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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event
reported): August 7, 1996
Riverwood Holding, Inc.
- -------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-11113 58-2205241
- --------------------------------------------------------------------
(State of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
1013 Centre Road, Suite 350
Wilmington, Delaware 19805
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(Address of principal executive offices)
c/o Riverwood International Corporation
(770) 644-3000
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(Registrant's telephone number)
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ITEM 5. OTHER EVENTS.
On August 7, 1996, Riverwood International
Corporation (the "Company"), an indirect wholly owned
subsidiary of Riverwood Holding, Inc., the registrant,
entered into an agreement to sell substantially all of the
assets of the U.S. Timberlands/Wood Products business
segment for $540 million plus payment for the value of
transferred inventory. The sale, subject to certain
conditions, is expected to close in the fourth quarter of
1996. Under the terms of the agreement for such sale, the
Company and the buyer will upon the closing enter into a
long-term supply agreement for the purchase by the Company
of a majority of the requirements for pine pulpwood and
residual chips of its West Monroe, Louisiana mill, as well
as a portion of the Company's needs for hardwood pulpwood.
The sale is subject to the consent of the lenders under the
Company's credit facilities. There can be no assurance that
the sale will be completed.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) EXHIBITS.
2 Asset Purchase Agreement, dated as of August 6, 1996,
by and among Plum Creek Timber Company, L.P., the
Company and New River Timber, LLC, including the form
of Wood Products Supply Agreement to be entered into by
and among the Company and Plum Creek Timber Company,
L.P., as Exhibit A thereto, together with a list of
omitted schedules and exhibits and an undertaking of
the registrant to furnish supplementally a copy of any
such omitted schedule or exhibit to the Securities and
Exchange Commission upon request.
99 Press Release, dated August 7, 1996.
2
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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.
RIVERWOOD HOLDING, INC.
Date: August 22, 1996 By: Bill H. Chastain
-----------------
Bill H. Chastain
Secretary
3
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EXHIBIT INDEX
EXHIBIT EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
- ---------- ------------- --------
2 Asset Purchase Agreement, dated as of August 6,
1996, by and among Plum Creek Timber Company,
L.P., the Company and New River Timber, LLC,
including the form of Wood Products Supply
Agreement to be entered into by and among the
Company and Plum Creek Timber Company, L.P., as
Exhibit A thereto, together with a list of omitted
schedules and exhibits and an undertaking of the
registrant to furnish supplementally a copy of any
such omitted schedule or exhibit to the Securities
and Exchange Commission upon request.
99 Press Release, dated August 7, 1996.
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EXHIBIT 2
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ASSET PURCHASE AGREEMENT
AMONG
PLUM CREEK TIMBER COMPANY, L.P.,
RIVERWOOD INTERNATIONAL CORPORATION
AND
NEW RIVER TIMBER, LLC
AUGUST 6, 1996
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TABLE OF CONTENTS
Page
ARTICLE ONE DEFINITIONS. . . . . . . . . . . . . . . . .2
1.1 Terms Generally . . . . . . . . . . . . . . . . .2
1.2 Certain Terms . . . . . . . . . . . . . . . . . .2
ARTICLE TWO PURCHASE OF ASSETS AND ASSUMPTION OF
LIABILITIES . . . . . . . . . . . . . . . 15
2.1 Generally . . . . . . . . . . . . . . . . . . . 15
2.2 Sale and Purchase of Assets . . . . . . . . . . 16
2.3 Purchase Price. . . . . . . . . . . . . . . . . 19
2.4 Purchase Price Adjustment . . . . . . . . . . . 20
2.5 Assumption of Liabilities, etc. . . . . . . . . 27
2.6 Certain Post-Closing Matters. . . . . . . . . . 29
ARTICLE THREE REPRESENTATIONS AND WARRANTIES OF
SELLERS. . . . . . . . . . . . . . . . . 30
3.1 Corporate Status and Authority of the Seller
Parent. . . . . . . . . . . . . . . . . . . . 30
3.2 Limited Liability Company Status and
Authority of the Company. . . . . . . . . . . . 31
3.3 No Conflicts, Consents and Approvals, etc.. . . 32
3.4 Assets, etc.. . . . . . . . . . . . . . . . . . 33
3.5 Contracts . . . . . . . . . . . . . . . . . . . 34
3.6 Employment Agreements and Benefits, etc.. . . . 35
3.7 Labor Relations and Employment. . . . . . . . . 36
3.8 Absence of Changes. . . . . . . . . . . . . . . 37
3.9 Licenses; Compliance With Law . . . . . . . . . 38
3.10 Litigation. . . . . . . . . . . . . . . . . . . 38
3.11 Taxes . . . . . . . . . . . . . . . . . . . . . 39
3.12 Environmental Matters . . . . . . . . . . . . . 39
3.13 Brokers . . . . . . . . . . . . . . . . . . . . 40
3.14 DISCLAIMER. . . . . . . . . . . . . . . . . . . 41
ARTICLE FOUR REPRESENTATIONS AND WARRANTIES OF
BUYER. . . . . . . . . . . . . . . . . . 41
4.1 Corporate Status and Authority of the Buyer . . 41
4.2 No Conflicts. . . . . . . . . . . . . . . . . . 42
4.3 Financing . . . . . . . . . . . . . . . . . . . 42
4.4 Litigation. . . . . . . . . . . . . . . . . . . 43
4.5 Brokers . . . . . . . . . . . . . . . . . . . . 43
4.6 No Knowledge of Misrepresentations. . . . . . . 43
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ARTICLE FIVE CERTAIN PRECLOSING MATTERS . . . . . . . . 43
5.1 Conduct of the Business Prior to Closing. . . . 43
5.2 Access. . . . . . . . . . . . . . . . . . . . . 44
ARTICLE SIX EMPLOYMENT MATTERS . . . . . . . . . . . . 45
6.1 Employee Matters Generally. . . . . . . . . . . 45
6.2 Employee Pension Benefit Plans. . . . . . . . . 47
6.3 Welfare Plans . . . . . . . . . . . . . . . . . 47
6.4 Worker's Compensation . . . . . . . . . . . . . 49
ARTICLE SEVEN ADDITIONAL AGREEMENTS. . . . . . . . . . . 49
7.1 Confidentiality . . . . . . . . . . . . . . . . 49
7.2 Post-Closing Access . . . . . . . . . . . . . . 51
7.3 Expenses. . . . . . . . . . . . . . . . . . . . 51
7.4 Transfer Taxes. . . . . . . . . . . . . . . . . 51
7.5 Non-Solicitation. . . . . . . . . . . . . . . . 52
7.6 Further Assurances. . . . . . . . . . . . . . . 53
7.7 Agreement Regarding Environmental Matters . . . 55
7.8 Supplements to Disclosure . . . . . . . . . . . 55
ARTICLE EIGHT CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER . . . . . . . . . . 55
8.1 Representations and Covenants of Sellers. . . . 56
8.2 Closing Certificate of Sellers. . . . . . . . . 56
8.3 No Injunction, etc. . . . . . . . . . . . . . . 56
8.4 Consents and Approvals. . . . . . . . . . . . . 56
8.5 Delivery at Closing . . . . . . . . . . . . . . 56
ARTICLE NINE CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF SELLERS . . . . . . . . . 57
9.1 Representations and Covenants of Buyer. . . . . 57
9.2 Closing Certificate of Buyer. . . . . . . . . . 58
9.3 No Injunction, etc. . . . . . . . . . . . . . . 58
9.4 Consents and Approvals. . . . . . . . . . . . . 58
9.5 Delivery at Closing . . . . . . . . . . . . . . 58
ARTICLE TEN INDEMNIFICATION. . . . . . . . . . . . . . 60
10.1 Survival of Representations, Warranties,
Covenants and Agreements. . . . . . . . . . . 60
10.2 Indemnification by the Sellers. . . . . . . . . 60
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10.3 Indemnification by the Buyer. . . . . . . . . . 62
10.4 Procedures for Indemnification. . . . . . . . . 62
10.5 Indemnity Exclusive . . . . . . . . . . . . . . 65
ARTICLE ELEVEN TERMINATION. . . . . . . . . . . . . . . . 66
11.1 Method of Termination . . . . . . . . . . . . . 66
11.2 Effect of Termination . . . . . . . . . . . . . 67
ARTICLE TWELVE MISCELLANEOUS PROVISIONS . . . . . . . . . 67
12.1 Publicity . . . . . . . . . . . . . . . . . . . 67
12.2 Expenses, etc.. . . . . . . . . . . . . . . . . 68
12.3 Notices . . . . . . . . . . . . . . . . . . . . 68
12.4 Amendment; Waiver . . . . . . . . . . . . . . . 69
12.5 Binding Effect; Third Party
Beneficiary Rights. . . . . . . . . . . . . . . 70
12.6 Entire Agreement. . . . . . . . . . . . . . . . 70
12.7 Assignment. . . . . . . . . . . . . . . . . . . 70
12.8 Headings. . . . . . . . . . . . . . . . . . . . 71
12.9 Counterparts. . . . . . . . . . . . . . . . . . 71
12.10 Exhibits and Schedules. . . . . . . . . . . . . 71
12.11 Severability. . . . . . . . . . . . . . . . . . 72
12.12 EXCLUSIVITY OF REPRESENTATIONS AND WARRANTIES;
RELATIONSHIP BETWEEN THE PARTIES. . . . . . . 72
12.13 Governing Law; Service of Process, etc. . . . . 72
12.14 Consequential Damages . . . . . . . . . . . . . 73
12.15 WAIVER OF PUNITIVE DAMAGES. . . . . . . . . . . 73
12.16 WAIVER OF JURY TRIAL. . . . . . . . . . . . . . 73
iii
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SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1 Timber Deeds
Schedule 2 Timberland Leases
Schedule 3 Owned Timberlands
Schedule 4 Huttig Facility
Schedule 5 Joyce Facility
Schedule 6 Other Facilities
Schedule 7 Equipment
Schedule 8 Motor Vehicles
Schedule 9 Excluded Properties and Assets
Schedule 10 Inventory Count Procedure
EXHIBITS
Exhibit A Wood Products Supply Agreement
Exhibit B Special Warranty Deed - Arkansas Form
Exhibit C Act of Transfer and Conveyance with Warranty
Against Grantor's Acts - Louisiana Form
Exhibit D Special Warranty Deed - Texas Form
Exhibit E Assignment and Assumption of Timberland Leases,
Timber Deeds and Other Interests in Real
Property - Arkansas Form
Exhibit F Assignment and Assumption of Timberland Leases,
Timber Deeds and Other Interests in Real
Property - Louisiana Form
Exhibit G Form of General Assignment and Bill of Sale
Exhibit H Form of General Assignment and Bill of Sale
Exhibit I Form of Assumption Agreement and Undertaking
Exhibit J-1 Opinion of Debevoise & Plimpton, Special
Counsel to Sellers
Exhibit J-2 Opinion of Special Louisiana Counsel to Sellers
Exhibit J-3 Opinion of Special Arkansas Counsel to Sellers
Exhibit K-1 Opinion of General Counsel to Buyer
Exhibit K-2 Opinion of Special Louisiana Counsel to Buyer
Exhibit K-3 Opinion of Special Arkansas Counsel to Buyer
DISCLOSURE SCHEDULE
Section 2.4(a)(iii) Prorated Payments
Section 2.4(d) 1996 Harvesting Schedule
Section 3.3(a) Certain Agreements Requiring Consent
Section 3.3(b) Governmental Consents
Section 3.4(a) Encumbrances
iv
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Section 3.4(b) Defaults or Notices under Leases
Section 3.4(d) Access Rights
Section 3.4(e) Notices of Violation, etc. at Joyce
Facility and Huttig Facility
Section 3.5(a) Contracts
Section 3.5(b) Defaults Under Contracts
Section 3.6(a) Employment Agreements and Plans
Section 3.7 Labor Matters
Section 3.8 Certain Changes
Section 3.9 Licenses; Compliance with Law
Section 3.10 Litigation
Section 3.11 Taxes
Section 3.12(a) Environmental Licenses; Compliance
Section 3.12(b) Environmental Matters, etc.
v
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT, dated as of August
6, 1996, among PLUM CREEK TIMBER COMPANY, L.P., a Delaware
limited partnership (the "Buyer"), RIVERWOOD INTERNATIONAL
CORPORATION, a Delaware corporation (the "Seller Parent"),
and NEW RIVER TIMBER, LLC, a Delaware limited liability
company (the "Company," and together with the Seller Parent,
the "Sellers") and wholly owned subsidiary of the Seller
Parent,
WITNESSETH:
WHEREAS, (i) the Seller Parent and the Company own
and operate a business unit known as the "Wood Products
Division" (the "Division"), the assets of which include
certain timberlands located in Louisiana, Arkansas and
Texas, including a tree nursery located in Marion County,
Texas, sawmill and plywood facilities located in Joyce,
Louisiana, and a sawmill facility located in Huttig,
Arkansas, and (ii) certain of the Seller Parent's other
business units utilize certain wood products of the
Division; and
WHEREAS, subject to and upon the terms and
conditions of this Agreement, (i) the Sellers desire to
sell, transfer and convey to the Buyer, and the Buyer
desires to purchase and acquire from the Sellers, the Assets
(as that and all other capitalized terms used herein are
defined in Article One hereof), and the Buyer desires to
assume the Assumed Liabilities, and (ii) the Buyer and the
Seller Parent desire to enter into an arrangement by which
the Buyer will supply the Seller Parent and certain of its
Affiliates with certain wood products, pursuant to the Wood
Products Supply Agreement to be entered into by the Buyer
and the Seller Parent at the Closing of the transactions
contemplated hereby;
NOW, THEREFORE, in consideration of the foregoing
premises and the mutual covenants and agreements hereinafter
set forth, the parties hereto hereby agree as follows:
<PAGE>
ARTICLE ONE
DEFINITIONS
1.1 TERMS GENERALLY. (a) The words "hereby,"
"herein," "hereof," "hereunder" and words of similar import
refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which such word ap-
pears. All references herein to Articles, Sections,
Schedules and Exhibits shall be deemed references to
Articles and Sections of, and Schedules and Exhibits to,
this Agreement unless the context shall otherwise require.
The words "include," "includes" and "including" shall be
deemed to be followed by the phrase "without limitation,"
unless already expressly followed by such phrase or the
phrase "but not limited to." The definitions given for
terms in this Article One shall apply equally to both the
singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the cor-
responding masculine, feminine and neuter forms. Except as
otherwise expressly provided herein, all references to
"Dollars," "dollars" or "$" shall be deemed references to
the lawful money of the United States of America.
(b) To the extent this Agreement describes Assets
located in Louisiana, or rights therein, or to the extent
the internal laws of Louisiana govern this Agreement, the
terms "real property," "real estate" and words of similar
import shall include immovable property; the term "personal
property" and words of similar import shall include movable
property; and the term "easements" and words of similar
import shall include servitudes.
1.2 CERTAIN TERMS. Whenever used in this Agree-
ment, the following terms shall have the respective meanings
given to them below or in the Sections indicated below:
"ACCOUNTANT" shall have the meaning provided in
Section 2.4(b).
"ACQUISITION PROPOSAL" shall have the meaning
provided in Section 7.5.
"ADJUSTMENT REPORT" shall have the meaning
provided in Section 2.4(b).
"ADVERSE EFFECT" means an adverse effect on the
Business or the Assets that subjects the Buyer to a
liability or obligation after the Closing that is in excess
2
<PAGE>
of $500,000 within one year of the Closing Date and that the
Buyer would not have incurred or sustained but for the
occurrence of such effect, except for any such effect,
liability or obligation (x) for which an adjustment to the
Purchase Price is or may be made pursuant to Section 2.4,
(y) for which the Buyer receives insurance proceeds or any
right thereto in accordance with Section 2.2(a)(xi), or (z)
that results from or arises out of any event, occurrence,
fact, condition, change or development that affects the
economy generally or the timber industry or wood products
industry as a whole.
"AFFILIATE" of a Person shall mean any other
Person directly, or indirectly through one or more
intermediaries, controlling, controlled by or under common
control with the first Person. For purposes hereof,
Clayton, Dubilier & Rice Fund V Limited Partnership, a
Cayman Islands exempted limited partnership, and Clayton,
Dubilier & Rice, Inc., a Delaware corporation, each shall be
deemed to be an Affiliate of each Seller. As used in this
definition of the term "Affiliate," or in Section 12.7(c),
"control" (including the terms "controlled by" and "under
common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of
the management policies of a Person, whether through the
ownership of voting securities, by voting trust, contract or
similar arrangement, as trustee or executor, or otherwise.
"AGGREGATE PURCHASE PRICE" shall have the meaning
provided in Section 2.4(d).
"AGREEMENT" shall mean this Asset Purchase
Agreement (including the Exhibits and Schedules hereto).
"ASSETS" shall have the meaning provided in
Section 2.2(a).
"ASSUMED LIABILITIES" shall have the meaning
provided in Section 2.5(a).
"ASSUMPTION AGREEMENT" shall mean the Assumption
Agreement and Undertaking to be entered into by the Buyer in
favor of the Sellers and others, substantially in the form
of Exhibit I.
"BASE PURCHASE PRICE" shall have the meaning
provided in Section 2.3.
3
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"BILLS OF SALE" shall mean, collectively, (x) the
General Assignment and Bill of Sale to be executed by the
Seller Parent in favor of the Buyer, substantially in the
form of EXHIBIT G, and (y) the General Assignment and Bill
of Sale to be executed by the Company in favor of the Buyer,
substantially in the form of EXHIBIT H.
"BOARD" shall have the meaning provided in Sec-
tion 7.5.
"BUSINESS" shall mean the business, as currently
conducted by the Sellers through the Division, of (i) grow-
ing, managing, harvesting and selling timber located on the
Timberlands, including the related operations of the
Nursery, and (ii) manufacturing and marketing wood products
produced at the Joyce Facility and the Huttig Facility.
"BUSINESS EMPLOYEES" shall have the meaning
provided in Section 6.1(a).
"BUSINESS INFORMATION" shall have the meaning
provided in Section 7.1(b).
"BUYER" shall have the meaning provided in the
first paragraph hereof.
"BUYER INDEMNITEES" shall have the meaning
provided in Section 10.2(a).
"BUYER'S KNOWLEDGE" or any similar term or phrase,
as used herein, shall mean the actual knowledge of each of
the Buyer Principals as to the matters addressed in this
Agreement, obtained in the normal course of their respective
duties as such Buyer Principals (or through an inquiry
addressed by such Buyer Principals to the Buyer Additional
Employees), but without any further investigation or inquiry
by any of such Buyer Principals. For purposes of this
definition, neither the Buyer nor any of such Buyer
Principals shall be deemed to have constructive knowledge of
matters that are of public record, nor shall any knowledge
be imputed to any of such Buyer Principals or to the Buyer
(except that the actual knowledge of such Buyer Principals
will be imputed to the Buyer). As used in this definition,
(x) the term "Buyer Principals" shall mean Rick R. Holley,
Charles Grenier, Lindsay Crawford, and James A. Kraft, and
(y) the term "Buyer Additional Employees" shall mean Robert
Boeh, Will Sonnenfeld and Sheri Ward.
4
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"BUYER'S WELFARE PLANS" shall mean the welfare
benefit plans and other benefit arrangements maintained by
the Buyer or an ERISA affiliate referred to in Sec-
tion 6.3(a).
"CERCLA" shall mean the Comprehensive
Environmental Response Compensation and Liability Act, as
amended, 42 U.S.C. Section 9601 et seq.
"CLOSING" shall mean the consummation of the
closing of the transactions provided for in this Agreement.
"CLOSING DATE" shall have the meaning provided in
Section 2.1.
"CLOSING DATE INVENTORY STATEMENT" shall have the
meaning provided in Section 2.4(b).
"CLOSING DATE INVENTORY VALUE" shall have the
meaning provided in Section 2.4(b).
"CODE" shall mean the Internal Revenue Code of
1986, as amended.
"COMPANY" shall have the meaning provided in the
first paragraph hereof.
"CONFIDENTIALITY AGREEMENT" shall have the meaning
provided in Section 7.1(a).
"CONTRACTS" shall mean all written agreements and
contracts constituting Assets to which either Seller is a
party, or by which either Seller or any of the Assets is
bound, incurred through the Division and relating to the
Business (other than (i) labor or employment-related agree-
ments (which are the subject of Section 3.6), and (ii)
Plans).
"COVERED RETURNS" shall have the meaning provided
in Section 3.11.
"COVERED TAXES" shall mean any Taxes on or in
respect of the conduct of the Business or the ownership or
operation of the Assets, but excluding any Transfer Taxes.
"CURRENT EMPLOYEES" shall have the meaning
provided in Section 6.1(a).
5
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"DELIVERY DATE" shall have the meaning set forth
in Section 2.4(b).
"DISCLOSURE SCHEDULE" shall mean the disclosure
schedule delivered by the Sellers and the Buyer prior to or
concurrently with the execution and delivery of this
Agreement, as such disclosure schedule may be amended or
supplemented by the Sellers from time to time prior to the
Closing pursuant to Section 7.8.
"DISPUTE NOTICE" shall have the meaning set forth
in Section 2.4(b).
"DIVISION" shall have the meaning provided in the
Recitals hereto.
"ENVIRONMENTAL CLAIM" shall mean any claim,
action, cause of action, proceeding, investigation, request
for information or notice by any governmental authority or
other Person alleging potential liability (including,
without limitation, potential liability for investigatory
costs, clean-up costs, governmental response costs, natural
resources damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from
(a) the presence, or release into the environment, of any
Hazardous Substance at any location, whether or not owned or
operated by either Seller, or (b) circumstances forming the
basis of any violation, or alleged violation, of any
Environmental Law or liability or claim arising from any
Environmental Matter.
"ENVIRONMENTAL LAWS" shall mean all federal, state
and local laws and regulations relating to pollution or
protection of human health or the environment (including
ambient air, surface water, ground water, land surface or
subsurface strata, flora, fauna and other natural
resources), including CERCLA, RCRA and other laws relating
to emissions, discharges, releases or threatened releases of
any Hazardous Substance or other hazardous chemicals,
pollutants, contaminants, petroleum or petroleum products,
or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport
or handling of any Hazardous Substance or other hazardous
chemicals, pollutants, contaminants, petroleum or petroleum
products.
"ENVIRONMENTAL LICENSES" shall have the meaning
provided in Section 3.12.
6
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"ENVIRONMENTAL MATTER" shall mean any matter or
circumstance related to (i) the disposal or release of any
Hazardous Substance or other hazardous chemicals,
pollutants, contaminants, petroleum or petroleum products
into the environment, (ii) the treatment, storage, or other
handling of any Hazardous Substance or other hazardous
chemicals, pollutants, contaminants, petroleum or petroleum
products, (iii) the placement or discharge of Hazardous
Substances or other hazardous chemicals, pollutants,
contaminants, petroleum or petroleum products into waters of
the United States, or (iv) the presence of any Hazardous
Substance, including asbestos in any building, structure or
workplace.
"EQUIPMENT" shall have the meaning provided in
Section 2.2(a).
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ESTIMATED INVENTORY VALUE" shall have the meaning
provided in Section 2.3.
"EXCLUDED ASSETS" shall have the meaning provided
in Section 2.2(b).
"EXCLUDED EMPLOYEES" shall have the meaning
provided in Section 6.1(a).
"EXCLUDED LIABILITIES" shall have the meaning
provided in Section 2.5(b).
"EXCHANGE" shall have the meaning provided in
Section 7.6(d).
"EXCLUDED REAL PROPERTY" shall mean all real
property owned or leased by either Seller that is not
specifically identified in Schedule 1, 2, 3, 4, 5 or 6.
"EXPIRATION DATE" shall have the meaning provided
in Section 7.5.
"FEE" shall have the meaning provided in Sec-
tion 11.2(b).
"FIXED ASSETS" shall have the meaning provided in
Section 2.2(a).
7
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"FORESTRY CONSULTANT" shall mean the firm of
Bennet & Peters located in Baton Rouge, Louisiana or such
other firm as may be mutually acceptable to the Sellers and
the Buyer in their reasonable judgment.
"HAZARDOUS SUBSTANCE" shall mean any hazardous
waste or hazardous substance, as those terms are defined by
applicable Environmental Law.
"HSR ACT" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the
rules and regulations promulgated under that Act.
"HUTTIG FACILITY" shall have the meaning provided
in Section 2.2(a).
"INDEMNIFICATION CLAIM" shall have the meaning
provided in Section 10.4(b).
"INDEMNITEE" shall have the meaning provided in
Section 10.4(a).
"INDEMNITOR" shall have the meaning provided in
Section 10.4(b).
"INTELLECTUAL PROPERTY" shall mean all of the
patents, patents pending, trade secrets, formulas, processes
(whether trade secrets or not), trade names, trademarks,
service marks, brand names, and copyrights, and all
registrations and applications therefor, which are used in
connection with the operation of the Business.
"INVENTORY" shall mean any products produced and
sold by the Business, including lumber, plywood, landscape
timbers, pulpwood, logs, chips, wood shavings, sawdust and
bark.
"INVENTORY PRICE DECREASE" shall have the meaning
provided in Section 2.4(b).
"INVENTORY PRICE INCREASE" shall have the meaning
provided in Section 2.4(b).
"IRS" shall mean the Internal Revenue Service.
"JOYCE FACILITY" shall have the meaning provided
in Section 2.2(a).
8
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"LEASED TIMBERLANDS" shall mean the approximately
9,000 acres of timberlands located in Arkansas and Louisiana
that are leased under the Timberlands Leases, whether or not
such leases are recorded.
"LIABILITIES" shall mean any and all liabilities
and obligations of every kind and description whatsoever,
whether such liabilities or obligations are known or
unknown, disclosed or undisclosed, matured or unmatured,
accrued, absolute, contingent or otherwise.
"LICENSES" shall mean licenses, permits,
franchises, approvals and authorizations of governmental
authorities.
"LIEN" shall mean any lien, charge, mortgage,
pledge, deed of trust, security interest, burden, title
defect, title retention agreement, occupancy agreement,
easement, encroachment or other encumbrance.
"LOSSES" shall mean any and all claims, lia-
bilities, obligations, losses, fines, costs, royalties,
proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not
resulting from third party claims), including out-of-pocket
expenses and reasonable attorneys' and accountants' fees
incurred in the investigation or defense of any of the same
or in enforcing any of their respective rights hereunder.
"MATERIAL ADVERSE EFFECT" shall mean (a) a
material adverse effect on the Business or the Assets taken
as a whole or (b) a loss of right, title and interest in and
to, or right to operate, manage and harvest, more than
25,000 acres of Timberlands in the aggregate, except in the
case of clause (a) or (b) for any such effect or loss (x)
for which an adjustment to the Purchase Price is or may be
made pursuant to Section 2.4, (y) for which the Buyer
receives insurance proceeds or any right thereto in
accordance with Section 2.2(a)(xi), or (z) that results from
or arises out of any event, occurrence, fact, condition,
change or development that affects the economy generally or
the timber industry or wood products industry as a whole.
"MOTOR VEHICLES" shall have the meaning provided
in Section 2.2(a).
"1996 HARVESTING SCHEDULE" shall have the meaning
provided in Section 2.4(d).
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"NONTRANSITIONING EMPLOYEES" shall have the
meaning provided in Section 6.1(a).
"NURSERY" shall mean the tree nursery facility
located in Marion County, Texas on the Timberlands in Texas.
"OTHER ASSETS" shall mean the Assets other than
the Timberland Interests, the Huttig Facility, the Joyce
Facility and the Other Facilities.
"OTHER FACILITIES" shall have the meaning provided
in Section 2.2(a).
"OWNED TIMBERLANDS" shall have the meaning
provided in Section 2.2(a).
"PERMITTED ENCUMBRANCES" shall mean (i) Liens for
taxes, assessments and similar charges not yet due and
payable, or the nonpayment of which is being contested in
good faith by appropriate proceedings, or for which adequate
reserves have been set aside; (ii) Liens in connection with
worker's compensation, unemployment insurance or other
social security obligations (including pledges or deposits
securing liability to insurance carriers under insurance or
self-insurance arrangements); (iii) Liens to secure bids,
tenders, contracts (other than contracts for the payment of
money), leases, statutory obligations, surety and appeal
bonds and other obligations of like nature arising in the
ordinary course of business; (iv) mechanics', worker's,
materialmen's, carrier's, banker's or other like Liens
arising in the ordinary course of business; (v) oil, gas and
mineral rights vested in other Persons (other than
Affiliates of either Seller); (vi) for leased property or
assets, Liens of lessors or of mortgagees of lessors arising
by operation of law or pursuant to the terms of leases;
(vii) rights of way and related rights vested in Pine
Pipeline, Inc., a subsidiary of the Seller Parent, in
connection with its ownership of a pipeline servicing the
West Monroe Facility, as evidenced by recorded documents or
current use; (viii) pay-as-you-harvest timber sales
agreements, lump sum timber deeds or sales agreements and
similar encumbrances entered into in the ordinary course of
business; (ix) such easements, rights-of-way, servitudes,
restrictive covenants, permits, licenses, use agreements,
surface leases, subsurface leases or other similar
encumbrances (including hunting and recreational leases and
leases and other encumbrances in respect of pipelines,
compressor stations and television antennas) on, over or in
respect of timberland, as would not reasonably be expected
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to have a Material Adverse Effect; (x) such zoning
restrictions, easements, rights-of-way, restrictions on the
use of the property, and other similar encumbrances incurred
in the ordinary course of business, as would not reasonably
be expected to have a Material Adverse Effect; and
discrepancies, conflicts of boundary lines, shortages in
area, encroachments or any other facts that a correct survey
would disclose; (xi) matters disclosed in the title reports
or policies listed in Section 3.4(a) of the Disclosure
Schedule; (xii) items listed in Section 3.4(a) of the
Disclosure Schedule; and (xiii) such imperfections of title
and such other Liens, if any, as would not reasonably be
expected to have a Material Adverse Effect.
"PERSON" shall mean any individual, sole proprie-
torship, trust, estate, executor, legal representative,
unincorporated association, association, institution, corpo-
ration, company, partnership, limited liability company,
limited liability partnership, joint venture, government
(whether national, Federal, state, county, city, municipal
or otherwise, including, without limitation, any instrumen-
tality, division, agency, body or department thereof) or
other entity.
"PLANS" shall have the meaning provided in Section
3.6(b).
"PROPERTY TAXES" shall have the meaning provided
in Section 2.4(a).
"PURCHASE PRICE" shall have the meaning specified
in Section 2.3.
"RCRA" shall mean the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. Section 6901 et seq.
"REAL PROPERTY ASSIGNMENTS" shall mean the
assignments and assumption agreements conveying to the Buyer
the Sellers' interests in the Timberland Leases, the Timber
Deeds and certain other leases and contracts relating to the
Owned Timberlands, the Huttig Facility, the Joyce Facility
and the Other Facilities, substantially in the respective
forms of EXHIBIT E and EXHIBIT F, to be executed by the
appropriate Seller and the Buyer.
"REAL PROPERTY DEEDS" shall mean the limited
warranty deeds conveying to the Buyer the Sellers' interests
in the Owned Timberlands, the Joyce Facility, the Huttig
Facility and any Other Facilities owned by either Seller to
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the Buyer, substantially in the respective forms of EXHIBIT
B, EXHIBIT C and EXHIBIT D, to be executed by the
appropriate Seller and, in Louisiana, the Buyer.
"RELATED PARTY" shall have the meaning provided in
Section 10.4(a).
"REPLACEMENT PROPERTY" shall have the meaning
provided in Section 7.6(d).
"RETIREMENT ELIGIBLE TRANSITIONING EMPLOYEES"
shall have the meaning provided in Section 6.3(c).
"REVIEW PERIOD" shall have the meaning provided in
Section 2.4(b).
"SCHEDULED AMOUNT" shall have the meaning provided
in Section 2.4(d).
