UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): November 12, 1998
PLUM CREEK TIMBER COMPANY, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-10239 91-1443693
(State or other (Commission File Number) (I.R.S. Employer
jurisdiction of Identification Number)
incorporation or
organization)
999 Third Avenue, Suite 2300
Seattle, Washington 98104-4096
Telephone: (206) 467-3600
Item 2. Acquisition of Assets
On November 12, 1998, the Partnership acquired 905,000 acres of
forest lands in central Maine (the "Maine Timberland Acquisition")
from S.D. Warren Company, a Pennsylvania corporation, for a purchase
price of $180 million. The purchase price was determined through
arm's length negotiations. As part of the acquisition, the
Partnership entered into a long-term fiber supply agreement to supply
fiber to S.D. Warren Company's paper facility in Skowhegan, Maine, at
prevailing market prices.
The acquisition was financed with approximately $3 million in
cash and the balance with unsecured promissory notes that were issued
to the seller. The notes have an average maturity of 10 years with an
expected average interest rate ranging from 7% to 8%.
Item 7. Exhibits
(c) Exhibits
2.5 Purchase and Sale Agreement by and between S.D. Warren
Company as seller and Plum Creek Timber Company, L.P. as
purchaser, dated as of October 5, 1998. (Incorporated by
reference to Registrant's Form 10-Q for the quarter ended
September 30, 1998, file no. 1-10239.)
4.7 Senior Note Agreement, dated as of November 12, 1998, Series
E due February 12, 2007, Series F due February 12, 2009,
Series G due February 12, 2011. See attached exhibit.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF
THIS EXHIBIT. THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
PLUM CREEK TIMBER COMPANY, L.P.
(Registrant)
By: Plum Creek Management Company, L.P.
as General Partner
By: /s/ DIANE M. IRVINE
-----------------------
Diane M. Irvine
Vice President and
Chief Financial Officer
(Duly Authorized Officer)
Date: November 19, 1998
Exhibit Index
-------------
Exhibit Description
2.5 Purchase and Sale Agreement by and between S.D. Warren
Company as seller and Plum Creek Timber Company, L.P. as
purchaser, dated as of October 5, 1998. (Incorporated by
reference to Registrant's Form 10-Q for the quarter ended
September 30, 1998, file no. 1-10239.)
4.7 Senior Note Agreement, dated as of November 12, 1998, Series
E due February 12, 2007, Series F due February 12, 2009,
Series G due February 12, 2011. See attached exhibit.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF
THIS EXHIBIT. THE CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR
PORTIONS OF THIS EXHIBIT. THE CONFIDENTIAL
PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.
OMITTED TEXT HAS BEEN REPLACED WITH BRACKETED
LEGEND: [CONFIDENTIAL TREATEMENT REQUESTED]
-----------------------------------------------
PLUM CREEK TIMBER COMPANY, L.P.
999 Third Avenue
Seattle, Washington 98104
As of November 12, 1998
SDW Timber I, L.L.C.
c/o S.D. Warren Company
225 Franklin Street
Boston, MA 02110
Ladies and Gentlemen:
The undersigned, Plum Creek Timber Company, L.P. (together
with any Person who succeeds to all or substantially all of
Plum Creek Timber Company, L.P.'s assets and business,
herein called the "Company"), a Delaware limited
partnership, hereby agrees with SDW Timber I, L.L.C. (the
"Seller") as follows:
1. Authorization of Issue of Notes
The Company will authorize the issuance and delivery of
$171,375,000 aggregate principal amount of its Senior Notes
(the "Notes", such term to include each Note delivered
pursuant to any provision of this Agreement and any such
Notes issued in substitution therefor pursuant to any such
provision). The Notes will be issued in three separate
series which shall be entitled, shall be issued in such
amounts, shall bear interest (subject to adjustment as
provided in paragraph 4D) and shall mature as follows:
Title Principal Amount Interest Rate Maturity Date
Series E $71,406,250 -.--% February 12, 2007
Series F 49,984,375 -.--% February 12, 2009
Series G 49,984,375 -.--% February 12, 2011
The Notes shall be substantially in the form set out in
Exhibit A, with such changes therefrom, if any, (i) as
provided in paragraph 4G and (ii) as may be approved by the
Seller and the Company. Certain capitalized terms used in
this Agreement are defined in paragraph 10; references to a
"Schedule" or an "Exhibit" are, unless otherwise specified,
to a Schedule or an Exhibit attached to this Agreement and
references to "this Agreement" shall mean this Agreement as
it may from time to time be amended or supplemented.
2. Issuance of Notes
The Company and S.D. Warren Company ("SDW") have entered
into a Purchase and Sale Agreement (the "Timber Contract"),
dated as of October 5, 1998, whereby (A) SDW has agreed to
(i) transfer certain timberlands and associated property
located in the central portion of Maine, and assets and
rights appurtenant thereto, to its wholly-owned subsidiary,
SDW Timber II, L.L.C., a Delaware limited liability company
("SDW Timber II"), (ii) transfer its limited liability
interest in SDW Timber II (the "LLC Interest") to the Seller
and (iii) cause the Seller to sell, transfer and deliver the
LLC Interest to the Company, and (B) the Company has agreed
to purchase the LLC Interest from the Seller for
consideration which includes the Notes provided for herein.
It is a condition of the Timber Contract that the Company
and the Seller shall enter into this Agreement and that the
Company shall issue its Notes to the Seller in payment of a
portion of the purchase price payable by the Company under
the Timber Contract (the "Property Purchase Price").
Accordingly, subject to the terms and conditions herein set
forth, the Company hereby agrees to issue to the Seller, and
the Seller agrees to accept from the Company, $171,375,000
aggregate principal amount of Notes in payment of the
portion of the Property Purchase Price represented by the
Notes. The Company will deliver to the Seller, at the
offices of Ropes & Gray, One International Place, Boston,
Massachusetts, on the "Closing Date" under the Timber
Contract (herein called the "closing" or the "date of
closing") one or more Notes registered in the Seller's name
or in the name of its nominee, evidencing the aggregate
principal amount of Notes to be issued to the Seller
hereunder and in the denomination or denominations specified
in Schedule I.
