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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 15, 1997
CROWN PACIFIC PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-24976
Delaware 93-1161833
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
121 SW Morrison Street, Suite 1500, Portland, Oregon 97204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 503-274-2300
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CROWN PACIFIC PARTNERS, L.P.
FORM 8-K
INDEX
ITEM DESCRIPTION PAGE
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Item 2. Acquisition or Disposition of Assets 2
Item 7. Financial Statements and Exhibits 3
Signatures 4
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
(a) On October 15, 1997, Crown Pacific Partners, L.P. (the "Partnership")
through its 99% owned subsidiary, Crown Pacific Limited Partnership (the
"Operating Partnership"), purchased approximately 65,000 acres of
timberlands, associated timber cutting rights and all improvements, roads,
bridges, easements, rights of way and other rights of access related to the
purchased timberlands (collectively the "Timberlands" or the "Purchase")
from Trillium Corporation ("Trillium" or the "Seller"), located in
Bellingham, Washington, pursuant to a Timberlands Purchase Agreement and a
separate Timber Purchase Agreement (collectively the "Agreements") both
dated as of September 12, 1997. The 65,000 acres of timberlands are
located in Whatcom, Skagit and Snohomish Counties in the State of
Washington and contain approximately 590 million board feet of merchantable
hemlock, Douglas fir, cedar and hardwoods. The total purchase price was
approximately $156.5 million, consisting of approximately $152.5 million
under the Timberlands Purchase Agreement and approximately $4.0 million
under the Timber Purchase Agreement. The $156.5 million is being paid with
$49 million in cash from the Partnership's existing acquisition line of
credit, for which Bank of America serves as agent, and $107.5 million in
notes to the Seller. The notes to the Seller are due in two installments,
$55 million on January 15, 1998 and $52.5 million on January 15, 1999.
The Partnership anticipates that the balance sheet effect of the
acquisition will only result in an increase to timber and timberlands of
$156.5 million with a corresponding increase in debt obligations
There was no previous relationship between the Partnership and Trillium,
other than in the ordinary course of business, nor between any of the
Partnership's and Trillium's affiliates, officers or directors.
(b) The Timberlands will be used by the Partnership for growing and harvesting
timber, which was how they were used by the Seller. The Partnership did
not acquire any other assets used in the operation of Trillium's business.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS
(a) and (b) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED AND PRO FORMA
FINANCIAL INFORMATION
As discussed above, the Purchase represents approximately 65,000 acres of
timberlands previously owned by Trillium. The Purchase did not represent a
distinguishable business or business unit of Trillium and did not include
any of Trillium's sales force, customer base, trade names or accounts
receivable. Management is currently integrating the Purchase with its
existing operations in Washington and added two former Trillium employees
as a result of the Purchase. Consequently, there is no continuity of the
former operations of the Seller. As a result of the foregoing, the
Purchase does not represent an acquisition of a business for financial
reporting purposes. Therefore, historical and pro forma financial
information related to the acquired assets is not considered relevant
and has not been provided.
(c) EXHIBITS
The exhibits filed as a part of this report are listed below and this list
constitutes the exhibit index.
2.1 Timberlands Purchase Agreement by and between Trillium Corporation
and Crown Pacific Limited Partnership, dated September 12, 1997.
2.2 Timber Purchase Agreement by and between Trillium Corporation and
Crown Pacific Limited Partnership, dated September 12, 1997.
10.1 $55 million Purchase Price Note due to Trillium Corporation, dated
October 15, 1997.
10.2 $52.5 million Purchase Price Note due to Trillium Corporation, dated
October 15, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: October 27, 1997 CROWN PACIFIC PARTNERS, L.P.