"SELLER CREDIT AGREEMENTS" shall mean (x) the
Credit Agreement, dated as of March 20, 1996, among the
Seller Parent (as successor by assumption to RIC Holding,
Inc.), the other borrowers from time to time parties
thereto, the lenders party thereto, and Chemical Bank, as
administrative agent thereunder, and (y) the Machinery
Credit Agreement, dated as of March 27, 1996, among
Riverwood International Machinery, Inc., a Delaware
corporation and wholly-owned subsidiary of the Seller
Parent, the other borrowers from time to time parties
thereto, the lenders party thereto, Chemical Bank, as
administrative Agent thereunder, and Bank of America NT &
SA, as documentation agent thereunder.
"SELLER INDEMNITEES" shall have the meaning pro-
vided in Section 10.3.
"SELLER PARENT" shall have the meaning provided in
the first paragraph hereof.
"SELLERS" shall have the meaning provided in the
first paragraph hereof.
"SELLERS' KNOWLEDGE" or any similar term or
phrase, as used herein, shall mean the actual knowledge of
each of the Seller Officers of the Seller Parent as to the
matters addressed in this Agreement, obtained in the normal
course of their respective duties as such Seller Officers
(or through an inquiry addressed by such Seller Officers to
the Seller Additional Employees), but without any further
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investigation or inquiry by any of such Seller Officers.
For purposes of this definition, neither Seller nor any of
such Seller Officers shall be deemed to have constructive
knowledge of matters that are of public record, nor shall
any knowledge be imputed to any of such Seller Officers or
either Seller (except that the actual knowledge of such
Seller Officers will be imputed to the Seller Parent). As
used in this definition, (x) the term "Seller Officers"
shall mean Thomas H. Johnson, President and Chief Executive
Officer of the Seller Parent; Frank R. McCauley, Senior Vice
President of the Seller Parent; C. Steven Clark, Vice
President and General Manager, Wood Products of the Seller
Parent; and (solely as to Section 3.12) Gregory J. Hollod,
Vice President, Health, Safety & Environment of the Seller
Parent, and (y) the term "Seller Additional Employees" shall
mean (solely as to the Timberlands) Harold L. Humphries,
Director Forest Resources; (solely as to the Huttig
Facility) Robert J. Packman, Plant Manager; (solely as to
Section 3.12) Phillip K. Wilkerson, Supervisor Environmental
Coordinator; (solely as to Sections 3.5 and 3.10) John J.
Hemrick, Senior Attorney; (solely as to financial matters
involving the Business) Aubrey D. Hamilton, Jr., Manager
Planning; and (solely as to Section 3.6) Claire Steiner,
Manager Benefits and Compensation.
"SPECIFIED DATA" shall have the meaning provided
in Section 7.5.
"TAX" shall mean any federal, state, provincial,
local, foreign or other income, alternative, minimum,
accumulated earnings, personal holding company, franchise,
capital stock, net worth, capital, profits, windfall
profits, gross receipts, value added, sales (including, but
not limited to, bulk sales), use, goods and services,
excise, customs duties, transfer, conveyance, mortgage,
registration, stamp, documentary, recording, premium,
severance, environmental (including, but not limited to
taxes under section 59A of the Code), real property,
personal property, ad valorem, intangibles, rent, occupancy,
license, occupational, employment, unemployment insurance,
social security, disability, workers' compensation, payroll,
health care, withholding, estimated or other similar tax,
duty or other governmental charge or assessment or deficien-
cies thereof (including all interest and penalties thereon
and additions thereto whether disputed or not).
"TAX RETURN" shall mean any return, report,
declaration, form, claim for refund or information return or
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statement relating to Taxes, including any schedule or at-
tachment thereto, and including any amendment thereof.
"THIRD PARTY CLAIM" shall have the meaning pro-
vided in Section 10.4(a).
"TIMBER DEED TIMBERLANDS" shall mean the
timberlands located in Arkansas and Louisiana against which
the Timber Deeds are recorded.
"TIMBER DEEDS" shall mean the timber deeds
described in SCHEDULE 1 creating the Sellers' rights in
third party purchased stumpage, as amended, modified and
assigned to date, and as hereafter amended or modified as
permitted hereby (other than any such timber deeds expiring
or terminating after the date hereof and prior to the
Closing in accordance with their respective terms).
"TIMBERLAND INTERESTS" shall mean the right, title
and interest of the Sellers in and to the Timberlands.
"TIMBERLAND LEASES" shall mean the leases
described in SCHEDULE 2 creating the Sellers' rights in the
Leased Timberlands, as amended, modified and assigned to
date, and as hereafter amended or modified as permitted
hereby.
"TIMBERLANDS" shall mean the Owned Timberlands,
the Leased Timberlands and the Timber Deed Timberlands.
"TRANSACTION AGREEMENTS" shall mean (1) the Wood
Products Supply Agreement, (2) the Real Property Deeds,
(3) the Real Property Assignments, (4) the Bills of Sale,
(5) with respect to Assets, if any, not sold, transferred or
conveyed pursuant to the Real Property Deeds, the Real
Property Assignments and the Bills of Sale, such other bills
of sale, assignments and other instruments of sale, con-
veyance, transfer and assignment from the Sellers, contain-
ing such terms, as shall be necessary in order to transfer
the Assets to the Buyer, subject to Permitted Encumbrances,
PROVIDED that such bills of sale, deeds and other instru-
ments shall not be required to contain any representations,
warranties, covenants, agreements and undertakings of either
Seller that conflict with or are inconsistent with or
materially additional to those of either Seller contained
herein or in any Transaction Agreement identified in any of
the preceding clauses (1) through (4), (6) the Assumption
Agreement, and (7) such other instruments of assumption,
containing such terms, as shall be necessary in order for
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the Assumed Liabilities to be effectively assumed by the
Buyer.
"TRANSFER" shall have the meaning provided in
Section 7.6(d).
"TRANSFER TAXES" shall have the meaning provided
in Section 7.4.
"TRANSFERRED INVENTORY" shall have the meaning
provided in Section 2.2(a).
"TRANSFERRED INVENTORY PRICE" shall have the
meaning in Section 2.3.
"TRANSITIONING EMPLOYEES" shall have the meaning
provided in Section 6.1(a).
"TREASURY REGULATIONS" shall mean the regulations
prescribed pursuant to the Code.
"WARN ACT" shall mean the Worker Adjustment and
Retraining Notification Act of 1988.
"WEST MONROE FACILITY" shall mean the Seller
Parent's properties in or near West Monroe, Louisiana,
including its paperboard mill, converting plant and offices
located at 1000 Jonesboro Road, West Monroe, Louisiana.
"WOOD PRODUCTS SUPPLY AGREEMENT" shall mean the
Wood Products Supply Agreement to be entered into between
the Seller Parent and the Buyer, substantially in the form
of EXHIBIT A.
ARTICLE TWO
PURCHASE OF ASSETS AND
ASSUMPTION OF LIABILITIES
2.1 GENERALLY. The Closing will take place at
the offices of Debevoise & Plimpton, 875 Third Avenue, New
York, New York 10022 at 10:00 a.m., New York City time, on
October 7, 1996, or at such other date and time as the
parties shall have agreed to in writing (such date, the
"Closing Date"). Subject to and upon the terms and
conditions of this Agreement, at the Closing,
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(a) the Sellers will sell, and the Buyer will
purchase, the Assets,
(b) the Buyer will pay to the Sellers the Purchase
Price, and will assume the Assumed Liabilities, and
(c) the Seller Parent will enter into and agree to
buy certain wood products from the Buyer under, and the
Buyer will enter into and agree to sell certain wood
products under, the Wood Products Supply Agreement.
2.2 SALE AND PURCHASE OF ASSETS. (a) ASSETS.
Subject to and upon the terms and conditions of this
Agreement, at the Closing the Sellers will sell, transfer
and convey to the Buyer, and the Buyer will purchase and
acquire, all of the Sellers' right, title and interest in
and to the following assets, other than the Excluded Assets
(such assets, excluding the Excluded Assets, the "Assets"):
(i) approximately 529,000 acres of timberlands
located in Louisiana, Arkansas and Texas, together with
all improvements and all down and standing trees
thereon, and all easement and access rights appurtenant
thereto, as described in SCHEDULE 3, including the
Nursery (collectively, the "Owned Timberlands");
(ii) the Timberland Leases, together with any
rights, title and interest in improvements and down and
standing trees located on the Leased Timberlands, and
easement and access rights appurtenant thereto;
(iii) The real property located in or near Huttig,
Arkansas and described in SCHEDULE 4, together with all
improvements and fixtures located thereon and all
appurtenances, rights, easements, rights-of-way,
tenements, and hereditaments incident thereto (the
"Huttig Facility");
(iv) The real property located in or near Joyce,
Louisiana and described in SCHEDULE 5, together with
all improvements and fixtures located thereon and all
appurtenances, rights, easements, rights-of-way,
tenements, and hereditaments incident thereto (the
"Joyce Facility");
(v) The parcels of real property and leases of
real property to either Seller described in SCHEDULE 6
(the "Other Facilities");
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(vi) All fixed assets of the Seller Parent on the
Closing Date that are located at the Joyce Facility,
the Huttig Facility, the Nursery or any Other Facility
(collectively, the "Fixed Assets");
(vii) All machinery, equipment, tools, office
equipment, business machines, furniture and
accessories, including all sawmill and plywood
processing equipment, of the Sellers on the Closing
Date that are located at the Joyce Facility, the Huttig
Facility, the Nursery or any Other Facility, together
with the other equipment of the Sellers on the Closing
Date that is located at the West Monroe Facility and is
specifically described in SCHEDULE 7 (collectively, the
"Equipment");
(viii) The leased or owned motor vehicles identified
in SCHEDULE 8, and any leased motor vehicles leased to
replace any thereof between the date hereof and the
Closing Date, that in each case is owned or leased by
either Seller on the Closing Date (the "Motor
Vehicles");
(ix) All of the following assets relating to the
Business and existing on the Closing Date (such assets,
collectively, the "Transferred Inventory"): plant log
inventory, third-party purchased stumpage (together
with the Timber Deeds in effect on the Closing Date and
any other rights conveyed under the Timber Deeds in
effect on the Closing Date), in-process lumber, in-process
plywood, finished lumber, finished plywood, and
other inventory, store room parts and supplies used
primarily by the Business, but excluding any logs and
timber located on the Owned Timberlands and Leased
Timberlands;
(x) All contracts, purchase orders, leases of
real property to others, leases of personal property,
instruments and other agreements incurred through the
Division and relating primarily to the Business and
existing on the Closing Date; and the trademark
Tuf-Frame-TM- (Registration No. 1971275);
(xi) All net insurance proceeds actually received
by either Seller (after deducting all attorneys' fees,
expenses and other costs of recovery) under any of
Sellers' insurance policies relating to the Business,
which proceeds constitute a recovery for damage or
destruction to any other Assets (other than Transferred
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Inventory, and other than any timber located on the
Timberlands) occurring after the date hereof and prior
to the Closing;
(xii) All Licenses (including their respective
applications for renewal and application materials in
process) used primarily in the operation of the
Business, but in each case only to the extent
transferable by law; and
(xiii) Copies of all customer lists, files, records,
correspondence, plats, architectural plans, manufactur-
ing and engineering drawings and specifications,
patterns, jigs, program maps, computer hard drives, oil
and gas lease records, environmental records and files,
sales information, and other technical and business
records relating primarily to the Business and existing
on the Closing Date.
(b) EXCLUDED ASSETS. The Assets shall not
include, and the Sellers shall not sell, transfer or convey,
and the Buyer shall not purchase or acquire, any right,
title or interest of either Seller or of any of its Affili-
ates, or of any other Person, in or to any of the following
properties and assets (collectively, the "Excluded Assets"):
(i) Any Intellectual Property (other than the
trademark Tuf-Frame-TM-), including (x) the name
"Riverwood" and any rights in respect thereof, (y) any
name, expression, trade name, logo, trademark or
service mark, whether or not registered, consisting of,
including or similar to the name "Riverwood," or
otherwise used in connection with the Business, and any
rights in respect thereof, and (z) Patent No.
5,435,954, dated July 25, 1995, entitled "Method for
Forming Articles of Reinforced Composite Material";
(ii) Any Excluded Real Property;
(iii) Any properties or assets used in or related
to the Business and located at the West Monroe
Facility, except for those assets specifically
described in SCHEDULE 7;
(iv) Any assets of or relating to any "employee
benefit plan" (as defined within the meaning of ERISA
Section 3(3)), whether or not subject to ERISA,
established or maintained for the benefit of any
employees employed in the operation of the Business;
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(v) Any accounts receivable, cash, cash
equivalents or deposit accounts;
(vi) Any purchase orders, leases, Licenses, and
other instruments, contracts and agreements of or
affecting either Seller that do not relate exclusively
or primarily to the Business;
(vii) Any assets and properties used in the
Business that have been disposed of since the date of
this Agreement;
(viii) Any rights to any of the Sellers' insurance
policies, premiums, or (except as provided in Sec-
tion 2.2(a)(xi)) proceeds from insurance coverages
relating to the Business for any period; and any other
recovery by either Seller for the benefit of or
otherwise relating to the Business from any Person
based upon events that occurred, conditions or facts
that existed, or any act committed or omitted or
alleged to have been committed or omitted, prior to the
Closing;
(ix) Any rights to any refunds, and any deposits
of either Seller with any governmental authority,
relating to Taxes that are Excluded Liabilities;
(x) Any and all minerals, or oil, gas and mineral
rights and interests of any nature whatsoever, that
have been previously acquired by third parties (other
than any reversionary rights that accrue to the surface
owner of the Owned Timberlands by operation of law);
(xi) All Licenses (including applications for
issuance or renewal thereof and application materials
in process) used in the operation of the Business, to
the extent that they are not transferable by law;
(xii) The properties and assets described in
SCHEDULE 9; and
(xiii) Any other property or asset not specifically
identified as an Asset in Section 2.2(a), whether or
not used in or relating to the Business.
2.3 PURCHASE PRICE. CLOSING PAYMENTS. Subject
to and upon the terms and conditions of this Agreement, in
consideration for the sale, transfer and conveyance to the
Buyer of the Assets, the Buyer shall pay to the Sellers the
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purchase price for the Assets (the "Purchase Price"), by
wire transfer of immediately available funds in U.S. dollars
to one or more previously designated accounts of the Seller
Parent, as follows:
(i) to the Seller Parent (on its own behalf and
on behalf of the Company), in payment for the Assets
(other than Transferred Inventory), the sum of Five
Hundred Forty Million Dollars ($540,000,000), as the
same may be adjusted on the Closing Date pursuant to
Section 2.4(a) (the "Base Purchase Price"); and
(ii) to the Seller Parent (on its own behalf and
on behalf of the Company), in payment for the
Transferred Inventory, an amount of funds equal to the
Seller Parent's estimate of the lower of cost or market
value of the Transferred Inventory (the "Estimated
Inventory Value"), subject to adjustment following the
Closing pursuant to Section 2.4(b) (as so adjusted, the
"Transferred Inventory Price").
The Estimated Inventory Value shall be estimated by the
Seller Parent in good faith based upon and consistent with
generally accepted accounting principles and the Seller
Parent's accounting practices and policies currently in
effect (to the extent such practices and policies are
consistent with generally accepted accounting principles),
and shall be provided by the Seller Parent to the Buyer at
least two (2) business days prior to the Closing. The
determination of market value will be based (x) to the
extent applicable, on such published prices for such
Transferred Inventory products as are published in the most
recent Friday edition of the "Random Lengths-Registered Trademark-" trade
publication, and (y) otherwise on the Sellers' average
selling prices for the thirty (30) day period preceding the
date on which such estimate shall be completed.
2.4 PURCHASE PRICE ADJUSTMENT. (a) PRORATIONS
AND CERTAIN PAYMENTS WITH RESPECT TO THE ASSETS. (i) The
following items relating to the Assets will be prorated as
of the Closing Date, with (x) the relevant Seller credited
for receivables outstanding or amounts prepaid, and liable
for obligations (other than Assumed Liabilities), to the
extent such items relate to any time period or periods
ending on or prior to the Closing Date, and (y) the Buyer
credited for receivables received by either Seller, and
liable for obligations, to the extent such items relate to
any time period or periods beginning after the Closing Date,
and liable for Assumed Liabilities:
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(1) personal property, real estate, occupancy and
other similar Taxes ("Property Taxes"), if any, on or
with respect to the Assets;
(2) the amount of any license, permit or
registration fees with respect to licenses, permits or
registrations that are being assigned and transferred
hereunder;
(3) the amount of sewer rents and charges for
water, telephone, electricity and other utilities and
fuel; and
(4) rental and royalty payments under any
contracts, leases and other agreements constituting
Assets.
(ii) If the current year's Property Taxes are not
then known, the parties shall prorate such Property Taxes on
the basis of the previous year's Property Taxes or a written
assessor's office notice of any estimate of the current
year's Property Taxes, if received by either Seller prior to
the Closing Date. To the extent that any of the Assets
constituting real property include only a portion of a
particular Tax parcel, then for purposes of performing the
Tax proration for the parcel being transferred to the Buyer,
the Property Taxes for that particular parcel shall be
deemed to be the Property Taxes due for the entire Tax
parcel multiplied by a fraction, the numerator of which is
the acreage in the parcel being transferred to Buyer and the
denominator of which is the total acreage of the property
that comprises the entire Tax parcel. To the extent that
any of the Assets constituting real property include only a
portion of a particular Tax parcel, then until the portion
of the Tax parcel conveyed to the Buyer is separately
assessed for Property Tax purposes the Buyer and Seller each
agree to pay their share of Property Taxes due for the
entire Tax parcel on or before the date when the same
becomes due, and failing to do so, the other party may, but
shall not be obligated to, pay such taxes. Each of the
Buyer, on the one hand, and the Sellers, on the other hand,
hereby agrees to indemnify, defend and hold harmless the
other such party or parties from and against all Liability
for Property Taxes paid by any other such party on behalf of
any such indemnifying party as provided in the immediately
preceding sentence as a result of any such indemnifying
party's failure to pay such Property Taxes.
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(iii) To the extent there is any rent or royalty
past due under any contracts, leases and other agreements
constituting Assets as of the Closing Date, the Buyer shall
cooperate with each Seller to collect the same and upon
collecting any such amount shall promptly pay to the
relevant Seller the appropriate prorated portion of such
amount (net of reasonable collection costs), as determined
in accordance with Section 2.4(a)(i). In the event that,
after the Closing, either Seller shall settle the matter
referred to in Section 2.4(a)(iii) of the Disclosure
Schedule, the Buyer shall reimburse such Seller for any
portion of such settlement that represents the present value
of all or part of the royalty payments to be paid at any
time after the Closing in respect of the lease referred to
in such Section of the Disclosure Schedule.
(iv) The net amount of all such prorations shall
be initially settled and paid on the Closing Date, as an
adjustment to the Base Purchase Price. In the event that
the amount of any of the items to be prorated pursuant to
this Section 2.4(a) is not known by the Sellers and the
Buyer at the Closing, the proration shall be made based upon
the amount of the most recent cost of such item to the
relevant Seller. After the Closing, the Buyer and the
relevant Seller shall each provide to the other, within five
(5) business days after receipt, each third party invoice
relating to any item so estimated. From time to time the
Buyer and the relevant Seller shall each make any payments
to the other that are necessary to compensate for any
difference between the proration made at the Closing and the
correct proration based on such third party invoice, as and
to the extent the aggregate net amount due to the Buyer or
to the Sellers shall equal or exceed $25,000, based on all
such third party invoices so received, after giving effect
to any such payment previously made, and after netting
amounts due from the Buyer to the Sellers against amounts
due from the Sellers to the Buyer. In the event that no
such payment shall have been made for a 180-day period, the
Buyer or the relevant Seller, as the case may be, shall make
payment to the other of the aggregate net amount so
calculated, whether or not equal to or exceeding $25,000.
Each such payment shall be made within ten (10) business
days after any date on which such aggregate net amount shall
so equal or exceed $25,000, or after the end of such 180-day
period.
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(b) TRANSFERRED INVENTORY ADJUSTMENT. (i) On
the Closing Date, the Seller Parent, with the assistance
of its independent public accountants, Deloitte & Touche
LLP, shall (x) conduct a physical count of the plant logs,
in-process lumber, in-process plywood, finished lumber,
finished plywood and supplies that constitute Transferred
Inventory, and calculate the then remaining third party
purchased stumpage that constitutes Transferred Inventory,
using the procedures described in SCHEDULE 10, and (y) de-
termine the actual value of such items of Transferred
Inventory as of the Closing Date, based on the lower of cost
or market value (the "Closing Date Inventory Value"), and
determined based upon and consistent with generally accepted
accounting principles and the Seller Parent's accounting
practices and policies currently in effect (to the extent
consistent with generally accepted accounting principles).
The Buyer, in conjunction with its independent public
accountants, Coopers & Lybrand L.L.P., shall be entitled to
observe and participate in the inventory count conducted by
the Seller Parent at the Buyer's own cost. The Seller
Parent shall deliver a statement of the Closing Date
Inventory Value ("Closing Date Inventory Statement") to the
Buyer no later than thirty (30) days after the Closing Date,
together with a certificate signed by a senior financial
officer of the Seller Parent stating that such inventory
count was performed in accordance with the procedure set
forth in SCHEDULE 10.
(ii) The Buyer shall have ten (10) days from the
date on which the Closing Date Inventory Statement and such
certificate are delivered (the "Delivery Date") to the Buyer
to review such documents (the "Review Period"). If the
Buyer disputes the Closing Date Inventory Value as
determined by the Seller Parent, the Buyer shall deliver a
written notice to the Seller Parent in writing within ten
(10) days of the Delivery Date, setting forth, in reasonable
detail, each disputed item or amount and the basis for the
Buyer's disagreement therewith, together with supporting
calculations (such notice, a "Dispute Notice"). The Buyer
shall not be entitled to dispute any item or amount unless
all such misstated items and amounts are misstated by more
than $25,000 in the aggregate. If no Dispute Notice is
received by the Seller Parent on or prior to the date that
is ten (10) days after the Delivery Date, the Closing Date
Inventory Statement and accompanying certificate shall be
deemed accepted by the Buyer.
(iii) If the Buyer has delivered a Dispute Notice
to the Seller in compliance with Section 2.4(b)(ii), the
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Buyer and the Seller Parent shall attempt in good faith to
resolve such dispute for a period of fifteen (15) days. If
such dispute is not resolved within such fifteen (15) day
period, the Buyer and the Seller Parent shall jointly
contact the national office of Arthur Andersen LLP and shall
retain Arthur Andersen LLP to resolve the issues set forth
in the Dispute Notice. If for any reason Arthur Andersen
LLP shall not be available to resolve such issues consistent
with this Section 2.4(b), the Buyer and the Seller Parent
shall promptly contact the national office of, and shall
retain the services of, an independent accounting firm with
experience in the timber and wood products industries and
that does not at the time of retention provide and has not
in the prior five years provided services to the Buyer or
the Seller Parent. If the Buyer and the Seller Parent
cannot agree on the independent accounting firm to be
retained, the Buyer and the Seller Parent shall each submit
the name of one accounting firm that satisfies the
qualifications set forth in this Section 2.4(b), and the
independent accounting firm shall be selected by lot from
those two firms. The independent accounting firm retained
by the Buyer and the Seller Parent (the "Accountant") shall
conduct such review of the Closing Date Inventory Statement
and the Dispute Notice, and any supporting documentation as
the Accountant in its sole discretion deems necessary, and
the Accountant shall conduct such hearings or hear such
presentations by the parties as the Accountant in its sole
discretion deems necessary. The Accountant shall, as
promptly as practicable and in no event later than twenty
(20) days following the date of its retention, deliver to
the Seller Parent and the Buyer a report (the "Adjustment
Report"), in which the Accountant shall, after considering
all matters set forth in the Dispute Notice, determine what
adjustments, if any, should be made to the Closing Date
Inventory Statement in order for it to comply with this
Section 2.4(b), and shall determine the appropriate Closing
Date Inventory Value on that basis. No adjustment shall be
made for any individual disputed item or amount unless the
aggregate amount of all such adjustments for all such items
and amounts shall exceed $25,000. The Adjustment Report
shall set forth, in reasonable detail, the Accountant's
determination with respect to each of the disputed items
or amounts specified in the Dispute Notice, and the
revisions, if any, to be made to the Closing Date Inventory
Statement and the Closing Date Inventory Value, together
with supporting calculations. The Seller Parent shall pay
one-half, and the Buyer shall pay one-half, of the fees and
expenses of the Accountant incurred in connection with the
matters referred to in this Section 2.4(b). The Adjustment
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Report shall be final and binding upon the Buyer and the
Seller Parent, and shall be deemed a final arbitration award
that is enforceable pursuant to the terms of the Federal
Arbitration Act, 9 U.S.C. Section 1 et seq.
(iv) Effective upon the end of the Review Period
(if a timely Dispute Notice is not delivered), or upon the
resolution of all matters set forth in the Dispute Notice by
agreement of the parties or by the issuance of the
Adjustment Report (if a timely Dispute Notice is delivered),
if the Closing Date Inventory Value exceeds the Estimated
Inventory Value, the Transferred Inventory Price shall be
increased by the amount of such difference ("Inventory Price
Increase"), and if the Closing Date Inventory Value as so
determined is less than the Estimated Inventory Value, the
Transferred Inventory Price shall be decreased by the amount
of such difference ("Inventory Price Decrease"). The Buyer
shall pay to the Seller Parent (on its own behalf and on
behalf of the Company, as applicable), an amount equal to
the Inventory Price Increase, and the Seller Parent (on its
own behalf and on behalf of the Company, as applicable)
shall pay to the Buyer an amount equal to the Inventory
Price Decrease. Any such payment shall be made by the Buyer
or the Seller Parent, as the case may be, on or prior to the
second business day following the end of the Review Period
(if a timely Dispute Notice is not delivered), or two
business days after the date on which the Adjustment Report
has been received by the Seller and the Buyer (if a timely
Dispute Notice is delivered). Any such payment shall be
made by wire transfer of immediately available funds in U.S.
dollars to the account or accounts of the Seller Parent or
the Buyer, as the case may be, designated by notice to the
other such party in accordance with Section 12.3 at least
two business days prior to the date on which such payment is
scheduled to be made.
(c) RISK OF LOSS AS TO TIMBERLANDS. (i) The
Company shall bear the risk of "casualty losses" with
respect to the Timberlands until the Closing, as and to the
extent provided in this Section 2.4(c)(i). The term
"casualty loss" as used in this Section 2.4(c) means any
destruction or material damage to more than five thousand
(5,000) acres of timber in the aggregate located on the
Timberlands by fire, flood or storm (or other similar
casualty) or by insects or disease. In the event any timber
is lost because of a casualty loss occurring after the date
hereof and prior to the Closing, the Base Purchase Price
shall be adjusted to reflect such casualty loss to the
extent that the economic loss in value of the Timberlands
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resulting from such casualty loss exceeds Five Million
Dollars ($5,000,000), PROVIDED that in the event that such
casualty loss shall involve over one hundred thousand
(100,000) acres of timber in the aggregate located on the
Timberlands, the Buyer may at its option instead terminate
this Agreement as provided in Section 11.1(e).
(ii) The amount of such adjustment shall be
mutually determined by the parties hereto by inspection of
the affected parcels. If the parties hereto are unable to
agree on said amount before the Closing Date, the reduction
of the Base Purchase Price for purposes of the Closing shall
be determined by the Forestry Consultant, whose determina-
tion shall be conclusive and binding upon the Sellers and
the Buyer.
(iii) The Company agrees to promptly notify the
Buyer of any and all casualty losses.
(d) ADJUSTMENT FOR EXCESS HARVESTING. (i) In
the event that, after the date hereof and prior to the
Closing, the respective amounts of pine sawlogs, hardwood
sawlogs, pine pulpwood and hardwood pulpwood harvested for
the portion of calendar 1996 preceding the Closing Date
exceed by more than five percent (5%) the respective
Scheduled Amounts thereof (which harvesting may in any event
include cutting diseased or insect-infested trees), the Base
Purchase Price shall be adjusted to reflect such excess
harvesting, to the extent of such excess. The amount of
such adjustment shall be mutually determined by the parties
hereto by inspection of the affected parcels. If the
parties hereto are unable to agree on said amount before the
Closing Date, the reduction of the Base Purchase Price for
purposes of the Closing shall be determined by the Forestry
Consultant, whose determination shall be conclusive and
binding upon the Sellers and the Buyer.
(ii) The term "1996 Harvesting Schedule" means
the harvesting schedule for 1996, a copy of which is set
forth in Section 2.4(d) of the Disclosure Schedule. The
term "Scheduled Amount" shall mean, as to pine sawlogs,
hardwood sawlogs, pine pulpwood or hardwood pulpwood, the
respective amount thereof contemplated by the 1996
Harvesting Schedule to be harvested in the first three
quarters of calendar 1996, plus (in the event that the
Closing shall occur after October 1, 1996) a prorated
portion of the respective amount thereof contemplated by the
1996 Harvesting Schedule to be harvested in the fourth
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quarter of calendar 1996, prorated for the portion of such
quarter ending on the Closing Date.
(e) PURCHASE PRICE ALLOCATION. The parties
hereto agree to allocate the aggregate of the Base Purchase
Price (as adjusted pursuant to Section 2.4(a)) and the
Assumed Liabilities (collectively, the "Aggregate Purchase
Price") among the Assets (other than the Transferred
Inventory) in accordance with section 1060 of the Code and
based on an allocation prepared by the Buyer, at the Buyer's
expense, and delivered to the Sellers not later than the
date that is thirty (30) days after the date hereof; PRO-
VIDED that if the Sellers object to the Buyer's proposed
allocation, the parties shall cooperate and negotiate in
good faith in determining, prior to the Closing, an agreed
upon allocation. The Transferred Inventory Price as finally
determined pursuant to Section 2.4(b) shall be allocated to
the Transferred Inventory. No portion of the Aggregate
Purchase Price shall be allocated to the Wood Products
Supply Agreement. In connection with the preparation of the
foregoing allocation, the parties hereto shall cooperate
with each other and provide such information as any of them
shall reasonably request. The parties hereto will each
report the federal, state and local and other Tax
consequences of the purchase and sale contemplated hereby
(including the filing of IRS Form 8594) in a manner
consistent with such allocation.
2.5 ASSUMPTION OF LIABILITIES, ETC.
(a) ASSUMED LIABILITIES. Effective from and
after the Closing, the Buyer agrees to and shall assume and
pay, perform, satisfy, be responsible for and discharge in a
timely manner all of the following Liabilities (collec-
tively, the "Assumed Liabilities"):
(x) all Liabilities of every kind and description
arising out of, relating to, or incurred in connection
with the conduct of the Business or relating to the
Assets that arise or are incurred after the Closing,
including all such Liabilities (i) with respect to
products shipped or manufactured in connection with the
conduct of the Business after the Closing (including
product liability claims), (ii) with respect to all
contracts and agreements constituting or relating to
any Assets, (iii) in respect of the employment or
termination of any individual employed by the Buyer or
any of its Affiliates in the operation of the Business
by the Buyer or any of its Affiliates, (iv) Tax
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Liabilities of any kind, including but not limited to
any severance or processing tax imposed by the State of
Arkansas, Louisiana or Texas against the Timberlands,
the Buyer or either Seller by reason of business
operations or cutting or removal of timber by the Buyer
or its agents, or (v) otherwise resulting from or
arising out of the operation of the Business by the
Buyer, or the Buyer's ownership, operation or use of
the Assets, following the Closing, and
(y) all Liabilities of every kind and description
arising out of, relating to, or incurred in connection
with the conduct of the Business or relating to the
Assets that have arisen on or before the Closing Date
and that are (i) performance obligations (other than to
the extent such obligations are for the payment of
money and are due and payable prior to the Closing)
with respect to contracts and agreements constituting
or relating to any Assets, (ii) Liabilities in respect
of any current or former employee for which the Buyer
is to be responsible pursuant to any of Sections 6.1,
6.2, 6.3 or 6.4, and (iii) Liabilities under or in
respect of any Environmental Matter or Environmental
Law or any Environmental Claim, other than any
Environmental Claim to the extent the Sellers are to be
responsible therefor as provided in Section 7.7(b).