3. Conditions of Closing
The obligation of the Company to issue the Notes hereunder,
and the obligation of the Seller to accept such Notes is, in
each case, entirely dependent upon the occurrence of the
"Closing" under the Timber Contract. The obligation of the
Seller to accept the Notes to be issued to it hereunder is
subject to the satisfaction, on or before the date of
closing, of the following further conditions:
3A. Opinion of Company's General Counsel
The Seller shall have received from James A. Kraft, Vice
President, General Counsel and Secretary for the Company, a
favorable opinion satisfactory to the Seller and
substantially in the form of Exhibit B attached hereto.
3B. 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 the Seller a certificate
signed by a Responsible Officer, dated the date of closing,
to both such effects.
3C. Insurance
The Company shall have delivered to the Seller 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.
3D. 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 the
Seller, and the Seller shall have received all such
counterpart originals or certified or other copies of such
documents as it may reasonably request.
4. Prepayments and Acquisitions of Notes; Payment on
Business Days; Interest Rate Adjustment
4A. Prepayments
The Notes shall not be subject to any required prepayment
prior to their stated maturity. The Notes shall be subject
to prepayment under the circumstances set forth in paragraph
4B.
4B. Optional Prepayment With Yield-Maintenance Premium
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.
4C. Notice of Optional Prepayment
The Company shall give the holder of each Note irrevocable
written notice of any prepayment pursuant to paragraph 4B
not less than 20 Business Days prior to the prepayment date,
specifying such prepayment date and the principal amount of
the Notes, 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 4B. 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 4B 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.
4D. Partial Payments Pro Rata
Upon any partial prepayment of the Notes the principal
amount so prepaid shall be allocated to all Notes at the
time outstanding (including, for the purpose of this
paragraph 4D only, all Notes prepaid or otherwise retired or
purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates) in proportion to the respective
outstanding principal amounts thereof.
4E. 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 4B 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 4D.
4F. Payments on Business Days
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or interest on
any Note that is due on a date other than a Business Day
shall be made on the next succeeding Business Day without
including the additional days elapsed in the computation of
the interest payable on such next succeeding Business Day.
4G. Interest Rate Adjustment
The interest rate on each Series of Notes is subject to
adjustment 90 days (or earlier if the parties so elect)
after the date of closing (the "Adjustment Date"). The
amount of the adjustment in the interest rate on each Series
of Notes, if any, will be the positive or negative result of
(a) the rate at which the Company could borrow through notes
issued at par in a hypothetical private placement to large
US institutional investors utilizing a special purpose
structured debt vehicle on the same terms as such Series of
Notes, minus (b) the sum of (i) the yield to maturity of
U.S. treasury securities (determined as of the Adjustment
Date) used to price such Series of Notes plus (ii) 200 basis
points. The foregoing shall be determined jointly, as of
the Adjustment Date, by NationsBanc Montgomery Securities
LLC and Donaldson, Lufkin & Jenrette Securities Corporation.
Upon any such adjustment of interest rates, the Company will
issue to the holders of the Notes, new Notes reflecting the
adjusted interest rate upon surrender to the Company of the
old Notes held by such holders. The surrendered Notes shall
be cancelled by the Company.
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
PricewaterhouseCoopers LLP, 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 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.
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
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 at any time during the
continuance of an Event of Default it will permit any Person
designated in writing by (a) the Seller 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 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.
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 12C), 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 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 and the Other Senior
Notes to be paid on the interest payment date immediately
following such immediately preceding calendar quarter, and
(y) 25% of the aggregate 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
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 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(l), 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 and the
Other 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 $112,000,000 at any time,
(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(l), 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, Debt incurred 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 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 subc1ause (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 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, (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,
(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 the sale 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 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 not engaged in any business other than a Permitted
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 4B, 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 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:
Calendar Year Maximum Cunits to be Harvested
- ------------- ------------------------------
1998 through 2000 2330 MCCF
2001 and each calendar year thereafter 2270 MCCF
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)
2,342 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 4B 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 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 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 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 trustee, receiver, custodian, liquidator or similar
(xi) 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
(xii) 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
(xiii) 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
(xiv) 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
(xv) 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
(xvi) any "Event of Default" as defined in the
Mortgage Note Agreements shall exist; or
(xvii) 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 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
(xviii) 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 and the
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
12C, 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
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. Notwithstanding the
foregoing, so long as the Seller (or an SDW Affiliate) is
the holder of the Notes (and the Notes are not pledged to
secure any obligation) no acceleration of the Notes as a
consequence of an Event of Default specified in any of
clauses (iii), (iv), (v), (vi), (vii), (xiv), (xvi), (xvii)
and (xviii) of this paragraph 7A shall be effective unless
the maturity of one or more issues of the Other Senior Notes
shall have been accelerated as a consequence of an analogous
"Event of Default" under the relevant Other Senior Note
Agreements (a "Coordinate Acceleration").
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
12C, 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 and annulment shall extend
to or affect any subsequent Event of Default or Default or
impair any right consequent thereon. If the acceleration of
Notes was a Coordinate Acceleration (as defined in paragraph
7A) and if the acceleration of all of the Other Senior Notes
that were accelerated in connection therewith has been
rescinded and annulled, then the acceleration of Notes
hereunder shall be similarly rescinded and annulled without
any requirement of any action by the holders of the Notes
hereunder, provided only that the conditions specified in
clauses (x), (y) and (z) of the preceding sentence are
satisfied and the Company is in compliance with the
provisions of paragraph 12Q.
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.
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 Maine,
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 on the
date of closing will not have any significant liabilities
other than the Notes, the Other Senior Notes, the Guarantee,
the Mortgage Notes and indebtedness under the Bank of
America Revolving Credit Agreement.