By: /s/ Crown Pacific Management Limited
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Partnership, as General Partner
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By: /s/ Richard D. Snyder
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Richard D. Snyder
Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial and Accounting Officer)
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EXHIBIT 2.1
TIMBERLANDS PURCHASE AGREEMENT
between
TRILLIUM CORPORATION
and
CROWN PACIFIC LIMITED PARTNERSHIP
Dated September 12, 1997
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TABLE OF CONTENTS
1. Purchase and Sale of Timberland Assets and Assumption of
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Timberland Assets . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . 3
1.4 Excluded Liabilities. . . . . . . . . . . . . . . . . . . . . 4
1.5 Assignment of Contracts . . . . . . . . . . . . . . . . . . . 5
1.6 Licenses and Permits. . . . . . . . . . . . . . . . . . . . . 6
2. Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Purchase Price; Deposit . . . . . . . . . . . . . . . . . . . 7
2.2 Allocation of Purchase Price; Tax Matters . . . . . . . . . . 8
2.3 Prorations. . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.4 Closing Costs; Transfer Taxes . . . . . . . . . . . . . . . . 9
2.5 Purchase Price Note and Conversion Option . . . . . . . . . . 9
3. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Documents to Be Delivered by Seller at Closing. . . . . . . . 11
3.3 Documents to Be Delivered by Buyer at Closing . . . . . . . . 11
3.4 Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4. Representations and Warranties of Seller. . . . . . . . . . . . . . . 15
4.1 Organization and Good Standing. . . . . . . . . . . . . . . . 15
4.2 Authorization and Enforceability. . . . . . . . . . . . . . . 15
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4.3 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Consents and Approvals. . . . . . . . . . . . . . . . . . . . 16
4.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.6 Environmental Matters . . . . . . . . . . . . . . . . . . . . 16
4.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.8 Claims and Legal Proceedings. . . . . . . . . . . . . . . . . 18
4.9 Compliance With Laws. . . . . . . . . . . . . . . . . . . . . 18
4.10 Permits and Qualifications. . . . . . . . . . . . . . . . . . 18
4.11 Title to Timberlands. . . . . . . . . . . . . . . . . . . . . 19
4.12 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.13 Disclaimer of Warranties and Representations From
Seller; "AS IS, WHERE IS" . . . . . . . . . . . . . . . . . . 19
5. Representations and Warranties of Buyer . . . . . . . . . . . . . . . 21
5.1 Organization and Good Standing. . . . . . . . . . . . . . . . 21
5.2 Authorization and Enforceability. . . . . . . . . . . . . . . 21
5.3 Financial Capability. . . . . . . . . . . . . . . . . . . . . 21
5.4 No Conflict . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.5 Consents and Approvals. . . . . . . . . . . . . . . . . . . . 22
5.6 Claims and Legal Proceedings. . . . . . . . . . . . . . . . . 22
5.7 Brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6. Certain Covenants of Seller and Buyer . . . . . . . . . . . . . . . . 23
6.1 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.2 Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . 23
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6.3 Further Assurances. . . . . . . . . . . . . . . . . . . . . . 24
6.4 Conduct of Seller's Timberlands Operations Pending
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5 Public Announcements. . . . . . . . . . . . . . . . . . . . . 25
6.6 Environmental Audit . . . . . . . . . . . . . . . . . . . . . 25
6.7 Right to Update . . . . . . . . . . . . . . . . . . . . . . . 27
6.8 Removal of Trademarks . . . . . . . . . . . . . . . . . . . . 27
6.9 Governmental Approvals. . . . . . . . . . . . . . . . . . . . 27