(b) EXCLUDED LIABILITIES. Except as expressly
provided in Section 2.5(a), the Buyer shall not assume, and
shall not have been deemed to assume (whether by acquiring
any Asset subject to any Permitted Encumbrance or
otherwise), any Liabilities of either Seller arising out of,
relating to, or incurred in connection with the conduct of
the Business or relating to the Assets arising on or before
the Closing (such Liabilities, other than those constituting
Assumed Liabilities, the "Excluded Liabilities").
(c) NO NOVATION, ETC. Each party hereto agrees
that no assignment or transfer by the Buyer of all or part
of the Assets or the Business to any other Person shall
relieve such party of its obligations hereunder with respect
to the Assumed Liabilities (in the case of the Buyer) or the
Excluded Liabilities (in the case of the Sellers). The
Buyer further covenants that the Buyer will do, execute and
deliver, or will cause to be done, executed and delivered,
all such further acts and instruments that either Seller or
any of its successors and assigns may reasonably request in
order to more fully evidence the assumption of the Assumed
Liabilities provided for in this Section 2.5. Each Seller
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further covenants that such Seller will do, execute and
deliver, or will cause to be done, executed and delivered,
all such further acts and instruments that the Buyer or any
of its successors and assigns may reasonably request in
order to more fully evidence the retention of the Excluded
Liabilities provided for in this Section 2.5.
2.6 CERTAIN POST-CLOSING MATTERS. (a) In the
event that, after the Closing, (i) the Buyer shall receive
any payment of any amount that is an Excluded Asset
(including, but not limited to, any account receivable) or
(ii) either Seller shall receive any payment of any amount
that is an Asset, the party receiving such payment shall
promptly deliver it to the Seller Parent (in the case of any
such amounts received by the Buyer) or the Buyer (in the
case of any such amounts received by either Seller),
endorsed where necessary, with recourse in favor of such
other party, except to the extent that such amount has
previously been reflected in any adjustment to the Purchase
Price pursuant to, or for which provision is made under,
Section 2.4. In the event that, after the Closing, (i) the
Buyer shall pay any amount that is an Excluded Liability or
(ii) either Seller shall pay any amount that is an Assumed
Liability, the party making such payment shall be entitled
to indemnification in respect thereof as and to the extent
provided in Section 10.2 or 10.3, respectively.
(b) To the extent any License, contract or
agreement constituting or relating to any Assets
(including any lease of real property) covers or affects
both Assets and Excluded Assets, the Sellers and the Buyer
shall each comply with its obligations under such License,
contract or agreement and shall share all income and expenses
thereunder on a pro-rata basis determined by acreage or on such
other basis as the parties hereto agree is appropriate. If at
any time after the Closing either the Buyer or the relevant
Seller desires to terminate or amend such License, contract
or agreement, then, to the extent that any such termination
or amendment will not materially adversely affect the
interests of the other parties hereto, each such other party
shall cooperate in all reasonable respects with the party
desiring such termination or amendment to accommodate the
desires of such party, at the cost and expense of such
party.
(c) Notwithstanding anything to the contrary in
this Agreement, this Agreement shall not constitute an
agreement to assign or transfer any contract, lease, permit,
license or other agreement, instrument or arrangement, or
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any interest in any property or assets leased or licensed
thereunder, or any claim, right or benefit arising
thereunder or resulting therefrom, if an assignment or
transfer or an attempt to make such an assignment or
transfer without the consent or approval of another Person
would constitute a breach or violation thereof or affect
adversely the rights of the Buyer or of either Seller
thereunder; and any transfer or assignment to the Buyer by
either Seller of any interest under any such contract,
lease, permit, license or other agreement, instrument or
arrangement that requires the consent or approval of another
Person shall be made subject to such consent or approval
being obtained. In the event any such consent or approval
is not obtained on or prior to the Closing Date, the Sellers
shall continue to cooperate in all reasonable respects with
the Buyer (at the Buyer's sole cost and expense) in its
efforts to obtain any such consent or approval after the
Closing Date until the earlier of (x) such time as such
consent or approval has been obtained and (y) the eighteen-
month anniversary of the Closing Date, and the Sellers will
cooperate in all reasonable respects with the Buyer (at the
Buyer's sole cost and expense) in any lawful and economical-
ly feasible arrangement to provide that the Buyer shall
receive the interest of the relevant Seller in the benefits
under any such contract, lease, permit, license or other
agreement, instrument or arrangement (except that any such
arrangement shall not require performance by such Seller as
agent), PROVIDED that the Buyer shall undertake to and shall
pay or satisfy the corresponding Liabilities for the
enjoyment of such benefit to the extent the Buyer would have
been responsible therefor hereunder if such consent or ap-
proval had been obtained.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers represent and warrant to the Buyer, as
of the date hereof and (as modified by any transactions
permitted by this Agreement) as of the Closing Date, as
follows:
3.1 CORPORATE STATUS AND AUTHORITY OF THE SELLER
PARENT. The Seller Parent is a corporation duly incorpo-
rated, validly existing and in good standing under the laws
of the State of Delaware. The Seller Parent has the
corporate power and authority to execute and deliver this
Agreement and the other Transaction Agreements to which it
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is to be a party and to perform its obligations hereunder
and thereunder. The Seller Parent is duly qualified and in
good standing as a foreign corporation authorized to do
business in Arkansas, Louisiana and Texas. The execution,
delivery and performance of this Agreement and such
Transaction Agreements have been duly authorized by all
necessary corporate action on the part of the Seller Parent.
This Agreement has been duly executed and delivered by the
Seller Parent, and constitutes the valid and legally binding
obligation of the Seller Parent, enforceable against the
Seller Parent in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance, mora-
torium, receivership or similar laws affecting creditors'
rights or remedies generally and by general principles of
equity (whether considered at law or in equity). Each of
the Transaction Agreements to which the Seller Parent is to
be a party (including the Wood Products Supply Agreement),
when executed and delivered by the Seller Parent, will have
been duly executed and delivered by the Seller Parent and
will constitute the valid and legally binding obligation of
the Seller Parent, enforceable against the Seller Parent in
accordance with its respective terms, except as such
enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance, mora-
torium, receivership or similar laws affecting creditors'
rights or remedies generally and by general principles of
equity (whether considered at law or in equity).
3.2 LIMITED LIABILITY COMPANY STATUS AND AUTHO-
RITY OF THE COMPANY. The Company is a limited liability
company duly formed, validly existing and in good standing
under the laws of the State of Delaware. The Company has
the limited liability company power and authority to execute
and deliver this Agreement and the other Transaction
Agreements to which it is to be a party and to perform its
obligations hereunder and thereunder. The Company is duly
qualified and in good standing as a foreign limited
liability company authorized to do business in Arkansas,
Louisiana and Texas. The execution, delivery and
performance of this Agreement and such Transaction
Agreements have been duly authorized by all necessary
limited liability company action on the part of the Company.
This Agreement has been duly executed and delivered by the
Company, and constitutes the valid and legally binding
obligation of the Company, enforceable against the Company
in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium, receivership
or similar laws affecting creditors' rights or remedies
generally and by general principles of equity (whether
considered at law or in equity). Each of the Transaction
Agreements to which the Company is to be a party, when
executed and delivered by the Company, will have been duly
executed and delivered by the Company and will constitute
the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its
respective terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insol-
vency, fraudulent conveyance, moratorium, receivership
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or similar laws affecting creditors' rights or remedies
generally and by general principles of equity (whether
considered at law or in equity).
3.3 NO CONFLICTS, CONSENTS AND APPROVALS, ETC.
(a) Except as set forth in Section 3.3(a) of the Disclosure
Schedule, the execution, delivery and performance of this
Agreement by the Sellers will not result in (i) any
violation of the certificate of incorporation or by-laws of
the Seller Parent or the certificate of formation or limited
liability company agreement of the Company, (ii) any breach
or violation of or default under any law, statute, rule,
regulation, judgment, order or decree of any court or other
governmental authority or arbitrator binding upon either
Seller or (iii) any breach or violation of or default under
any Seller Credit Agreement, mortgage, agreement, deed of
trust, indenture or any other agreement or instrument to
which either Seller is a party or by which either Seller or
any of their respective Assets are bound, except in each
case under clauses (ii) and (iii) for such breaches, viola-
tions or defaults as would not reasonably be expected to
have a Material Adverse Effect or a material adverse effect
on the Sellers' ability to perform their obligations
hereunder or under any Transaction Agreement.
(b) Except as set forth in Section 3.3(b) of the
Disclosure Schedule, no consent, approval or authorization
of or filing with any governmental authority is required to
be made or obtained by either Seller in connection with the
execution and delivery of this Agreement by the Sellers or
the consummation by the Sellers of the transactions contem-
plated hereby, except (i) filings required with respect to
the HSR Act and (ii) consents, approvals, authorizations or
filings the failure of which to be made or obtained would
not reasonably be expected to have a Material Adverse Effect
or a material adverse effect on the Sellers' ability to
perform their obligations hereunder or under any Transaction
Agreement.
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3.4 ASSETS, ETC. (a) Except for Permitted
Encumbrances or as set forth in Section 3.4(a) to the
Disclosure Schedule, the Sellers have, or will have on the
Closing Date, good and valid title to all material Other
Assets.
(b) The Timberland Leases and the Timber Deeds as
of the Closing Date will not have been amended except for
amendments that will have been made available to the Buyer
and, to the extent required by Section 3.8, consented to by
the Buyer. Complete and correct copies of the Timberland
Leases and the Timber Deeds have been, or as of the Closing
Date will have been, made available to the Buyer. Except as
set forth in Section 3.4(b) to the Disclosure Schedule, all
payments of rents and taxes due and payable by either Seller
as lessee under the Timberland Leases and the Timber Deeds
have been paid in full, the Timberland Leases and the Timber
Deeds are in full force and effect, and, to the Sellers'
knowledge, the Company is not in default under any other
material term of any Timberland Lease or Timber Deed nor has
the Company received any written notice from any lessor
alleging that the Company is in such default nor has the
Company taken any action that with the passage of the time
or the giving of notice would constitute a default, except
such defaults as have been cured in all material respects or
as would not reasonably be expected to have a Material
Adverse Effect. To the Sellers' knowledge, no one other
than the landlords or their successors and assigns is
claiming ownership of the Leased Timberlands, the Timber
Deed Timberlands, the Timberland Leases or the Timber Deeds
or making other claims that would reasonably be expected to
materially interfere with the Sellers' activities as lessees
under the Timberland Leases or the Timber Deeds. Except as
set forth in Section 3.4(b) to the Disclosure Schedule, no
consent is required from the lessors under the Timberland
Leases or the Timber Deeds to assign such Timberland Leases
or Timber Deeds to the Buyer pursuant to this Agreement.
(c) Except for matters of public record, for
leases, contracts or other agreements that have been made
available to the Buyer, or for matters specifically
addressed in this Agreement, to Sellers' knowledge, there
are no written leases, cutting contracts or other contracts
or agreements affecting or covering the Timberlands or any
portion thereof in any material respect.
(d) To the Sellers' knowledge, except as
described in Section 3.4(d) of the Disclosure Schedule,
(i) the Company has legal or other access rights to the
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Timberlands consistent with timber practices in the area
sufficient for timber harvest activity in accordance with
current industry practices; (ii) the Company has not
received any written notice terminating or threatening to
terminate such access rights, that has not been cured or if
not cured would reasonably be expected to have a Material
Adverse Effect; and (iii) the Company has not received any
written notice of condemnation proceedings pending or
threatened against the Timberlands, that have not been
concluded or that if concluded would reasonably be expected
to have a Material Adverse Effect. The Sellers make no
representation or warranty as to the accessibility of the
Timberlands or lack thereof due to terrain conditions.
(e) To the Sellers' knowledge, except as de-
scribed in Section 3.4(e) of the Disclosure Schedule,
(i) the Company has not received any written notice that the
Joyce Facility or the Huttig Facility violates any building
or zoning laws, which violation has not been cured or if not
cured would reasonably be expected to have a material
adverse effect on the operation of such facility; (ii) the
Huttig Facility and the Joyce Facility are served by
utilities sufficient to operate them for the purposes for
which they are presently being used in the Business;
(iii) the Company has not received any written notice that
any utilities serving the Huttig Facility or the Joyce
Facility will be cut off, which notice has not been
withdrawn or relates to a dispute that has not been
resolved; and (iv) the Company has not received any written
notice of condemnation proceedings pending or threatened
against the Joyce Facility or the Huttig Facility, that have
not been concluded or that if concluded would reasonably be
expected to have a material adverse effect on the operation
of such facility.
3.5 CONTRACTS. (a) Section 3.5(a) of the
Disclosure Schedule lists all Contracts of any of the
following types that are in effect on the date hereof:
(i) joint venture and limited partnership agreements,
(ii) agreements for distribution, supply and marketing of
products to customers of the Business (excluding agreements
for the sale of Inventory in the ordinary course of
business), in each case involving in excess of $100,000 in
any calendar year, (iii) written agreements between either
Seller and any of its Affiliates (excluding agreements for
the sale of Inventory in the ordinary course of business),
in each case involving financial obligations on the part of
such Seller of more than $100,000 in any calendar year, and
(iv) other agreements and contracts (excluding agreements
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for the sale of Inventory in the ordinary course of
business) that in each case require payment by either Seller
after the date hereof of more than $100,000 in any calendar
year. The parties hereto acknowledge that the foregoing
dollar and other thresholds shall not be utilized for the
interpretation of "material" or "materiality" as used in any
provision of this Agreement.
(b) Except as set forth in Section 3.5(b) of the
Disclosure Schedule, each Contract, Timber Deed or
Timberland Lease constituting an Asset is in full force and
effect, and, to the Sellers' knowledge, is enforceable by
the Seller party thereto in accordance with its terms, and
there does not exist any default (or any condition that with
the passage of time or the giving of notice would constitute
a default) thereunder by the Seller party thereto, except
for such failures to be in full force and effect or
enforceable and such defaults as would not reasonably be
expected to have a Material Adverse Effect, and except as
such enforceability may be limited by applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance,
moratorium, receivership or similar laws affecting
creditors' rights or remedies generally and by general
principles of equity (whether considered at law or in
equity).
3.6 EMPLOYMENT AGREEMENTS AND BENEFITS, ETC.
(a) EMPLOYMENT AGREEMENTS AND PLANS. Section 3.6
of the Disclosure Schedule lists all written agreements,
contracts and commitments of the following types to which
either Seller is a party: (i) employment, employee
severance and employee retention agreements, other than
those agreements providing for annual base salary or other
payments not exceeding $75,000, and other than any employee
retention agreements that will be paid and performed by
either Seller, (ii) collective bargaining agreements and
(iii) bonus incentive or deferred compensation, stock option
and retirement agreements (other than any such agreement
that is subject to ERISA), in any such case under clause
(i), (ii) and (iii), covering Current Employees of either
Seller employed in the operation of the Business (other than
Excluded Employees).
(b) ERISA. All employee benefit plans that are
subject to ERISA and are currently maintained or contributed
to by either Seller for the benefit of current employees of
either Seller employed in the operation of the Business (the
"Plans") comply in all respects with the requirements of
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ERISA and the Code, except for any failures to comply that
would not reasonably be expected to have a Material Adverse
Effect. No Plan which is subject to Part 3 of Subtitle B of
Title I of ERISA has incurred any "accumulated funding defi-
ciency" within the meaning of section 302 of ERISA or sec-
tion 412 of the Code and no material liability (other than
for annual premiums) to the Pension Benefit Guaranty
Corporation has been incurred by either Seller with respect
to any such Plan. Neither Seller has engaged in a
"prohibited transaction," within the meaning of Section 406
of ERISA or section 4975 of the Code, that would reasonably
be expected to result in any material liability of such
Seller for any tax or penalty imposed by section 4975 of the
Code. No Plan that is a pension plan is a multiemployer
plan, as defined in section 3(37) of ERISA. There are no
pending or, to each Seller's knowledge, threatened claims by
or on behalf of any employee with respect to the Plans
(other than routine claims for benefits), except for such
claims as would not reasonably be expected to result in a
Material Adverse Effect. All contributions required to have
been made by either Seller to any Plan under the terms of
such Plan or pursuant to any applicable collective bar-
gaining agreement or applicable law (including ERISA and the
Code) have been made within the time prescribed by such
Plan, agreement or law.
(c) No Liability has been incurred pursuant to
Title IV of ERISA by any trade or business, whether or not
incorporated, that is treated as a single employer together
with Seller Parent under section 414(b) or (c) of the Code
that will, following the Closing, remain or become a
liability of the Buyer or the Business, except for any such
Liability as would not reasonably be expected to have a
Material Adverse Effect.
(d) TAX QUALIFICATION. Each Plan intended to be
qualified under section 401(a) of the Code has received a
favorable determination letter from the IRS as to its
qualification under the Code and, to the Sellers' knowledge,
no amendment to any such Plan has been adopted since the
date of such determination letter that will adversely affect
such determination of qualification, except for any such
amendment as would not reasonably be expected to have a
Material Adverse Effect.
3.7 LABOR RELATIONS AND EMPLOYMENT. Except as set
forth in Section 3.7 of the Disclosure Schedule, with
respect to the employees of the Sellers employed in the
operation of the Business, (i) no labor strike, dispute,
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slowdown, stoppage or lockout is pending, or to the Sellers'
knowledge, threatened against either Seller, (ii) the
Sellers are in compliance with all applicable laws
respecting employment practices, terms and conditions of
employment and occupational safety and health, (iii) no
unfair labor practice charge or complaint against either
Seller is pending or, to the Sellers' knowledge, threatened
before the National Labor Relations Board and (iv) no
grievance or arbitration proceeding arising out of any
collective bargaining agreement is pending, except in each
case under clauses (i), (ii), (iii) and (iv) as would not
reasonably be expected to have a Material Adverse Effect.
3.8 ABSENCE OF CHANGES. As of the Closing,
except in connection with the transfer of assets and
operations relating to the Business between the Sellers, or
as reflected in Section 3.8 of the Disclosure Schedule, or
as permitted by this Agreement, since the date hereof the
Sellers will have operated the Business only in the ordinary
course, and will have not:
(a) sold, transferred or conveyed any Inventory
except in the ordinary course of business;
(b) suffered any change in the Business that
would reasonably be expected to have a Material Adverse
Effect;
(c) suffered any material destruction, damage or
loss relating to the Assets or the Business (not
covered by insurance) that would reasonably be expected
to have a Material Adverse Effect;
(d) on behalf of the Business, incurred any other
liability or obligation, made any purchase commitment,
or entered into any transaction, that would constitute
or result in an Assumed Liability, other than in the
ordinary course of business;
(e) amended or modified in any material respect,
or entered into, (x) any Contracts other than in the
ordinary course of business, or (y) any Timber Deeds
other than (i) Timber Deeds for up to 10,000,000 board
feet of timber in the aggregate entered into in the
ordinary course of business or (ii) with the Buyer's
prior written consent (PROVIDED that such consent shall
not be unreasonably withheld or delayed);
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(f) maintained the Assets other than
substantially in accordance with the Sellers' current
maintenance practices; or
(g) sold any Owned Timberlands, any Leased
Timberlands, the Joyce Facility, the Huttig Facility,
any Other Facility, any material Fixed Assets, or
(other than in the ordinary course of business) any
Equipment.
3.9 LICENSES; COMPLIANCE WITH LAW. The Seller
Parent or the Company holds all Licenses from all
governmental authorities that are necessary for the conduct
of the Business, except with respect to Licenses under or
relating to Environmental Laws (which are the subject of
Section 3.12), and except where failure to hold such
Licenses would not reasonably be expected to have a Material
Adverse Effect. Section 3.9 of the Disclosure Schedule
lists all such Licenses so held under which the Business is
being conducted on the date hereof, and any applications for
any such Licenses that are pending as of the date hereof.
The execution and delivery of this Agreement by the Sellers,
and the consummation by the Sellers of the transactions
contemplated hereby, will not result in the termination of
any such License, except as set forth in Section 3.9 of the
Disclosure Schedule (and provided that the filings, notices,
consents, approvals and authorizations of third parties
described therein shall have been made or obtained), and
except as would not reasonably be expected to have a
Material Adverse Effect. To the Sellers' knowledge, the
Sellers are currently conducting the Business in compliance
in all material respects with all applicable laws, statutes,
rules, regulations, judgments, orders and decrees of
governmental authorities applicable to the conduct of the
Business by the Sellers, and neither Seller has received any
written notice of any failure to be so in compliance, except
with respect to Environmental Laws (which are the subject of
Section 3.12), and except where failure to be so in
compliance would not reasonably be expected to have a
Material Adverse Effect.
3.10 LITIGATION. As of the date hereof, to the
Sellers' knowledge as of such date, except as set forth in
Section 3.10 of the Disclosure Schedule, and except for
Environmental Claims (which are the subject of Sec-
tion 3.12), there is no action, proceeding or investigation
by or before any court or other governmental authority
pending or, to the Sellers' knowledge, threatened against
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either Seller and involving the Business or the Assets, that
would reasonably be expected to have an Adverse Effect.
3.11 TAXES. Each Seller has (or on or before the
Closing Date will have) duly and timely filed all material
Tax Returns relating to the Business or the Assets with
respect to Covered Taxes required to be filed by it on or
before the Closing Date ("Covered Returns") and has (or by
the Closing Date will have) duly and timely paid, or is
contesting in appropriate proceedings (which contests
existing as of the date hereof are described in Section 3.11
of the Disclosure Schedule), (i) all Covered Taxes shown to
be due on such Covered Returns, (ii) all deficiencies and
assessments of material Covered Taxes of which notice has
been received by either Seller and (iii) all other material
Covered Taxes due and payable on or before the Closing Date
for which neither filing of Covered Returns nor notice of
deficiency or assessment is required. Except as set forth
in Section 3.11 of the Disclosure Schedule, as of the date
hereof no agreement or other document extending, or having
the effect of extending, the period of assessment or
collection of any Covered Taxes, and no power of attorney
with respect to any such Covered Taxes, has been filed with
the IRS or any other taxing authority.
3.12 ENVIRONMENTAL MATTERS. (a) As of the date
hereof, to the Sellers' knowledge as of such date, except as
disclosed in Section 3.12 to the Disclosure Schedule, the
Seller Parent or the Company holds all Licenses under or
relating to Environmental Laws from all governmental
authorities that are necessary for the conduct of the
Business ("Environmental Licenses"), except for any such
failure to hold such Environmental Licenses as would not
reasonably be expected to have an Adverse Effect. Section
3.12 of the Disclosure Schedule lists all such Environmental
Licenses so held under which the Business is being conducted
on the date hereof. As of the date hereof, to the Sellers'
knowledge as of such date, except as disclosed in Section
3.12 to the Disclosure Schedule, (i) the Sellers are
currently conducting the Business in compliance in all
material respects with all applicable Environmental Laws
applicable to the conduct of the Business by the Sellers,
and (ii) there are no Environmental Claims pending or
threatened asserting that any portion of the Timberlands,
the Huttig Facility or the Joyce Facility is in violation of
or is not in compliance with any Environmental Law, in each
case with respect to clauses (i) and (ii) except for any
such violation or failure so to comply or be in compliance
as would not reasonably be expected to have an Adverse
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Effect. Except as disclosed in Section 3.12 to the
Disclosure Schedule, to the Sellers' knowledge, the Sellers
are not subject to any liability or obligation on the part
of the Sellers under applicable Environmental Laws,
including any obligation to cleanup or take any other
response action, relating to the use, management, transport,
treatment, generation, storage, disposal or release of any
Hazardous Substances at, on or from, or the environmental
conditions on, under or about, the Timberlands, the Huttig
Facility or the Joyce Facility, in each case except for such
liabilities and obligations as would not reasonably be
expected to have a Material Adverse Effect.
(b) As of the date hereof, to the Sellers'
knowledge as of such date, except as disclosed in Sec-
tion 3.12 of the Disclosure Schedule, (i) there is no
underground storage tank located at the Huttig Facility, the
Joyce Facility or any Other Facility, or on the Owned
Timberlands, that would reasonably be expected to have an
Adverse Effect, (ii) there has been no spill of any
Hazardous Substance involving the Business at the Huttig
Facility, the Joyce Facility or any Other Facility or
(except as would not reasonably be expected to have an
Adverse Effect) involving the Assets in a manner or quantity
required to be reported under any applicable Environmental
Law that has not been reported in accordance with such law,
and (iii) as of July 1, 1996, (x) not more than one hundred
(100) active colonies of red-cockaded woodpeckers are
located on the Owned Timberlands or Leased Timberlands, and
(y) such colonies are the only known active red-cockaded
woodpecker colonies on the Owned Timberlands or Leased
Timberlands.
(c) No representations or warranties by either
Seller elsewhere in this Agreement or any Transaction
Agreement, including but not limited to those regarding the
Business's compliance with applicable laws or any other
aspects of the Business, shall be deemed to relate to
Environmental Laws, Environmental Claims or other
Environmental Matters.
3.13 BROKERS. All negotiations relating to this
Agreement and the transactions contemplated hereby have been
carried out without the intervention of any Person acting on
behalf of either Seller in such manner as to give rise to
any valid claim against the Buyer for any brokerage or
finder's commission, fee or similar compensation.
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3.14 DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED FOR IN THIS ARTICLE THREE, THE ASSETS (INCLUDING
THE TIMBERLAND INTERESTS, THE HUTTIG FACILITY, THE JOYCE
FACILITY, THE OTHER FACILITIES, THE EQUIPMENT, THE FIXED
ASSETS AND TRANSFERRED INVENTORY) ARE SOLD, CONVEYED AND
TRANSFERRED "AS IS, WHERE IS" AND WITH "ALL FAULTS" AND
WITHOUT REPRESENTATIONS OR WARRANTIES OF ANY KIND, EXPRESS
OR IMPLIED, AND EACH SELLER DISCLAIMS TO THE BUYER AND TO
ALL THIRD PARTIES ANY AND ALL REPRESENTATIONS AND WARRANTIES
CONCERNING THE CONDITION OF THE ASSETS, INCLUDING ANY
IMPLIED REPRESENTATION OR WARRANTY OF QUALITY, MERCHANT-
ABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AND ANY
REPRESENTATION OR WARRANTY AGAINST REDHIBITORY DEFECTS.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer represents and warrants to each of
Sellers, as of the date hereof and as of the Closing Date,
as follows:
4.1 CORPORATE STATUS AND AUTHORITY OF THE BUYER.
The Buyer is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of
Delaware. The Buyer has the partnership power and authority
to execute and deliver this Agreement and the other
Transaction Agreements to which it is to be a party and to
perform its obligations hereunder and thereunder. The
execution, delivery and performance of this Agreement and
such Transaction Agreements have been duly authorized by all
necessary partnership action on the part of the Buyer. This
Agreement has been duly executed and delivered by the Buyer,
and constitutes the valid and legally binding obligation of
the Buyer enforceable against the Buyer in accordance with
its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency,
fraudulent conveyance, moratorium, receivership or similar
laws affecting creditors' rights or remedies generally and
by general principles of equity (whether considered at law
or in equity). Each of the other Transaction Agreements to
which the Buyer is to be a party (including the Wood
Products Supply Agreement), when executed and delivered by
the Buyer, will have been duly executed and delivered by the
Buyer and will constitute the valid and legally binding
obligation of the Buyer, enforceable against the Buyer in
accordance with its respective terms, except as such
enforceability may be limited by applicable bankruptcy,
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reorganization, insolvency, fraudulent conveyance, mora-
torium, receivership or similar laws affecting creditors'
rights or remedies generally and by general principles of
equity (whether considered at law or in equity).
4.2 NO CONFLICTS. (a) The execution, delivery
and performance of this Agreement by the Buyer will not
result in (i) any violation of the certificate of
partnership or partnership agreement of the Buyer, (ii) any
breach or violation of or default under any law, statute,
rule, regulation, judgment, order, injunction or decree of
any court or other governmental authority binding upon the
Buyer or (iii) any breach or violation of or default under
any note, bond, mortgage, agreement, deed of trust, inden-
ture, guarantee, letter of credit or any other agreement or
instrument to which the Buyer is a party or by which the
Buyer or any of its properties or assets are bound except in
each case under clauses (ii) and (iii) for such breaches,
violations or defaults as would not reasonably be expected
to have a material adverse effect on the Buyer's ability to
perform its obligations hereunder or under any Transaction
Agreement.
(b) No consent, approval or authorization of or
filing with any governmental authority is required to be
made or obtained by the Buyer in connection with the
execution and delivery of this Agreement by the Buyer or the
consummation by the Buyer of the transactions contemplated
hereby, except (i) filings required with respect to the HSR
Act and (ii) consents, approvals, authorizations or filings
the failure of which to be made or obtained would not
reasonably be expected to have a material adverse effect on
the Buyer's ability to perform its obligations hereunder or
under any Transaction Agreement.
4.3 FINANCING. The Buyer has received a commit-
ment letter from Bank of America NT & SA, whereby such
financial institution has committed, upon the terms and
subject to the conditions set forth therein, to provide
financing for, in an amount sufficient to consummate, the
transactions contemplated by this Agreement. The Buyer has
delivered to the Sellers a complete and correct copy of such
letter as in effect on the date hereof, and will deliver to
the Sellers a complete and correct copy of any other
commitment letter that the Buyer receives prior to the
Closing with respect to financing the transactions
contemplated by this Agreement.
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4.4 LITIGATION. There are no actions,
proceedings or investigations by or before any court or
other governmental authority pending or, to the knowledge of
the Buyer, threatened against the Buyer, except for such
actions, proceedings or investigations as would not
reasonably be expected to have a material adverse effect on
the Buyer's ability to perform its obligations hereunder or
under any Transaction Agreement.
4.5 BROKERS. All negotiations relating to this
Agreement and the transactions contemplated hereby have been
carried out without the intervention of any Person acting on
behalf of the Buyer in such manner as to give rise to any
valid claim against the Seller Parent or the Company for any
brokerage or finder's commission, fee or similar compensa-
tion, or against the Buyer therefor other than Shaw, McLeod,
Belser and Hurlbutt, Inc., the commission, fee or
compensation of which will be paid by the Buyer.
4.6 NO KNOWLEDGE OF MISREPRESENTATIONS. At and
as of the date hereof, and (except as the Buyer shall have
notified the Sellers in writing) at and as of the Closing
Date, to the Buyer's knowledge, the representations and
warranties of each Seller in this Agreement are true and
correct in all material respects.
ARTICLE FIVE
CERTAIN PRECLOSING MATTERS
5.1 CONDUCT OF THE BUSINESS PRIOR TO CLOSING.
From the date hereof until the Closing, except as permitted
by this Agreement or as otherwise consented to by the Buyer
in writing, such consent not to be unreasonably withheld or
delayed, the Sellers shall:
(i) carry on the Business in the ordinary course
in substantially the same manner in which the Business
previously has been conducted and, to the extent
consistent with such Business, use reasonable efforts
to preserve intact the present business organization of
the Business and to preserve the relationships with
customers, suppliers and others having business
dealings with the Business; and
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(ii) maintain their books of account and records
relating to the Business in their usual, regular and
ordinary manner, consistent with past practice.
Notwithstanding the preceding sentence, the Sellers shall be
entitled to continue to conduct harvesting operations on the
Timberlands during the period from the date hereof until the
Closing, so long as the respective amounts of pine sawlogs,
hardwood sawlogs, pine pulpwood and hardwood pulpwood so
harvested for the portion of calendar 1996 preceding the
Closing Date do not exceed by more than five percent (5%)
the respective Scheduled Amounts thereof (which harvesting
may in any event include cutting diseased or insect-infested
trees).
5.2 ACCESS. (a) From the date hereof until the
Closing, the Sellers will allow the Buyer and its represen-
tatives reasonable access at reasonable times to all the
employees, books, records, files, documents, assets, proper-
ties, contracts, and agreements of the Sellers related to
the Assets and the Business, as the Buyer may reasonably
request, and will furnish the Buyer and its representatives
with such copies of such documents (at the Buyer's sole cost
and expense), and such other information, concerning the
Assets and the Business as the Buyer may reasonably request;
PROVIDED that (x) such access will not materially interfere
with the operation of the Assets or the Business, (y) the
Sellers shall not be obligated to obtain any information
requiring the initiation or conduct of sampling or analysis
of soils, groundwater or other environmental media at or
from any of the Assets, and (z) prior to initiating any such
sampling or analysis program, the Buyer shall notify and
consult with the Sellers and shall furnish such duplicate or
split samples to the Sellers as either Seller may request,
and (if requested by either Seller) the Buyer shall, as soon
as practicable but in any event not less than fifteen (15)
days prior to the Closing, provide to the Sellers a copy of
any chemical or physical data it has obtained as a result of
such program, and any analysis or report in respect thereof.