(b) The Company has delivered or caused to be
delivered to each Purchaser complete and correct copies of
(i) the Company's Annual Report on Form 10-K as filed with
the Securities and Exchange Commission on March 9, 1998
(fiscal year ended December 31, 1997), the Company's
Quarterly Reports on Form 10-Q as filed with the Securities
and Exchange Commission on May 12, 1998 (quarter ended March
31, 1998) and August 13, 1998 (quarter ended June 30, 1998)
and the Company's Current Reports on Form 8-K dated April
17, 1998 ( filed on April 20, 1998), June 5, 1998 ( filed on
June 8, 1998), July 20, 1998 ( filed on July 20, 1998) and
October 6, 1998 (filed on October 13, 1998) (together, the
"1934 Act Reports") and (ii) the Preliminary Proxy/Statement
Prospectus, dated September 29, 1998, relating to the
Conversion Transaction (as defined in paragraph 11A) (the
"Proxy/Statement Prospectus"). 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 unaudited pro forma condensed
consolidated financial statements of the Corporation (as
defined in paragraph 11A) contained in the Proxy
Statement/Prospectus (the "Pro Forma Statements") comply as
to form in all material respects with the applicable
accounting requirements of the Securities Act of 1933 and
the Securities Exchange Act of 1934 and the published rules
and regulations thereunder and the assumptions on which the
pro forma adjustments reflected in the Pro Forma Statements
are based provide a reasonable basis for presenting the
significant effects of the transactions contemplated by the
Pro Forma Statements and such pro forma adjustments give
appropriate effect to such assumptions and are properly
applied in the Pro Forma Statements.
8G. Changes, etc
Except as contemplated by this Agreement or disclosed in
Exhibit 8G or the Proxy/Statement Prospectus, subsequent to
December 31, 1997, (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
nonpayment of which is permitted by paragraph 5E.
8I. Franchises, Licenses, Agreements, etc.
Except as disclosed in Exhibit 8R, 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 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(l); 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.
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. 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
the Seller, 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 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 any
applicable jurisdiction.
8O. 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
reportable event (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).
(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(l) 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.
As used in this paragraph 8O, the terms "employee benefit
plan" and "party in interest" have the respective meanings
assigned to such terms in section 3 of ERISA.
8P. 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.
11301(b)(1) is applicable.
8Q. Environmental Matters
(a) Except as disclosed in Exhibit 8Q, 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 8Q, 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 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 8Q, 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.
8R. Disclosure
Neither this Agreement, the Proxy Statement/Prospectus, the
1934 Act Reports nor any other document, certificate or
statement furnished to the Seller 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 Proxy Statement/Prospectus, or the
1934 Act Reports or in the other documents, certificates and
statements in writing furnished to the Seller by or on
behalf of the Company prior to the date hereof in connection
with the transactions contemplated hereby.
9. Representations of the Seller
The Seller represents, and in issuing the Notes to the
Seller it is expressly understood and agreed between the
Company and the Seller, that the Seller is not acquiring the
Notes hereunder with a view to or for sale in connection
with any distribution thereof within the meaning of the
Securities Act. The Seller 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.
10. Definitions
For the purpose of this Agreement, the terms defined in
paragraphs 1, 2 and 11 shall have the respective meanings
specified therein, and the following terms shall have the
meanings specified with respect thereto below.
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 4B (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 "Page PX1" in the Bloomberg Financial Markets Service (or
such other display as may replace Page PX1 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, with respect to the
Called Principal of any 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.
"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 4B
(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:
(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
(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 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 (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, 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 or Investments 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 Agreement" shall mean the
revolving credit 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
$225,000,000 and any extension, renewal, refunding or
refinancing thereof.
"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.
"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, Barbara L. Crowe, Vice President,
Human Resources, William R. Brown, Vice President, Strategic
Business Development, Lindsay G. Crawford, Vice President,
Southern Region, Michael J. Covey, Vice President,
Resources, 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, (y) 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 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.
"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.
"8.73% Senior Note Agreements" shall mean the Note
Agreements, dated as of August 1, 1994 and amended as of
October 15, 1995, May 31, 1996 and April 15, 1997, 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, May 31, 1996 and April 15, 1997, 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.
"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, or may 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, commencing with
the fiscal quarter in which such date occurs and ending with
the fiscal quarter in which November, 2010 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, May 31, 1996 and April 15, 1997, 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).
"1934 Act Reports" is defined in paragraph 8F(b).
"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.
"Other Senior Notes" means the Company's outstanding 8.73%
Senior Notes due August 1, 2009, 11 1/8% Senior Notes due
June 8, 2007 and Senior Notes, Series A, B, C and D, due
November 13, 2006, 2008, 2011 and 2013, respectively.
"Other Senior Note Agreements" means the Note Agreements
relating to the Other Senior Notes.
"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.
"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
plus depreciation, 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 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 and the
Other 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; provided that at any
time that the Notes are subject to a pledge that is not
precluded by the provisions of paragraph 12E, "Required
Holder(s)" shall mean the holder or holders of greater than
50% of the aggregate principal amount of the obligations
secured by such pledge of the Notes.
"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
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.
"SDW" is defined in paragraph 2.
"Securities Act" shall mean the Securities Act of 1933, as
amended.
"Series D Notes" shall mean the Company's 8.05% Senior Notes
Due November 13, 2016, Series D, outstanding in the original
aggregate principal amount of $25,000,000.
"Significant Holder" shall mean (i) the Seller (and any
Person controlling or controlled by or under common control
with the Seller or SDW - an "SDW Affiliate") so long as it
(or such SDW Affiliate) shall hold any Note, or (ii) any
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. 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.
"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.
"Ton" shall mean 2,000 pounds of green saw logs and
pulpwood. For purposes of conversion of Timber in the
Company's Maine timberlands, one million Tons shall equal
355 MCCF.
"Transferee" shall mean any direct or indirect transferee of
all or any part of any Note purchased by the Seller 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.
11. REIT Reorganization
The Company proposes to reorganize its business to be
carried on by an entity (the newly formed "Corporation"
described in paragraph 11A below) which will elect to be
treated as a real estate investment trust for Federal income
tax purposes. In connection with that transaction the
Company and the Seller agree that the following amendments
to, and consents and waivers under and in respect of, this
Agreement shall become effective as provided in, and subject
to the terms and provisions of, this paragraph 11.
