thereof; or
(j) Non-Monetary Judgments. Any non-monetary judgment, order or
decree shall be rendered against the Company or any of its Subsidiaries which
does or would reasonably be expected to have a Material Adverse Effect, and
there shall be any period of 10 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; or
(k) Auditors. The Agent or any Bank shall receive notice from the
Independent Auditor that the Agent and the Banks should no longer use or rely
upon any audit report or other financial data provided by the Independent
Auditor; or
(l) Adverse Change. One of the following has occurred and the
Agent, at the direction of the Majority Banks, shall so notify the Company:
(i) a material adverse change in, or a material adverse effect upon, any of the
operations, business, properties, or condition (financial or otherwise) of the
Company or the Company and its Subsidiaries taken as a whole or as to any
Restricted Subsidiary which materially impairs the ability of the Company to
perform under any Loan Document and avoid any Event of Default, or (ii) a
material adverse effect upon the legality, validity, binding effect or
enforceability of any Loan Document.
9.2 REMEDIES
If any Event of Default occurs, the Agent shall, at the request of, or
may, with the consent of, the Majority Banks do any one or more of the
following:
(a) declare the Commitment of each Bank and the Swingline
Commitment of the Swingline Bank to make Loans and any obligation of the
Issuing Banks to issue Letters of Credit to be terminated, whereupon such
Commitments and obligations shall forthwith be terminated;
(b) declare an amount equal to the maximum aggregate amount that
is or at any time thereafter may become available for drawing under any
outstanding Letters of Credit (whether or not any beneficiary shall have
presented, or shall be entitled at such time to present, the drafts or other
documents required to draw under such Letters of Credit) to be immediately due
and payable, and declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan
99
<PAGE> 107
Document to be immediately due and payable, without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived
by the Company; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
provided, however, that upon the occurrence of any event specified in paragraph
(f) or (g) of Section 9.1 above (in the case of clause (i) of paragraph (g)
upon the expiration of the 60-day period mentioned therein), the obligation of
each Bank and the Swingline Bank to make Loans and any obligation of the
Issuing Banks to Issue Letters of Credit shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Agent, the Issuing Banks, the Swingline Bank, or any Bank.
9.3 RIGHTS NOT EXCLUSIVE
The rights provided for in this Agreement and the other Loan Documents
are cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
10. THE AGENT
10.1 APPOINTMENT AND AUTHORIZATION
(a) Each Bank and each Issuing Bank hereby irrevocably (subject to
Section 10.9) appoints, designates and authorizes the Agent to take such action
on its behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Loan Document,
together with such powers as are reasonably incidental thereto, including,
without limitation, to enter into Cash Collateral Account Agreements from time
to time in accordance with this Agreement, and to release funds to the Company
in accordance with Section 1(b) of the Cash Collateral Account Agreement and,
if applicable, pursuant to an Officer's Certificate substantially in the form
attached thereto as Exhibit A. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, the Agent
shall not have any duties or responsibilities, except those expressly set forth
herein, nor shall the Agent have or be deemed to have any fiduciary
relationship with any Bank or any Issuing Bank, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Agent. Without limiting the generality of the foregoing
100
<PAGE> 108
sentence, the use of the term "agent" in this Agreement with reference to the
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law. Instead, such
term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting
parties.
(b) Each Issuing Bank shall act on behalf of the Banks with
respect to any Letters of Credit Issued by it and the documents associated
therewith until such time and except for so long as the Agent may agree at the
request of the Majority Banks to act for such Issuing Bank with respect
thereto; provided, however, that each Issuing Bank shall have all of the
benefits and immunities (i) provided to the Agent in this Article X with
respect to any acts taken or omissions suffered by such Issuing Bank in
connection with Letters of Credit Issued by it or proposed to be Issued by it
and the application and agreements for letters of credit pertaining to the
Letters of Credit as fully as if the term "Agent," as used in this Article X,
included such Issuing Bank with respect to such acts or omissions, and (ii) as
additionally provided in this Agreement with respect to the Issuing Banks.
10.2 DELEGATION OF DUTIES
The Agent may execute any of its duties under this Agreement or any
other Loan Document by or through agents, employees or attorneys- in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects with reasonable
care.
10.3 LIABILITY OF AGENT
None of the Agent-Related Persons shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Banks for any recital, statement,
representation or warranty made by the Company or any Subsidiary or Affiliate
of the Company, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Company or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan
101
<PAGE> 109
Document, or to inspect the Properties, books or records of the Company or any
of the Company's Subsidiaries or Affiliates.
10.4 RELIANCE BY AGENT
(a) The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone
message, statement or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including counsel
to the Company), independent accountants and other experts selected by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Majority Banks as it deems
appropriate and, if it so requests, it shall first be indemnified to its
satisfaction by the Banks against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement or any other Loan Document in accordance with
a request or consent of the Majority Banks and such request and any action
taken or failure to act pursuant thereto shall be binding upon all of the
Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent or made available by the Agent to such
Bank for consent, approval, acceptance or satisfaction, or required thereunder
to be consented to or approved by or acceptable or satisfactory to the Bank,
unless an officer of the Agent responsible for the transactions contemplated by
the Loan Documents shall have received notice from the Bank prior to the
initial Credit Extension specifying its objection thereto and either such
objection shall not have been withdrawn by notice to the Agent to that effect
or the Bank shall not have made available to the Agent the Bank's ratable
portion of such Credit Extension.