(b) The Buyer shall conduct any investigation,
inspection, appraisal or examination of the Assets or the
Business in a manner that will not materially interfere with
the operation of the Assets or the Business, and agrees to
repair any and all damage caused by any such investigation,
inspection, appraisal or examination and to indemnify,
defend and hold harmless the Sellers from and against any
and all Liability incurred by either Seller as a result of
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the exercise by or on behalf of the Buyer of such right of
investigation, inspection, appraisal or examination.
(c) The Buyer shall submit a request for access
to C. Steven Clark and to Frank R. McCauley or Bill H.
Chastain at least three (3) business days prior to the date
it desires such access. The Sellers shall have the right to
be present and observe all activities of the Buyer on the
Sellers' premises.
ARTICLE SIX
EMPLOYMENT MATTERS
6.1 EMPLOYEE MATTERS GENERALLY.
(a) The Seller Parent has delivered to the Buyer
a list of all employees who are currently on either Seller's
employment rolls employed in the operation of the Business,
other than those employees who are on long term disability
(the "Business Employees"), as of the most recent date for
which such information is reasonably available. At least
five business days prior to the Closing, the Buyer shall
extend written offers of employment to all Business
Employees, other than up to twelve (12) Business Employees
identified to the Seller Parent by the Buyer in writing
within thirty (30) days of the date hereof (such Business
Employees to whom the Buyer is to extend such offers of
employment, the "Current Employees," and such Business
Employees to whom the Buyer will not extend such an offer of
employment, the "Excluded Employees"). Each such offer of
employment with the Buyer shall (i) be effective as of the
Closing, (ii) provide for employment within a reasonable
distance of each such Current Employee's present employment
location, (iii) be at a salary or hourly wage rate, as
applicable, that is at least equal to the salary or hourly
wage rate of each such Current Employee in effect as of the
date hereof or as the same may have been increased since the
date hereof in the ordinary course of business, consistent
with past practice, (iv) provide for employee benefits that
are equivalent to the employee benefits of similarly
situated employees of the Buyer and its Affiliates and (v)
be for a position with the Buyer that is suitable for each
such Current Employee's education, training and skills.
Those Current Employees who accept such offer of employment
with the Buyer are referred to herein as the "Transitioning
Employees" and those Current Employees who do not accept
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such offer of employment, together with the Excluded
Employees, are referred to herein as the "Nontransitioning
Employees." Effective as of the Closing, the Buyer shall
recognize and, to the extent required to comply with
Applicable Law, bargain with each union or other collective
bargaining representative then representing any of the
Transitioning Employees.
(b) Effective from and after the Closing, the
Buyer shall assume and become solely responsible for any and
all Liabilities that arise on or after the Closing Date
under or in respect of each of the employment agreements
listed in Section 3.6 of the Disclosure Schedule to which
any of the Transitioning Employees is a party. In the event
that the Buyer or any Affiliate thereof shall, within two
years of the date hereof, employ any Nontransitioning
Employee party to any employment agreement listed in Sec-
tion 3.6 of the Disclosure Schedule, the Buyer shall
reimburse the Sellers for all amounts paid by either Seller
under such employment agreement after the Closing or as a
result of the Closing or any other transaction contemplated
by this Agreement, including pursuant to section 7 of any
such agreement.
(c) Effective from and after the Closing, the
Buyer shall assume and become solely responsible for (x) any
and all Liabilities in respect of the Transitioning
Employees relating to or arising in connection with any
actual or constructive termination of any such Transitioning
Employee's employment with the Buyer or any of its
Affiliates on or after the Closing, including, without
limitation, any and all such Liabilities relating to the
claims of any such Transitioning Employee for any severance
compensation or benefits (whether from the Buyer or either
Seller or any of their respective Affiliates), and (y) any
and all Liabilities for accrued but unpaid vacation days for
services rendered by the Transitioning Employees, whether
prior to or after the Closing. From and after the Closing,
the Sellers shall remain solely responsible for any and all
Liabilities for accrued but unpaid salaries, wages, (subject
to the immediately preceding sentence) vacation or sick pay,
deferred compensation and similar payroll items for services
rendered by the Transitioning Employees to the Sellers prior
to the Closing and for accrued benefits or, in the case of
claims for medical or other welfare benefits, for claims
incurred under any Plan by the Transitioning Employees prior
to the Closing.
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(d) From and after the Closing, the Sellers shall
remain solely responsible for any and all Liabilities in
respect of the Nontransitioning Employees including, without
limitation, such Liabilities (i) subject to Section 6.1(b),
for claims for severance compensation or benefits arising in
connection with or related to any actual or constructive
termination of employment with either Seller of any such
Nontransitioning Employee before, on or after the Closing
Date, including in connection with the consummation of the
transactions contemplated by this Agreement, and (ii) for
benefits accrued or, in the case of claims for medical or
other welfare benefits, for claims incurred, under any Plan
by the Nontransitioning Employee.
(e) The Sellers shall comply with all applicable
notice and other adminstrative requirements under Section
601 et seq. of ERISA and Section 4980B of the Code arising
by reason of the termination of the employment of any
employee of any of the Sellers as a result of the
transactions contemplated hereby.
6.2 EMPLOYEE PENSION BENEFIT PLANS.
(a) Effective as of the Closing Date, the Buyer
shall establish or amend an existing defined benefit pension
plan and defined contribution plan to provide for (i) the
immediate participation of the Transitioning Employees in
each such plan on the same basis as the Buyer's similarly
situated employees are then eligible to participate and
(ii) the recognition under each such plan of all service of
the Transitioning Employees with either Seller completed
prior to the Closing only for purposes of eligibility to
participate and vesting under each such plan but not for
purposes of pension-benefitted credited service.
(b) Effective as of the Closing, the Seller
Parent shall cause the accrued benefits of the Transitioning
Employees under those Plans that are defined benefit and
defined contribution Plans that are intended to qualify
under section 401(a) of the Code to become fully vested.
6.3 WELFARE PLANS.
(a) Effective from and after the Closing, the
Buyer shall cause each Transitioning Employee and his
eligible dependents to be eligible to participate
immediately in each employee welfare benefit plan (as such
term is defined in Section 3(1) of ERISA) maintained by the
Buyer and each other benefit arrangement maintained by the
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Buyer for the benefit of similarly situated employees of the
Buyer ("Buyer's Welfare Plans"). In connection therewith,
the Buyer shall cause each Buyer's Welfare Plan to (i)
recognize the 1996 co-payments and deductible expenses of
the Transitioning Employees and their eligible dependents
incurred under those Plans that are health benefit plans and
(ii) waive all pre-existing condition exclusions and
limitations of the Transitioning Employees and their
eligible dependents. From and after the Closing, the Seller
Parent shall remain solely responsible for Liabilities for
claims of the Transitioning Employees and their eligible
dependents incurred prior to the Closing Date under those
Plans that are health, disability, accident or life
insurance plans and the Buyer shall be solely responsible
for all such Liabilities for claims incurred by any
Transitioning Employee and his eligible dependents on or
after the Closing Date. For the purposes of this Section
6.3(a), a claim for health benefits shall be deemed to have
been incurred when the services that are the subject of such
claim are rendered and a claim for disability, accident or
life insurance shall be deemed to have been incurred when
the last event giving rise to such claim occurs. The Buyer
and the Seller Parent shall cooperate in ensuring that
welfare benefit coverage for Transitioning Employees and
their eligible dependents prior to the Closing is
coordinated with such coverage provided after the Closing.
(b) From and after the Closing, the Seller Parent
shall remain solely responsible for (i) disability benefits
payable under any Plan that is a disability benefit plan in
respect of those employees of either Seller employed in the
operation of the Business who, on the Closing Date, are on
long term disability status and entitled to benefits under
such Plans and (ii) post-retirement health and life
insurance benefits payable under the terms of any Plan that
provides such post-retirement benefits in respect of those
former employees of either Seller formerly employed in the
operation of the Business who, on the Closing Date, are
receiving such post-retirement benefits under such Seller
Plan.
(c) From and after the Closing, (i) the Buyer
shall provide to the Retirement Eligible Transitioning
Employees (as defined below), and their eligible dependents,
retiree medical benefits and coverages upon and following
each such Retirement Eligible Transitioning Employee's
termination of employment with the Buyer and (ii) the Buyer
shall assume and become solely responsible for any and all
Liabilities in respect of retiree medical benefits and
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coverages of the Retirement Eligible Transitioning Employees
and their eligible dependents. The term "Retirement
Eligible Transitioning Employees" means those Transitioning
Employees who, on or prior to the Closing Date, have
completed at least ten years of service with the Seller
Parent or any Affiliate thereof, or any of their respective
predecessors, and have attained at least age 50, but not age
55 or older.
6.4 WORKER'S COMPENSATION. From and after the
Closing, (i) the Seller Parent shall remain solely
responsible for all worker's compensation claims of any
Transitioning Employee that relate to any accident that
occurred or injury that was documented prior to the Closing,
regardless of whether such claim is filed by such
Transitioning Employee before or after the Closing, and (ii)
the Buyer shall assume and become solely responsible for all
other worker's compensation claims of any Transitioning
Employee.
ARTICLE SEVEN
ADDITIONAL AGREEMENTS
7.1 CONFIDENTIALITY.
(a) BUYER. (i) The Buyer hereby confirms and
agrees that, with respect to any information directly or
indirectly furnished by or on behalf of either Seller,
whether before, on or after the date hereof, the Buyer shall
continue to be bound by the terms of (i) the letter
agreement, dated May 3, 1996, entered into by the Buyer with
Shaw, McLeod, Belser and Hurlbutt, Inc. for the benefit of
the Sellers, and (ii) the letter agreement, dated June 11,
1996, entered into by the Buyer with the Seller Parent for
the benefit of the Sellers (such letter agreements
collectively, the "Confidentiality Agreement").
(ii) The Buyer understands and agrees that the
Sellers are making available confidential information and
trade secrets to the Buyer concerning the operations of the
Sellers and the Business, which information would be
damaging to the Sellers and their Affiliates if disclosed to
a competitor or made available to any other Person, and that
such information has been divulged in confidence. The Buyer
acknowledges that the Sellers have permitted the Buyer to
conduct Phase I environmental due diligence and/or a review
of the premises of the Business for Environmental Matters.
The Buyer shall not notify any federal, state or local
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regulatory agency or any other Person (other than the
Buyer's agents) concerning, or disclose to any such Person,
any contents or results of any environmental-related due
diligence or investigation by or on behalf of the Buyer,
including any information concerning any alleged violation
of any Environmental Law, without obtaining prior written
approval from the Sellers, except as may be required by any
applicable federal, state or local laws, in which case the
Buyer will notify the Sellers in writing of the Buyer's
intent to make such notification and whereupon the Sellers
shall have the option of making such notification jointly
with the Buyer. The Buyer agrees that the Sellers would be
irreparably harmed by any violation, or threatened viola-
tion, of this Section 7.1 and that, therefore, the Sellers
shall be entitled to an injunction prohibiting it from any
violation, or threatened violation, of this Section 7.1.
(iii) The agreements and undertakings of the Buyer
set forth in this Section 7.1 shall survive the termination
of this Agreement.
(b) SELLERS. From and after the Closing Date,
the Sellers shall not disclose to any Person (other than any
agents or representatives of the Sellers) any Business
Information (as defined below) that is known to either
Seller on the Closing Date. The term "Business Information"
means any trade secret information concerning the Business
or the Assets that is confidential or proprietary and is
necessary for the conduct of the Business, other than
information that (i) is or becomes generally available to
the public other than as a result of a disclosure by either
Seller after the Closing Date, (ii) relates to any trans-
action contemplated by the Wood Products Supply Agreement,
or (iii) either Seller is required to disclose by law or
legal process. In the event that either Seller is requested
in any proceeding to disclose any Business Information,
either Seller shall give the Buyer prompt written notice of
such request so that the Buyer may seek an appropriate pro-
tective order. If in the absence of a protective order
either Seller is requested in a proceeding to disclose
Business Information, such Seller may disclose such portion
of the Business Information that in the opinion of such
Seller's counsel such Seller is required to disclose,
without liability under this Agreement, PROVIDED that either
Seller shall give the Buyer written notice of the Business
Information to be disclosed as far in advance of its disclo-
sure as is practicable and shall use reasonable efforts to
obtain assurances that confidential treatment will be ac-
corded to such Business Information. The provisions of this
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Section 7.1(b) (x) shall not restrict either Seller from
using Business Information in performing its respective
obligations under, or enforcing the terms of, this Agreement
or any Transaction Agreement, or in exercising its respec-
tive rights relating hereto or thereto or to the trans-
actions contemplated hereby or thereby, and (y) shall expire
for all purposes on the second anniversary of the Closing
Date and thereafter be of no further force or effect.
7.2 POST-CLOSING ACCESS. In connection with any
matter relating to any period prior to, or any period ending
on, the Closing, the Buyer shall, upon the request of either
Seller and at the reasonable expense of such Seller, permit
such Seller and its representatives full access at all
reasonable times to the books and records of the Business
that shall have been transferred to the Buyer. The Buyer
shall execute (and shall cause its Affiliates to execute)
such documents as either Seller may reasonably request to
enable such Seller to file any required reports or tax re-
turns relating to the Business or the Assets. The Buyer
shall not dispose of such books and records during the
seven-year period beginning on the Closing Date without the
Sellers' prior written consent, which shall not be
unreasonably withheld. Following the expiration of such
seven-year period, the Buyer may dispose of such books and
records at any time, unless either Seller shall have
previously notified the Buyer (not sooner than the fifth
anniversary of the Closing Date) of its desire to take pos-
session of all or part of such books and records, in which
event the Buyer shall deliver such specified portion of such
books and records to such Seller.
7.3 EXPENSES. The Buyer shall be solely
responsible for paying all title insurance premiums,
examination fees and other charges related to obtaining any
title commitments and any policy or policies issued pursuant
thereto.
7.4 TRANSFER TAXES. The Buyer, on the one hand,
and the Sellers, on the other hand, shall each bear and
timely pay one-half of the aggregate amount of all sales
(including, without limitation, bulk sales), use, value
added, documentary, stamp, gross receipts, registration,
transfer, conveyance, excise, recording, and other similar
Taxes and fees arising out of or in connection with or
attributable to the sale and purchase of the Assets pursuant
to this Agreement ("Transfer Taxes"). The Buyer shall
prepare and timely file all Tax Returns required to be filed
in respect of Transfer Taxes; PROVIDED that the Sellers
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shall be permitted to prepare any such Tax Returns that are
the primary responsibility of the Sellers under applicable
law. Any party's preparation of any such Tax Return shall
be subject to the other party's approval, which approval
shall not be unreasonably withheld or delayed. The parties
shall cooperate in all reasonable respects in connection
with the preparation of any such Tax Returns, and shall
cooperate with each other in all reasonable respects in
attempting to minimize Transfer Taxes.
7.5 NON-SOLICITATION. From the date hereof until
the Closing, the Sellers (a) shall not initiate, solicit or
encourage the making of any inquiry or proposal made by a
third party relating to such party's acquisition (other than
pursuant to this Agreement) of all or substantially all of
the Timberlands, or the Joyce Facility or the Huttig
Facility, whether through a direct acquisition of assets or
through an acquisition of equity interests in the Company,
or both (any such inquiry or proposal, an "Acquisition
Proposal") and (b) shall not engage in negotiations or dis-
cussions (including, as a part thereof, making any counter-
proposal) with, or furnish any information or data to, any
third party relating to an Acquisition Proposal (other than
the transactions contemplated by this Agreement).
Notwithstanding the foregoing sentence, in the event that
either Seller receives an unsolicited Acquisition Proposal
in writing within ten (10) business days of the date hereof,
the Sellers may engage in such discussions, or furnish
Specified Data or permit plant or site visits for purposes
(in their good faith judgment) of clarifying, understanding
or obtaining further information concerning such unsolicited
Acquisition Proposal, until the later to occur of the tenth
business day after the date hereof or the fifth business day
after such receipt of such Acquisition Proposal (such later
date, the "Expiration Date"), if (i) the lenders party to
either Seller Credit Agreement request either Seller to do
so, or (ii) the board of directors of the Seller Parent or
of its corporate parent (each, a "Board") determines in its
good faith judgment, after consultation with its counsel,
that the failure to do so could constitute a breach of such
Board's fiduciary duties under applicable law. Any such
discussions shall not include any employee of either Seller
who is employed in the Business other than C. Steven Clark
(it being understood that Frank R. McCauley is not such an
employee). The term "Specified Data" means information
regarding Inventory; financial statements and supporting
schedules relating to the Business for periods beginning on
or after January 1, 1993; maps and site location diagrams
and data relating to the Business and the Assets; the terms
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and conditions of this Section 7.5; and the Schedules and
the Disclosure Schedule. The Seller Parent shall promptly
advise the Buyer in writing of the receipt of any inquiries
or proposals relating to an Acquisition Proposal, specifying
the material terms and conditions of such Acquisition
Proposal and identifying the Person making such Acquisition
Proposal.
7.6 FURTHER ASSURANCES.
(a) The Sellers and the Buyer will each use all
reasonable efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things
necessary, proper or advisable to carry out all of its
respective obligations under this Agreement and to
consummate and make effective the purchase and sale of the
Business and the Assets pursuant to this Agreement, the
transfer of Assets and assumption of Liabilities
contemplated by this Agreement, and the other transactions
contemplated hereby and by the Transaction Agreements.
(b) Each party hereto shall, as promptly as
practicable, (i) make or cause to be made all filings and
submissions required under the HSR Act, or any other law,
rule, regulation, judgment, order or decree applicable to
such party or any of its Affiliates, and to give or cause to
be given such reasonable undertakings as may be required in
connection therewith, and (ii) use all reasonable efforts to
obtain or make, or to cause to be obtained or made, all
consents and approvals of any governmental authorities
required to be obtained or made by such party or any such
Affiliate in connection with this Agreement or any of the
Transaction Agreements or the consummation of the other
transactions contemplated hereby or thereby. Each party
hereto shall, and shall cause each of its Affiliates to,
coordinate and cooperate with the other parties hereto in
exchanging such information and supplying such reasonable
assistance as may be reasonably requested by such other
parties in connection with the filings and other actions
contemplated by this Section 7.6(b).
(c) After the Closing Date, each party hereto
shall execute, acknowledge and deliver all such further
conveyances, transfer orders, notices, assumptions, releases
and acquittances, and shall take such further actions, as
may be necessary or reasonably requested by any other party
hereto, to assure fully to the Buyer and its successors and
assigns the effectiveness of the transfer of the Assets to
the Buyer pursuant to this Agreement, and to assure fully to
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each Seller and its successors and assigns the effectiveness
of the assumption and performance of the Liabilities
intended to be assumed by the Buyer pursuant to this
Agreement.
(d) The Buyer may, at its sole option, request
that the Sellers cooperate with the Buyer in effecting the
transfer of a portion of the Owned Timberlands (such
portion, the "Replacement Property") as part of an exchange
qualifying for nonrecognition of gain under Section 1031 of
the Code (such transfer, a "Transfer, and such exchange, an
"Exchange"). Any such request shall be made in writing and
delivered not later than thirty (30) days after the date
hereof. In the event that the Buyer shall make such
request, the Sellers shall use reasonable efforts to
cooperate with the Buyer in effecting such Transfer at the
Closing, including in respect of executing such agreements
and instruments as reasonably requested by the Buyer in
connection with such Transfer, to the extent necessary to
effect such Exchange, PROVIDED that (i) consummation of the
transactions contemplated hereby shall not in any way be
predicated or conditioned on completion of any such Transfer
or Exchange, and the Sellers shall not be required to agree
to any delay in the Closing in order to permit such Transfer
or Exchange to occur, (ii) after giving effect to such
Transfer and Exchange, the Buyer shall hold all right, title
and interest in and to the Replacement Property, and the
Replacement Property and the Buyer's interest therein shall
be fully subject to the Wood Products Supply Agreement, to
the same extent as if the transactions contemplated hereby
had been consummated at the Closing without such a Transfer
or such an Exchange, (iii) the Sellers shall not, and shall
not be required to, make any representations, warranties or
covenants, or incur any Liability, costs or expenses, or
expend any funds, that the Sellers would not have made,
incurred or expended if the transactions contemplated hereby
had been consummated at the Closing without such a Transfer
or such an Exchange, (iv) the Buyer shall not in any way be
relieved of any of its liabilities or obligations under or
in respect of this Agreement, any Transaction Agreement or
any of the transactions contemplated hereby or thereby, and
(v) any such agreements and instruments requested by the
Buyer shall otherwise be in form and substance satisfactory
to the Sellers in their reasonable judgment. The Buyer
hereby agrees to indemnify, defend and hold harmless each
Seller and each other Seller Indemnitee from and against any
Losses incurred or sustained by any Seller or any other
Seller Indemnitee arising out of or resulting from such a
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Transfer or such an Exchange or the participation of either
Seller in such a Transfer or such an Exchange.
7.7 AGREEMENT REGARDING ENVIRONMENTAL MATTERS.
From and after the Closing, (a) the Buyer shall be
responsible for all Environmental Matters and Environmental
Claims arising out of or relating to the Business or any of
the Assets, regardless of whether any such Environmental
Matter or Environmental Claim arose before, on or after the
Closing Date, and (b) except pursuant to clause (i) of
Section 10.2(a) (and subject to the terms and conditions of
Article 10), the Sellers shall have no liability whatsoever
to the Buyer under, or with respect to, any Environmental
Laws or any Environmental Matter or Environmental Claim, all
such liability being expressly waived by the Buyer.
7.8 SUPPLEMENTS TO DISCLOSURE. From time to time
prior to the Closing Date, the Sellers may amend or
supplement the Disclosure Schedule with respect to any
matter that, if existing or occurring at or prior to the
Closing Date, would be required to be set forth or described
in any Section of the Disclosure Schedule or that would be
necessary to complete or correct any information in any
representation or warranty contained in Article Three, other
than any matter that, to the Sellers' knowledge on the date
hereof, was required to be set forth or described in such
Section of the Disclosure Schedule or otherwise necessary to
render such representation or warranty true and correct in
all material respects on the date hereof. Each such
amendment or supplement shall be given effect for all
purposes under or in connection with this Agreement and the
Transaction Agreements and the transactions contemplated
hereby and thereby, other than for purposes of determining
the fulfillment of the condition precedent set forth in Sec-
tion 8.1; PROVIDED that the Buyer's consummation of the
Closing shall constitute, without any further action on the
part of the Buyer, a waiver by the Buyer of its right to
require satisfaction of the condition precedent set forth in
Section 8.1.
ARTICLE EIGHT
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER
The obligations of the Buyer to consummate the
transactions contemplated by this Agreement shall be subject
to the fulfillment, on or before the Closing Date, of each
of the following conditions, all or any of which may be
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waived, in whole or in part, by the Buyer for purposes of
consummating those transactions:
8.1 REPRESENTATIONS AND COVENANTS OF SELLERS.
The representations and warranties of the Sellers contained
in Article Three of this Agreement shall be true and correct
in all material respects on the date hereof, and on the
Closing Date with the same force and effect as though such
representations and warranties had been made on, and as of,
the Closing Date. The Sellers shall have performed in all
material respects all of the covenants and agreements to be
performed by them under this Agreement on or prior to the
Closing Date.
8.2 CLOSING CERTIFICATE OF SELLERS. The Seller
Parent shall have delivered to the Buyer a certificate dated
as of the Closing Date and executed by a duly authorized
President or Vice President of the Seller Parent, certifying
as to the fulfillment of the condition set forth in Sec-
tion 8.1.
8.3 NO INJUNCTION, ETC. No action, suit or
proceeding shall have been instituted or threatened by any
governmental authority, to restrain or prevent the carrying
out of the transactions contemplated by this Agreement or
that seeks other material relief with respect to any of such
transactions. On the Closing Date, there shall be no
injunction, restraining order, judgment or decree of any
nature of any court or other governmental authority in
effect binding upon the Buyer that restrains or prohibits
the consummation of the transactions contemplated by this
Agreement.
8.4 CONSENTS AND APPROVALS. All necessary
filings and notifications under the HSR Act shall have been
made, including any additional information or documents
required, and the applicable waiting period under the HSR
Act (including any extension thereof) shall have expired or
been terminated.
8.5 DELIVERY AT CLOSING. The Sellers shall have
delivered to the Buyer, on or prior to the Closing Date,
each of the following:
(a) The Wood Products Supply Agreement, duly
executed by the Seller Parent;
(b) The other Transaction Agreements, duly
executed by the applicable Seller;
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(c) A certificate of each Seller, dated as of the
Closing Date, setting forth the name, address and
federal tax identification number of such Seller and
stating that such Seller is not a "foreign person"
within the meaning of section 1445 of the Code, such
certificate to be in the form set forth in the Treasury
Regulations thereunder;
(d) Evidence of all corporate and limited
liability company proceedings of the Sellers in
connection with the transactions contemplated by this
Agreement, certified if the Buyer so requests, and
copies of such documents and instruments incident to
such corporate proceedings, as the Buyer may reasonably
request; and
(e) An opinion of each of (i) Debevoise &
Plimpton, special counsel to the Sellers, as to each
Seller's due authorization, execution and delivery of
this Agreement and (in the case of the Seller Parent)
the Wood Products Supply Agreement, and as to the
enforceability of this Agreement against each Seller,
substantially in the form of EXHIBIT J-1, (ii) special
Louisiana counsel to the Sellers, which counsel shall
be reasonably satisfactory to the Buyer, as to the
enforceability of the Wood Products Supply Agreement
against the Seller Parent, substantially in the form of
EXHIBIT J-2 and (iii) special Arkansas counsel to the
Sellers, which counsel shall be reasonably satisfactory
to the Buyer, as to the enforceability of the Wood
Products Supply Agreement against the Seller Parent,
substantially in the form of EXHIBIT J-3.
ARTICLE NINE
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS
The obligations of the Sellers to consummate the
transactions contemplated by this Agreement shall be subject
to the fulfillment, on or before the Closing Date, of each
of the following conditions, all or any of which may be
waived, in whole or in part, by the Sellers for the purposes
of consummating those transactions:
9.1 REPRESENTATIONS AND COVENANTS OF BUYER. The
representations and warranties of the Buyer contained in
Article Four of this Agreement shall be true and correct in
all material respects on the date hereof, and on the Closing
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Date with the same force and effect as though such represen-
tations and warranties had been made on, and as of, the
Closing Date. The Buyer shall have performed in all
material respects all of the covenants and agreements to be
performed by it under this Agreement on or prior to the
Closing Date.
9.2 CLOSING CERTIFICATE OF BUYER. The Buyer
shall have delivered a certificate dated as of the Closing
Date and executed by a duly authorized President or Vice
President of the Buyer certifying as to the fulfillment of
the condition set forth under Section 9.1.
9.3 NO INJUNCTION, ETC. No action, suit or
proceeding shall have been instituted or threatened by any
court or other governmental authority, to restrain or
prevent the carrying out of the transactions contemplated by
this Agreement or that seeks other material relief with
respect to any of such transactions. On the Closing Date,
there shall be no injunction, restraining order, judgment or
decree of any nature of any court or other governmental
authority in effect that restrains or prohibits the
consummation of the transactions contemplated by this
Agreement.
9.4 CONSENTS AND APPROVALS. (a) The Sellers
shall have received all requisite consents and approvals to
or of the execution, delivery and performance of this
Agreement and the Transaction Agreements, and the consumma-
tion of the transactions contemplated hereby and thereby, of
any lenders to the Seller Parent or any of its Affiliates,
including in respect of the Seller Credit Agreements
(including all releases, termination statements and other
agreements, instruments and documents necessary or
appropriate to evidence or effect the release and
termination of any and all mortgages, pledges and security
interests in respect of the Assets in favor of any such
lenders).
(b) All necessary filings and notifications under
the HSR Act shall have been made, including any additional
information or documents required, and the applicable
waiting period under the HSR Act shall have expired or been
terminated.
9.5 DELIVERY AT CLOSING. The Buyer shall have
delivered to the Sellers on or prior to the Closing Date
each of the following:
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(a) Immediately available funds in the amount of
the Purchase Price;
(b) The Wood Products Supply Agreement, duly
executed by the Buyer;
(c) The Real Property Deeds for Louisiana;
(d) The Real Property Assignments;
(e) Any other Transaction Agreements to be
executed by the Buyer;
(f) For each state in which inventory of the
Business is located, a completed resale certificate
valid for such state, but only if necessary in order to
exempt the inventory from sales taxes incident to the
consummation of the transactions contemplated by this
Agreement;
(g) Evidence of all partnership proceedings of
the Buyer in connection with the transactions
contemplated by this Agreement, certified if the
Sellers so request, and copies of such documents and
instruments incident to such partnership proceedings as
the Sellers may reasonably request, certified if the
Sellers so request; and
(h) An opinion of each of: (i) James A. Kraft,
the General Counsel of the Buyer, as to the Buyer's due
authorization, execution and delivery of this Agreement
and the Wood Products Supply Agreement, and as to the
enforceability of this Agreement against the Buyer,
substantially in the form of EXHIBIT K-1, (ii) special
Louisiana counsel to the Buyer, which counsel shall be
reasonably satisfactory to the Sellers, as to the
enforceability of the Wood Products Supply Agreement
against the Buyer, substantially in the form of EXHIBIT
K-2 and (iii) special Arkansas counsel to the Buyer,
which counsel shall be reasonably satisfactory to the
Sellers, as to the enforceability of the Wood Products
Supply Agreement against the Buyer, substantially in
the form of EXHIBIT K-3.
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ARTICLE TEN
INDEMNIFICATION
10.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS. (a) The representations and
warranties of the Sellers contained in Article Three of this
Agreement (or in any certificate delivered by either Seller
pursuant to Section 8.2 in connection with the Closing,
relating to any such representation and warranty of the
Sellers) are made only as of the date of this Agreement and
as of the Closing Date. Such representations and warranties
of the Sellers, and the covenants and agreements of the
Sellers contained in Article Five of this Agreement, shall
expire for all purposes at 12:01 A.M., New York City time,
on the first anniversary of the Closing Date, except for the
representations and warranties of the Sellers contained in
Section 3.12, which shall expire for all purposes at 12:01
A.M., New York City time, on the third anniversary of the
Closing Date. Without limiting the foregoing, except solely
as and to the extent provided in Sections 10.1(b) and 10.2,
from and after any such expiration of any such representa-
tion, warranty, covenant or agreement of the Sellers, such
representation, warranty, covenant or agreement shall be of
no further force or effect, and the Buyer shall not, and
shall cause each other Buyer Indemnitee not to, assert any
claim or bring any legal action, suit or other proceeding
based upon or relating to any inaccuracy in or breach of, or
any breach of any obligation in respect of, or any other
claim with respect to, such representation, warranty,
covenant or agreement.
(b) All claims for indemnification under Sec-
tion 10.2 with respect to the representations and warranties
contained herein, or in any certificate referred to in
Section 10.1(a), must be asserted on or prior to the date of
expiration of such representations and warranties set forth
in Section 10.1(a), at or prior to the time of such expira-
tion set forth in Section 10.1(a), by the transmittal of
written notice to the Sellers prior to such date of expira-
tion in accordance with Section 10.4(b), and all legal
actions, suits or other proceedings with respect to such
claims must be brought within one hundred eighty (180) days
after such date of expiration.