7. Conditions Precedent to Obligations of Buyer. . . . . . . . . . . . . 28
7.1 No Injunction or Litigation; HSR Act Waiting Period . . . . . 28
7.2 Representations, Warranties and Covenants . . . . . . . . . . 28
7.3 Filing and Consents . . . . . . . . . . . . . . . . . . . . . 28
7.4 Environmental Matters . . . . . . . . . . . . . . . . . . . . 29
7.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.6 Delivery of Closing Documents . . . . . . . . . . . . . . . . 29
7.7 Title Commitments . . . . . . . . . . . . . . . . . . . . . . 29
7.9 Continuance of Special Use Classifications. . . . . . . . . . 30
8. Conditions Precedent to Obligations of Seller . . . . . . . . . . . . 30
8.1 No Injunction or Litigation; HSR Act Waiting Period . . . . . 30
8.2 Representations, Warranties and Covenants . . . . . . . . . . 30
8.3 Filings and Consents. . . . . . . . . . . . . . . . . . . . . 30
8.4 Delivery of Closing Documents . . . . . . . . . . . . . . . . 31
8.5 Continuance of Special Use Classifications. . . . . . . . . . 31
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9. Survival and Indemnification. . . . . . . . . . . . . . . . . . . . . 31
9.1 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . 31
9.3 Indemnification by Buyer. . . . . . . . . . . . . . . . . . . 32
9.4 Threshold Limitations . . . . . . . . . . . . . . . . . . . . 32
9.5 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.6 Proportional Liability for Losses . . . . . . . . . . . . . . 34
9.7 Specific Performance. . . . . . . . . . . . . . . . . . . . . 34
9.8 Exclusive Remedies. . . . . . . . . . . . . . . . . . . . . . 35
10. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . 36
11. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.1 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 36
11.2 Modification and Waiver . . . . . . . . . . . . . . . . . . . 36
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
11.4 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.5 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 38
11.7 No Third-Party Rights . . . . . . . . . . . . . . . . . . . . 38
11.8 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 38
11.9 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 39
11.10 Time of the Essence . . . . . . . . . . . . . . . . . . . . . 39
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11.11 Attorney's Fees . . . . . . . . . . . . . . . . . . . . . . . 39
SCHEDULES
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Schedule 1.1(a) Legal Descriptions
Schedule 1.1(c) Contracts
Schedule 1.1(d) Licenses and Permits
Schedule 1.2(i) Operating Deposits
Schedule 1.3(f) Reforestation Obligations
Schedule 2.2 Purchase Price Allocation
Schedule 3.2(d) Items To Be Conveyed by Quit Claim Deed
Schedule 3.4 Title Commitments
Schedule 3.4(a)(xiii) Forest Practice Applications Under
Timber Purchase Agreement
Schedule 3.4(b) Price Reduction Formula
Schedule 4.4 Seller's Consents and Approvals
Schedule 4.6 Environmental Matters
Schedule 4.6(b)(i) Persons with Actual Knowledge
Schedule 4.7 Defaults or Events of Default
Schedule 4.8 Claims and Legal Proceedings
Schedule 4.10 Defaults Under Licenses, Permits,
Approvals and Qualification
Schedule 5.5 Buyer's Consents and Approvals
Schedule 6.3 Post-Signing Matters
EXHIBITS
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Exhibit 2.5 Form of Purchase Price Note
Exhibit 3.2(d) Form of Bargain and Sale Deed
Exhibit 3.2(e) Form of Bill of Sale
Exhibit 3.2(f) Form of Assignment and Assumption
Agreement
Exhibit 3.2(g) Form of Option to Purchase Real Property
Exhibit 6.1(b) Confidentiality Agreement
Exhibit 6.4(b) Form of Timber Purchase Agreement
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TIMBERLANDS PURCHASE AGREEMENT
This Timberlands Purchase Agreement (this "Agreement") is made as of the
12th day of September, 1997, by and between Trillium Corporation, a Washington
corporation ("Seller"), and Crown Pacific Limited Partnership, a Delaware
limited partnership ("Buyer").