10.5 NOTICE OF DEFAULT
The Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, except with respect to defaults
in the payment of principal, interest and fees required to be paid to the Agent
for the account of the Banks, unless the Agent shall have received written
notice from a Bank or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". The Agent will notify the Banks of its receipt of any such notice.
The Agent shall take such action with respect to such Default or Event of
Default as may be requested by the Majority
102
<PAGE> 110
Banks in accordance with Article IX; provided, however, that unless and until
the Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable or in
the best interest of the Banks.
10.6 CREDIT DECISION
Each Bank expressly acknowledges that none of the Agent-Related
Persons has made any representation or warranty to it, and that no act by the
Agent hereinafter taken, including any review of the affairs of the Company and
its Subsidiaries, shall be deemed to constitute any representation or warranty
by any Agent-Related Person to any Bank. Each Bank represents to the Agent
that it has, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries, and all applicable bank regulatory laws relating
to the transactions contemplated hereby, and made its own decision to enter
into this Agreement and to extend credit to the Company hereunder. Each Bank
also represents that it will, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of the Company. Except for
notices, reports and other documents expressly herein required to be furnished
to the Banks by the Agent, the Agent shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of the Company which may come into the possession of any of
the Agent-Related Persons.
10.7 INDEMNIFICATION OF AGENT
Whether or not the transactions contemplated hereby are consummated,
the Banks shall indemnify upon demand the Agent-Related Persons (to the extent
not reimbursed by or on behalf of the Company and without limiting the
obligation of the Company to do so), pro rata from and against any and all
Indemnified Liabilities; provided, however, that no Bank shall be liable for
the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including reasonable Attorney Costs) incurred by the Agent in connection with
the preparation,
103
<PAGE> 111
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any
other Loan Document, or any document contemplated by or referred to herein, to
the extent that the Agent is not reimbursed for such expenses by or on behalf
of the Company. Without limiting the generality of the foregoing, if the
Internal Revenue Service or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Bank hereunder
(because the appropriate form was not delivered, was not properly executed, or
because such Bank failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax ineffective, or
for any other reason) such Bank shall indemnify the Agent fully for all amounts
paid, directly or indirectly, by the Agent as tax or otherwise, including
penalties and interest, and including any taxes imposed by any jurisdiction on
the amounts payable to the Agent under this Section, together with all costs
and expenses and attorneys' fees (including reasonable Attorney Costs). The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Agent.
10.8 AGENT IN INDIVIDUAL CAPACITY
BofA, NationsBank,N.A., and any of their respective Affiliates may
make loans to, issue letters of credit for the account of, accept deposits
from, acquire equity interests in and generally engage in any kind of banking,
trust, financial advisory, underwriting or other business with the Company and
its Subsidiaries and Affiliates as though neither BofA nor NationsBank, N.A.
was the Agent and the Senior Co- Agent, respectively, the Swingline Bank or an
Issuing Bank hereunder and without notice to or consent of the Banks. The
Banks acknowledge that, pursuant to such activities, BofA or its Affiliates may
receive information regarding the Company or its Affiliates (including
information that may be subject to confidentiality obligations in favor of the
Company or such Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to its Loans and
participation in Letters of Credit, each of BofA and NationsBank, N.A. shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent or the Senior Co-Agent, as
the case may be, and the terms "Bank" and "Banks" shall include each of BofA
and NationsBank, N.A. in its individual capacity.
10.9 SUCCESSOR AGENT
The Agent may, and at the request of the Majority Banks shall, resign
as Agent upon 30 days' notice to the Banks. If the Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a successor
agent for the Banks. If no successor agent is appointed prior to the effective
date of the
104
<PAGE> 112
resignation of the Agent, the Agent may appoint, after consulting with the
Banks and the Company, a successor agent from among the Banks. Upon the
acceptance of its appointment as successor agent hereunder, such successor
agent shall succeed to all the rights, powers and duties of the retiring Agent
and the term "Agent" shall mean such successor agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated. After any
retiring Agent's resignation hereunder as Agent, the provisions of this Article
X and Sections 11.4 and 11.5 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is 30 days
following a retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the Banks shall
perform all of the duties of the Agent hereunder until such time, if any, as
the Majority Banks appoint a successor agent as provided for above.
Notwithstanding the foregoing, however, BofA may not be removed as the Agent at
the request of the Majority Banks unless BofA shall also simultaneously be
replaced as an "Issuing Bank" hereunder pursuant to documentation in form and
substance satisfactory to BofA.
10.10 SENIOR CO-AGENT
The Bank identified on the facing page or signature pages of this
Agreement as a "senior co-agent" shall have no right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Banks as such. Each Bank acknowledges that it has not
relied, and will not rely, on the Bank so identified in deciding to enter into
this Agreement or in taking or not taking action hereunder.