10.2 INDEMNIFICATION BY THE SELLERS. (a) Sub-
ject to and upon the terms and conditions of this Article
Ten, the Sellers agree, from and after the Closing, to
indemnify, defend and hold harmless the Buyer, each of its
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Affiliates, and each of the directors, officers, employees
and agents of the Buyer or any such Affiliate (collectively,
the "Buyer Indemnitees"), from and against any Losses
incurred or sustained by the Buyer arising out of or
resulting from (i) any material breach by the Sellers of any
representation or warranty made by the Seller in Article
Three of this Agreement, except with respect to matters for
which an adjustment to the Purchase Price is or may be made
pursuant to Section 2.4, or for which the Buyer receives
insurance proceeds in accordance with Section 2.2(a)(xi)
(but only to the extent of such insurance proceeds), (ii)
any Excluded Liabilities, and (iii) any failure by either
Seller to comply with any applicable bulk sales laws in
connection with the transactions contemplated hereby.
(b) The rights of any Buyer Indemnitee to indem-
nification under clause (i) of Section 10.2(a) shall be
limited as follows:
(i) the amount of any Losses incurred or
sustained by such Buyer Indemnitee shall be reduced to
the extent such Losses shall have been caused,
contributed to or exacerbated by any action or omission
of any Buyer Indemnitee;
(ii) the amount of any Losses incurred by such
Buyer Indemnitee shall be reduced by the net amount
such Buyer Indemnitee recovers (after deducting all
attorneys' fees, expenses and other costs of recovery)
from any insurer or other party in respect of such
Losses, and such Buyer Indemnitee shall, and the Buyer
shall cause such Buyer Indemnitee to, use reasonable
efforts to effect any such recovery that may be
available to such Buyer Indemnitee;
(iii) in the event that any Buyer Indemnitee shall
seek indemnification under clause (i) of Sec-
tion 10.2(a) with respect to any breach of any repre-
sentation or warranty of either Seller contained in
Section 3.12, and shall not assert any claim for such
indemnification in accordance with Sections 10.1(b) and
10.4(b) prior to the second anniversary of the Closing
Date, such Buyer Indemnitee shall only be entitled to
such indemnification for fifty percent (50%) of any
Losses incurred or sustained by such Buyer Indemnitee
arising out of or resulting from such breach, and shall
bear and be responsible for the remaining fifty percent
(50%) of such Losses;
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(iv) such Buyer Indemnitee shall be entitled to
indemnification with respect to Losses only to the
extent that the aggregate amount of all Losses incurred
or sustained by all Buyer Indemnitees (after such
amount has been reduced as provided in Sections
10.2(b)(i), 10.2(b)(ii), and 10.2(b)(iii) above)
exceeds Five Million Dollars ($5,000,000), and only for
any amount that is in excess of Five Million Dollars
($5,000,000); and
(v) the aggregate amount paid or payable by the
Sellers pursuant to clause (i) of Section 10.2(a) shall
not exceed Twenty-Five Million Dollars ($25,000,000).
(c) The rights of any Buyer Indemnitee to
indemnification under clause (ii) of Section 10.2(a) shall
be limited as follows: The amount of any Losses incurred or
sustained by such Buyer Indemnitee shall be reduced by the
net amount such Buyer Indemnitee recovers (after deducting
all attorneys' fees, expenses and other costs of recovery)
from any insurer or other party in respect of such Losses,
and such Buyer Indemnitee shall, and the Buyer shall cause
such Buyer Indemnitee to, use reasonable efforts to effect
any such recovery that may be available to such Buyer
Indemnitee.
10.3 INDEMNIFICATION BY THE BUYER. Subject to
and upon the terms and conditions of this Article Ten, the
Buyer agrees, from and after the Closing, to indemnify,
defend and hold harmless each of the Sellers and their
respective Affiliates, and each of the directors, officers,
employees and agents of any of the Sellers and such
Affiliates (collectively, the "Seller Indemnitees"), from
and against any Losses incurred or sustained by any of them
arising out of or resulting from any Assumed Liability;
PROVIDED that the amount of any Losses incurred or sustained
by the relevant Seller Indemnitee shall be reduced by the
net amount such Seller Indemnitee recovers (after deducting
all attorneys' fees, expenses and other costs of recovery)
from any insurer or other party in respect of such Losses,
and such Seller Indemnitee shall, and the Seller shall cause
such Seller Indemnitee to, use reasonable efforts to effect
any such recovery that may be available.
10.4 PROCEDURES FOR INDEMNIFICATION. (a) CER-
TAIN TERMS. As used herein, (i) the term "Indemnitee" shall
mean a Buyer Indemnitee or Seller Indemnitee, as applicable,
(ii) the term "Related Party" shall mean, as to any Buyer
Indemnitee, the Buyer, and as to any Seller Indemnitee, the
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Seller Parent, and (iii) the term "Third Party Claim" shall
mean any claim made, or action, suit or other proceeding
(including a binding arbitration or an audit by any taxing
authority) commenced, against any Indemnitee, including any
Environmental Claim to or against such Indemnitee.
(b) NOTICE. In the event that (x) any Third
Party Claim is made or commenced against any Indemnitee that
(if prosecuted successfully) would be, or such Indemnitee
discovers facts that such Indemnitee or its Related Party
believes would otherwise be, a matter for which such
Indemnitee is entitled to indemnification under this Article
Ten, and (y) a claim for indemnification under this Article
Ten (an "Indemnification Claim") is to be made against the
party hereto from which indemnification is sought (the
"Indemnitor"), such Indemnitee or Related Party shall
promptly deliver a written notice to such Indemnitor re-
questing such indemnification and specifying in reasonable
detail the basis on which indemnification is sought. Such
notice, if related to a Third Party Claim, shall contain or
be accompanied by such other material information as such
Indemnitee and such Related Party shall have concerning such
Third Party Claim. Such notice shall be so given promptly
after such Related Party has actual knowledge of any Third
Party Claim or such facts; PROVIDED that any failure or
delay in giving such notice as so provided shall not relieve
such Indemnitor of its indemnification and other obligations
under this Article Ten except to the extent that such
failure or delay results in a failure or delay of actual
notice to such Indemnitor, and such Indemnitor is thereby
materially prejudiced or damaged. Such Indemnitee and such
Related Party shall promptly deliver to such Indemnitor
copies of all notices and documents (including court papers)
received by such Indemnitee or Related Party relating to any
such Third Party Claim.
(c) INDEMNIFICATION DISPUTES. If such Indemnitor
notifies such Indemnitee or Related Party that such
Indemnitor believes that it is not required to indemnify
such Indemnitee in respect of all or part of any such
Indemnification Claim, at the request of such Indemnitor or
such Related Party, such Indemnitor and such Related Party
shall meet to discuss the Indemnification Claim made and
such Indemnitor's reason for such belief. Such Indemnitor
and such Related Party shall use their reasonable efforts to
attempt in good faith to resolve any dispute remaining after
such meeting within forty-five (45) days from the date such
Indemnitor delivers such notice. Such Indemnitee or Related
Party shall not commence any legal action, suit or other
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proceeding with respect to such Indemnification Claim prior
to the expiration of such 45-day period; PROVIDED the
Indemnitee may commence such legal action, suit or other
proceeding during such period if necessary to prevent such
claim from being barred under any applicable statute of
limitations. If such Indemnitor and such Related Party are
unable to resolve such dispute as to such Indemnification
Claim to their mutual satisfaction, such Indemnitee or
Related Party must commence any legal action, suit or other
proceeding against such Indemnitor with respect to such
Indemnification Claim on or prior to the date that is one
hundred eighty (180) days from the date the Indemnitor
delivers such notice.
(d) DEFENSE OF THIRD PARTY CLAIMS. (i) In the
event that any Third Party Claim is made or commenced and an
Indemnification Claim is made with respect thereto, the
relevant Indemnitor shall have thirty (30) days from receipt
of such Indemnification Claim to notify the relevant
Indemnitee concerning whether or not such Indemnitor will
assume the defense and management of such Third Party Claim.
In the event that such Indemnitor notifies such Indemnitee
within such 30-day period of its election to assume such
defense and management, then such Indemnitee shall permit
such Indemnitor to assume and control such defense and
management, at such Indemnitor's expense, and such
Indemnitor shall not be liable to such Indemnitee for any
legal or other expenses subsequently incurred by such
Indemnitee in connection with the defense or management of
such Third Party Claim (other than reasonable out-of-pocket
costs of investigation). If such Indemnitee desires to
participate in any such defense and management, it may do so
at its sole cost and expense, PROVIDED that if such
Indemnitee determines in good faith, based on advice of
counsel, that such Indemnitee may have available to such
Indemnitee one or more defenses or counterclaims that are
inconsistent with one or more of those defenses or
counterclaims that may be available to such Indemnitor in
respect of such Third Party Claim or any related claim,
action, suit or other proceeding, such Indemnitee shall be
entitled to indemnification by such Indemnitor, to the
extent provided in Section 10.2 or 10.3, respectively, for
the reasonable fees and expenses of one separate firm of
counsel for all Indemnitees asserting Indemnification Claims
with respect to such Third Party Claim or any related claim,
action, suit or other proceeding.
(ii) If such Indemnitor does not elect to assume
the defense and management of such Third Party Claim, such
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Indemnitee shall act reasonably and in accordance with its
good faith business judgment with respect thereto, and may
only consent to entry of any judgment upon, or settle or
compromise, any such Third Party Claim with the prior
written consent of such Indemnitor, which consent shall not
be unreasonably withheld or delayed. If such Indemnitor has
elected to assume such defense and management and has not
reserved such right or has subsequently waived such right by
written notice to such Indemnitee, such Indemnitor in
conducting such defense and management, shall be entitled to
consent to entry of any judgment upon, or enter into any
settlement or compromise of, such Third Party Claim binding
upon such Indemnitee without such Indemnitee's consent,
PROVIDED that such Indemnitor shall not consent to entry of
any such judgment or enter into any such settlement or
compromise that provides for injunctive or other nonmonetary
relief affecting such Indemnitee or that does not include as
an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnitee of a release of all liability
with respect to such Third Party Claim, without the prior
written consent of such Indemnitee, which consent shall not
be unreasonably withheld or delayed.
(iii) Such Indemnitee and such Related Party, on
the one hand, and such Indemnitor, on the other hand, shall
cooperate with each other in all reasonable respects in
connection with the defense and management of any Third
Party Claim, and render such assistance to each other as may
be reasonably requested in order to ensure the proper and
adequate defense thereof, including making available records
relating to such Third Party Claim and furnishing, without
expense to such Indemnitor, such employees of such
Indemnitee and such Related Party as may be reasonably
necessary for the preparation of such defense and management
or for testimony as witnesses.
10.5 INDEMNITY EXCLUSIVE. The sole recourse and
remedy of the Buyer or any Buyer Indemnitee for any breach
or inaccuracy of, or any breach of any obligation under, or
any other claim with respect to, any representation or
warranty or alleged representation or warranty by or on
behalf of either Seller contained in or made pursuant to
this Agreement or any Transaction Agreement, or any other
certificate, instrument or document delivered pursuant
hereto or thereto (including pursuant to Section 8.2), shall
be under the provisions of and to the extent provided in
this Section 10. The Buyer shall, and shall cause each
Buyer Indemnitee to, comply with this Section 10.5, and not
assert any such breach, inaccuracy or claim or seek any
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recourse or remedy in respect thereof other than under the
provisions of this Section 10.
ARTICLE ELEVEN
TERMINATION
11.1 METHOD OF TERMINATION. This Agreement may be
terminated at any time prior to the Closing:
(a) by the written agreement of the Buyer and the
Sellers;
(b) by the Seller Parent, by written notice to
the Buyer, if any of the conditions set forth in
Article Nine shall not have been fulfilled by 5:00 p.m.
New York City time on November 4, 1996, unless such
failure shall be due to the failure of either Seller to
perform or comply with any of the covenants, agreements
or conditions hereof to be performed or complied with
by such Seller prior to the Closing;
(c) by the Buyer, by written notice to the
Sellers, if any of the conditions set forth in Article
Eight shall not have been fulfilled by 5:00 p.m. New
York City time on November 4, 1996, unless such failure
shall be due to the failure of the Buyer to perform or
comply with any of the covenants, agreements or con-
ditions hereof to be performed or complied with by the
Buyer prior to the Closing;
(d) by the Buyer by written notice to the Seller
Parent, or by the Seller Parent by written notice to
the Buyer, given after the date that is sixty (60) days
after the Expiration Date, if the condition precedent
set forth in Section 9.4(a) shall not have been
satisfied or waived by the Sellers on or before such
date as to all matters other than (x) any modifications
to or in this Agreement or any Transaction Agreement or
any of the transactions contemplated hereby or thereby
occurring after such date, or any other matters arising
after such date, or (y) execution, delivery and
effectiveness of all releases, termination statements
and other agreements, instruments and documents
necessary or appropriate to evidence or effect the
release and termination of any and all mortgages,
pledges and security interests in respect of the Assets
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in favor of any lenders to the Seller Parent or any of
its Affiliates; or
(e) by the Buyer, by written notice to the Seller
Parent given within ten (10) days of the delivery to
the Buyer by the Company of notice, as provided in
Section 2.4(c)(iii), of the occurrence of a casualty
loss (as defined in Section 2.4(c)) involving over one
hundred thousand (100,000) acres of timber located on
the Timberlands.
11.2 EFFECT OF TERMINATION. (a) In the event of
a termination of this Agreement pursuant to Section 11.1,
this Agreement shall become void and of no further force or
effect, and no Person shall have any liability in respect
hereof or of the transactions contemplated hereby, except
(i) with respect to any breach of any covenant contained in
this Agreement by such Person prior to such termination and
(ii) that the provisions of the Confidentiality Agreement,
and the provisions of Sections 5.2(b), 7.1 and 7.3, Article
Eleven and Article Twelve (other than Section 12.1), shall
survive such termination and shall remain in full force and
effect.
(b) The Seller Parent shall promptly pay to the
Buyer a termination fee of $10,000,000 (the "Fee") in the
event that this Agreement is terminated pursuant to Section
11.1(d) as a consequence of an Acquisition Proposal, and
prior to the first anniversary of such termination the
Sellers enter into a definitive written agreement with the
third party making such Acquisition Proposal or any
Affiliate thereof (other than any Affiliate of either
Seller), pursuant to which such third party or
Affiliate acquires all or substantially all of the Assets,
whether through a direct acquisition of assets or through an
acquisition of equity interests in the Company, or both.
ARTICLE TWELVE
MISCELLANEOUS PROVISIONS
12.1 PUBLICITY. Neither Seller, on the one hand,
nor the Buyer, on the other hand, shall issue or make, or
permit to be issued or made on its behalf, any press release
or public announcement related to this Agreement, or the
transactions contemplated hereby, prior to the Closing,
unless (a) such release or announcement has been approved by
both the Seller Parent and the Buyer or (b) such release or
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announcement is required by law (in the reasonable opinion
of counsel to either the Seller Parent or the Buyer, as the
case may be), and the party hereto issuing or making such
release or announcement has consulted with the other parties
hereto concerning the nature, scope and wording of such
release or announcement, and provided a copy thereof to the
other parties hereto for their review prior to publication
thereof. Notwithstanding the foregoing, it is understood
that the Seller Parent and the Buyer will be permitted to
make filings, on Form 8-K or 10-Q or otherwise, with the
Securities and Exchange Commission with respect to or
referring to this Agreement and the transactions contem-
plated hereby (which may include as exhibits thereto any
such press release or public announcement, and copies of
this Agreement and any Exhibits hereto).
12.2 EXPENSES, ETC. Except as otherwise
expressly provided herein, all expenses incurred by the
parties hereto in connection with or related to the
authorization, preparation and execution of this Agreement
and the Transaction Agreements, or the Closing, including
all fees and expenses of agents, representatives, counsel,
and accountants employed by any such party, shall be borne
solely and entirely by the party that has incurred those
expenses. The Buyer hereby waives compliance by either
Seller with any applicable bulk sales laws.
12.3 NOTICES. All notices, requests, demands and
other communications hereunder shall be in writing or by
electronic means producing a written record (facsimile
machine, telex, telecopier or telegraph), personally deliv-
ered or mailed by registered or certified United States
mail, return receipt requested, first-class postage prepaid,
or by nationally recognized overnight courier, effective
upon personal delivery, or one (1) day after mailing if by
overnight courier, or three (3) days after mailing if by
United States mail, addressed as follows:
If to the Sellers: Riverwood International
Corporation
3350 Cumberland Circle
Suite 1400
Atlanta, Georgia 30339
Telecopy No. (770) 644-2923
Attention: Frank R. McCauley
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with a copy to: Riverwood International
Corporation
3350 Cumberland Circle
Suite 1400
Atlanta, Georgia 30339
Telecopy No. (770) 644-2929
Attention: Bill H. Chastain,
Esq.
with a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy No. (212) 909-6836
Attention: David Brittenham,
Esq.
and prior to the
Closing, with a
copy to: Riverwood International
Corporation
1000 Jonesboro Road
West Monroe, Louisiana 71292
Telecopy No. (318) 362-2272
Attention: C. Steven Clark
If to the Buyer: Plum Creek Timber Company, L.P.
999 Third Avenue, Suite 2300
Seattle, Washington 98014-4096
Telecopy No. (206) 467-3799
Attention: Rick R. Holley
with a copy to: Cairncross & Hempelmann
701 5th Avenue, Suite 7000
Seattle, Washington 98104
Telecopy: (206) 587-2308
Attention: Daniel C. Vaughn
Any party may change its address specified for notices by
designating a new address by notice given in accordance with
this Section 12.3.
12.4 AMENDMENT; WAIVER. No amendment, modifi-
cation or discharge of this Agreement, and no waiver here-
under, shall be valid or binding unless set forth in writing
and duly executed by the party against whom enforcement of
the amendment, modification, discharge or waiver is sought.
Any such waiver shall constitute a waiver only with respect
to the specific matter described in such writing and shall
in no way impair the rights of the party granting such waiv-
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er in any other respect or at any other time. Neither the
waiver by any of the parties hereto of a breach of or a
default under any of the provisions of this Agreement, nor
the failure by any of the parties, on one or more occasions,
to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder, shall be constru-
ed as a waiver of any other breach or default of a similar
nature, or as a waiver of any of such provisions, rights or
privileges hereunder.
12.5 BINDING EFFECT; THIRD PARTY BENEFICIARY
RIGHTS. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective
heirs, legal representatives, executors, administrators,
successors, and assigns, and shall inure to the benefit of
the Indemnitees. This Agreement is not intended, and shall
not be construed, to give any person or entity other than
the parties signatory hereto, the Indemnitees (solely as
provided in Article Ten), and their respective successors
and permitted assigns, any interest or rights (including
third party beneficiary rights) with respect to or in
connection with any agreement or provision herein or any
matter contemplated hereby.
12.6 ENTIRE AGREEMENT. This Agreement and the
Confidentiality Agreement (and the Transaction Agreements
when executed and delivered) constitute the entire agreement
between the parties hereto with respect to the subject
matter hereof and supersede all prior agreements,
understandings, statements, representations, warranties,
documents, instruments, communications and correspondence,
whether written or oral, express or implied, among the
parties hereto and their respective Affiliates,
representatives and agents with respect to the subject
matter hereof and thereof.
12.7 ASSIGNMENT. (a) This Agreement shall not be
assignable or otherwise transferable by any party hereto
without the prior written consent of the other parties
hereto, except as provided in this Section 12.7.
(b) Each party hereto may assign this Agreement
to any lender or lenders to such party or any Affiliate
thereof as security for obligations to such lender or
lenders in respect of financing arrangements of such party
or Affiliate with such lender or lenders, PROVIDED that no
assignment to any such lender or lenders shall in any way
affect the obligations or liabilities of such party under
this Agreement.
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(c) The Buyer may assign this Agreement, upon
prior written notice to the Sellers, to Plum Creek
Manufacturing Company, L.P., a Delaware limited partnership
that is an Affiliate of the Buyer controlled by the Buyer,
PROVIDED that such Person is and at all times remains such
an Affiliate and so controlled, and assumes all liabilities
and obligations of the Buyer under this Agreement pursuant
to an instrument in form and substance satisfactory to the
Sellers in their reasonable judgment. If the Buyer pursuant
to Section 7.6(d) shall have requested the Sellers'
cooperation in effecting a Transfer and an Exchange, the
Buyer pursuant thereto may request that the Sellers execute
a consent to the assignment by the Buyer of certain of its
rights under this Agreement to a third party solely as and
to the extent necessary to effect such Transfer and such
Exchange, PROVIDED that the requirements of Section 7.1(d)
shall have been complied with in all respects. No such
assignment or assumption pursuant to the two preceding
sentences shall in any way affect the liabilities or
obligations of the Buyer under this Agreement, and in the
event of any such assignment or assumption, the Buyer shall
remain fully liable for its liabilities and obligations
under this Agreement.
(d) Any purported assignment or transfer of this
Agreement in violation of this Section 12.7 shall be void
and of no force or effect.
12.8 HEADINGS. The section and other headings in
this Agreement are inserted solely as a matter of
convenience and for reference, are not a part of this
Agreement, and shall not be deemed to affect the meaning or
interpretation of this Agreement.
12.9 COUNTERPARTS. This Agreement may be ex-
ecuted in two or more counterparts, each of which shall be
deemed an original, and all of which together shall
constitute one and the same instrument.
12.10 EXHIBITS AND SCHEDULES. All Exhibits and
Schedules referenced herein are incorporated herein by
reference. Matters disclosed in any Section of the
Disclosure Schedule with respect to any representation or
warranty of the Sellers contained herein shall be deemed
disclosed with respect to every other representation and
warranty of the Seller contained herein.
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12.11 SEVERABILITY. Any term or provision of
this Agreement that is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
unenforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any term or
provision of this Agreement is so broad as to be invalid or
unenforceable, the provision shall be interpreted to be only
so broad as is valid or enforceable. Subject to the
foregoing provisions of this Section 12.11, if any term or
provision of this Agreement is invalid or unenforceable for
any reason, such circumstances shall not have the effect of
rendering such term or provision invalid or unenforceable in
any other case or circumstance.
12.12 EXCLUSIVITY OF REPRESENTATIONS AND WARRAN-
TIES; RELATIONSHIP BETWEEN THE PARTIES. NOTWITHSTANDING
ANYTHING CONTAINED IN THIS AGREEMENT, IT IS THE EXPLICIT
INTENT AND UNDERSTANDING OF EACH OF THE PARTIES HERETO THAT
NO SUCH PARTY IS MAKING ANY REPRESENTATION OR WARRANTY
WHATSOEVER, ORAL OR WRITTEN, EXPRESS OR IMPLIED, OTHER THAN
THOSE SET FORTH IN THIS AGREEMENT AND THE TRANSACTION
AGREEMENTS AND NO SUCH PARTY IS RELYING ON ANY STATEMENT,
REPRESENTATION OR WARRANTY, ORAL OR IMPLIED, MADE BY ANY
OTHER SUCH PARTY, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES SPECIFICALLY SET FORTH IN THIS AGREEMENT OR ANY
TRANSACTION AGREEMENT. THE PARTIES AGREE THAT THIS IS AN
ARM'S LENGTH TRANSACTION IN WHICH THE PARTIES' UNDERTAKINGS
AND OBLIGATIONS ARE LIMITED TO THE PERFORMANCE OF THEIR
OBLIGATIONS UNDER THIS AGREEMENT. THE BUYER ACKNOWLEDGES
THAT IT IS A SOPHISTICATED INVESTOR AND THAT IT HAS ONLY A
CONTRACTUAL RELATIONSHIP WITH THE SELLERS, BASED SOLELY ON
THE TERMS OF THIS AGREEMENT, AND THAT THERE IS NO SPECIAL
RELATIONSHIP OF TRUST OR RELIANCE BETWEEN THE BUYER AND THE
SELLERS.
12.13 GOVERNING LAW; SERVICE OF PROCESS, ETC.
(a) This Agreement shall be governed by and construed in
accordance with the internal laws of the state of New York
applicable to agreements made and to be performed entirely
within such state, without regard to the conflict of laws
principles or rules of such state.
(b) In the event of any suit, action or
proceeding arising from or relating to this Agreement or the
transactions contemplated hereby, each party irrevocably and
unconditionally submits, for itself and its property, to the
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exclusive jurisdiction of the federal or state courts based
in New York, New York. In any such suit, action or
proceeding, each party irrevocably waives personal service
of any summons, complaint, or other process and agrees that
service thereof may be made in the manner provided for
notices in Section 12.3. Each party irrevocably and
unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or
proceeding arising from or relating to the Agreement or the
transactions contemplated hereby in any federal or state
court based in New York, New York. Each party hereby
irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(c) In the event of any suit, action or
proceeding arising from or relating to this Agreement or the
transactions contemplated hereby, the prevailing party in
such suit, action or proceeding shall be entitled to recover
its costs, including attorneys' fees and expenses, incurred
in connection with such suit, action or proceeding.
12.14 CONSEQUENTIAL DAMAGES. In no event shall
either party be liable to the other for consequential,
special, indirect or special damages.
12.15 WAIVER OF PUNITIVE DAMAGES. THE PARTIES TO
THIS AGREEMENT EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO
RECOVER PUNITIVE, EXEMPLARY OR SIMILAR DAMAGES IN ANY
ARBITRATION, LAWSUIT, LITIGATION OR PROCEEDING ARISING OUT
OF OR RESULTING FROM ANY CONTROVERSY OR CLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION OR
VALIDITY OF THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES
THAT (A) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER, (B) IT UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) IT MAKES
THIS WAIVER VOLUNTARILY AND (D) IT HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 12.15.
12.16 WAIVER OF JURY TRIAL. EACH PARTY
ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY THAT MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY
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JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH,
TERMINATION OR VALIDITY OF THIS AGREEMENT, OR THE TRANSAC-
TIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES
AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (B) IT
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS
WAIVER, (C) IT MAKES THIS WAIVER VOLUNTARILY AND (D) IT HAS
BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SEC-
TION 12.16.
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IN WITNESS WHEREOF, each party hereto has executed
or caused this Agreement to be executed on its behalf, all
on the day and year first above written.
PLUM CREEK TIMBER COMPANY,
L.P.
By: Plum Creek Management
Company, L.P.,
its General Partner
By:_____________________
Name:
Title:
RIVERWOOD INTERNATIONAL
CORPORATION
By:_____________________
Name:
Title:
NEW RIVER TIMBER, LLC
By:_____________________
Name:
Title:
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EXHIBIT A
WOOD PRODUCTS SUPPLY AGREEMENT
WOOD PRODUCTS SUPPLY AGREEMENT, dated as of
________, 1996 (the "Agreement"), between PLUM CREEK TIMBER
COMPANY, L.P., a Delaware limited partnership ("Plum
Creek"), and RIVERWOOD INTERNATIONAL CORPORATION, a Delaware
corporation ("Riverwood").
RECITALS
Plum Creek, Riverwood and New River Timber, LLC, a
Delaware limited liability company and an affiliate of
Riverwood ("New River"), are parties to the Asset Purchase
Agreement dated as of August 6, 1996 (the "Asset Purchase
Agreement").
Pursuant to the Asset Purchase Agreement, Plum
Creek is purchasing from Riverwood and New River certain
assets of their line of business known as the "Wood Products
Division" (the "Division"). The assets of the Division
include a sawmill located in Huttig, Arkansas (the "Huttig
Facility"), a sawmill and plywood plant in Joyce, Louisiana
(the "Joyce Facility"), and an aggregate of approximately
538,000 fee and leasehold acres of timber property located
in the States of Arkansas, Louisiana and Texas, including a
nursery located in Texas (collectively, the "Timberlands").
The Division has been and is a significant source
of wood fiber products for Riverwood, consisting of pine
pulpwood ("Pine Pulpwood"), chips ("Chips") and hardwood
pulpwood ("Hardwood Pulpwood," and together with Pine
Pulpwood, "Pulpwood," and together with Pine Pulpwood and
Chips, "Products"), all of which have been used in
connection with the production of paper products by
Riverwood at its West Monroe, Louisiana paper mill (the
"West Monroe Facility"). Following the sale of the
Division's assets, Riverwood will need a long-term, assured
source of supply of the Products in order to meet its paper
production requirements and the demands of its customers.
This Agreement is an essential part of the
transactions contemplated by the Asset Purchase Agreement.
Without this Agreement, Riverwood, New River and Plum Creek
would not have entered into the Asset Purchase Agreement.
Capitalized and other terms defined in Section 8.1(c), or in
the provisions hereof referenced therein, are used herein as
defined therein.
<PAGE>
NOW, THEREFORE, in consideration of the mutual
covenants described in this Agreement, and other good and
valuable consideration the receipt and sufficiency of which
are acknowledged, Plum Creek and Riverwood agree as follows:
ARTICLE I
PURCHASE OF PRODUCTS
Section 1.1 PURCHASE OF PINE PULPWOOD. Plum
Creek shall sell and Riverwood shall purchase each calendar
year the quantity of Pine Pulpwood specified in Annex A.
All Pine Pulpwood purchased pursuant to this Agreement shall
satisfy the specifications for Pine Pulpwood set forth in
Riverwood's Specification Nos. RI-3696 and RI-3697, copies
of which are set forth in Annex B, as the same may be
modified from time to time in accordance with Section 1.4
(as the same may be so modified, the "Pulpwood Quality
Specifications"). For purposes of this Agreement, each cord
of Pine Pulpwood shall weigh not less than five thousand two
hundred (5,200) pounds.
Section 1.2 PURCHASE OF WOOD CHIPS. Plum Creek
shall sell and Riverwood shall purchase each calendar year
the quantity of Chips specified in Annex A. All Chips
purchased pursuant to this Agreement shall satisfy the
specifications for chips as set forth in Riverwood's Chip
Specification No. RI-3695, a copy of which is set forth in
Annex C, as the same may be modified from time to time in
accordance with Section 1.4 (as the same may be so modified,
the "Chip Quality Specifications," and together with the
Pulpwood Quality Specifications, the "Product
Specifications"). For the purposes of this Agreement, a ton
shall weigh two thousand (2,000) pounds.
Section 1.3 PURCHASE OF HARDWOOD PULPWOOD. Plum
Creek shall sell and Riverwood shall purchase each calendar
year the quantity of Hardwood Pulpwood specified for such
year in Annex A. Riverwood shall have an option to purchase
in each calendar year any quantity of Hardwood Pulpwood
produced by Plum Creek in excess of such quantity thereof so
specified in Annex A. All Hardwood Pulpwood purchased
pursuant to this Agreement shall satisfy the specifications
for Hardwood Pulpwood set forth in the Pulpwood Quality
Specifications. For the purposes of this Agreement, each
cord of Hardwood Pulpwood shall weigh not less than five
thousand seven hundred (5,700) pounds.
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Section 1.4 MODIFICATION OF SPECIFICATIONS.
Riverwood may, from time to time, and upon at least ninety
(90) days' prior written notice to Plum Creek, modify any of
the Pulpwood Quality Specifications or Chip Quality Speci-
fications that Riverwood applies to all of its Product
suppliers to the West Monroe Facility or any other Facility
(as defined below). Riverwood shall not discriminate
against Plum Creek in modifying the Product Specifications.
All Products sold by Plum Creek to Riverwood following such
notice shall satisfy such modified Product Specifications.
Notwithstanding anything herein to the contrary, if such
modification would cause an effective decrease in Plum
Creek's production of any Products, Plum Creek's obligations
to provide such Products under Section 1.1, 1.2 or 1.3, as
applicable, shall be reduced pro rata and Riverwood shall
pay to Plum Creek an increase in Product price as a result
of any increased costs in production or volume loss
necessary to satisfy such modified Product Specifications
until expiration of the current Price Period (as defined
below). Thereafter, the determination of Product prices
pursuant to Section 2.1 shall reflect such modified Product
Specifications.
Section 1.5 VARIATION OF QUANTITIES. Plum Creek
may not substitute any type of Product for any other type of
Product without Riverwood's prior written consent (such
consent not to be unreasonably withheld).
Section 1.6 ANNUAL PLAN. (a) The parties shall
each use their respective best commercially reasonable
efforts to agree upon and complete, not later than October 1
of each calendar year during the Term (as defined below), a
written production and delivery plan with respect to the
Products to be made available for purchase by Riverwood
during the next calendar year as provided in Sections 1.1,
1.2 and 1.3 (the "Annual Plan"), including a schedule for
delivery of Products to the West Monroe Facility or to other
Facilities as designated by Riverwood. Such Annual Plan may
reflect any substitution of Products upon which the parties
shall have agreed as provided in Section 1.5.