RECITALS
A. Seller owns and operates approximately 65,000 acres of timberlands in
Whatcom, Skagit and Snohomish Counties in the State of Washington;
B. Buyer wishes to purchase and assume from Seller, and Seller wishes to
sell and assign to Buyer, certain assets and liabilities of Seller in accordance
with the following terms and conditions.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth herein, the parties hereby agree as follows:
1. PURCHASE AND SALE OF TIMBERLAND ASSETS AND ASSUMPTION OF LIABILITIES
1.1 TIMBERLAND ASSETS
On the terms and subject to the conditions set forth herein, Seller will
sell and convey to Buyer, and Buyer will purchase and acquire from Seller, all
of Seller's right, title and interest, as of the date on which the closing (the
"Closing") of the purchase and sale contemplated hereby is effective in
accordance with the terms of this Agreement (the "Closing Date"), in and to the
following assets (collectively, the "Timberland Assets"), but specifically
excluding the Excluded Assets (as defined below):
(a) those certain parcels of real property and timber cutting rights
situated in Whatcom, Skagit and Snohomish Counties in the State of Washington
and described on Schedule 1.1(a), together with all timber of all species,
standing, dead or down, pulpwood, felled and bucked logs, trees, shrubs,
seedlings, saplings and reproduction thereon as of the Closing Date, excepting
therefrom changes therein prior to Closing pursuant to Section 6.4 as a result
of the conduct of Seller's business
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and operations from the date hereof through and including the Closing Date in
accordance with such Section (collectively, the "Timberlands");
(b) all buildings and improvements, roads, bridges, servitudes,
easements, rights of way and other rights of access to the Timberlands owned or
leased by Seller or which Seller has a right to use and on or appurtenant to the
Timberlands;
(c) subject to Section 1.5, all right, title and interest of Seller
in and to the contracts, licenses, orders, leases and other agreements relating
exclusively or primarily to the Timberland Assets listed on Schedule 1.1(c) (the
"Contracts");
(d) subject to Section 1.6, all franchises, licenses, permits,
consents and similar authorizations or qualifications held by Seller and
relating directly to the Timberland Assets issued by any federal, state or other
governmental body, any subdivision, agency, commission, court, or authority
thereof, or any quasi-governmental or private body exercising any regulatory or
taxing authority thereunder, domestic or foreign ("Governmental Body") as listed
on Schedule 1.1(d) (the "Licenses and Permits");
(e) all water rights owned by Seller relating to and appurtenant to
the Timberlands;
(f) all mineral rights owned by Seller relating to and appurtenant to
the Timberlands; and
(g) all business records of Seller relating specifically to the
management of the Timberlands, including without limitation all land and harvest
management records, forest inventory records, harvest plans, watershed studies
and other environmental studies, title records, aerial photographs, maps, charts
and surveys of the Timberlands owned by Seller which, in the reasonable judgment
and discretion of Seller, are segregated or segregable by Seller from the
overall records of Seller.
1.2 EXCLUDED ASSETS
All assets of Seller on the Closing Date not specifically included in the
Timberland Assets under Section 1.1 (the "Excluded Assets") shall remain the
property of Seller and shall not be transferred to or purchased by Buyer
pursuant to this Agreement. Without limiting the generality of the foregoing,
the Excluded Assets shall include:
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(a) all accounts receivable of Seller relating to the Timberland
Assets that arise from transactions or other actions or events occurring prior
to the Closing Date;
(b) all insurance policies, premiums, refunds, proceeds, and
certificates of insurance obtained by Seller from third parties (including
without limitation contractors, suppliers and truckers);
(c) all prepaid and deferred items or credits and deposits, rights of
offset and credits and claims for refund generated or incurred by or in
connection with the Timberland Assets prior to the Closing Date;
(d) all claims for refunds of taxes, charges, fees, levies and other
assessments, as well as any fines, interest and penalties thereon, imposed by
any Governmental Body ("Tax" or "Taxes") arising from or pertaining to periods,
activities, operations or events occurring prior to the Closing Date;
(e) all of Seller's bank accounts, cash, cash equivalents, deposit
accounts, securities and instruments;
(f) all pension, retirement savings or other employee benefit plans
and plan assets of Seller;
(g) all trademarks, trade names, trade dress, logos, service marks,
copyrights, patents, registrations of or applications for any of the foregoing,
trade secrets, know-how, information, proprietary rights and other intellectual
property and intangible assets of every kind and description;
(h) all contracts, leases, licenses, agreements, claims and other
binding rights and obligations of Seller not directly related to the Timberlands
or otherwise not included in the Contracts;
(i) all deposits and collateral that Seller has made or pledged in
connection with logging road usage, or any other rights related to the
Timberlands, as listed in Schedule 1.2(i) (the "Operating Deposits"); and
(j) all other assets and operations of Seller not specifically
included in the Timberland Assets.