11. MISCELLANEOUS
11.1 AMENDMENTS AND WAIVERS
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent with respect to any departure by the Company
therefrom, shall be effective unless the same shall be in writing and signed by
the Majority Banks, the Company and acknowledged by the Agent, and then such
waiver shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Banks, the Company and
acknowledged by the Agent, do any of the following:
(a) increase or extend the Commitment of any Bank or the Swingline
Commitment of the Swingline Bank (or reinstate any such Commitment terminated
pursuant to subsection 9.2(a)), including, without limitation, any amendment to
or
105
<PAGE> 113
waiver of subsection 2.7(b) or any other provision providing for a mandatory
commitment reduction, or subject any Bank to any additional obligations;
(b) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due to the Banks (or any of them) hereunder or
under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (iii) below) of any fees or other
amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which shall be required for the Banks or
any of them to take any action hereunder; or
(e) amend this Section 11.1 or Section 2.15 or any provision
providing for consent or other action by all Banks;
and, provided further that (i) no amendment, waiver or consent shall, unless in
writing signed by the relevant Issuing Bank in addition to the Majority Banks
or all the Banks, as the case may be, affect the rights or duties of such
Issuing Bank under this Agreement or any L/C-Related Document relating to any
Letter of Credit Issued or to be Issued by it, (ii) no amendment, waiver or
consent shall, unless in writing and signed by the Agent in addition to the
Majority Banks or all the Banks, as the case may be, affect the rights or
duties of the Agent under this Agreement or any other Loan Document, (iii) no
amendment, waiver or consent shall, unless in writing and signed by the
Swingline Bank in addition to the Majority Banks or all the Banks, as the case
may be, affect the rights or duties of the Swingline Bank under this Agreement
or any other Loan Document, and (iv) the fee letter between the Company and
BofA may be amended, or rights and privileges thereunder waived, in a writing
executed by the parties thereto.
11.2 NOTICES
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Company by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on Schedule 11.2, and
(ii) shall be followed promptly by a hard copy original thereof) and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
Schedule 11.2; or, as directed to the Company or the Agent, to such other
address as shall be designated by such party in a written notice to the other
parties, and as directed to each other party, at such other address as shall be
designated by such party in a written notice to the Company and the Agent.
106
<PAGE> 114
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted by facsimile machine,
respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that,
notwithstanding the foregoing, notices pursuant to Article III to an Issuing
Bank shall not be effective until actually received by the Issuing Bank at the
address specified for the "Issuing Bank" on Schedule 11.2, and notices to the
Company or the Agent shall not be effective until actually received by the
Company or the Agent, respectively.
(c) The Company acknowledges and agrees that any agreement of the
Agent, the Issuing Banks, and the Banks at Article II and Article III herein to
receive certain notices by telephone and facsimile is solely for the
convenience and at the request of the Company. The Agent, the Issuing Banks,
and the Banks shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Company to give such notice and the
Agent, the Issuing Banks and the Banks shall not have any liability to the
Company or other Person on account of any action taken or not taken by the
Agent, the Issuing Banks or the Banks in reliance upon such telephonic or
facsimile notice. The obligation of the Company to repay the Loans and L/C
Obligations shall not be affected in any way or to any extent by any failure by
the Agent, the Issuing Banks, and the Banks to receive written confirmation of
any telephonic or facsimile notice or the receipt by the Agent, the Issuing
Banks and the Banks of a confirmation which is at variance with the terms
understood by the Agent, the Issuing Banks, and the Banks to be contained in
the telephonic or facsimile notice.
11.3 NO WAIVER; CUMULATIVE REMEDIES
No failure to exercise and no delay in exercising, on the part of the
Agent or any Bank, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.
11.4 COSTS AND EXPENSES
The Company shall, whether or not the transactions contemplated hereby
shall be consummated:
(a) pay or reimburse BofA (including in its capacity as Agent) and
the Arranger within five Business Days after demand (subject to subsection
5.1(e)) for all reasonable costs and expenses incurred by BofA (including in
its capacity as Agent) or Arranger in connection with the development,
preparation, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any
107
<PAGE> 115
Loan Document and any other documents prepared in connection herewith or
therewith, the initial assignments by BofA of its Loans and Commitments
hereunder, and the consummation of the transactions contemplated hereby and
thereby, including expenses of outside experts, printing costs, and the
reasonable Attorney Costs incurred by BofA (including in its capacity as Agent)
or Arranger with respect thereto; provided, however, that this subsection (a)
shall not apply to any such costs and expenses incurred by BofA after any date
that BofA is no longer the Agent hereunder and after any such date any
references in this subsection (a) to BofA shall be deemed a reference to the
successor Agent; and
(b) pay or reimburse each Bank, the Agent, and the Arranger within
five Business Days after demand (subject to subsection 5.1(e)) for all costs
and expenses incurred by them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies (including in connection
with any "workout" or restructuring regarding the Loans, and including in any
Insolvency Proceeding or appellate proceeding) under this Agreement, any other
Loan Document, and any such other documents, including Attorney Costs and
appraisal (including the allocated cost of internal appraisal services), audit,
environmental inspection and review (including the allocated cost of such
internal services), and search and filing costs, fees and expenses, incurred by
the Agent, the Arranger and any Bank.