(b) Following adoption of each Annual Plan, the
parties shall each use their respective best commercially
reasonable efforts to implement such Annual Plan in
accordance with its terms. Products shall be delivered
throughout the calendar year in accordance with the Annual
Plan for such year, PROVIDED that during any one or more
consecutive calendar quarters of any calendar year, Plum
Creek may vary its deliveries, and Riverwood may vary its
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purchases, of Pine Pulpwood or Chips above or below the
relevant Cumulative Quarterly Quantity (as defined below)
therefor by up to five percent (5%) of the Yearly Quantity
(as defined below) therefor, and of Hardwood Pulpwood above
or below the relevant Cumulative Quarterly Quantity therefor
by up to ten percent (10%) of the Yearly Quantity therefor,
as long as delivery and purchase obligations are reconciled,
and the Yearly Quantity of such Product shall have been
delivered and purchased, by the end of each calendar year.
Any other fluctuations in deliveries during any calendar
quarter will be reconciled by the end of such quarter. The
term "Yearly Quantity" means, for any calendar year, the
annual quantity for the relevant Product to be purchased and
sold hereunder during such year as specified in Annex A.
The term "Cumulative Quarterly Quantity" means, for any one
or more consecutive quarters in any calendar year, the
Yearly Quantity for the relevant Product for such year,
multiplied by the number of such quarters, and divided by
four.
(c) A failure in good faith of the parties to
agree on an Annual Plan shall not constitute a breach of
this Agreement entitling a party to exercise its termination
rights under Article VII or affect the parties' obligations
to comply with all other terms and conditions of this
Agreement.
Section 1.7 FORCE MAJEURE; NON-DISCRIMINATION.
(a) For the purposes of this Agreement, (1) the term "Force
Majeure" means any cause, condition or event beyond a
party's reasonable control that delays or prevents such
party's performance of its obligations hereunder, including
war, acts of government, acts of public enemy, riots, civil
strife, lightning, fires, explosions, storms, floods, power
failures, other acts of God or nature, labor strikes,
lockouts or other disputes, and other similar events or
circumstances; PROVIDED, HOWEVER, that adverse financial or
market conditions shall not constitute Force Majeure, and
(2) the term "Affected Party" means the party that becomes
subject to Force Majeure, and (3) the term "Non-Affected
Party" means the party that is not the Affected Party.
(b) Subject to the provisions of this Section
1.7, the Affected Party shall not be liable hereunder to the
Non-Affected Party for a delay in or failure of performance
by the Affected Party of its obligations hereunder that is
caused by Force Majeure. If Force Majeure results in a
reduction, but not a complete cessation, of the Affected
Party's production or operations in connection with this
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Agreement, the Affected Party (i) shall use its best efforts
to meet its obligations hereunder to the extent commercially
reasonable (including, in the case of Plum Creek,
substituting Pulpwood for Chips if Riverwood elects to
accept such substitution in its reasonable discretion), (ii)
shall treat the Non-Affected Party on a preferred basis as
and to the extent provided in Section 1.7(c) with respect to
its purchase or sale hereunder, as the case may be, of the
respective quantities of Products set forth in Annex A under
the heading "Preferred Quantity" (the "Preferred
Quantities"), and (iii) otherwise shall treat the Non-Affected
Party no less favorably than the Affected Party
treats all of its other customers (if Plum Creek is the
Affected Party) or suppliers (if Riverwood is the Affected
Party) during the period of such reduced production or
operations.
(c) If Riverwood becomes subject to Force
Majeure, Plum Creek shall be the preferred supplier of
Products in Preferred Quantities to Riverwood at the West
Monroe Facility and the Other Facilities, and accordingly
Riverwood shall not reduce its purchases of any Product from
Plum Creek below the respective Preferred Quantity thereof
unless Riverwood shall have previously suspended its
purchases of such Product from all other suppliers to the
West Monroe Facility and the Other Facilities. If Plum
Creek becomes subject to Force Majeure, Riverwood shall be
Plum Creek's preferred customer for Products in Preferred
Quantities, and accordingly Plum Creek shall not reduce its
sales of any Product to Riverwood below the respective
Preferred Quantity thereof unless Plum Creek shall have
previously suspended its sales of such Product to all other
customers.
(d) The amount by which the quantity of any
Product otherwise required to be purchased or sold hereunder
shall be permitted to be reduced as a result of Force
Majeure shall be prorated for the period during which such
Force Majeure is in effect and continuing (such period, the
"Force Majeure Period"), based on the respective Yearly
Quantity for each calendar year in which such Force Majeure
is in effect, prorated (if applicable) for the portion of
such year constituting all or part of such Force Majeure
Period. The Affected Party shall not be required to make up
the volume not purchased or produced during the Force
Majeure Period. The Affected Party shall be entitled to
make up such volume to the extent of Product delivery or
purchase variations otherwise permitted by Section 1.6(b),
subject to Section 1.7(e).
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(e) If the Affected Party reduces the volume of
any Product to be purchased or sold due to Force Majeure
(the amount of such reduction, the "Reduction Amount"), the
Affected Party shall give written notice to the Non-Affected
Party of such reduction and the effective date thereof. If
such reduction continues in effect for a period of 60 days
or more, the Non-Affected Party shall then have the right,
in the case of Plum Creek, to sell all or part of the
Reduction Amount of such Product not purchased by Riverwood
to another buyer or buyers, and in the case of Riverwood, to
purchase all or part of the Reduction Amount of such Product
not sold by Plum Creek from another seller or sellers,
subject to the following:
(i) The Non-Affected Party shall not enter into
any contract for any such sale or purchase for a term
longer than one (1) year's duration.
(ii) The Non-Affected Party shall give the
Affected Party written notice of each such contract,
including the volume sold or purchased thereunder and
the term thereof.
(iii) The annual volume commitment of the Non-Affected
Party for such Product as specified in Section
1.1, 1.2 or 1.3 (as applicable) and Annex A shall be
reduced by such volume sold or purchased under such
contract for the duration thereof.
(iv) The Affected Party may, at any time, increase
the volume of such Product to be purchased or sold
hereunder by all or part of the Reduction Amount,
provided the amount of such increase shall not exceed
the volume of such Product that the Non-Affected Party
has already committed to sell or purchase to or from
any third party as provided in and in compliance with
this Section 1.7(e).
ARTICLE II
PRICE AND DELIVERY TERMS
Section 2.1 PRICES. (a) The initial prices for
the Products shall be as has been separately agreed between
the parties. Such prices shall remain in effect until
December 31, 1996. Beginning on January 1, 1997 and at the
beginning of every calendar quarter thereafter (each such
calendar quarter period, a "Price Period"), the prices to be
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paid for the Products to be delivered during such Price
Period shall be adjusted in accordance with the provisions
of this Section 2.1. Riverwood and Plum Creek shall nego-
tiate in good faith to determine the prices for Products for
the next Price Period prior to expiration of the current
Price Period. If the parties cannot agree on such prices at
least ten (10) days prior to expiration of the current Price
Period, the parties shall submit the issue to arbitration as
provided in Section 2.4.
(b) The price of each Product for any Price
Period shall be equal to the then current fair market value
of such Product in the Region (as defined below), including
exports from the Region. The determination of fair market
value for any Product shall take into account all relevant
factors, including quality specifications, prices for such
Product paid by Riverwood to other suppliers to the West
Monroe Facility or the Other Facilities, prices for such
Product obtained for sales by Plum Creek from the Region,
published prices for such Product in the Region in any
industry publications, and delivery costs. Volume may be
considered as a factor in determining the fair market value
of any Product but shall not be used to impute any price
premium or discount. Notwithstanding the foregoing, the
fair market value of Pine Pulpwood or Hardwood Pulpwood
shall be calculated by determining the Stumpage Price (as
defined below) of such Product and adding to such amount the
amount of Delivery Cost (as defined below).
(c) The term "Region" means the region consisting
of (1) the portion of Arkansas south of a line running due
west to due east and intersecting the city of Little Rock,
Arkansas, (2) Louisiana, (3) the portion of Mississippi
south of Interstate 20, and (4) the portion of Texas east of
a line running due north to due south and intersecting the
town of Tyler, Texas. The term "Stumpage Price" means, for
Pine Pulpwood or Hardwood Pulpwood, the fair market price
paid "at the stump" for such Product in the Region. The
term "Delivery Cost" means, for Pine Pulpwood or Hardwood
Pulpwood, the fair market delivery cost for cutting such
Product and hauling such Product a distance of twenty-five
(25) miles in northern Louisiana.
(d) A failure in good faith of the parties to
agree on the prices to be paid for any Product shall not
constitute a breach of this Agreement entitling a party to
exercise its termination rights under Article VII or affect
the parties' obligations to comply with all other terms and
conditions of this Agreement.
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Section 2.2 DELIVERY TERMS. All Products covered
by this Agreement shall be delivered to Riverwood F.O.B. to
the West Monroe Facility or to Riverwood's Farmerville, Wild
Spur or Martin chip mill facilities located in northern
Louisiana (the "Other Facilities"), pursuant to the delivery
requirements in the Annual Plan. In addition, Riverwood
may, from time to time, acquire or construct one or more
additional chip or paper mill facilities within ten (10)
miles of the West Monroe Facility or any Other Facility, and
Products shall be delivered to Riverwood F.O.B. to any such
additional facility (such additional facilities, together
with the West Monroe Facility and the Other Facilities, the
"Facilities"). Riverwood may direct that Plum Creek deliver
Products not in accordance with the Annual Plan or that Plum
Creek deliver Products to other facilities owned by
Riverwood or any affiliate of Riverwood, in addition to the
Facilities, as long as (i) Riverwood gives Plum Creek at
least thirty (30) days' prior written notice, and (ii)
Riverwood pays Plum Creek for the increased costs of
delivery (if any) resulting from such a redirection of
Products. Risk of loss and title shall pass when Products
are unloaded at the designated facility.
Section 2.3 PAYMENT. Riverwood shall pay Plum
Creek within twenty (20) days after Riverwood's receipt of
each invoice for any Products delivered to Riverwood, based
upon the volume of the Products delivered, as determined by
the weight of such Products at the time of delivery. Such
invoices shall not be delivered by Plum Creek to Riverwood
more frequently than weekly.
Section 2.4 DISPUTES. (a) If Riverwood and Plum
Creek do not agree on the prices for all Products for the
next Price Period at least ten (10) days prior to the ex-
piration of the current Price Period, the fair market price
for any Product as to which the parties shall not have so
agreed shall be determined by an arbitrator selected by the
parties. If the parties fail to agree on the selection of
an arbitrator by the end of the current Price Period, the
parties shall each select an arbitrator within five (5) days
thereafter and the two arbitrators shall select a third
arbitrator within five (5) days of their selection. Any
arbitrator shall be independent and shall have no af-
filiation with either party or any affiliate of either
party. The arbitrators shall be experienced in the timber
and paper industries, familiar with the factors taken into
account in pricing wood fiber products in such industries,
and otherwise qualified to make the pricing determinations
required by this Section 2.4. If one of the parties does
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not select an arbitrator within five (5) days after the end
of the current Price Period, the arbitrator chosen solely by
the other party shall be responsible for determining the
fair market price for any Product as to which the parties
shall not have previously agreed.
(b) Each party shall each submit to the
arbitrator or arbitrators and to the other party within ten
(10) days of the date of selection of the arbitrator or
arbitrators, as applicable, the last price proposal made to
the other party prior to initiating the arbitration pro-
ceedings. Each party may submit information in support of
its price proposal, consistent with the fair market value
analysis described in Section 2.1. Within ten (10) days of
the date the parties have submitted their price proposals,
the arbitrator or arbitrators shall, with respect to each
Product for which the price is in dispute, select either the
proposed price submitted by Plum Creek or the proposed price
submitted by Riverwood. The arbitrator or arbitrators, in
making such decision, shall select the proposed price that
most accurately reflects the fair market price for such
Product, taking into account all of the factors set forth in
Sections 2.1(b) and 2.1(c). If a party has failed to timely
submit its price proposal for any Product, the arbitrator or
arbitrators shall select the other party's price proposal
for such Product. During the pendency of the arbitration
proceedings, the price for any Product in dispute shall be
the price for such Product that was in effect at the end of
the Price Period in which the dispute arose. Once the price
for such Product has been determined by such arbitration,
such price shall be retroactive to the beginning of the
Price Period for which such price is applicable. The
arbitration decision shall be final, binding and conclusive
upon both parties for such Price Period. The expenses of
any arbitration hereunder shall be borne equally by the
parties.
Section 2.5 TESTING AND VERIFICATION; NON-CONFORMING
PRODUCT. (a) Riverwood shall be entitled to sample and test
Products in accordance with the procedures described in Annex D,
as such procedures may be modified or changed by Riverwood from time
to time in accordance with this Section 2.5 (as so modified or changed,
the "Test Procedures"). Riverwood may from time to time modify any of
the Test Procedures as to any Product that Riverwood applies
to all of its suppliers of such Product to the West Monroe
Facility or any other Facility. Riverwood shall not
discriminate against Plum Creek in modifying the Test
Procedures. Plum Creek shall have the right to inspect at
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all reasonable times Riverwood's method of measurement of
weight and quality specification compliance in order to
verify accuracy in such measurements. Riverwood shall
modify its measurement practices if Plum Creek reasonably
demonstrates that existing practices have produced material
errors in measurement. Riverwood shall pay any under-
payments, and Plum Creek shall reimburse any overpayments,
for discrepancy in Product measurements for the period of
time for which the parties agree such procedural error is
reasonably estimated to have occurred.
(b) If any shipment of any Product fails to
satisfy the applicable Product Specifications, as determined
by Riverwood pursuant to the Test Procedures, Riverwood
shall have the right to reject such shipment. Riverwood
shall notify Plum Creek of any such rejection as soon as is
reasonably possible. If such rejected shipment is of
Pulpwood, Riverwood shall have the options respecting non-conforming
Pulpwood set forth in Annex E. If such rejected
shipment is of Chips, Riverwood shall either return the
rejected Product to Plum Creek at Plum Creek's expense or,
in Riverwood's sole discretion, offer to accept such
rejected Chips as wood fuel, provided Riverwood then has a
need for wood fuel. If Plum Creek elects to sell the
rejected product to Riverwood as wood fuel, Riverwood will
pay to Plum Creek a reasonable price for such product, equal
to the then-current average price paid for such wood fuel by
Riverwood to unaffiliated third parties.
ARTICLE III
TERM
Section 3.1 INITIAL TERM. This Agreement shall
remain in full force and effect for twenty (20) years from
the date hereof (the "Initial Term"), unless sooner
terminated as provided in Section 7.1.
Section 3.2 EXTENDED TERM. Either party may, at
its sole option, extend the Initial Term of this Agreement
by written notice to the other party for a period of up to
ten (10) additional years upon written notice to such other
party delivered not later than twelve (12) months prior to
the expiration of the Initial Term (the Initial Term, as the
same may be extended pursuant to this Section 3.2, the
"Term"). If both parties exercise such option, the Initial
Term shall be extended by the longer of the two periods so
elected.
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ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 WARRANTY OF QUALITY. Plum Creek
warrants and covenants that it will use its best
commercially reasonable efforts to cause all Chips to meet
the Chip Quality Specifications, and to cause all Pine
Pulpwood and Hardwood Pulpwood to meet the Pulpwood Quality
Specifications.
Section 4.2 OWNERSHIP OF PRODUCTS. (a) Plum
Creek represents and warrants that it is, and at all times
during the Term will be, the owner of all Products, and that
it shall sell such Products to Riverwood free and clear of
any and all Liens (as defined below). Plum Creek shall
protect, indemnify, defend and hold harmless Riverwood
against any Losses (as defined below) incurred or sustained
by Riverwood arising out of or resulting from any Liens
affecting any Products.
(b) The term "Liens" means any and all liens,
charges, mortgages, deeds to secure debt, pledges, security
interests, options, adverse claims or other encumbrances of
any nature whatsoever. The term "Losses" means any and all
claims, liabilities, obligations, losses, fines, costs,
royalties, proceedings, deficiencies or damages (whether
absolute, accrued, conditional or otherwise and whether or
not resulting from third party claims) including but not
limited to out-of-pocket expenses and reasonable attorneys'
and accountants' fees incurred in the investigation or
defense of any of the same or in enforcing any of their
respective rights hereunder.
Section 4.3 PLUM CREEK POWER AND AUTHORITY;
ENFORCEABILITY. Plum Creek represents and warrants that it
is a limited partnership duly organized and validly existing
under the laws of the State of Delaware, and that it has all
requisite partnership authority to enter into this Agreement
and to perform its obligations hereunder. Plum Creek
represents and warrants that this Agreement has been duly
authorized, executed and delivered by Plum Creek and
constitutes the legal, valid and binding obligation of Plum
Creek, enforceable against Plum Creek in accordance with its
terms, except as enforceability may be limited by (i) bank-
ruptcy, reorganization, insolvency, moratorium, receivership
or other similar laws affecting or relating to the
enforcement of creditors' rights or remedies generally, and
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(ii) general principles of equity (whether considered at law
or in equity).
Section 4.4 COMPLIANCE WITH LAWS; MAINTENANCE OF
TIMBERLANDS. (a) Plum Creek agrees that its performance of
this Agreement shall comply in all material respects with
applicable state and federal laws and regulations,
including, but not limited to, all environmental laws and
the Fair Labor Standards Act of 1938, as amended.
(b) Plum Creek agrees to cultivate, manage and
maintain the Timberlands in accordance with the Sustainable
Forestry Principles of the American Forest and Paper
Association (the "AFPA"), as modified by the AFPA from time
to time (and in the event that the AFPA at any time in the
future ceases to exist or to establish such principles, then
the principles of any successor entity performing a similar
function shall apply) and with the Best Forestry Management
Practices published by the Louisiana and Arkansas Forestry
Associations, respectively, and in a manner which will
enable it to perform all of its obligations hereunder.
Section 4.5 PLUM CREEK AS INDEPENDENT CONTRACTOR.
No relationship of employer and employee, or master and
servant, is intended to exist, nor shall any be construed to
exist, between Riverwood and Plum Creek, or between
Riverwood and any servant, agent, employee, subcontractor or
supplier of or to Plum Creek. Each party hereto shall
select and pay its own servants, agents, employees,
subcontractors and suppliers, and neither such party nor any
of its servants, agents, employees, subcontractors and
suppliers shall be subject to any orders, supervision or
control of the other party hereto. The parties acknowledge
that this Agreement does not create a partnership, joint
venture or any relationship other than a contract between
independent parties.
Section 4.6 INDEMNITY BY PLUM CREEK. Riverwood
shall in no way be liable for any personal injuries (in-
cluding death), property damage or other Losses caused by,
resulting from, or attributable to, the negligence,
intentional misconduct or bad faith of Plum Creek, or of any
servant, agent, employee, subcontractor or supplier of or to
Plum Creek, in performing Plum Creek's obligations under
this Agreement, or in the operation of the business of Plum
Creek or any such servant, agent, employee, subcontractor or
supplier in connection with this Agreement. Plum Creek
shall protect, defend, indemnify and hold harmless each of
Riverwood, its parents Riverwood Holding, Inc. and RIC
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Holding, Inc., and its subsidiaries and other affiliates,
and each of its and their respective agents, officers,
partners, directors, employees, successors and assigns, from
and against any claim, demand, cause of action, lawsuit or
other Loss arising out or resulting from any such
negligence, intentional misconduct or bad faith of Plum
Creek, or of any servant, agent, employee, subcontractor or
supplier of or to Plum Creek, except solely to the extent
such Loss is finally judicially determined to have arisen
out of or resulted from the negligence, intentional
misconduct or bad faith of any of Riverwood, its parents
Riverwood Holding, Inc. and RIC Holding, Inc., and its
subsidiaries and other affiliates, or any of its or their
respective servants, agents, officers, partners, directors,
employees, subcontractors or suppliers.
Section 4.7 RIVERWOOD POWER AND AUTHORITY;
ENFORCEABILITY. Riverwood represents and warrants that it
is a corporation duly organized and validly existing under
the laws of the State of Delaware, and that it has all
requisite corporate authority to enter into this Agreement
and to perform its obligations hereunder. Riverwood
represents and warrants that this Agreement has been duly
authorized, executed and delivered by Riverwood and
constitutes the legal, valid and binding obligation of
Riverwood, enforceable against Riverwood in accordance with
its terms, except as enforceability may be limited by
(i) bankruptcy, reorganization, insolvency, moratorium,
receivership or other similar laws affecting or relating to
the enforcement of creditors' rights or remedies generally,
and (ii) general principles of equity (whether considered at
law or in equity).
Section 4.8 INDEMNITY BY RIVERWOOD. Plum Creek
shall in no way be liable for any personal injuries (in-
cluding death), property damage or other Losses caused by,
resulting from, or attributable to, the negligence,
intentional misconduct or bad faith of Riverwood, or of any
servant, agent, employee, subcontractor or supplier of or to
Riverwood, in performing Riverwood's obligations under this
Agreement, or in the operation of the business of Riverwood
or any such servant, agent, employee, subcontractor or
supplier in connection with this Agreement. Riverwood shall
protect, defend, indemnify and hold harmless each of Plum
Creek, its general partner Plum Creek Management Company,
L.P., and its subsidiaries and other affiliates, and each of
its and their respective agents, officers, partners,
directors, employees, successors and assigns, from and
against any claim, demand, cause of action, lawsuit or other
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Loss arising out or resulting from any such negligence,
intentional misconduct or bad faith of Riverwood, or of any
servant, agent, employee, subcontractor or supplier of or to
Riverwood, except solely to the extent such Loss is finally
judicially determined to have arisen out of or resulted from
the negligence, intentional misconduct or bad faith of any
of Plum Creek, its general partner, and its subsidiaries and
other affiliates, or any of its or their respective
servants, agents, officers, partners, directors, employees,
subcontractors or suppliers.
ARTICLE V
REMEDIES
Section 5.1 ALTERNATIVE PURCHASE OR SALE RIGHTS.
(a) In the event Plum Creek fails or is unable for any
reason other than Force Majeure to deliver the quantities of
any of the Products required by this Agreement, then, in
addition to any other remedies available to Riverwood,
Riverwood may purchase an equivalent quantity of such
Products from any other source or sources, and Plum Creek
shall reimburse Riverwood for the reasonable difference
between Riverwood's costs in purchasing such Products and
the costs that Riverwood would have incurred had Plum Creek
delivered such Products in accordance with this Agreement.
Riverwood shall use its reasonable efforts to obtain the
Products at reasonable prices and delivery costs and to
mitigate its damages accordingly.
(b) In the event Riverwood fails or is unable for
any reason other than Force Majeure to purchase the
quantities of any of the Products required by this
Agreement, then, in addition to any other remedies available
to Plum Creek, Plum Creek may sell an equivalent quantity of
such Products to any other buyer or buyers, and Riverwood
shall reimburse Plum Creek for the reasonable difference
between Plum Creek's price in selling such Products to such
third party and the price that Plum Creek would have
received had Riverwood purchased such Products in accordance
with this Agreement. Plum Creek shall use its reasonable
efforts to sell the Products at reasonable fair market
prices and to mitigate its damages accordingly.
Section 5.2 EQUITABLE RELIEF. Each party
understands and acknowledges that monetary damages will not
be a sufficient remedy for breach of this Agreement by such
party, and that the other party shall be entitled to
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injunctive relief and for specific performance as remedies
for any such breach. Such remedies shall not be deemed to
be such other party's exclusive remedies for any such breach
of this Agreement, but shall be in addition to any other
remedies provided herein or available at law, in equity or
otherwise.
Section 5.3 CONSENT TO JURISDICTION. In con-
nection with any proceeding initiated by either party under
or with respect to this Agreement and the transactions
contemplated hereby, each party hereby consents to the
jurisdiction of any United States Federal Court sitting in
the State of Louisiana having jurisdiction in the matter and
to the jurisdiction of the Fourth Judicial District Court,
Ouachita Parish, Louisiana. Each party acknowledges and
agrees that any controversy that may arise under this
Agreement is likely to involve complicated and difficult
issues, and therefor it hereby irrevocably and
unconditionally waives any right it may have to a trial by
jury in respect of any litigation directly or indirectly
arising out of or relating to this Agreement, or the breach,
termination or validity of this Agreement, or the trans-
actions contemplated by this Agreement. Each party cer-
tifies and acknowledges that (a) no representative, agent or
attorney of any other party has represented expressly or
otherwise, that such other party would not, in the event of
litigation, seek to enforce the foregoing waiver, (b) it
understands and has considered the implications of this
waiver, (c) it makes this waiver voluntarily, and (d) it has
been induced to enter into this Agreement by, among other
things, the mutual waivers and certifications in this Sec-
tion 5.3.
Section 5.4 WAIVER OF CONSEQUENTIAL DAMAGES.
Each party hereby waives any right to recover consequential,
punitive, exemplary or similar damages in any arbitration,
lawsuit, litigation or proceeding arising out or resulting
from this Agreement. Each party certifies and acknowledges
that (a) no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such
other party would not, in the event of arbitration,
litigation or other proceeding, seek to enforce the
foregoing waiver, (b) it understands and has considered the
implications of this waiver, (c) it makes this waiver volun-
tarily, and (d) it has been induced to enter into this
Agreement by, among other things, the mutual waivers and
certifications in this Section 5.4.
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ARTICLE VI
RIGHT OF FIRST OFFER OR REFUSAL
Section 6.1 LIMITS ON CERTAIN TRANSFERS OF
TIMBERLANDS. As indicated in the Recitals, Riverwood and
New River have transferred and conveyed their right, title
and interest in and to the Timberlands to Plum Creek. So
long as this Agreement is in effect and subject to the terms
and conditions hereof, Plum Creek agrees not to effect,
cause or permit any Transfer (as defined below) to any other
Person except in compliance with the terms of this Article
VI. The term "Transfer" means any sale, lease, conveyance,
exchange, grant of usufruct, disposition or other transfer,
directly or indirectly (whether by agreement, operation of
law, or otherwise), of all or any portion of the Timberlands
or all or any portion of Plum Creek's interest in the
Timberlands.
Section 6.2 LIMITATION ON TRANSFERS FOR THREE
YEARS. (a) During the period beginning on the date hereof
and ending on the third anniversary of the date hereof (such
three-year period, the "Initial Period"), Plum Creek agrees
not to effect, cause or permit any Transfer to any other
Person, except pursuant to Permitted Transfers (as defined
below). The term "Permitted Transfer" means any Transfer
(whether during the Initial Period or after the Initial
Period):
(i) that is a transfer to any one or more
Persons, in one or a series of transactions, of up to
an aggregate of fifty thousand (50,000) acres of the
Timberlands on any terms and conditions (the "Initial
50,000 Acres");
(ii) to any Person (other than a natural person)
that is an affiliate of Plum Creek controlled by Plum
Creek and that assumes all liabilities and obligations
of Plum Creek under this Agreement in accordance with
Section 8.2, PROVIDED that such Person shall not be a
Specified Entity and at all times prior to the end of
the Initial Period shall be and remain an affiliate of
Plum Creek controlled by Plum Creek;
(iii) to any Person that merges or consolidates
with or into Plum Creek, or acquires all or
substantially all of the assets of Plum Creek, and that
assumes all liabilities and obligations of Plum Creek
under this Agreement in accordance with Section 8.2;
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(iv) in connection with a land exchange, swap or
similar arrangement involving Plum Creek's acquisition
of replacement timbered property located in northern
Louisiana or southern Arkansas ("Replacement
Property"), PROVIDED that (1) Plum Creek shall have
demonstrated to Riverwood's reasonable satisfaction
that Plum Creek's obligations under this Agreement can
be satisfied by use and exploitation of such Re-
placement Property, (2) such Replacement Property shall
be and become subject to this Agreement, and Plum
Creek's liabilities and obligations and Riverwood's
rights hereunder, including under this Article VI, (3)
such Replacement Property shall be made subject to the
recorded memorandum described in Section 6.9, and (4)
such Replacement Property shall be deemed to constitute
a part of the Timberlands for purposes of this Article
VI; or
(v) consisting of operating leases for hunting or
other recreational or other operational purposes
entered into by Plum Creek, or stumpage sales made by
Plum Creek, in each case in the ordinary course of
business.
(b) Any Permitted Transfer of all or part of the
Initial 50,000 Acres pursuant to and in compliance with
Section 6.2(a)(i) (a "Permitted 50,000 Acre Transfer") shall
be free of any right of Riverwood granted under this
Agreement, subject to compliance with the provisions of
Sections 6.2 and 6.10.
(c) Any Permitted Transfer to any affiliate of
Plum Creek pursuant to and in compliance with Section
6.2(a)(ii) (a "Permitted Controlled Affiliate Transfer")
shall be free of any right of first offer or refusal of
Riverwood under this Article VI, but shall be subject to the
provisions of Sections 6.2, 6.4, 6.9 and 8.2. Plum Creek
agrees to cause such affiliate of Plum Creek to be and
remain an affiliate of Plum Creek that is controlled by Plum
Creek, at all times prior to the end of the Initial Period.
If at any time after the end of the Initial Period, such
Person is not, or will not be, an affiliate of Plum Creek
that is controlled by Plum Creek, Plum Creek shall comply
with the provisions of Section 6.4.
(d) Any Permitted Transfer pursuant to and in
compliance with Section 6.2(a)(iii) shall be free of any
right of first offer, purchase or first refusal of Riverwood
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under this Article VI, but shall be subject to the
provisions of Section 6.2, 6.9 and 8.2.
(e) Any Permitted Transfer pursuant to and in
compliance with Section 6.2(a)(iv) (a "Permitted Land Swap
Transfer") shall be free of any right of Riverwood granted
under this Agreement, subject to compliance with the
provisions of Sections 6.2, 6.9 (with respect to the
relevant Replacement Property) and 6.10.
(f) Except as provided in Sections 6.2(b),
6.2(c), 6.2(d) and 6.2(e), all Transfers shall be subject to
Riverwood's rights under this Agreement, including
Riverwood's rights of first offer, purchase or first refusal
as and to the extent described in this Article VI, and shall
be subject to the provisions of Section 6.9. Any purported
Transfer that does not comply with all of the requirements
of this Article VI shall be null and void and shall be of no
force or effect.
(g) Any Person to which a Permitted Controlled
Affiliate Transfer, or any Transfer pursuant to and in
compliance with Section 6.2(a)(iii), is made, shall be
entitled to effect any Permitted Transfer pursuant to and in
compliance with Section 6.1(a)(i), subject to the
requirement thereof that not more than an aggregate of the
Initial 50,000 Acres shall be permitted to be transferred
pursuant thereto. Any such Person, and any Person to which
a Transfer referred to in Section 6.2(f) is made, shall be
subject to and shall comply with the provisions of this
Article VI to which Plum Creek is subject.
Section 6.3 TRANSFERS SUBJECT TO RIGHT OF FIRST
OFFER. (a) Subject to the terms and conditions of this
Section 6.3, Riverwood shall have a right of first offer
(the "First Offer Right") with respect to any proposed
Transfer, other than (i) a Specified Transfer (as defined
below) to which Section 6.5 applies and for which Plum Creek
has given a Specified Transfer Notice (as defined below),
(ii) a Permitted 50,000 Acre Transfer, (iii) a Permitted
Land Swap Transfer, or (iv) a Permitted Controlled Affiliate
Transfer.
(b) If, at any time following the expiration of
the Initial Period during the Term, Plum Creek desires to
effect, cause or permit a Transfer (other than a Specified
Transfer to which Section 6.5 applies and for which Plum
Creek has given a Specified Transfer Notice, a Permitted
50,000 Acre Transfer, a Permitted Land Swap Transfer, or a
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Permitted Controlled Affiliate Transfer), Plum Creek shall,
prior to effecting, causing or permitting any such Transfer,
give to Riverwood written notice of such desire (a "Transfer
Notice"). Such Transfer Notice shall specify the acreage
and interest proposed to be transferred (the "Notice
Acreage"), and the proposed purchase price for the Notice
Acreage (the "Notice Price"), which price shall be an
all-cash price. Any purported Transfer Notice that does not
comply with all of the requirements of this Article VI shall
be null and void and shall be of no force or effect.