11A. Conversion Transaction
The Company proposes to convert its outstanding ownership
interests into shares of stock of Plum Creek Timber Company,
Inc., a Delaware corporation (the "Corporation"),
[CONFIDENTIAL TREATMENT REQUESTED]
11B. Amendments to Note Agreement
The following amendments to this Agreement shall become
effective as provided in paragraph 11D:
(a) Paragraph 5A of this Agreement shall be amended by
adding the following paragraph at the end thereof.
In preparing the financial statements, computations and
reports provided for herein the Facilities Subsidiary and
its Subsidiaries shall be considered as consolidated or
combined subsidiary entities of the Company (and not
accounted for on the equity method of accounting or as an
investment)
[CONFIDENTIAL TREATMENT REQUESTED]
(b) The following definitions set forth in paragraph
10B of this Agreement shall be amended in their entirety to
read as follows:
"Company" means [CONFIDENTIAL TREATMENT REQUESTED]
"Facilities Subsidiary's Facility" shall mean any facility
pursuant to which Manufacturing 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
"Facilities Subsidiary" shall mean, collectively,
Manufacturing, Marketing, [CONFIDENTIAL TREATMENT REQUESTED]
"General Partner" shall mean [CONFIDENTIAL TREATMENT
REQUESTED]
"Merger" shall mean [CONFIDENTIAL TREATMENT REQUESTED]
"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 May 31, 1996 and April 15, 1997, providing for the
issuance and sale of $160,000,000 original aggregate
principal amount of the 11 1/8% First Mortgage Notes of the
Facilities Subsidiary to the purchasers listed in the
schedule of purchasers attached thereto.
"Partnership Agreement" shall mean the Agreement of Limited
Partnership of the Company, as in effect at the time of and
after giving effect to the Merger, and as the same may, from
time to time, be amended, modified or supplemented in
accordance with the terms thereof.
"Restricted Payment" shall mean (a) any dividend or other
distribution, direct or indirect, on account of any shares
of any class of stock of or other ownership interests in the
Company [CONFIDENTIAL TREATMENT REQUESTED] now or
hereafter outstanding, except a dividend payable solely in
shares of stock of or ownership interests in the Company,
and (b) any redemption, retirement, purchase or other
acquisition, direct or indirect, of any shares of any class
of stock of or other ownership interests in the Company
[CONFIDENTIAL TREATMENT REQUESTED] or of any warrants,
rights or options to acquire any such shares or interests,
except to the extent that the consideration therefor
consists of shares of stock of or other ownership interests
in the Company.
"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 (i) in the case of any
Subsidiary other than the Facilities Subsidiary all the
stock and other ownership interests of which are owned by
the Company either directly or indirectly through Wholly-
Owned Subsidiaries (other than the Facilities Subsidiary or
one or any of its Subsidiaries) and (ii) at such time as the
Mortgage Notes shall have been paid in full and retired, (x)
Manufacturing provided that all the stock and other
ownership interests thereof are owned by the Company either
directly or indirectly through Wholly-Owned Subsidiaries
(other than a Facilities Operating Subsidiary or one of its
Subsidiaries), (y) Holding provided that all the outstanding
stock and ownership interests thereof (other than Voting
Stock) are owned by the Company either directly or
indirectly through Wholly-Owned Subsidiaries (other than
Marketing,
[CONFIDENTIAL TREATMENT REQUESTED]
(c) The following new defined terms shall be added to
paragraph 10B of this Agreement in proper alphabetical
order:
"Facilities Operating Subsidiaries" shall mean Marketing,
[CONFIDENTIAL TREATMENT REQUESTED] and "Facilities Operating
Subsidiary" shall mean one of them.
"Holding" shall mean [CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED] shall mean, at any time,
[CONFIDENTIAL TREATMENT REQUESTED]
[CONFIDENTIAL TREATMENT REQUESTED] shall mean [CONFIDENTIAL
TREATMENT REQUESTED]
11C. Consent and Waiver
The Seller (on behalf of itself and each other holder from
time to time of the Notes) hereby consents to
[CONFIDENTIAL TREATMENT REQUESTED]
and hereby waives compliance by the Company with the
provisions of paragraphs 6B(3) (Loans, Advances, Investments
and Contingent Liabilities), 6B(4) (Sale of Stock and Debt
of Subsidiaries), 6B(9) (Transactions with Affiliates), and
6D (Issuance of Stock by Subsidiaries) of this Agreement
solely for purposes of effectuating (and only to the extent
necessary to effectuate) such transactions in the context of
consummating the entire Conversion Transaction as described
in and as contemplated by the Conversion Agreement and the
Proxy Statement/Prospectus. The effectiveness of this
Agreement shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any of
the holders of the Notes under this Agreement, nor
constitute a waiver of any other provision of this
Agreement.
11D. Conditions to Effectiveness.
The amendments, consents and waivers set forth in paragraphs
11B and 11C hereof shall become effective at the "Effective
Time" (as defined in the Conversion Agreement), subject to
the fulfillment to the satisfaction of (or waiver by) the
Required Holders (as defined in the Other Senior Note
Agreements) of the Other Senior Notes (as hereinafter
defined) of the following conditions:
A. Other Senior Notes. The Note Agreements (the
"Other Senior Note Agreements") relating to the Other Senior
Notes shall have been amended by amendment agreements (the
"Senior Note Amendments") executed by the holders of such
Notes (the "Other Senior Noteholders") having the same
substantive effect (as to such Other Senior Note Agreements)
and all amendments, waivers and consents provided for in
such amendment agreements shall have become effective. The
Noteholders shall have received true and correct copies of
the Senior Note Amendments.
B. Opinion of Company's Counsel. The holders of the
Notes (the "Noteholders") shall have received favorable
opinions from counsel to the Company and the Corporation,
substantially in the respective forms attached to, or
otherwise provided for in, the Senior Note Amendments (or
such other forms of opinions as may be actually delivered to
the Other Senior Noteholders on the date of the Effective
Time), addressed to the Noteholders, dated the date of the
Effective Time and otherwise satisfactory in substance and
form to the Required Holders (as defined in the Other Senior
Note Agreements) of the Other Senior Notes.