11.5 INDEMNITY
Whether or not the transactions contemplated hereby shall be
consummated: The Company shall pay, indemnify, and hold each Bank, the Agent,
and each of their respective officers, directors, employees, counsel, agents
and attorneys-in-fact (each, an "Indemnified Person") harmless from and against
any and all liabilities, obligations, losses, claims, damages, penalties,
actions, judgments, suits, costs, charges, expenses or disbursements (including
reasonable Attorney Costs) of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement, any Loan Documents, or the transactions contemplated hereby and
thereby, and with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to this
Agreement, or the Loans or the Letters of Credit or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided that the
Company shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
108
<PAGE> 116
11.6 Marshalling; Payments Set Aside
Neither the Agent nor the Banks shall be under any obligation to
marshall any assets in favor of the Company or any other Person or against or
in payment of any or all of the Obligations. To the extent that the Company
makes a payment or payments to the Agent or the Banks, or the Agent or the
Banks enforce their Liens or exercise their rights of set-off, and such payment
or payments or the proceeds of such enforcement or set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Agent in its discretion) to be repaid to a trustee, receiver or any other party
in connection with any Insolvency Proceeding, or otherwise, then (a) to the
extent of such recovery the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or set-off had not occurred, and
(b) each Bank severally agrees to pay to the Agent upon demand its ratable
share of the total amount so recovered from or repaid by the Agent.
11.7 SUCCESSORS AND ASSIGNS
The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the Agent
and each Bank.
11.8 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) Any Bank may, with the written consent of the Company at all
times other than during the existence of an Event of Default and the Agent,
which consents shall not be unreasonably withheld or delayed, at any time
assign and delegate to one or more Eligible Assignees (each, an "Assignee")
(provided that no written consent of the Company or the Agent shall be required
in connection with any assignment and delegation by a Bank to an Eligible
Assignee that is an Affiliate of such Bank) all or any ratable part of all of
the Loans, the Commitments, the L/C Obligations and all other rights and
obligations of such Bank hereunder; provided, however, that (i) no assignment
shall in any event be less than $10,000,000 of the Commitment of the assigning
Bank under this Agreement unless as a result of such assignment the assigning
Bank's rights and obligations hereunder shall be reduced to zero; (ii) if a
Bank assigns less than all of its rights and obligations hereunder, such Bank's
aggregate remaining Commitment, after giving effect to such assignment, shall
not be less than $10,000,000; and (iii) the Company and the Agent may continue
to deal solely and directly with such Bank in connection with the interest so
assigned to an Assignee until (A) written notice of such assignment, together
with payment instructions, addresses and related information with respect to
the Assignee, shall have been given to the Company and the Agent by such Bank
and the Assignee; (B) such Bank and its Assignee shall have delivered to the
Company and the Agent an Assignment and Acceptance
109
<PAGE> 117
in the form of Exhibit F ("Assignment and Acceptance") and (C) the assignor
Bank or Assignee has paid to the Agent a processing fee in the amount of
$3,500. In connection with any assignment by BofA, its Swingline Commitment
may be in whole but not in part included as part of the assignment transaction,
and the Assignment and Acceptance may be appropriately modified to include an
assignment and delegation of its Swingline Commitment and any outstanding
Swingline Loans.
(b) From and after the date that the Agent notifies the assignor
Bank that it has received (and provided its consent with respect to) an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Immediately upon each Assignee's making its processing fee
payment under the Assignment and Acceptance, this Agreement shall be deemed to
be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitment arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitment of the assigning Bank pro tanto.
(d) Any Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Company (a "Participant") participating
interests in any of the Loans, the Commitment of that Bank and the other
interests of that Bank (the "originating Bank") hereunder and under the other
Loan Documents; provided, however, that (i) the originating Bank's obligations
under this Agreement shall remain unchanged, (ii) the originating Bank shall
remain solely responsible for the performance of such obligations, (iii) the
Company, the Issuing Banks and the Agent shall continue to deal solely and
directly with the originating Bank in connection with the originating Bank's
rights and obligations under this Agreement and the other Loan Documents, and
(iv) no Bank shall transfer or grant any participating interest under which the
Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to
the extent such amendment, consent or waiver would require unanimous consent of
the Banks as described in the first proviso to Section 11.1. In the case of
any such participation, the Participant shall be entitled to the benefit of
Sections 4.1, 4.3 and 11.5 as though it were also a Bank hereunder, and if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an
110
<PAGE> 118
Event of Default, each Participant shall be deemed to have the right of set-off
in respect of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.