(c) Following receipt of such Transfer Notice,
Riverwood may exercise its First Offer Right to purchase the
Notice Acreage by giving written notice thereof (a "Notice
of Election") to Plum Creek not later than the date that is
thirty (30) days after the date on which Riverwood receives
such Transfer Notice (such date of receipt, the "Notice
Date").
(d) In the event that Riverwood does not give a
Notice of Election to Plum Creek within the applicable
period specified in Section 6.3(c), Plum Creek shall be free
to effect a Transfer of all (but not less than all) of the
Notice Acreage to one (but not more than one) Person in one
(but not more than one) transaction, without further
restriction under this Section 6.3 (but subject to Section
6.4 and Section 6.9(b)), within one hundred eighty (180)
days of the Notice Date, at a price that is not less than
the Notice Price, and otherwise upon the terms specified in
the Transfer Notice. If Plum Creek does not consummate any
such Transfer within such time period or upon such terms,
such Notice Acreage shall become and remain subject to all
of the rights of Riverwood under this Article VI.
Section 6.4 INDIRECT TRANSFERS SUBJECT TO RIGHT
OF PURCHASE. (a) Subject to the terms and conditions of
this Section 6.4, Riverwood shall have a right of purchase
(the "Purchase Right") with respect to the Timberlands and
any interest therein, in the event of any Transfer Event (as
defined below). The term "Transfer Event" means any
Transfer, transaction, occurrence or event pursuant to which
any affiliate of Plum Creek that acquires Timberlands or any
interest therein in a Permitted Controlled Affiliate
Transfer shall no longer be an affiliate of Plum Creek
controlled by Plum Creek (such Person, a "Former
Affiliate").
(b) If, at any time following the expiration of
the Initial Period during the Term, Plum Creek desires to
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effect, cause or permit a Transfer Event, or any other
Transfer Event shall occur, Plum Creek shall, prior to
effecting, causing or permitting any such Transfer Event,
and concurrently with the occurrence of any other Transfer
Event, give to Riverwood written notice of such desire or of
such occurrence (a "Transfer Event Notice"). Such Transfer
Event Notice shall provide reasonably detailed information
concerning such Transfer Event, including its status and the
identity of the Persons involved therein. Any purported
Transfer Event Notice that does not comply with all of the
requirements of this Article VI shall be null and void and
shall be of no force or effect.
(c) Following receipt of such Transfer Event
Notice, Riverwood may exercise its Purchase Right to
purchase the Timberlands and interest therein held by the
Former Affiliate (the "Subject Property"), for a price equal
to the fair market value of such Subject Property, by giving
written notice thereof (a "Transfer Event Notice of
Election") to Plum Creek not later than the date that is
thirty (30) days after the date on which such fair market
value shall have been determined in accordance with Section
6.4(d).
(d) Within fifteen (15) days of the date on which
Riverwood receives such Transfer Event Notice (such date of
receipt, the "Transfer Event Notice Date"), Plum Creek shall
choose a nationally recognized investment banking firm (the
"Plum Creek Firm") and Riverwood shall choose a nationally
recognized investment banking firm (the "Riverwood Firm").
Such firms shall jointly determine the method of evaluating
the fair market value of the Subject Property, and such fair
market value. If such firms are unable to agree on such
method of evaluation or such fair market value, such firms
shall jointly designate a third nationally recognized
investment banking firm (the "Third Firm"), which shall
determine the fair market value of the Subject Property, and
such determination shall be final and binding on the
parties. Any such fair market value determination, whether
by the Plum Creek Firm and Riverwood Firm jointly or by the
Third Firm, shall be on the basis of the most likely sales
price for such Subject Property or similar property in an
arms length transaction in the then current market, and
shall take into account the form of conveyance and any Liens
to which the Subject Property is then subject. Plum Creek
shall bear the fees and expenses of the Plum Creek Firm, and
Riverwood shall bear the fees and expenses of the Riverwood
Firm. The fees and expenses of the Third Firm shall be
borne equally by the parties.
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Section 6.5 TRANSFERS SUBJECT TO RIGHT OF FIRST
REFUSAL. (a) Subject to the terms and conditions of this
Section 6.5, Riverwood shall have a right of first refusal
(the "First Refusal Right") with respect to any proposed
Transfer to any Specified Entity (as defined below), other
than a Permitted 50,000 Acre Transfer. Riverwood shall have
such First Refusal Right regardless of whether it has
previously elected not to exercise any First Offer Right
with respect to the acreage or interest proposed to be
transferred pursuant to such Transfer.
(b) If, at any time following the expiration of
the Initial Period during the Term, Plum Creek desires to
effect, cause or permit a Transfer to a Specified Entity (a
"Specified Transfer"), other than a Permitted 50,000 Acre
Transfer, Plum Creek shall, prior to effecting, causing or
permitting any such Specified Transfer, give to Riverwood
written notice of such desire (a "Specified Transfer
Notice"). Plum Creek shall not give such Specified Transfer
Notice, or effect, cause or permit any such Specified
Transfer, unless and until it shall have received a bona
fide, legally binding offer in writing from a Specified
Entity with respect to a Transfer that includes all the
material economic terms on which such Specified Transfer
would occur (a "Transfer Offer"), which Plum Creek desires
to accept and pursuant to which Plum Creek would effect,
cause or permit such Specified Transfer. Such Specified
Transfer Notice shall specify the acreage and interest
proposed to be transferred (the "Specified Acreage"), the
identity of the proposed transferee Specified Entity, the
purchase price for the Specified Acreage (the "Specified
Price"), and the terms for payment of such price, the date
agreed on by Plum Creek and such proposed transferee for the
closing of such Specified Transfer, and the other terms of
the Transfer Offer. The Specified Transfer Notice shall be
accompanied by a copy of any document evidencing the
Transfer Offer and, if the terms of the proposed Specified
Transfer have been reduced to a written contingent purchase
agreement (a "Contract"), a copy of such Contract. Any
purported Specified Transfer Notice that does not comply
with all of the requirements of this Article VI shall be
null and void and shall be of no force or effect.
(c) Following receipt of such Specified Transfer
Notice, Riverwood may exercise its First Refusal Right to
purchase the Specified Acreage by giving written notice
thereof (a "Specified Notice of Election") to Plum Creek as
follows:
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(i) If the Specified Price is an all-cash price,
or other price acceptable to Riverwood, such Specified
Notice of Election shall be given not later than the
date that is thirty (30) days after the date on which
Riverwood receives such Specified Transfer Notice (such
date of receipt, the "Specified Notice Date").
(ii) In the event that the Specified Price
contains terms (including such terms as a "like-kind"
exchange under Section 1031 of the Internal Revenue
Code) that Riverwood in its reasonable judgment
determines that it cannot meet, then Riverwood may,
within five (5) days of the Specified Notice Date,
propose a reasonable cash equivalent in lieu of such
terms to Plum Creek, and if Plum Creek agrees with such
proposal, such Specified Notice of Election shall be
given not later than the date that is thirty (30) days
after the date on which Plum Creek so notifies
Riverwood in writing.
(iii) If Plum Creek does not accept Riverwood's
proposal, any dispute as to the amount of such
reasonable cash equivalent shall be settled by
arbitration in accordance with the provisions of
Section 6.6, and such Specified Notice of Election
shall be given not later than the date that is thirty
(30) days after the date on which the parties shall
have been notified in writing of the final arbitration
determination of such cash equivalent.
(d) In the event that Riverwood does not give
such Specified Notice of Election to Plum Creek within the
applicable period specified in Section 6.5(c), Plum Creek
shall be free to effect the Specified Transfer of all (but
not less than all) the Specified Acreage, without further
restriction under this Section 6.5 (but subject to Section
6.9), to the proposed transferee Specified Entity within one
hundred twenty (120) days of the Specified Notice Date, at a
price equal to the Specified Price, and otherwise upon the
terms specified in the Specified Transfer Notice, any
accompanying document evidencing the Transfer Offer, and any
accompanying Contract. If Plum Creek does not consummate
such Specified Transfer within such time period or upon such
terms, such Specified Acreage shall again become and remain
subject to all of the rights of Riverwood under this Article
VI.
(e) The term "Specified Entity" shall mean any of
(x) Georgia-Pacific Corporation, International Paper
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Company, Weyerhaeuser Company, Willamette Industries, Inc.,
Boise Cascade Corporation or Stone Container Corporation,
(y) any other timber products company having an integrated
paper division consisting in whole or in part of a paper
plant within 100 miles of the West Monroe Facility, and
having assets valued in excess of the Specified Amount (as
defined below) at the time of the proposed Specified
Transfer, or (z) any successor, subsidiary or affiliate of
any Person specified in either of the foregoing clauses (x)
and (y). The term "Specified Amount" shall mean an amount
equal to $100,000,000, plus or minus, for each then elapsed
year in the Term, $100,000,000 multiplied by the percentage
increase or decrease in such year, if any, in the Consumer
Price Index for All Urban Consumers (CPI-U), U.S. City
Average, All Items (1982-84=100), as published from time to
time by the U.S. Department of Labor, Bureau of Labor
Statistics. If the referenced index (1982-1984=100) of the
CPI-U is revised, the base index will be converted to a new
base reference index in accordance with the conversion table
published by the Bureau of Labor Statistics.
Section 6.6 ARBITRATION TO DETERMINE CASH
EQUIVALENT PRICE. (a) Either party may initiate
arbitration to determine the reasonable cash equivalent of
the Specified Price (or portion thereof), if Riverwood has
proposed a cash equivalent in accordance with Section
6.5(c), and Plum Creek has not accepted such proposal within
ten (10) days after the Specified Notice Date. The party
desiring to initiate such arbitration shall give notice to
the other party of such desire (an "Arbitration Notice")
within fifteen (15) days of such Specified Notice Date.
Upon the giving of such Arbitration Notice, all other time
periods specified in Sections 6.5 and 6.7 relating to a
Specified Transfer shall be extended until the arbitration
provided for in this Section 6.6 has been completed.
(b) The reasonable cash equivalent of the
Specified Price (or portion thereof) shall be determined (i)
by an arbitrator selected by the parties, or (ii) if the
parties fail to agree on the selection of such arbitrator
within five (5) days of date of delivery of the applicable
Arbitration Notice, by a majority of a committee of three
(3) arbitrators consisting of one arbitrator chosen by Plum
Creek, one arbitrator chosen by Riverwood, and a third
chosen by the first two arbitrators, or (iii) if either
party fails to notify the other party of its choice of an
arbitrator for such committee within ten (10) days of the
date of delivery of the applicable Arbitration Notice,
solely by the arbitrator so chosen by the other party.
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(c) All arbitrators chosen hereunder shall have
at least ten (10) years' experience in the timber and paper
industries, and the arbitration shall be conducted in
accordance with the rules of the American Arbitration
Association as then in effect. Such arbitration shall be
held within the state of Louisiana at such location as the
arbitrator or arbitrators shall determine. The final
determination of the arbitrator or arbitrators shall be made
within five (5) days after the appointment thereof, and
shall be final and binding on the parties. The expenses of
the arbitration shall be borne equally by the parties.
Section 6.7 CLOSING TERMS. (a) If Riverwood
provides a Specified Notice of Election to purchase any
Specified Acreage pursuant to Section 6.5 and the related
Specified Transfer Notice was accompanied by a definitive
Contract that had been executed and delivered by Plum Creek
and the applicable Specified Entity, Riverwood and Plum
Creek shall close such purchase in substantial accordance
with the material economic terms of such Contract, subject
to Sections 6.5(c) and 6.6.
(b) If such Specified Transfer Notice was not so
accompanied by such a definitive Contract, Riverwood and
Plum Creek shall close such purchase of such Specified
Acreage in substantial accordance with the material economic
terms of the Transfer Offer, subject to Sections 6.5(c) and
6.6, and to the extent consistent therewith the following
terms and conditions. The following terms and conditions
shall also apply to the consummation of any purchase by
Riverwood of any Notice Acreage pursuant to an exercise of
any First Offer Right in respect thereof in accordance with
Section 6.3, or of any Subject Property pursuant to an
exercise of any Purchase Right in respect thereof in
accordance with Section 6.4. Plum Creek shall, and cause
any Former Affiliate to, comply with the following terms and
conditions.
(i) Riverwood shall pay one-half, and Plum Creek
(or the Former Affiliate, as applicable) shall pay
one-half, of all real estate and other similar transfer
taxes on the deed or deeds given by Plum Creek (or the
Former Affiliate, as applicable). Riverwood shall pay
the costs of recording all documents to be recorded and
all costs of examining and insuring title. Each party
shall pay its own attorney's fees. There shall be a
proration of any applicable ad valorem taxes. Each
party shall pay all other expenses of the transaction
incurred by it, including all brokers' commissions.
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(ii) Plum Creek (or the Former Affiliate, as
applicable) shall convey the property to Riverwood by
limited warranty deed, subject only to Permitted
Exceptions (as defined below). In no event shall the
property be subject to any deed to secure debt, or any
mortgage, Lien or judgment, held by a person claiming
by, through or under Plum Creek (or the Former
Affiliate, as applicable). The obligation of Plum
Creek (or the Former Affiliate, as applicable) to
convey title to any property in accordance with this
Section 6.7(b) shall not be affected by whether or not
Riverwood examined title or gives any notice to Plum
Creek with respect to title. If Riverwood notifies
Plum Creek of the existence of any objections to Plum
Creek's title other than the Permitted Exceptions, Plum
Creek shall cause such objections to be cured prior to
Closing (as defined below) or shall indemnify Riverwood
against such items; PROVIDED, HOWEVER, that Plum
Creek's obligation to cure or indemnify hereunder shall
be limited to the removal of any and all mortgages,
deeds to secure debt and similar monetary Liens
evidencing indebtedness of Plum Creek (or the Former
Affiliate). Riverwood, at its expense, may obtain
title insurance in connection with its purchase. The
term "Permitted Exceptions" means (X) any and all
Permitted Encumbrances (as defined in the Asset
Purchase Agreement) in existence immediately prior to
the consummation of the closing of the transactions
provided for in the Asset Purchase Agreement on the
date hereof, (Y) liens and encumbrances incurred by
Plum Creek (or the Former Affiliate, as applicable) in
the ordinary course of its business consistent with
Riverwood's current operation of the relevant property
or with standard industry practice in the Region and
(Z) other liens and encumbrances that in the aggregate
do not materially impair the use or value of the Notice
Acreage, Subject Property or Specified Acreage, as
applicable.
(iii) Plum Creek shall make representations and
warranties to Riverwood at the time of Riverwood's
delivery of the Notice of Election, Transfer Event
Notice of Election or Specified Notice of Election, as
applicable, and at the time of Closing, that are
similar in scope and duration to those given by
Riverwood to Plum Creek pursuant to the Asset Purchase
Agreement. Plum Creek shall make assignments to
Riverwood at the time of Closing relating to the Notice
Acreage, Subject Property or Specified Acreage, as
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applicable, that are similar in scope and effect to
those given by Riverwood to Plum Creek pursuant to the
Asset Purchase Agreement (including assignments of
related contracts and insurance proceeds).
(iv) The closing (the "Closing") of any
transaction contemplated by this Section 6.7 shall be
held on or before (x) in the case of a Specified
Transfer, the latest of (1) the date specified for
closing under the Contract, if any, (2) the date
specified for closing in the Specified Notice of
Transfer, or (3) the date that is one hundred twenty
(120) days after Riverwood delivers its Specified
Notice of Election, and (y) in the case of any other
Transfer or Transfer Event, the date that is one
hundred twenty (120) days after Riverwood delivers its
Notice of Election or Transfer Event Notice of
Election, as applicable. The exact time, place, and
date of Closing will be selected by Riverwood at least
ten (10) days prior to Closing. At Closing, Plum Creek
(or the Former Affiliate, as applicable) shall execute
and deliver to Riverwood one or more limited warranty
deeds in proper form for recording, an affidavit that
Plum Creek (or the Former Affiliate, as applicable) is
not a foreign person as defined in and in compliance
with Section 1445 of the Internal Revenue Code of 1986,
satisfactory evidence of the power and authority of
Plum Creek (or the Former Affiliate, as applicable) to
perform hereunder, and a settlement statement. Subject
only to the Permitted Exceptions, possession of the
property shall be given to Riverwood at Closing.
(c) Any purchase of property by Riverwood
pursuant to any right granted under this Article VI shall
include all necessary or appropriate rights of access to
such property.
Section 6.8 ACCESS. From the Notice Date, the
Transfer Event Notice Date or Specified Notice Date (as
applicable) until the later of (x) the date that is thirty
(30) days thereafter and (y) if a Notice of Election, a
Transfer Event Notice of Election or Specified Notice of
Election (as applicable) has been timely given, the date of
the Closing pursuant to Section 6.7, Plum Creek and its
affiliates shall allow the Buyer and its representatives
reasonable access at reasonable times to all the employees,
books, records, files, documents (including title
commitments, title policies, and surveys), assets, proper-
ties, contracts and agreements of Plum Creek or any of its
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affiliates related to the Notice Acreage, the Subject
Property or Specified Acreage (as applicable), as Riverwood
may reasonably request, and shall furnish Riverwood and its
representatives with such copies of such documents (at
Riverwood's sole cost and expense), and such other
information, concerning the Notice Acreage, the Subject
Property or Specified Acreage (as applicable), as Riverwood
may reasonably request; PROVIDED that (x) such access will
not materially interfere with the operation of the Notice
Acreage, the Subject Property or Specified Acreage (as
applicable), and (y) Plum Creek shall not be obligated to
obtain any information requiring the initiation or conduct
of sampling or analysis of soils, groundwater or other
environmental media at or from any of the Notice Acreage,
the Subject Property or Specified Acreage (as applicable).
Section 6.9 MEMORANDA OF RIGHTS; TRANSFEREES TO
ASSUME THIS AGREEMENT. (a) Plum Creek acknowledges and
agrees that one or more memoranda of the rights of Riverwood
granted in this Agreement, including the rights of Riverwood
granted in this Article VI, in the customary forms used in
the States of Louisiana and Arkansas, or consisting of this
Agreement in recordable form, or both (and including a
complete legal description of the Timberlands), may be
placed of record in all jurisdictions where any portion of
the Timberlands is located, and Plum Creek shall execute and
record each such memorandum in all jurisdictions where any
portion of the Timberlands is located prior to recording any
mortgage, deed of trust or other document of any kind.
(b) Plum Creek further agrees to cause any
transferee of all or any portion of the Timberlands or Plum
Creek's interest therein, other than a transferee in a
Permitted 50,000 Acre Transfer, to assume the liabilities
and obligations of Plum Creek under this Agreement as they
relate to the Timberlands or interest therein so transferred
and to execute and record evidence of such assumption in the
jurisdictions affected.
(c) This Agreement, Riverwood's rights hereunder
(including under this Article VI) and Plum Creek's
liabilities and obligations hereunder (including under this
Article VI) shall be a covenant that runs with the land and
shall bind all successors and assigns to or of the property
comprising all or any portion of the Timberlands or any
Replacement Property.
Section 6.10 RELEASES OF RIGHTS. (a) Riverwood
shall provide a written release of its First Offer Right and
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First Refusal Right under this Article VI for any proposed
Permitted 50,000 Acre Transfer within five (5) business days
of the date on which Riverwood receives a written request by
Plum Creek for such release, accompanied by a form of such
release in form and substance reasonably acceptable to Plum
Creek and Riverwood and in proper form for recording to Plum
Creek, and by evidence reasonably satisfactory to Riverwood
that such Transfer complies with the provisions of Sections
6.2(a) and 8.2. Such release shall also release any
memoranda of the rights of Riverwood granted in this
Agreement that shall have been recorded pursuant to Section
6.9 against the portion of the Initial 50,000 Acres that is
the subject of such Permitted 50,000 Acre Transfer.
(b) Riverwood shall provide a written release of
its First Offer Right and First Refusal Right under this
Article VI for any Permitted Land Swap Transfer within ten
(10) business days of the date on which Riverwood receives a
written request by Plum Creek for such release, accompanied
by a form of such release in form and substance reasonably
acceptable to Plum Creek and Riverwood and in proper form
for recording to Plum Creek, and by evidence reasonably
satisfactory to Riverwood that such Transfer complies with
the provisions of Sections 6.2(a) and 8.2 (including all
agreements and instruments necessary or appropriate to
comply with and carry out the requirements of the proviso to
Section 6.2(a)(iv), in form and substance satisfactory to
Riverwood in its reasonable judgment). Such release shall
also release any memoranda of the rights of Riverwood
granted in this Agreement that shall have been recorded
pursuant to Section 6.9 against the portion of the
Timberlands that is the subject of such Permitted Land Swap
Transfer.
(c) All release requests pursuant to this Section
6.10 shall be made to Riverwood in accordance with Section
8.4. All such releases shall be sent by overnight mail to
Plum Creek in accordance with Section 8.4. Plum Creek shall
pay any recording charges for recording of any such releases
but shall not be obligated to pay Riverwood any fees or
other consideration for the releases.
28
<PAGE>
ARTICLE VII
TERMINATION
Section 7.1 TERMINATION. This Agreement may be
terminated in the following manner:
(a) at any time by the mutual written agreement
of the parties;
(b) at the expiration of the Term;
(c) by either party following a material breach
by the defaulting party of any of its monetary
obligations hereunder, written notice of such breach to
the defaulting party, and the continued failure by the
defaulting party to cure such breach in all material
respects for a period of thirty (30) days, following
which the nondefaulting party will have no further
obligations hereunder;
(d) by either party at any time following a
material breach by the defaulting party of any of its
other obligations hereunder, written notice of such
breach to the defaulting party, and the continued
failure by the defaulting party to cure such breach in
all material respects for a period of ninety (90) days,
provided that if the breach is not reasonably sus-
ceptible of cure within ninety (90) days, such de-
faulting party shall have such additional time as is
necessary as long as the defaulting party initiates
cure within the ninety (90) day period and diligently
pursues completion of the cure, following which the
nondefaulting party shall have no further obligations
hereunder.
Termination shall not relieve a defaulting party of any
liability to the nondefaulting party for breach of its
obligations hereunder. The provisions of Sections 4.2, 4.5,
4.6, 4.8, 5.3, 5.4 and 7.1 and Article VIII shall survive
any termination of this Agreement.
ARTICLE VIII
MISCELLANEOUS
29
<PAGE>
Section 8.1 DEFINITIONS. (a) The words
"hereby," "herein," "hereof," "hereunder" and words of simi-
lar import refer to this Agreement as a whole and not merely
to the specific section, paragraph or clause in which such
word appears. The word "party" or "parties" means a party
or the parties to this Agreement, unless preceded by the
word "third" or unless the context shall otherwise expressly
require. All references herein to Articles, Sections,
Annexes and Exhibits shall be deemed references to Articles
and Sections of, and Annexes and Exhibits to, this Agreement
unless the context shall otherwise require. The words
"include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation," unless already
expressly followed by such phrase or the phrase "but not
limited to." The definitions given for terms in this
Section 8.1 shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. Except as otherwise
expressly provided herein, all references to "Dollars,"
"dollars" or "$" shall be deemed references to the lawful
money of the United States of America.
(b) To the extent this Agreement describes
property located in Louisiana, or rights therein, the terms
"real property," "real estate" and words of similar import
shall include immovable property; the term "personal
property" and words of similar import shall include movable
property; and the term "easements" and words of similar
import shall include servitudes.
(c) Whenever used in this Agreement, the
following terms shall have the respective meanings given to
them below, and the terms listed in Annex F shall have the
respective meanings given to them in the provisions hereof
indicated in Annex F.
"AFFILIATE" of a Person means any other Person
directly, or indirectly through one or more
intermediaries, controlling, controlled by or under
common control with the first Person. For purposes
hereof, Clayton, Dubilier & Rice Fund V Limited
Partnership, a Cayman Islands exempted limited
partnership, and Clayton, Dubilier & Rice, Inc., a
Delaware corporation, each shall be deemed to be an
affiliate of Riverwood. As used in this definition of
the term "affiliate," and elsewhere herein with respect
to any affiliate of any Person, "control" (including
the terms "controlled by" and "under common control
30
<PAGE>
with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the
management policies of a Person, whether through the
ownership of voting securities, by voting trust,
contract or similar arrangement, as trustee or
executor, or otherwise.
"PERSON" means any individual, sole proprietor-
ship, trust, estate, executor, legal representative,
unincorporated association, association, institution,
corporation, company, partnership, limited liability
company, limited liability partnership, joint venture,
government (whether national, Federal, state, county,
city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body
or department thereof) or other entity.
Section 8.2 ASSIGNMENT BY PLUM CREEK. Except as
provided in this Section 8.2, this Agreement may not be
assigned by Plum Creek in whole or in part. Notwithstanding
the foregoing, at any time during the Term, Plum Creek may
assign this Agreement (a) to any lender or lenders as
security for obligations to such lender or lenders in
respect of financing arrangements of Plum Creek or any
affiliate thereof with such lender or lenders, or (b) upon
prior written notice to Riverwood, to any Person (x) that is
and at all times remains an affiliate of Plum Creek
controlled by Plum Creek, or that merges or consolidates
with or into Plum Creek, or that acquires all or
substantially all of the assets of Plum Creek, and (y) that
assumes all liabilities and obligations of Plum Creek under
this Agreement pursuant to an instrument in form and
substance reasonably satisfactory to Riverwood. Plum Creek
shall cause any Person that merges or consolidates with or
into Plum Creek, or that acquires all or substantially all
of the assets of Plum Creek, so to assume all liabilities
and obligations of Plum Creek under this Agreement. No such
assignment or assumption pursuant to the two preceding
sentences shall in any way affect the liabilities or
obligations of Plum Creek under this Agreement, and in the
event of any such assignment or assumption, Plum Creek shall
remain fully liable for its liabilities and obligations
under this Agreement. Any purported assignment or transfer
of this Agreement in violation of this Section 8.2 shall be
void and of no force or effect.
Section 8.3 ASSIGNMENT BY RIVERWOOD. Except as
provided in this Section 8.3, this Agreement may not be
assigned by Riverwood in whole or in part. Notwithstanding
31
<PAGE>
the foregoing, at any time during the Term, Riverwood may
assign this Agreement (a) to any lender or lenders as
security for obligations to such lender or lenders in
respect of financing arrangements of Riverwood or any
affiliate thereof with such lender or lenders, or (b) upon
prior written notice to Plum Creek, to any Person (x) that
is and at all times remains an affiliate of Riverwood
controlled by Riverwood, or that merges or consolidates with
or into Riverwood, or that acquires all or substantially all
of the assets of Riverwood or the West Monroe Facility, and
(y) that assumes all liabilities and obligations of
Riverwood under this Agreement pursuant to an instrument in
form and substance reasonably satisfactory to Plum Creek.
Riverwood shall cause any Person that merges or consolidates
with or into Riverwood, or that acquires all or
substantially all of the assets of Riverwood or the West
Monroe Facility, so to assume all liabilities and
obligations of Riverwood under this Agreement. No such
assignment or assumption pursuant to the two preceding
sentences shall in any way affect the liabilities or
obligations of Riverwood under this Agreement, and in the
event of any such assignment or assumption, Riverwood shall
remain fully liable for its liabilities and obligations
under this Agreement. Any purported assignment or transfer
of this Agreement in violation of this Section 8.3 shall be
void and of no force or effect.
Section 8.4 NOTICES. All notices, requests,
demands and other communications hereunder shall be in
writing or by electronic means producing a written record
(facsimile machine, telex, telecopier or telegraph),
personally-delivered or mailed by registered or certified
United States mail, return receipt requested, first-class
postage prepaid, or by nationally-recognized overnight
courier, effective upon delivery, or one (1) day after
mailing if by overnight courier, or three (3) days after
mailing if by United States mail, addressed as follows:
If to Riverwood: Riverwood International Corporation
3350 Cumberland Circle, Suite 1400
Atlanta, Georgia 30339
Telecopy No. (770) 644-2923
Attention: Mr. Frank McCauley
with a copy to: Riverwood International Corporation
3350 Cumberland Circle, Suite 1400
Atlanta, Georgia 30339
Telecopy No. (770) 644-2929
Attention: Bill H. Chastain, Esq.
32
<PAGE>
with a copy to: Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy No. (212) 909-6836
Attention: David Brittenham, Esq.
and prior to Closing provide a copy to:
Riverwood International Corporation
1000 Jonesboro Road
West Monroe, Louisiana 71292
Telecopy No. (318) 362-2272
Attention: Mr. C. Steven Clark
If to Plum Creek: Plum Creek Timber Company, L.P.
500-12th Avenue W.
P.O. Box 1990
Columbia Falls, Montana 59912
Telecopy No. (406) 892-6177
Attention: Charles Grenier/
Lindsay Crawford
with a copy to: Plum Creek Timber Company, L.P.
999 Third Avenue, Suite 2300
Seattle, Washington 98104-4096
Telecopy No. (206) 467-3799
Attention: James A. Kraft, Esq.
with a copy to: Cairncross & Hempelmann, P.S.
701 Fifth Avenue, Suite 7000
Seattle, Washington 98104
Telecopy No. (206) 587-2308
Attention: Daniel C. Vaughn, Esq.
Any party may change its address or the addressee specified
for notices by designating a new address or addressee by
notice in accordance with this Section 8.4.
Section 8.5 AMENDMENT; WAIVER. No amendment,
modification or discharge of Agreement, and no waiver here-
under, shall be valid or binding unless set forth in writing
and duly executed by the party against whom enforcement of
the amendment, modification, discharge or waiver is sought
Any such waiver shall constitute a waiver only with respect
to the specific matter described in such writing and shall
in no way impair the rights of the party granting such
waiver in any other respect or at any other time. The
failure of either party to insist in any one or more in-
stances upon strict performance of any of the provisions of
33
<PAGE>
this Agreement or take advantage of any of its rights here-
under shall not be construed as a waiver of any such pro-
visions or the relinquishment of any such rights, but the
same shall continue and remain in full force and effect.
Section 8.6 ENTIRE AGREEMENT. This instrument,
together with the Asset Purchase Agreement, constitutes the
entire agreement between the parties relating to the subject
matter hereof and there are no agreements, understandings,
conditions, representations, or warranties not expressly set
forth herein.
Section 8.7 SOVEREIGN LAW. This Agreement shall
be governed by and construed in accordance with the laws of
the State of Louisiana, without reference to the conflicts
of laws or choice of law provisions thereof, except to the
extent that the laws of the State of Arkansas or the State
of Texas may govern the rights of the parties with respect
to real estate located therein. Notwithstanding the
foregoing, any arbitration pursuant to Section 2.4, 6.4(d)
or 6.6 shall be governed by the Federal Arbitration Act, 9
U.S.C. Section1 ET SEQ. and any determination in any such
arbitration shall be an arbitration award enforceable in
accordance with such Act.
Section 8.8 BINDING AGREEMENT. Subject to the
limitations of Sections 8.2 and 8.3, this Agreement shall
bind and inure to the benefit of the parties and their
respective successors and assigns, and to the benefit of
each Person entitled to indemnification under Section 4.6 or
4.8.
Section 8.9 HEADINGS. The section and other
headings in this Agreement are inserted solely as a matter
of convenience and for reference, are not a part of this
Agreement, and shall not be deemed to affect the meaning or
interpretation of this Agreement.
Section 8.10 COUNTERPARTS. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original, and all of which together shall con-
stitute one and the same instrument.
Section 8.11 ANNEXES AND EXHIBITS. All annexes
and exhibits to this Agreement referenced herein are
incorporated herein by reference.
Section 8.12 SEVERABILITY, ETC. (a) Any term or
provision of this Agreement that is invalid or unenforceable
34
<PAGE>
in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or
unenforceability, without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or
affecting the validity or unenforceability of any of the
terms or provisions of this Agreement in any other
jurisdiction. If any term or provision of this Agreement is
so broad as to be invalid or unenforceable, the provision
shall be interpreted to be only so broad as is valid or
enforceable. Subject to the foregoing provisions of this
Section 8.12, if any term or provision of this Agreement is
invalid or unenforceable for any reason, such circumstances
shall not have the effect of rendering such term or
provision invalid or unenforceable in any other case or
circumstance.