C. Opinion of Noteholders' Counsel. The Noteholders
shall have received a favorable opinion from Willkie Farr &
Gallagher, special counsel for the Other Senior Noteholders,
substantially in the form attached to, or otherwise provided
for in, the Senior Note Amendments (or such other form of
opinion as may be actually delivered to the Other Senior
Noteholders on the date of the Effective Time), addressed to
the Noteholders, dated the date of the Effective Time and
otherwise satisfactory in substance and form to the Required
Holders (as defined in the Other Senior Note Agreements) of
the Other Senior Notes.
D. Merger.
[CONFIDENTIAL TREATMENT REQUESTED]
No provision of the Conversion Agreement shall have been
amended, nor compliance with any provision thereof, or
satisfaction of any condition to the Conversion Transaction
set forth therein, shall have been waived, without the
consent of the Required Holders (as defined in the Other
Senior Note Agreements) of the Other Senior Notes
E. Assumption of Certain Notes. Manufacturing,
Marketing and [CONFIDENTIAL TREATMENT REQUESTED]
shall have executed and delivered [CONFIDENTIAL TREATMENT
REQUESTED] substantially in the form attached to or
otherwise provided for in, the Senior Note Amendments
thereby becoming an obligor in respect of a portion of the
First Mortgage Notes (in the case of the Facilities
Operating Subsidiaries) and the 11 1/8% Senior Notes.
F. First Mortgage Notes. The Mortgage Note
Agreements shall have been amended by an amendment agreement
in substantially the form of agreement delivered to the
Other Senior Noteholders in connection with the execution
and delivery of the Senior Note Amendments (a copy of which
shall have been delivered to the Noteholders) by the Company
and all amendments, waivers and consents provided for
therein shall have become effective.
G. Rating of Notes. The Notes shall have received an
investment grade rating from one of the four Nationally
Recognized Statistical Rating Organizations and the
Noteholders shall have received evidence that such rating
remains in effect at the Effective Time.
H. Representations and Warranties; No Default. The
representations and warranties contained in paragraph 11E
hereof shall be true in all material respects on and as of
the date of the Effective Time; there shall exist on the
date of closing no Event of Default or Default; and the
Company shall have delivered to you an Officers'
Certificate, dated the date of the Effective Time, to both
such effects.
I. 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 the Required Holders (as defined in
the Other Senior Note Agreements) of the Other Senior Notes,
and the Noteholders shall have received all such counterpart
originals or certified or other copies of such documents as
the Required Holders (as defined in the Other Senior Note
Agreements) of the Other Senior Notes may reasonably
request.
11E. Representations and Warranties.
The Company (the term "Company" as used herein including
both Plum Creek Timber Company, L.P. and [CONFIDENTIAL
TREATMENT REQUESTED] represents and warrants as follows:
A. 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 now conducted and as proposed to be conducted
and to enter into and perform its obligations under this
Agreement and
[CONFIDENTIAL TREATMENT REQUESTED]
B. Qualification. Each of the Company and its
Subsidiaries is duly qualified or registered for transaction
of business and in good standing as a foreign limited
partnership or corporation in each jurisdiction in which the
failure so to qualify or be registered would have a material
adverse effect on the business, property or assets,
condition (financial or other), operations or prospects of
the Company and its Subsidiaries taken as a whole, or on the
ability of the Company to perform its obligations under this
Agreement, or
[CONFIDENTIAL TREATMENT REQUESTED]
C. Financial Statements. The Company has delivered
to the Seller a complete and correct copy of the Proxy
Statement/Prospectus (which for the purposes of this
paragraph 11E shall include only those documents
incorporated by reference as of the date hereof). The
unaudited pro forma condensed consolidated financial
statements of the Corporation contained in the Proxy
Statement/Prospectus (the "Pro Forma Statements") comply as
to form in all material respects with the applicable
accounting requirements of the Securities Act of 1933 and
the Securities Exchange Act of 1934 and the published rules
and regulations thereunder and the assumptions on which the
pro forma adjustments reflected in the Pro Forma Statements
are based provide a reasonable basis for presenting the
significant effects of the transactions contemplated by the
Pro Forma Statements and such pro forma adjustments give
appropriate effect to such assumptions and are properly
applied in the Pro Forma Statements.
[CONFIDENTIAL TREATMENT REQUESTED]
D. Subsidiaries. As of the Effective Time the
Company will own, directly or indirectly, all of the issued
and outstanding equity interests of all of its Subsidiaries
[CONFIDENTIAL TREATMENT REQUESTED]
As of the Effective Time there will be outstanding no
warrants or options to acquire, or instruments convertible
into or exchangeable for, any equity interest in any such
Subsidiary.
E. Changes, etc. Since the date of the Proxy
Statement/Prospectus (a) the Company and its Subsidiaries
have not incurred any material liabilities or obligations,
direct or contingent, or entered into any material
transactions not in the ordinary course of business except
for those transactions described in the Proxy
Statement/Prospectus as constituting a part of the
Conversion Transaction, and (b) there has not been (i) any
material adverse change in the business, property or assets,
condition (financial or other), operations or prospects of
the Company and its Subsidiaries taken as a whole, or (ii)
any Restricted Payment of any kind declared, paid or made by
the Company.
F. Actions Pending. There is no action, suit,
investigation or proceeding pending or, to the knowledge of
the Company, threatened against the Company or any
Subsidiary, or any properties or rights of the Company or
any Subsidiary, by or before any court, arbitrator or
administrative or governmental body which questions the
validity of this Agreement, [CONFIDENTIAL TREATMENT
REQUESTED] or any action taken or to be taken pursuant to
any thereof, which would be reasonably likely to result in
any material adverse change in the business, properties or
assets, condition (financial or other), operations or
prospects of the Company and its Subsidiaries taken as a
whole, or in the ability of the Company to perform its
obligations under this Agreement or
[CONFIDENTIAL TREATMENT REQUESTED]
G. Compliance with other Instruments, etc. Neither
the Company nor any Subsidiary of the Company is in
violation of any provision of the Partnership Agreement or
of any term of any agreement or instrument to which it is a
party or by which it or 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, properties or assets, condition( financial or
other), operations or prospects of the Company and its
Subsidiaries taken as a whole or on the ability of the
Company to perform its obligations under this Agreement,
[CONFIDENTIAL TREATMENT REQUESTED]
The execution, delivery and performance by the Company of
this Agreement [CONFIDENTIAL TREATMENT REQUESTED] will not
in any case 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
or any such party to create) any Lien upon any of the
properties or assets of the Company or any of its
Subsidiaries, pursuant to any such term.