(e) Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as "confidential" by the Company and provided to it by the Company or any
Subsidiary of the Company, or by the Agent on such Company's or Subsidiary's
behalf, in connection with this Agreement or any Loan Document, and neither it
nor any of its Affiliates shall use any such information for any purpose or in
any manner other than pursuant to the terms contemplated by this Agreement;
provided, however, that any Bank may disclose such information (A) to the
extent that such information was or becomes generally available to the public
other than as a result of a disclosure by the Bank; (B) to the extent such
information was or becomes available to such Bank to whom it was furnished on a
non-confidential basis; (C) at the request or pursuant to any requirement of
any Governmental Authority to which the Bank is subject or in connection with
an examination of such Bank by any such authority; (D) pursuant to subpoena or
other court process; (E) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (F) to the extent reasonably
required in connection with any litigation or proceeding to which the Agent,
any Bank or their respective Affiliates may be party; (G) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (H) to such Bank's independent auditors and
other professional advisors and (I) to such Bank's Affiliates. Notwithstanding
the foregoing, the Company authorizes each Bank to disclose to any Participant
or Assignee (each, a "Transferee") and to any prospective Transferee, such
financial and other information in such Bank's possession concerning the
Company or its Subsidiaries which has been delivered to the Agent or the Banks
pursuant to this Agreement or which has been delivered to the Agent or the
Banks by the Company in connection with the Banks' credit evaluation of the
Company prior to entering into this Agreement; provided that, unless otherwise
agreed by the Company, such Transferee agrees in writing to such Bank to keep
such information confidential to the same extent required of the Banks
hereunder.
(f) Notwithstanding any other provision contained in this
Agreement or any other Loan Document to the contrary, any Bank may assign all
or any portion of the Loans held by it to any Federal Reserve Bank or the
United States Treasury as collateral security pursuant to Regulation A of the
Federal Reserve Board and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Loans made by the
Company to or for the account of the assigning or pledging Bank in accordance
with the terms of this Agreement shall satisfy the Company's obligations
hereunder in respect to such
111
<PAGE> 119
assigned Loans to the extent of such payment. No such assignment shall release
the assigning Bank from its obligations hereunder.
11.9 SET-OFF
In addition to any rights and remedies of the Banks provided by law,
if an Event of Default exists, each Bank is authorized at any time and from
time to time, without prior notice to the Company, any such notice being waived
by the Company to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by, and other indebtedness at any time owing to, such Bank and
any of its Affiliates to or for the credit or the account of the Company
against any and all Obligations owing to such Bank, now or hereafter existing,
irrespective of whether or not the Agent or such Bank shall have made demand
under this Agreement or any Loan Document and although such Obligations may be
contingent or unmatured. Each Bank agrees promptly to notify the Company and
the Agent after any such set-off and application made by such Bank; provided,
however, that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of each Bank under this Section 11.9
are in addition to the other rights and remedies (including other rights of
set-off) which the Bank may have.
11.10 AUTOMATIC DEBITS OF FEES
With respect to any commitment fee, facility fee, letter of credit fee
or other fee, or any other cost or expense (including Attorney Costs) due and
payable to the Agent, the Issuing Banks, the Swingline Bank or BofA under the
Loan Documents, the Company hereby irrevocably authorizes BofA to debit any
deposit account of the Company with BofA in an amount such that the aggregate
amount debited from all such deposit accounts does not exceed such fee or other
cost or expense. If there are insufficient funds in such deposit accounts to
cover the amount of the fee or other cost or expense then due, such debits will
be reversed (in whole or in part, in BofA's sole discretion) and such amount
not debited shall be deemed to be unpaid. No such debit under this Section
11.10 shall be deemed a setoff.
11.11 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC.
Each Bank shall notify the Agent in writing of any changes in the
address to which notices to the Bank should be directed, of addresses of its
Offshore Lending Office, of payment instructions in respect of all payments to
be made to it hereunder and of such other administrative information as the
Agent shall reasonably request.
112
<PAGE> 120
11.12 Counterparts
This Agreement may be executed by one or more of the parties to this
Agreement in any number of separate counterparts, each of which, when so
executed, shall be deemed an original, and all of said counterparts taken
together shall be deemed to constitute but one and the same instrument. A set
of the copies of this Agreement signed by all the parties shall be lodged with
the Company and the Agent.
11.13 SEVERABILITY
The illegality or unenforceability of any provision of this Agreement
or any instrument or agreement required hereunder shall not in any way affect
or impair the legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
11.14 NO THIRD PARTIES BENEFITED
This Agreement is made and entered into for the sole protection and
legal benefit of the Company, the Banks, the Issuing Banks, the Swingline Bank,
the Senior Co-Agent, and the Agent, and their permitted successors and assigns,
and no other Person shall be a direct or indirect legal beneficiary of, or have
any direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents. Neither the Agent, the Senior
Co-Agent, the Swingline Bank, the Issuing Bank nor any Bank shall have any
obligation to any Person not a party to this Agreement or other Loan Documents.
11.15 TIME
Time is of the essence as to each term or provision of this Agreement
and each of the other Loan Documents.
11.16 GOVERNING LAW AND JURISDICTION
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL
RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
11.17 ARBITRATION; REFERENCE
(a) Mandatory Arbitration. Any controversy or claim between or
among the parties, including but not limited to those arising out of or
relating to this Agreement or any agreements or instruments relating hereto or
delivered in connection herewith and any claim based on or arising from an
alleged tort, shall at
113
<PAGE> 121
the request of any party be determined by arbitration. The arbitration shall be
conducted in accordance with the United States Arbitration Act (Title 9, U.S.