(b) The parties acknowledge and agree that (i)
the rights granted to Riverwood under Article VI are granted
in connection with a contract that gives rise to obligations
of continuous or periodic performance, and are granted only
for so long a period as required for the performance of
those obligations, and (ii) the ten year limitation provided
for in Article 2628 of the Civil Code of the State of
Louisiana shall not apply to the rights granted to Riverwood
under Article VI.
(c) If, under applicable law at any time, any
right granted to Riverwood under any provision of Article VI
would (absent the provisions of this Section 8.12(c)) be
void or unenforceable (under the so-called "Rule against
Perpetuities" or any comparable rule of law, statute or
constitutional provision) by reason of the fact that, under
the other terms and conditions of this Agreement, such right
will continue in effect beyond, or might be exercised at a
time after the expiration of, a fixed period of years in
excess of 21 years (or such other number of years as may be
prescribed by such rule of law, statute or constitutional
provision) after the date hereof, then, notwithstanding any
other provision of this Agreement to the contrary, such
right shall not continue in effect beyond, and may not be
exercised at any time after, the earlier of (x) the date
that is 21 years after the date of death of the last to
survive of the descendants of Joseph P. Kennedy who are
living on the date hereof and (y) such earlier date after
which such right cannot in any lawful manner whatsoever be
validly continued in effect or exercised. The foregoing
provisions of this Section 8.12(c) relating to rights of
Riverwood are not intended to extend the duration of any
such right, but are intended to impose a limit on the
35
<PAGE>
duration thereof, or time within which any such right may be
exercised, to the extent (and only to the extent) necessary
to avoid such right being held void or unenforceable.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have exe-
cuted this Agreement as of the day and year first above
written.
PLUM CREEK TIMBER COMPANY, L.P.
By: Plum Creek Management
Company, L.P.,
its General Partner
By: ___________________________________
Name:
Title:
RIVERWOOD INTERNATIONAL CORPORATION
By: ___________________________________
Name:
Title:
37
<PAGE>
STATE OF _______________________________
PARISH (COUNTY) OF ______________________
On this _____ day of ___________, 1996, before me, the
undersigned authority in and for the above stated
jurisdiction, personally appeared __________________, the
__________________ of PLUM CREEK MANAGEMENT COMPANY, L.P., a
Delaware limited partnership, which is the general partner
of PLUM CREEK TIMBER COMPANY, L.P., a Delaware limited
partnership, to me personally known, who, after being by me
duly sworn, declared that he executed the above and
foregoing instrument for and on behalf of PLUM CREEK
MANAGEMENT COMPANY, L.P., as the general partner of PLUM
CREEK TIMBER COMPANY, L.P., for the purposes, intents and
consideration therein contained, as the free act and deed of
each said limited partnership.
In Witness Whereof, I have hereunto signed this
acknowledgment with the said appearer and the two
undersigned competent witnesses at _______________________,
on the date set forth above, after reading of the whole.
PLUM CREEK TIMBER COMPANY, L.P.
By: Plum Creek Management
WITNESSES: Company, L.P.,
its General Partner
_______________________ By: _____________________________
APPEARER
_______________________ _____________________________
Notary Public
Printed Name: ___________________
My Commission Expires: __________
38
<PAGE>
STATE OF ____________________________
PARISH (COUNTY) OF __________________
On this _____ day of ___________, 1996, before me, the
undersigned authority in and for the above stated
jurisdiction, personally appeared __________________, the
__________________ of RIVERWOOD INTERNATIONAL CORPORATION, a
Delaware corporation, to me personally known, who, after
being by me duly sworn, declared that he executed the above
and foregoing instrument for and on behalf of RIVERWOOD
INTERNATIONAL CORPORATION, for the purposes, intents and
consideration therein contained, as the free act and deed of
said corporation.
In Witness Whereof, I have hereunto signed this
acknowledgment with the said appearer and the two
undersigned competent witnesses at _______________________,
on the date set forth above, after reading of the whole.
WITNESSES: RIVERWOOD INTERNATIONAL
CORPORATION
_______________________ By: _____________________________
APPEARER
_______________________ ______________________________
Notary Public
Printed Name: ___________________
My Commission Expires: __________
39
<PAGE>
ANNEX A
This is Annex A to the Wood Products Supply Agreement,
dated as of __________, 1996 (the "Agreement"), between Plum
Creek Timber Company, L.P. and Riverwood International
Corporation. Capitalized terms used in this Annex A and not
defined herein are used as defined in the Agreement.
PRODUCT TYPE QUANTITY PER YEAR PREFERRED QUANTITY
Pine Pulpwood 1 280,000 cords 200,000 cords
Chips 2 300,000 tons 300,000 tons
Hardwood Pulpwood: 3
1997 through 2000 67,000 cords 4 67,000 cords 4
2001 through 2005 20,000 cords 4 20,000 cords 4
2006 through 2016 15,000 cords 4 15,000 cords 4
2017 and thereafter
(if Term extended
under Section 3.2) 10,000 cords 4 10,000 cords 4
Quantities of Pine Pulpwood and Chips for the portion of 1996 from the date
of the Agreement through December 31, 1996 (such portion of 1996, the
"Post-Closing 1996 Period") shall be equal to a prorated portion of the
annual quantities set forth in the above table. Quantity of Hardwood
Pulpwood for the Post-Closing 1996 Period shall equal a prorated portion of
67,000 cords. The prorated portion of any such quantity shall be calculated
by (1) multiplying such quantity by the number of days from but not including
the date of the Agreement to and including December 31, 1996 and (2) dividing
the product thus obtained by 365.
________________
1. Each cord of Pine Pulpwood to weigh not less than 5,200 pounds.
2. Each ton of Chips to weigh not less than 2,000 pounds.
3. Each cord of Hardwood Pulpwood to weigh not less than 5,700 pounds.
4. Or, if less, the amount of actual annual production from the Timberlands.
<PAGE>
ANNEX B
PINE AND HARDWOOD PULPWOOD QUALITY SPECIFICATIONS
RIVERWOOD INTERNATIONAL CORPORATION
LONG PULPWOOD SPECIFICATIONS
DIAMETER WEST MONROE FARMERVILLE WILD SPUR MARTIN CHIPMILL
PINE
MINIMUM 3" O.B. 3" O.B. N/A 3" O.B.
MAXIMUM 28" O.B. 28" O.B. N/A 22" O.B.
HARDWOOD
MINIMUM 3" O.B. 3" O.B. 3" O.B. 3" O.B.
MAXIMUM 26" O.B. 26" O.B. 26" O.B. 22" O.B.
LENGTH -
PINE & HARDWOOD
MINIMUM 12' 16' 16' 12'
MAXIMUM 55' 55' 55' 65'
CONDITION - APPLIES TO ALL DELIVERY POINTS
1. UNACCEPTABLE - Wood which is unusable in our paper making process.
DISPOSITION
TRUCK RAIL
A) BURNED REFUSED N.A.
B) METAL REFUSED N.A.
C) SAWMILL CANTS/SLABS REFUSED N.A.
D) OVERSIZE REFUSED N.A.
<PAGE>
2. UNDESIRABLE - Wood which is usable in our paper making process but
produces below standard products.
DISPOSITION
TRUCK RAIL
A) UNDERSIZE PENALIZED N.A.
B) ROTTEN PENALIZED N.A.
C) CROOKED PENALIZED N.A.
D) HOLLOW PENALIZED N.A.
E) POORLY TRIMMED PENALIZED N.A.
F) BROKEN PENALIZED N.A.
G) FORKED PENALIZED N.A.
SPECIES
- - CYPRESS AND CEDAR TO BE MIXED WITH PINE ONLY, NOT TO EXCEED 25% OF LOAD.
- - WOODS RUN HARDWOOD. HICKORY AND WILLOW NOT TO EXCEED 25% OF LOAD.
- - LOADING - APPLIES TO ALL DELIVERY POINTS
- - STEMS MUST BE LOADED BUTTS FORWARD. BUTTS INDEXED AT ALL LOCATIONS EXCEPT
WEST MONROE.
- - SHORT PIECES MUST NOT BE PLACED END TO END WITHIN THE LOAD. THIS CREATES A
SAFETY HAZARD DURING UNLOADING.
- - LOADS MUST NOT CONTAIN SOIL, LEAVES, VINES OR OTHER DEBRIS.
- - TRAILER COUPLING POLES MUST BE DESIGNED AND ARRANGED SO THAT CLEARANCE OF AT
LEAST 10 INCHES EXISTS BETWEEN THE COUPLING POLE AND THE WOOD - RIVERWOOD
INTERNATIONAL WILL NOT BE RESPONSIBLE FOR TRUCK DAMAGE CAUSED BY IMPROPER
LOADING.
2
<PAGE>
PINE AND HARDWOOD PULPWOOD QUALITY SPECIFICATIONS
RIVERWOOD INTERNATIONAL CORPORATION
SHORT PULPWOOD SPECIFICATIONS
DIAMETER TRUCK RAIL
PINE
MINIMUM 3" O.B. 3" O.B.
MAXIMUM 28" O.B. 28" O.B.
HARDWOOD
MINIMUM 3" O.B. 3" O.B.
MAXIMUM 26" O.B. 26" O.B.
LENGTH -
PINE & HARDWOOD
MINIMUM 2' 4'
MAXIMUM 12' 5.5'
CONDITION - APPLIES TO ALL DELIVERY POINTS
1. UNACCEPTABLE - Wood which is unusable in our paper making process.
DISPOSITION
TRUCK RAIL
A) BURNED REFUSED REFUSED
B) METAL REFUSED REFUSED
C) SAWMILL CANTS/SLABS REFUSED REFUSED
D) OVERSIZE REFUSED PENALIZED
3
<PAGE>
2. UNDESIRABLE - Wood which is usable in our paper making process but
produces below standard products.
DISPOSITION
TRUCK RAIL
A) UNDERSIZE PENALIZED PENALIZED
B) ROTTEN PENALIZED PENALIZED
C) CROOKED PENALIZED PENALIZED
D) HOLLOW PENALIZED PENALIZED
E) POORLY TRIMMED PENALIZED PENALIZED
F) BROKEN PENALIZED PENALIZED
G) FORKED PENALIZED PENALIZED
LOADING
- - LOADS MUST NOT CONTAIN SOIL, LEAVES, VINES OR OTHER DEBRIS.
- - WOOD MUST BE LOADED IN A NEAT AND SAFE MANNER - RIVERWOOD INTERNATIONAL
WILL NOT BE RESPONSIBLE FOR TRUCK DAMAGE CAUSED BY IMPROPER LOADING.
SPECIES
- - CYPRESS AND CEDAR TO BE MIXED WITH PINE ONLY, NOT TO EXCEED 25% OF LOAD.
- - WOODS RUN HARDWOOD. HICKORY AND WILLOW NOT TO EXCEED 25% OF LOAD.
4
<PAGE>
PINE AND HARDWOOD PULPWOOD QUALITY SPECIFICATIONS
DEFINITIONS/EXPLANATIONS
BROKEN: Normally occurs when tops snap during
felling, skidding and when using delimbing gates. Ends must
be cut square to bole.
BURNED: Charred wood; commonly found on skinned
trees. Burned bark is acceptable.
CROOKED: The amount of the crook or sweep is measured
from the two straight line sides of the bole. It cannot
exceed the maximum size limitations within a twelve foot
section of the entire bole/stick.
FORKED: Occurs when the bole divides into two or
more new boles.
HOLLOW: The diameter of the hollow or doty area may
not exceed the sum of the two sides of solid wood.
METAL: Wire, nails, chain, spikes, etc.
O.B.: Outside bark.
OVERSIZE: The maximum diameter outside bark -
including knots, flutes, crook and sweep.
POORLY TRIMMED: All limbs must be trimmed to within
three inches of the bole.
ROTTEN: Evidence of decay such as sawyer holes,
discoloration, saw pull of fiber, wood snaps like a pencil.
Loss of bark and blue stain are acceptable if no other
defects are present. If the wood is not usable for lumber,
veneer, ties, pallets, etc., it is not usable for pulp.
SAWMILL
CANTS/SLABS: Logs or boards partially sawed at a
sawmill.
UNDERSIZE: The minimum diameter measured outside bark.
5
<PAGE>
ANNEX C
CHIP QUALITY SPECIFICATIONS
RIVERWOOD INTERNATIONAL CORPORATION
CHIP SPECIFICATIONS
(Percent by Weight)
<TABLE>
<CAPTION>
Pine Chips D-Hardwood Chips Semi-Chem Chips
Fraction Target UCL LCL Target UCL LCL Target UCL LCL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Oversize 1.5 5.4 0.0 1.6 5.8 0.0 2.0 7.8 0.0
Overthick 10.4 24.3 0.0 9.2 20.9 0.0 8.1 17.4 0.0
Pinchips 5.0 11.7 0.0 3.7 8.9 0.0 6.1 12.8 0.0
Fines 0.2 1.3 0.0 0.3 1.5 0.0 0.6 2.4 0.0
Bark 0.3 1.2 0.0 0.8 3.9 0.0 2.3 7.7 0.0
Density 20.1 25.3 14.9 21.5 25.5 17.4 21.0 25.6 16.5
Moisture 49.8 64.3 35.4 44.5 58.0 30.9 43.2 54.5 31.9
</TABLE>
UCL = Upper Control Limit
LCL = Lower Control Limit
DEFINITIONS
Oversize = chips retained on a 45mm (1 3/4" nominal) round hole.
Overthick = chips over 8mm thick.
Pinchips = chips passing a 7mm (1/4" nominal) round hole, but not a 3mm
(1/8" nominal) round hole.
Fines = chips passing a 3mm round hole.
In addition to the above requirements, chips shall be free of contamination
such as dirt, plastic, metal, rocks, etc.
<PAGE>
ANNEX D
SUBJECT: CHIP SAMPLING PROCEDURES
1.0 PURPOSE:
This procedure gives instruction for sampling chips in the
manner least likely to introduce error into the chip sample test
results.
2.0 APPLICATION:
These methods of sampling are used by the
Chip Analyst in his routine sampling of chips at the unloaders and at
the West Monroe Woodmill. The samples are analyzed and the results
reported for statistical process control.
3.0 ASSOCIATED MATERIALS:
Weekly/Monthly Pulpwood Chip Analysis Report (QB 1.7.3).
4.0 PROCEDURE:
Chips are sampled by the Chip Analyst normally Monday through
Friday each week. The number of samples taken from each supplier per
week is based upon the annual amount budgeted to be received from that
supplier. These sample quotas are guidelines only and have flexibility
so that unbudgeted chips are sampled as the need arises.
Chips sampled from truck vans are taken off the surface of a
conveyor belt at the unloader except in the case of unloader No. 6
where the chips are sampled as they free-fall from the chip van. Care
must be taken when
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sampling from the belt to make sure that the section of the belt is
cleaned. On some occasions rail chips are sampled from the tops of
the cars after digging down approximately one foot. This is done when
the timing of unloading makes sampling them during unloading impractical.
The samples are collected into bags and tested the same day
unless the samples are taken at night. In the case of sampling at
night, the samples are tested the next day.
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SUBJECT: CHIP TESTING PROCEDURES
1.0 PURPOSE:
This procedure gives instruction on how to test the chip
samples consistently that have been collected for statistical process
control.
2.0 APPLICATION:
The Chip Analyst tests the chips for size, moisture, bark
content and bulk density. These results are used for statistical
process control to maintain and improve upon the quality of the
chips.
3.0 DEFINITIONS:
1. Oversize chips are those retained on a screen having round
holes 45 millimeters in diameter.
2. Overthick chips are those passing the oversize screen but are
retained on a screen having bars 8 millimeters apart.
3. Acceptable chips are those passing the overthick screen but are
retained on a screen having round holes 7 millimeters in diameter.
4. Pin chips are those passing the acceptable screen but are retained
on a screen having round holes 3 millimeters in diameter.
5. Fines are the particles passing the pin chips screen.
3
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4.0 ASSOCIATED MATERIALS:
Weekly/Monthly Pulpwood Chip Analysis Report (QB 1.7.3).
5.0 PROCEDURE:
a. Moisture Content
A small canister of chips from each sample is captured prior
to any other testing. Each moisture sample is promptly capped and
stored until 4:00 p.m. each day. The samples are then weighed, placed
in the oven and heated overnight at 107 degrees Celsius. The samples
are heated for 15 hours and cooled approximately 2 hours before
weighing the dry weight. Green weights and dry weights are entered
into the computer where moisture is calculated on the chip/fuel
analysis spreadsheet.
b. Bulk Density.
Bulk density is measured to give an indication of the amount of
fiber content per unit volume of chips. It must be kept in mind
however that moisture content greatly affects the bulk density
readings. The resulting values may not be sufficient for stand alone
information, but are good for the comparison of one chip type to
another assuming the moisture contents are similar.
4
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The Chip sample to be tested is first poured into a large graduated
cylinder marked on the inside in 0.05 cubic foot increments. The
cylinder is tilted in three directions to level the chips before
reading the volume. The sample size, usually about 0.25 cubic feet, is
recorded on the computer spreadsheet. The bulk density is calculated
internally on the spreadsheet and reported in pounds per cubic foot.
c. Bark Content
The sample is poured from the bulk density cylinder into a
rectangular pan where bark is separated by hand and weighed on a
digital balance to the nearest gram. The weight is entered on the
computer. Bark content is calculated automatically when the remainder
of the sample weight is entered from the Gradex results print-out.
d. Chip Size Distribution
The remainder of the chip sample after bark has been removed
is placed in the Gradex testing machine. The supplier identification
number is entered on the machine and the sample is automatically
tested. The Gradex produces a print-out of the test results after
about ten minutes of testing. Those test results are entered on the
computer spreadsheet and the percentages
5
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are recalculated taking the weight of the bark into account. In this
fashion all the fractions, oversize, overthick, pin chips, fines, bark
and accepts, add up to 100%. At the end of the day the spreadsheet is
saved on diskette. The following day (on Monday for Friday's data) the
dry moisture sample weight is added to complete the spreadsheet. Each
day of analyses is saved in a separate file. The file is named by the
letter "D" plus the six digit date.
At the beginning of each week the Quality Assurance/Semi-Chem
Procurement Supervisor uses the data from the analyses of the previous
week to generate the Weekly Pulpwood Chip Analysis Report. The weekly
reports are combined to produce a monthly report.
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SUBJECT: NONCONFORMING CHIPS
1.0 PURPOSE:
This procedure gives instruction for what to do when chips do not
meet specifications as outlined in QB 1.15.
2.0 APPLICATION:
This procedure applies to the Chip Analyst, the Quality
Assurance/Semi-Chem Procurement Supervisor and the Chip Procurement
Superintendent. The procedure regards the results of the chip
analysis.
3.0 PROCEDURE:
When a chip sample has any fraction that is outside the control
limits of the specifications, the Chip Analyst will notify one of the
procurement superintendents or the Quality Assurance Supervisor. That
person will in turn notify the supplier immediately. The supplier must be
requalified before chips can be received from him again.
Requalification involves the following steps:
IX If more chips from the supplier are already en route they will be
sampled and tested before unloading. Two consecutive loads must meet
specifications for a supplier to become requalified.
X In cases where it may be the following day or later before more
chips are received from that supplier,
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the supplier must notify Wood Procurement before shipping any more
chips. In this case the supplier can be requalified by testing at
the site of manufacture with the mobile chip lab or by sending loads
to the mill that will be tested before unloading as mentioned above.
When requalifying through tests run by the mobile chip lab, three
consecutive samples must meet specifications for a supplier to become
requalified.
XI The results of nonconforming samples must be recorded along with
corrective action on a Report of Nonconforming Chip Quality
(QB 1.7.6). Data from samples which are rejected are not stored with
the chip quality data since those samples did not enter the
system. However, the sample results are recorded on the
above mentioned form.
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ANNEX E
RIVERWOOD INTERNATIONAL CORPORATION Effective
PULPWOOD DEDUCT CODES AND PENALTIES 2/21/94
PIECES ALLOWED PENALTY PER STICK OF WOOD
-------------- ------------------------------
TRUCK TRUCK RAIL
CONDITION CODE TRUCK RAIL LONGWOOD SHORTWOOD SHORTWOOD
----------------------------------------------------------------------
BURNED NONE 0 0 REFUSED REFUSED REFUSED
METAL NONE 0 0 REFUSED REFUSED REFUSED
SAWMILL CANTS NONE 0 0 REFUSED REFUSED REFUSED
OVERSIZED 9 0 0 REFUSED REFUSED $50.00
---------------------------------------------------------------------
UNDERSIZED 1 5 15 $1.00 $1.00 $1.00
---------------------------------------------------------------------
ROTTEN 2 0 0 $4.00 $2.00 $2.00
---------------------------------------------------------------------
HOLLOW 4 3 10 $3.00 $2.00 $2.00
---------------------------------------------------------------------
POORLY TRIMMED 5 0 0 $2.00 $1.00 $1.00
---------------------------------------------------------------------
BROKEN 6 3 10 $1.00 $1.00 $1.00
---------------------------------------------------------------------
FORKED 7 0 0 $2.00 $1.00 $1.00
---------------------------------------------------------------------
Oversize code is used only at West Monroe when scaling Railwood.
<PAGE>
ANNEX F
DEFINITIONS
This is Annex F to the Wood Products Supply Agreement, dated as of ______,
1996 (the "Agreement"), between Plum Creek Timber Company, L.P. and
Riverwood International Corporation. Whenever used in the Agreement,
the following terms shall have the respective meanings given to them
in the provisions thereof indicated below:
"AFPA" shall have the meaning provided in Section 4.4(b).
"AFFECTED PARTY" shall have the meaning provided in Section 1.7(a).
"AGREEMENT" shall have the meaning provided in the first paragraph
of the Agreement.
"ANNUAL PLAN" shall have the meaning provided in Section 1.6(a).
"ARBITRATION NOTICE" shall have the meaning provided in Section 6.6(a).
"ASSET PURCHASE AGREEMENT" shall have the meaning provided in the Recitals
to the Agreement.
"CHIP QUALITY SPECIFICATIONS" shall have the meaning provided in
Section 1.2.
"CHIPS" shall have the meaning provided in the Recitals to the Agreement.
"CLOSING" shall have the meaning provided in Section 6.7(b).
"CONTRACT" shall have the meaning provided in Section 6.5(b).
"CUMULATIVE QUARTERLY QUANTITY" shall have the meaning provided in
Section 1.6(b).
"DELIVERY COST" shall have the meaning provided in Section 2.1(c).
"DIVISION" shall have the meaning provided in the Recitals to the Agreement.
<PAGE>
"FACILITIES" shall have the meaning provided in Section 2.2.
"FIRST OFFER RIGHT" shall have the meaning provided in Section 6.3(a).
"FIRST REFUSAL RIGHT" shall have the meaning provided in Section 6.5(a).
"FORCE MAJEURE" shall have the meaning provided in Section 1.7(a).
"FORCE MAJEURE PERIOD" shall have the meaning provided in Section 1.7(d).
"FORMER AFFILIATE" shall have the meaning provided in Section 6.4(a).
"HARDWOOD PULPWOOD" shall have the meaning provided in the Recitals
to the Agreement.
"HUTTIG FACILITY" shall have the meaning provided in the Recitals to
the Agreement.
"INITIAL 50,000 ACRES" shall have the meaning provided in Section 6.2(a).
"INITIAL PERIOD" shall have the meaning provided in Section 6.2(a).
"INITIAL TERM" shall have the meaning provided in Section 3.1.
"JOYCE FACILITY" shall have the meaning provided in the Recitals
to the Agreement.
"LIENS" shall have the meaning provided in Section 4.2(b).
"LOSSES" shall have the meaning provided in Section 4.2(b).
"NEW RIVER" shall have the meaning provided in the Recitals to the
Agreement.
"NON-AFFECTED PARTY" shall have the meaning provided in Section 1.7(a).
3
<PAGE>
"NOTICE ACREAGE" shall have the meaning provided in Section 6.3(b).
"NOTICE DATE" shall have the meaning provided in Section 6.3(c).
"NOTICE OF ELECTION" shall have the meaning provided in Section 6.3(c).
"NOTICE PRICE" shall have the meaning provided in Section 6.3(b).
"OTHER FACILITIES" shall have the meaning provided in Section 2.2.
"PERMITTED CONTROLLED AFFILIATE TRANSFER" shall have the meaning provided
in Section 6.2(c).
"PERMITTED EXCEPTIONS" shall have the meaning provided in Section 6.7(b).
"PERMITTED 50,000 ACRE TRANSFER" shall have the meaning provided in
Section 6.2(b).
"PERMITTED TRANSFER" shall have the meaning provided in Section 6.2(a).
"PINE PULPWOOD" shall have the meaning provided in the Recitals to
the Agreement.
"PLUM CREEK" shall have the meaning provided in paragraph one to the
Agreement.
"PLUM CREEK FIRM" shall have the meaning provided in Section 6.4(d).
"PREFERRED QUANTITIES" shall have the meaning provided in Section 1.7(b).
"PRICE PERIOD" shall have the meaning provided in Section 2.1(a).
"PRODUCT SPECIFICATIONS" shall have the meaning provided in Section 1.2.
"PRODUCTS" shall have the meaning provided in the Recitals to the Agreement.
3
<PAGE>
"PULPWOOD" shall have the meaning provided in the Recitals to the Agreement.
"PULPWOOD QUALITY SPECIFICATIONS" shall have the meaning provided in
Section 1.1.
"PURCHASE RIGHT" shall have the meaning provided in Section 6.4(a).
"REDUCTION AMOUNT" shall have the meaning provided in Section 1.7(e).
"REPLACEMENT PROPERTY" shall have the meaning provided in Section 6.2(a).
"REGION" shall have the meaning provided in Section 2.1(c).
"RIVERWOOD" shall have the meaning provided in paragraph one of the
Agreement.
"RIVERWOOD FIRM" shall have the meaning provided in Section 6.4(d).
"SPECIFIED ACREAGE" shall have the meaning provided in Section 6.5(b).
"SPECIFIED AMOUNT" shall have the meaning provided in Section 6.5(e).
"SPECIFIED ENTITY" shall have the meaning provided in Section 6.5(e).
"SPECIFIED NOTICE DATE" shall have the meaning provided in Section 6.5(c).
"SPECIFIED NOTICE OF ELECTION" shall have the meaning provided in
Section 6.5(c).
"SPECIFIED PRICE" shall have the meaning provided in Section 6.5(b).
"SPECIFIED TRANSFER" shall have the meaning provided in Section 6.5(b).
"SPECIFIED TRANSFER NOTICE" shall have the meaning provided in
Section 6.5(b).
4
<PAGE>
"STUMPAGE PRICE" shall have the meaning provided in Section 2.1(c).
"SUBJECT PROPERTY" shall have the meaning provided in Section 6.4(c).
"TERM" shall have the meaning provided in Section 3.2.
"TEST PROCEDURES" shall have the meaning provided in Section 2.5(a).
"THIRD FIRM" shall have the meaning provided inS Section 6.4(d).
"TIMBERLANDS" shall have the meaning provided in the Recitals to the
Agreement.
"TRANSFER" shall have the meaning provided in Section 6.1.
"TRANSFER EVENT" shall have the meaning provided in Section 6.4(a).
"TRANSFER EVENT NOTICE" shall have the meaning provided in Section 6.4(b).
"TRANSFER EVENT NOTICE DATE" shall have the meaning provided in
Section 6.4(d).
"TRANSFER EVENT NOTICE OF ELECTION" shall have the meaning provided in
Section 6.4(c).
"TRANSFER NOTICE" shall have the meaning provided in Section 6.3(b).
"TRANSFER OFFER" shall have the meaning provided in Section 6.5(b).
"WEST MONROE FACILITY" shall have the meaning provided in the Recitals
to the Agreement.
"YEARLY QUANTITY" shall have the meaning provided in Section 1.6(b).
<PAGE>
Omitted Schedules and Exhibits to the Asset Purchase
Agreement, dated as of August 6, 1996, by and among
Plum Creek Timber Company, L.P., Riverwood
International Corporation and New River Timber, LLC
SCHEDULES
Schedule 1 Timber Deeds
Schedule 2 Timberland Leases
Schedule 3 Owned Timberlands
Schedule 4 Huttig Facility
Schedule 5 Joyce Facility
Schedule 6 Other Facilities
Schedule 7 Equipment
Schedule 8 Motor Vehicles
Schedule 9 Excluded Properties and Assets
Schedule 10 Inventory Count Procedure
EXHIBITS
Exhibit B Special Warranty Deed - Arkansas Form
Exhibit C Act of Transfer and Conveyance with Warranty
Against Grantor's Acts - Louisiana Form
Exhibit D Special Warranty Deed - Texas Form
Exhibit E Assignment and Assumption of Timberland Leases,
Timber Deeds and Other Interests in Real
Property - Arkansas Form
Exhibit F Assignment and Assumption of Timberland Leases,
Timber Deeds and Other Interests in Real
Property - Louisiana Form
Exhibit G Form of General Assignment and Bill of Sale
Exhibit H Form of General Assignment and Bill of Sale
Exhibit I Form of Assumption Agreement and Undertaking
Exhibit J-1 Opinion of Debevoise & Plimpton, Special
Counsel to Sellers
Exhibit J-2 Opinion of Special Louisiana Counsel to Sellers
Exhibit J-3 Opinion of Special Arkansas Counsel to Sellers
Exhibit K-1 Opinion of General Counsel to Buyer
Exhibit K-2 Opinion of Special Louisiana Counsel to Buyer
Exhibit K-3 Opinion of Special Arkansas Counsel to Buyer
In lieu of filing these schedules and exhibits to
the Asset Purchase Agreement, the Registrant agrees to
furnish supplementally a copy of any such omitted schedule
or exhibit to the Securities and Exchange Commission upon
request.
<PAGE>
EXHIBIT 99
<PAGE>
NEWS RELEASE
Investor Contact: Brad Ankerholz
(770) 644-3289
Media Contact: Jonna Manes
(770) 644-3014
RIVERWOOD INTERNATIONAL AGREES TO SELL
U.S. TIMBERLANDS/WOOD PRODUCTS OPERATIONS
ATLANTA, Ga. (August 7, 1996)--Riverwood International
Corporation today announced that it has signed a definitive
agreement to sell the assets of its U.S. Timberlands/Wood
Products business unit to Plum Creek Timber Company, L.P.
(NYSE:PCL), based in Seattle, Washington. The purchase
price is $540 million plus a payment for the value of
transferred inventory. The assets to be sold include
approximately 529,000 acres of owned timberlands and
approximately 9,000 acres of leased timberlands located
principally in Louisiana and Arkansas, a sawmill and a
plywood plant located in Joyce, Louisiana, a sawmill located
in Huttig, Arkansas, and a seedling nursery in Texas. The
U.S. Timberlands/Wood Products business unit employs
approximately 700 employees, nearly all of whom are expected
to be offered comparable employment with Plum Creek.
These timberlands and wood products operations
currently provide a significant portion of the wood fiber
requirements for Riverwood's paperboard mill in West Monroe,
Louisiana. As part of the terms of the transaction, Plum
<PAGE>
Creek and Riverwood will enter into a long-term supply
agreement, under which Riverwood will purchase, at market-based
prices, a majority of the West Monroe facility's pine
pulpwood and residual chip requirements, as well as a
portion of its needs for hardwood pulpwood. The supply
agreement will initially run for a 20-year term, with a
renewal option for 10 years. The supply agreement will
contain certain protections in the event of certain future
timberland sales.
The transaction will not be subject to a financing or
title review condition. The transaction will be subject to
approval by Riverwood's senior secured lenders. Plum Creek
will assume certain specified preclosing liabilities. The
acquisition agreement will also contain other customary
representations, covenants, conditions and indemnities. The
transaction is expected to close by the end of the year.
The net proceeds from the sale of these assets will be used
to reduce Riverwood's debt or will be reinvested in its
business.
Plum Creek is one of the largest private forestland
owners in the Pacific Northwest and in the United States
with approximately 2 million acres of timberland and
approximately 10.1 billion board feet of softwood timber
inventory. Riverwood International Corporation is a global
<PAGE>
paperboard, packaging and packaging machinery company
headquartered in Atlanta, Ga, with total assets of
approximately $3.2 billion.
# # #