H. 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, [CONFIDENTIAL TREATMENT REQUESTED]
I. Franchises, Licenses, Agreements, etc. At the
Effective Time the Company and its Subsidiaries will each be
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 respective properties
and to permit the conduct of its business, except for those
franchises, grants, authorizations, approvals, licenses,
permits, easements, consents, certificates and orders
(collectively, "Permitted Exceptions") (i) which are routine
in nature and are expected to be obtained or given in the
ordinary course of business after the date of closing, (ii)
which are administrative in nature and which are expected to
be obtained or given in the ordinary course of business
after the date of closing, or (iii) the failure of which to
be obtained or given would not individually or in the
aggregate materially and adversely affect the business,
property or assets, condition (financial or other),
operations or prospects of the Company and its Subsidiaries
taken as a whole, or impair the ability of the Partnership
to perform its obligations under this Agreement,
[CONFIDENTIAL TREATMENT REQUESTED]
J. Title to Properties. At the Effective Time the
Company and its Subsidiaries will have good title to their
real properties (other than properties which are leased) and
good title to all of their other properties and assets,
subject to no Lien of any kind except Liens permitted by
paragraph 6B(1) of this Agreement. All leases necessary in
any material respect for the conduct of the businesses of
the Company and its Subsidiaries, are valid and subsisting
and are in full force and effect
K. Environmental Matters.
(a) Other than as disclosed in Exhibit 8Q hereto, at
the Effective Time the Company and its Subsidiaries will
have all environmental permits or licenses necessary for the
conduct of its business as to be conducted as of the
Effective Time and, as to any such permit or 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. The Company and its Subsidiaries are currently
operating in material compliance with the limits set forth
in such environmental permits or licenses and any
noncompliance with such permits or licenses will not result
in any material liability or penalty to the Company or any
of its Subsidiaries and the Company has no any knowledge of
any threatened or pending proceeding for the revocation,
loss or termination of any such environmental permits or
licenses.
(b) All facilities located on the real property owned
by the Company and its Subsidiaries at the Effective Time
after giving effect to the Conversion Transaction which are
subject to regulation by the Federal Resource Conservation
and Recovery Act, as in effect on the date hereof, are and
have been operated by the Company and its Subsidiaries in
material compliance with such Act and to the knowledge of
the Company neither the Company nor any of its Subsidiaries,
has received or, to the knowledge of the Company, been
threatened with, a notice of violation regarding such
facilities which reasonably can be expected to have a
material adverse effect on the business, properties or
assets, condition (financial or other), operations or
prospects of the Company and its Subsidiaries taken as a
whole.
(c) With respect to the real property to be owned by
the Company and its Subsidiaries as of the Effective Time,
there has not occurred to the best 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,
properties or assets, condition (financial or other),
operations or prospects of the Company and its Subsidiaries
taken as a whole. 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).
L. Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to
regulation under the Investment Company Act of 1940, the
Public Utility Holding Company Act of 1935, the
Transportation Acts or the Federal Power Act, in each case
as amended.
M. Year 2000.
With respect to the Company and its Subsidiaries (after
giving effect to the Conversion Transaction), (a) a review
and assessment has been initiated of all areas within the
Company's and its Subsidiaries' business and operations
(including those affected by suppliers, vendors and
customers) that could be adversely affected by the "Year
2000 Problem" (that is, the risk that computer applications
used by the Company or any of its Subsidiaries (or
suppliers, vendors and customers) may be unable to recognize
and properly perform date-sensitive functions involving
certain dates prior to and any date after December 31,
1999), (b) a plan and timetable has been developed for
addressing the Year 2000 Problem on a timely basis, and (c)
to date, that plan has been implemented in accordance with
that timetable. Any reprogramming required to avoid a Year
2000 Problem will be completed by June 30, 1999, except
where failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a material
adverse effect on the business, properties or assets,
condition (financial or other), operations or prospects of
the Company and its Subsidiaries taken as a whole. The cost
to the Company and its Subsidiaries of such reprogramming
and testing and of the reasonably foreseeable consequences
of the Year 2000 Problem to the Company and its Subsidiaries
(including reprogramming errors and the failure of others'
systems or equipment) will not result in a Default or a
material adverse effect on the business, properties or
assets, condition (financial or other), operations or
prospects of the Company and its Subsidiaries taken as a
whole. Except for such reprogramming referred to in the
preceding sentence as may be necessary, the computer and
management information systems of the Company and its
Subsidiaries are and, with ordinary course upgrading and
maintenance, will continue through the final maturity date
of the Notes to be sufficient to permit the Company and its
Subsidiaries to conduct their respective businesses without
a reasonable likelihood of resulting in a material adverse
effect on the business, property or assets, condition
(financial or other) or results of operations or prospects
of the Company and its Subsidiaries taken as a whole.
N. Disclosure.
The Proxy Statement/Prospectus fairly describes, in all
material respects, the general nature of the business and
principal properties of the Company and its Subsidiaries
after giving effect to the Conversion Transaction. Neither
this Agreement, nor any other document, certificate or
statement furnished to you by or on behalf of the Company 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 businesses, property or assets,
condition (financial or other) or results of operations or
prospects of the Company and its Subsidiaries and which has
not been set forth in this Agreement, or in the Proxy
Statement/Prospectus.
12. Miscellaneous
12A. Note Payments
The Company agrees that, so long as the Seller 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 the
Seller's account or accounts as specified in the Schedule I
attached hereto, or such other account or accounts in the
United States as the Seller may designate in writing,
notwithstanding any contrary provision herein or in any Note
with respect to the place of payment. The Seller 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 12A to any Transferee
which shall have made the same agreement as the Seller has
made in this paragraph 12A.