Code), notwithstanding any choice of law provision in this Agreement, and under
the Commercial Rules of the American Arbitration Association ("AAA"). The
arbitrator(s) shall give effect to applicable statutes of limitation in
determining any claim. Any controversy concerning whether an issue is
arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
(b) Judicial Reference. At the request of any party a controversy
or claim which is not submitted to arbitration as provided and limited in
subparagraph (a) shall be determined by a reference in accordance with
California Code of Civil Procedure Section 638 et seq. If such an election is
made, the parties shall designate to the court a referee or referees selected
under the auspices of the AAA in the same manner as arbitrators are selected in
AAA-sponsored proceedings. The presiding referee of the panel, or the referee
if there is a single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be entered
in the court in which such proceeding was commenced in accordance with
California Code of Civil Procedure Sections 644 and 645.
(c) Provisional Remedies, Self-Help and Foreclosure. No provision
of this paragraph shall limit the right of any party to this Agreement to
exercise self-help remedies such as setoff, foreclosure against or sale of any
real or personal property collateral or security, or obtaining provisional or
ancillary remedies from a court of competent jurisdiction before, after, or
during the pendency of any arbitration or other proceeding. The exercise of a
remedy does not waive the right of either party to resort to arbitration or
reference.
11.18 ENTIRE AGREEMENT
This Agreement, together with the other Loan Documents, embodies the
entire agreement and understanding among the Company, the Banks, the Swingline
Bank, the Issuing Banks, the Senior Co-Agent and the Agent, and supersedes all
prior or contemporaneous Agreements and understandings of such Persons, verbal
or written, relating to the subject matter hereof and thereof, except that (a)
the fee letter referenced in subsection 2.11(a), (b) any prior arrangements
made with respect to the payment by the Company of (or any indemnification for)
any fees, costs or expenses payable to or incurred (or to be incurred) by or on
behalf of the Agent or the Banks, and (c) the representations and warranties
(as of the dates made and deemed made) and the indemnities of the Company set
forth in the
114
<PAGE> 122
Existing Credit Agreement and the "Loan Documents" as defined therein shall, in
each case, survive the execution and delivery of this Agreement.
115
<PAGE> 123
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered in San Francisco, California by
their proper and duly authorized officers as of 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/ DIANE M. IRVINE
-------------------------------
Name: Diane M. Irvine
Title: Vice President and
Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as Agent
By: /s/ MICHAEL J. BALOK
-------------------------------
Name: Michael J. Balok
Title: Managing Director
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
as a Bank, as the Swingline Bank and as an
Issuing Bank
By: /s/ MICHAEL J. BALOK
-------------------------------
Name: Michael J. Balok
Title: Managing Director
NATIONSBANK N.A.
By: /s/ MICHAEL SHORT
-------------------------------
Name: Michael Short
Title: Vice President
<PAGE> 124
ABN AMRO BANK N.V. SEATTLE BRANCH
By: /s/ DAVID MCGINNIS
-------------------------------
Name: David McGinnis
Title: Vice President and Director
By: /s/ ERRET E. HUMMEL
-------------------------------
Name: Erret E. Hummel
Title: Vice President and Director
UNITED STATES NATIONAL BANK OF OREGON
By: /s/ WADE BLACK
-------------------------------
Name: Wade Black
Title: Vice President
BANK OF AMERICA NW, N.A., dba
SEAFIRST BANK
By: /s/ PAUL R. ROLLINS, JR.
-------------------------------
Name: Paul R. Rollins, Jr.
Title: Senior Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.,
SEATTLE BRANCH
By: /s/ DAVID M. PURCELL
-------------------------------
Name: David M. Purcell
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ KEVIN SULLIVAN
-------------------------------
Name: Kevin Sullivan
Title: Vice President
S-2
<PAGE> 125
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ ROD HURST
-------------------------------
Name: Rod Hurst
Title: Vice President
THE SUMITOMO BANK, LIMITED
By: /s/ TATSUO UEDA
-------------------------------
Name: Tatsuo Ueda
Title: General Manager
<PAGE> 126
SCHEDULE 2.1
COMMITMENTS
<TABLE>
<CAPTION>
COMMITMENT
BANK COMMITMENT PERCENTAGE
- - ------------------------------------- ------------ ---------------
<S> <C> <C>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION 30,000,000 13.33333334%
NATIONSBANK, N.A. 35,000,000 15.55555556%
ABN AMRO BANK N.V.
SEATTLE BRANCH 32,500,000 14.44444444%
UNITED STATES NATIONAL BANK OF OREGON 32,500,000 14.44444444%
THE BANK OF TOKYO-MITSUBISHI, LTD.
SEATTLE BRANCH 22,500,000 10.00000000%
CREDIT LYONNAIS NEW YORK BRANCH 22,500,000 10.00000000%
THE SUMITOMO BANK, LIMITED 20,000,000 8.88888889%
UNION BANK OF CALIFORNIA, N.A. 20,000,000 8.88888889%
BANK OF AMERICA NW, DBA SEAFIRST BANK 10,000,000 4.44444444%
============ =============
225,000,000 100.00000000%
</TABLE>
<PAGE> 1
EXHIBIT 10.8
PLUM CREEK
DIRECTOR UNIT OWNERSHIP AND DEFERRAL PLAN
1. Purpose. The purpose of this Director Unit Ownership and Deferral Plan
("Plan") is to encourage directors of PC Advisory Corp. I, the general partner
of PC Advisory Partners I, L.P., which serves as the general partner of Plum
Creek Management Company, L.P., a Delaware limited partnership ("General
Partner") which serves as the general partner of Plum Creek Timber Company, L.P.