12B. Expenses
The Company will pay all costs and expenses incurred by the
Seller in connection with any amendments, waivers or
consents under or in respect of this Agreement or the Notes
requested by the Company (whether or not such amendment,
waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or
defend) any rights under this Agreement or the Notes, and
(b) the costs and expenses, including financial advisors'
fees, incurred in connection with the insolvency or
bankruptcy of the Company or in connection with any work-out
or restructuring of the transactions contemplated hereby and
by the Notes. The obligations of the Company under this
paragraph 12B shall survive the transfer of any Note or
portion thereof or interest therein by a holder of Notes or
any Transferee and the payment of any Note.
12C. 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 (the "Required Consent") to such
amendment, action or omission to act, of the Required
Holder(s); provided that so long as the Notes are held by
the Seller (or an SDW Affiliate), and are not then pledged
to secure any obligation (i) such consent may not be
unreasonably withheld, and (ii) if consent to such
amendment, action or omission to act has been requested by
the Company from the holders of the Other Senior Notes in
respect of the analogous provisions of the Other Senior Note
Agreements and if the consent of the requisite percentage of
the holders of the Other Senior Notes necessary to make such
consent effective under the Other Senior Note Agreements
shall have been received by the Company, then in any such
case the Required Consent shall have been deemed to have
been given hereunder in respect of such amendment, action or
omission to act, as the case may be (provided that the
Company shall be in compliance with the provisions of
paragraph 12Q). Notwithstanding the foregoing, without the
written consent of the holder or holders of all Notes at the
time outstanding (including, without limitation, the Seller
or an SDW Affiliate), 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 4B 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 or thereafter outstanding shall be
bound by any consent authorized by this paragraph 12C,
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.
12D. 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 12C shall be delivered by the
Company to each holder of outstanding Notes forthwith
following the date on which the same shall have been
executed 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.
12E. 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 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
engaged in a Permitted Business (other than to an SDW
Affiliate) or to a 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 such holder 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. Notwithstanding any provision
to the contrary contained in this Agreement, (x) the Notes
may not be pledged to or for the benefit of any Person
engaged in a Permitted Business, and (y) in the event that
the Notes are pledged to a Person not engaged in a Permitted
Business, all rights of the holders of the Notes under this
Agreement arising out of or related to consents, waivers,
amendments, and the exercise of remedies (including, without
limitation, acceleration) shall be delegated to the Required
Holders. Any pledge or encumbrance in violation of the
preceding sentence shall be void.
12F. 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.
The Seller 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 12J in all or a portion of
its rights in the Note or Notes held by it.
12G. Non-Recourse Nature of Liability
Notwithstanding anything to the contrary contained in this
Agreement, the Seller 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 the Seller 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.
12H. Survival of Representations and Warranties; Entire
Agreement
All representations and warranties contained herein or made
in writing by or on behalf of the Company in connection
herewith shall survive the execution and delivery of this
Agreement and the Notes, the transfer by the Seller 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 the Seller or any Transferee. All
representations, warranties and covenants contained herein
made by the Seller 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 the Seller) 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 the Seller and the Company and
supersede all prior agreements and understandings relating
to the subject matter hereof.
12I. 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 assigns of the parties hereto (including, without
limitation, any Transferee) whether so expressed or not.
12J. Disclosure to Other Persons
The Seller 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 the Seller (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 the Seller 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 12J, (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 12J, (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.
12K. Notices
All written communications provided for hereunder shall be
sent by first class mail, if promptly confirmed by facsimile
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 the Seller, addressed to the address specified for such
communications in Schedule I attached hereto, or at such
other address as the Seller 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.
12L. 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.
12M. 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 the Seller or to
the Required Holder(s), the determination of such
satisfaction shall be made by the Seller 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.
12N. Governing Law
This Agreement shall be construed and enforced in accordance
with, and the rights of the Parties shall be governed by,
the law of the State of New York.
12O. 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.
12P. Severability
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render
unenforceable such provision in any other jurisdiction.
12Q. Actions in Respect of Other Senior Notes
So long as the Seller or an SDW Affiliate is the holder of
the Notes (and the Notes are not then pledged to secure any
obligation), the Company will not amend, or seek consents
under, the Other Senior Note Agreements, or agree to extend
any financial accommodations to the holders of the Other
Senior Notes in connection with any such amendment or
consent or in connection with any "Event of Default" or
rescission or acceleration under any of the Other Senior
Note Agreements (by payment of any fees, accelerated
amortization or increased interest rates or otherwise)
unless the Company shall offer to amend the provisions of
this Agreement in the same manner, shall seek the same
consents and extend the same financial accommodations to the
Seller (or any such SDW Affiliate) as holder of Notes
hereunder. Notwithstanding any provisions of this Agreement
to the contrary, the holders of the Notes shall not be
entitled to any financial accommodations related to
consents, waivers or amendments arising out of or related to
the REIT reorganization described in paragraph 11, unless
there are material modifications to the structure of the
REIT reorganization from the structure described in
paragraph 11 after the date of any pledge of the Notes that
is not prohibited by paragraph 12E.
The execution hereof by the Seller shall constitute a
contract among the Company and the Seller for the uses and
purposes herein above set forth.
Very truly yours,
PLUM CREEK TIMBER COMPANY, L.P.
By: Plum Creek Management Company,L.P.,
its General Partner
By: ____________________________
Name:
Title:
The foregoing Agreement is
accepted as of the date first
above written
SDW TIMBER I, L.L.C.
By: S.D. Warren Company,
its sole member
By:______________________
Name:
Title:
SCHEDULE I
INFORMATION RELATING TO SELLER
Name and Address of Seller
SDW Timber I, L.L.C.
c/o S.D. Warren Company
225 Franklin Street
Boston, MA 02110
(1) All payments on the Notes shall be made by wire
transfer of immediately available funds to:
[Name of Bank]
ABA #
for credit to A/C #
Reference:
with sufficient information to identify the source and
application of such funds.
(2) All notices of payments and written confirmations of
such wire transfers shall be sent to the above address,
Attention:
(3) All other communications shall be sent to the above
address, Attention::
(4) Taxpayer ID No.:
Exhibit A
Plum Creek Timber Company, L.P.