("Company"), to have an ongoing ownership interest in the Company by providing
to such directors opportunities to use director compensation to acquire
depositary units representing limited partner interests in the Company ("Units")
on a current or deferred basis.
2. Participants. The participants ("Participants") under this
Plan are the directors of PC Advisory Corp. I who are not
employees of the Company or the General Partner.
3. Administration. This Plan will be administered by a committee
("Committee") which shall be comprised of not fewer than two (2) persons as the
board of PC Advisory Corp. I (the "Board") may from time to time designate. The
Committee shall interpret this Plan and make all determinations necessary or
advisable for administration of the Plan. Any such action by the Committee shall
be final and conclusive on all persons having any interest in such action. Any
determination of the Committee under this Plan may be made by a majority of the
Committee members. The Committee may delegate such authority to the Vice
President, General Counsel and Secretary of the General Partner as it deems
necessary or appropriate to administer the Plan.
4. Terms and Conditions of Conversion Rights. Each Participant shall have
until December 15 each year to elect to receive Unit Conversion Rights
("Conversion Rights"), as calculated herein, in lieu of cash for his or her
director retainer fees ("Retainer Fees") and director meeting fees ("Meeting
Fees") payable during the subsequent calendar year ("Plan Year"). The election
shall be made on a form prescribed by the Committee and shall be revocable only
upon six months written notice to the Committee, except that Participants
electing to defer the receipt of Units under the Plan, as described below, may
not revoke their election to participate in the Plan during a Plan Year. On the
date each payment of a Retainer Fee or a Meeting Fee would otherwise be
<PAGE> 2
paid (a "Fee Event"), a Participant's Conversion Rights shall represent the
right to receive a number of Units calculated by dividing the amount of the
Participant's Retainer Fee or Meeting Fee by the Unit Average Price, rounded
down to the nearest whole Unit. The Unit Average Price is the average price,
excluding commissions, of Units purchased by a broker designated by the
Committee (the "Designated Broker") with respect to all Conversion Rights for
such Fee Event. Purchases of Units by the Designated Broker to satisfy
Conversion Rights, upon which Unit Average Price will be calculated, will be
made following the General Partner's transmission of funds to the Designated
Broker as a result of the Fee Event.
4.1 Cash in Lieu of Fractional Units. Funds representing the
difference between the total amount of the Retainer Fee or Meeting Fee and the
total actual cost of the Units received ("Cash in Lieu of Fractional Units")
shall be deposited into an account with the Designated Broker and applied at the
time of subsequent deposits of Cash in Lieu of Fractional Units to purchase
additional Units.
5. Deferral Option. A Participant may elect for each Plan Year,
concurrently with his or her election to receive Unit Conversion
Rights, to defer receipt of Units under the Plan (the "Deferral
Option") until the conclusion of such Participant's service as a
director of PC Advisory Corp. I.
5.1 Shadow Unit Account. The Company shall establish a ledger
account ("Shadow Unit Account") for each Participant electing to defer receipt
of Units for the purpose of reflecting the Company's obligation to deliver the
deferred Units as provided in Section 5.4.
5.2 Conversion of Unit Conversion Rights to Shadow Units. A
Participant's Conversion Rights arising from a Fee Event shall be converted into
Shadow Units to be credited to the Participant's Shadow Unit Account as follows:
As to Retainer Fees, on the date such Retainer would otherwise be paid,
and in a number of Shadow Units equal to
(A) the amount of the Retainer Fee, divided by
2
<PAGE> 3
(B) the closing reported sales price, regular way, per Unit
on the New York Stock Exchange on the date the Retainer Fee
would otherwise be paid;
As to Meeting Fees, on the date a Meeting Fee would otherwise be paid,
and in a number of Shadow Units equal to
(A) the amount of the Meeting Fee, divided by
(B) the closing reported sales price, regular way, per Unit
on the New York Stock Exchange on the date the Meeting Fee
would otherwise be paid.
5.3 Shadow Units Credited for Subsequent Partnership
Distributions. On the Distribution Date of any Partnership Distribution, Shadow
Units shall be credited to a Participant's Shadow Unit Account in an amount
equal to
(A) the product of the Shadow Units credited to the
Participant's Shadow Unit Account as of the Record Date for
such Distribution and the amount of the Partnership
Distribution determined on a per Unit basis, divided by
(B) the closing reported sales price, regular way, per Unit
on the New York Stock Exchange on the Distribution Date.
For purposes of this section 5.3 and section 5.2 above, if the appropriate day
for determining closing reported sales price is a day that Units are not traded,
the closing reported price shall be determined as of the first succeeding day
that Units are traded.
5.4 Delivery of Units. Whole Units will be delivered in settlement
of the Shadow Units credited to a Participant's Shadow Unit Account, along with
cash equal to the value of any fraction of a Unit credited to such Shadow Unit
Account, prior to the expiration of 60 (sixty) days following the last day of
such Participant's service as a director of PC Advisory Corp. I.
5.5 Funding of Deferral Option to Plan. Although the Company may
cause Units subject to be transferred pursuant to the terms of the Deferral
Option to be held under a grantor trust
3
<PAGE> 4
agreement, the Plan's Deferral Option is unfunded. A Trust, which shall be
intended to be a "grantor trust" within the meaning of section 671 of the Code,
may be used to assist the Company in meeting its obligations under the Plan.
Nothing contained in this Plan and no action taken pursuant to the provisions of
the Plan shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company, the Board (or any of its members),
or the Committee (or any of its members) and any Participant, any beneficiary,
or any other person. Although the Company may establish an accounting reserve
with respect to the future distribution of Units under the Plan, no reserve or
set aside amounts shall imply any rights of any Participant therein. Any reserve
or set aside shall be fully subject to the claims of the Company's creditors to
the same extent as the general assets of the Company. Nothing contained in this
Plan shall be construed to give any Participant an ownership interest in, or the
right to receive distributions from the Partnership with respect to, any Shadow
Units credited to the Participant's Shadow Unit Account or any Units subject to
a transfer related to such Shadow Units until such Units have been transferred
to the Participant pursuant to the terms of the Plan.
6. Legal and Other Requirements. The obligation to deliver Units under
this Plan shall be subject to all applicable laws, regulations, rules and
approvals, including, but not limited to, the effectiveness of a registration
statement under the Securities Act of 1933, as amended, if deemed necessary or
appropriate by the Committee, covering the Units acquired pursuant to Conversion
Rights. A Participant shall have no rights as a holder of Units with respect to
any Units covered by Conversion Rights or Shadow Units until the date of
delivery of a certificate to the Participant for such Units. Units issued
hereunder may be legended as the Committee shall deem appropriate to reflect the
restrictions imposed under this Plan or by securities laws generally.
7. Indemnification of Committee. The Company shall indemnify each member
of the Committee (which, for purposes of this Section 7, includes any employee
of the Company or a related company to whom the Committee has delegated any
responsibility in the administration of the Plan) against any and all claims,
losses, damages, expenses, including counsel fees incurred by the
4
<PAGE> 5
Committee, and any liability, including any amounts paid in settlement with the
Company's approval, arising from the member's or the Committee's determination,
action or failure to act, except when the same is judicially determined to be
attributable to the gross negligence or willful misconduct of such member. The
right of indemnity described in the preceding sentence shall be conditioned upon
(i) the timely receipt of notice by the Company of any claim asserted against
the Committee member, which notice, in the event of a lawsuit, shall be given
within ten (10) days after receipt by the Committee member, and (ii) the timely
receipt by the Company of an offer from the Committee member of an opportunity
to participate in the settlement or defense of such claim.
8. Amendment and Termination of Plan. The Plan may be
terminated with respect to any or all Participants at any time by
the Board and may be amended by the Board from time to time in
any respect.
9. Intentions. This Plan is intended to comply with Rule 16b-3
of the Securities Exchange Act of 1934, as amended, and any
provision which would prevent compliance with Rule 16b-3 shall be
deemed invalid to the extent permitted by law and deemed
necessary by the Committee.
10. Taxes. The Committee may, at its sole discretion, determine to
withhold, or instruct the Trustee to withhold, a number of Units otherwise to be
distributed under the Plan, the market value of which on the date of such
distribution is determined by the Committee to be sufficient to satisfy any
federal, state, local and other withholding tax requirements under applicable
law.
11. Washington Law to Govern. This Plan shall be governed by and construed
in accordance with the laws of the State of Washington.
5
<PAGE> 6
12. Effective Date of Plan. This Plan shall become effective upon the
approval of the Board.
PLUM CREEK MANAGEMENT COMPANY, L.P.
/s/ James A. Kraft January 21, 1996
------------------------------------- -------------------------
James A. Kraft Date
Vice President, General Counsel
and Secretary
6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Combined Financial
Statements of Plum Creek Timber Company, L.P. for the year ended December 31,
1996 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 123,892
<SECURITIES> 0
<RECEIVABLES> 25,122
<ALLOWANCES> 1,425
<INVENTORY> 53,884
<CURRENT-ASSETS> 222,485
<PP&E> 1,212,338
<DEPRECIATION> 116,998
<TOTAL-ASSETS> 1,336,434
<CURRENT-LIABILITIES> 69,497
<BONDS> 763,400
0
0
<COMMON> 0
<OTHER-SE> 491,648
<TOTAL-LIABILITY-AND-EQUITY> 1,336,434
<SALES> 633,741
<TOTAL-REVENUES> 633,741
<CGS> 429,897
<TOTAL-COSTS> 468,753
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,141
<INCOME-PRETAX> 224,990
<INCOME-TAX> 1,391
<INCOME-CONTINUING> 223,599
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 223,599
<EPS-PRIMARY> 4.71
<EPS-DILUTED> 0
</TABLE>