____% Senior Note, Series __, due February 12, ____
No. R-______
$_________________ November ___, 1998
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 February
12, __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 quarterly on the 12th day of February,
May, August and November in each year, commencing with the
February 12, May 12 , August 12 or November 12 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
quarterly 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) ____ % 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 __1__ % Senior Notes,
Series ____, due February 12, ____ (the "Notes") issued
pursuant to that certain Senior Note Agreement, dated as of
November 12, 1998 (the "Agreement"), between the Company and
the original holder of the Notes named therein 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 this Note is not otherwise subject to
prepayment.
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:
Exhibit B
November 12, 1998
SDW Timber I, L.L.C.
c/o S.D. Warren Company
225 Franklin Street
Boston, MA 02110
Re: $171,375,000 Senior Notes, Series E, F and G of
Plum Creek Timber Company, L.P.
Dear Seller:
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 the transactions
contemplated by the Senior Note Agreement, dated as of
November 12, 1998 (the "Note Agreement"), between the
Company and you (the "Seller"). 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.
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 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 the Seller has all requisite power and
authority to execute, deliver and perform the Loan Documents
and (vi) the due authorization, execution and delivery of
the Loan Documents by the Seller.
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, Maine 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,
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 States of Arkansas, Delaware, Idaho, Louisiana,
Montana, Texas, Maine or Washington is required for the
valid execution, delivery and performance by the Company of
the Loan Documents or the valid offer, issue 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
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 offer, issue and delivery of the Notes by
the Company subject to regulation thereunder.
7. Based upon the representations of the Seller contained
in the Note Agreement the offer, issue 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
and delivery.
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, Maine 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, Maine 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
EXHIBIT D
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 First Interstate Bank of
Washington, N.A., as Trustee; and Mortgage, Security
Agreement and Fixture Filing dated June 17, 1997, recorded
in Union County, Arkansas, in favor of Wells Fargo Bank,
National Association, 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, Inc.,
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 among Plum Creek Manufacturing, Inc.,
Plum Creek Timber Company, L.P., Plum Creek Merger Company,
Inc., Plum Creek Manufacturing, L.P., and the several
holders of the 11-1/8% First Mortgage Notes.; (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, (f) the Mortgage Note Agreement Amendment
dated as of May 31, 1996, (g) Mortgage Note Agreement,
Consent and Waiver dated as of September 10, 1996, and (h)
Mortgage Note Agreement Amendment dated as of April 15, 1997
(as amended, the "Mortgage Note Agreement").
EXHIBIT E
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
a loan to the following purchaser of real property from the
Company, in the amount listed below. The loan is evidenced
by a Promissory Note secured by a Deed of Trust in Favor of
PCTC Limited Liability Company:
a. First South Properties, L.L.C. ($5,039.29)
6. In conjunction with the Company's in-woods chipping
operations, the Company has made loans to its contractors in
order that such contractors could purchase chipping
equipment, in the following amounts:
a. C & F Forest Products, L.L.C. ($295,042.05)
b. Richards Logging, Inc. ($113,996.34)
7. Subject to a 5-year loan agreement (maturing 8/31/01),
the Company has agreed to make loans to provide financial
support to a co-operative of forest nurseries, in the amount
listed below:
a. IFA Nurseries, Inc. ($129,938.00)
EXHIBIT 8C
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. (100% interest held by Plum
Creek Marketing, Inc.)
Plum Creek Plywood, L.L.C. (100% owned by Plum Creek
Manufacturing, L.P.)
EXHIBIT 8G
Material Transactions and Changes
Subsequent to December 31, 1997, 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 pending
sale of Company's chipping facility in Cle Elum, Washington
for $750,000, expected to close prior to December 31, 1998,
and the acquisition of the Meridian, Idaho remanufacturing
facility in May of 1998 for $9.4 million.
Subsequent to December 31, 1997, 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, 1997, there have been the
following Restricted Payments declared, paid or made by the
Company:
1. Fourth Quarter 1997 Distribution of Available Cash
in the amount of $34.0 million paid to Unitholders
in the first quarter of 1998;
2. First Quarter 1998 Distribution of Available Cash
in the amount of $35.5 million paid to Unitholders
in the second quarter of 1998;
3. Second Quarter 1998 Distribution of Available Cash
in the amount of $35.5 million paid to Unitholders
in the third quarter of 1998; and
4. Third Quarter 1998 Distribution of Available Cash
in the amount of $35.5 million payable to
Unitholders on November 24, 1998.
EXHIBIT 8K
Property Title
The Company's title to the timberlands it acquired
during its formation in 1989 includes the related hard rock
mineral interests but does not include the oil and gas
mineral interests. The Company did not obtain the hard rock
mineral interest or the oil and gas mineral interests to
most of the 865,000 acres of timberland purchased in 1993
from Champion International Corporation. The Company's
title to the timberlands it acquired from Riverwood
International Corporation in 1996 includes the hard rock
mineral interests. However, the oil and gas interest on the
majority of such properties is owned by unrelated parties.
Under Louisiana law, such oil and gas rights may revert to
the Company under certain conditions beginning in 2004. The
title to all of 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 8Q
Environmental Matters
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. 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 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
1996, Plum Creek participated in the ongoing RUFS. The
proposed remedy for the site is a low permeability soil cap
with on-going monitoring to be conducted. It is anticipated
that the first remedial actions will be implemented in 1999.
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.
EXHIBIT R
Environmental Permits and Licenses
(None)
SCHEDULE 10B(1)
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:
-Preserves principal
-Meets liquidity needs
-Allows for appropriate diversification of investments
-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).
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,
Duration Minimum Credit Rating
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.
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.
Attachments to Senior Note Agreement
Schedule I -- Seller Information
Exhibit A -- Form of Note
Exhibit B -- Form of Opinion of Company's
General Counsel
Exhibit D -- Liens
Exhibit E -- Investments
Exhibit F -- Environmental Notices
Exhibit 8C -- Other Subsidiaries
Exhibit 8G -- Material Transactions
Exhibit 8K -- Property Titles
Exhibit 8R -- Environmental Permits and Licenses
Schedule 10B(1) -- Investment Policy