1.3 ASSUMED LIABILITIES
Except as provided in Section 1.4, at the Closing, Buyer shall assume and
agree to thereafter perform when due and discharge, without any recourse to
Seller or any
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affiliate of Seller whatsoever, the following liabilities and obligations of
Seller with respect to the Timberland Assets (the "Assumed Liabilities"):
(a) all liabilities and obligations for Taxes on or relating to the
Timberlands or other Timberland Assets which relate to periods on or after the
Closing Date;
(b) all liabilities, obligations, costs and expenses, of whatever
kind or character, (i) arising out of or relating to the ownership or operation
of the Timberland Assets on or after the Closing Date (subject to, and without
limitation of, Seller's indemnification obligations under this Agreement),
and/or (ii) for which Buyer will receive the benefit relating to such liability,
obligation, cost or expense determined by applying the accrual basis of
accounting in accordance with generally accepted accounting principles
consistently applied ("GAAP");
(c) all liabilities and obligations of Seller under the Contracts
relating to any period on or after the Closing Date, including without
limitation all obligations with respect to performance of any kind required
under the Contracts on or after the Closing Date and all liabilities,
obligations, costs and expenses arising or owing under the Contracts relating to
any period on or after the Closing Date;
(d) all trade accounts payable relating to the Timberland Assets,
regardless of when invoiced or paid, to the extent that the goods or services to
which such trade payables relate are delivered to or performed for the benefit
of Buyer on or after the Closing Date;
(e) all liabilities and obligations associated with the Operating
Deposits, for which Buyer shall reimburse Seller and/or substitute collateral to
Seller on or prior to the Closing Date;
(f) all obligations imposed by statute, regulation, contract or
otherwise with respect to reforestation of any portion of the Timberlands
including, without limitation, the obligations described on Schedule 1.3(f) (the
"Reforestation Obligations"); and
(g) all affirmative obligations of Seller (or the land owner) that
are set forth in any documents listed as Permitted Encumbrances and that relate
to any period on or after the Closing Date.
1.4 EXCLUDED LIABILITIES
All liabilities and obligations of Seller other than those specifically set
forth in Section 1.3 (the "Excluded Liabilities") shall remain the
responsibility of Seller and
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shall not be assumed by Buyer pursuant to this Agreement. The Excluded
Liabilities shall not include the specific liabilities set forth in Section 1.3
but shall otherwise include without limitation the following:
(a) all liabilities and obligations relating to the Excluded Assets;
(b) all liabilities and obligations, of whatever kind or character,
(i) relating to ownership or operation of the Timberland Assets prior to the
Closing Date and/or (ii) for which Seller received the benefit relating to such
liability or obligation determined by applying the accrual basis of accounting
in accordance with GAAP;
(c) all liabilities and obligations for Taxes relating to periods
prior to the Closing Date;
(d) all obligations of Seller for borrowed money, whether relating to
or secured by the Timberlands or otherwise; and
(e) all trade accounts payable relating to the Timberland Assets,
regardless of when invoiced or paid, to the extent that the goods or services to
which such trade payables relate are delivered or performed prior to the Closing
Date.
1.5 ASSIGNMENT OF CONTRACTS
(a) Seller agrees to assign or cause to be assigned to Buyer, as of
the Closing, all of the rights of Seller under the Contracts that are assignable
without consent of any third party, and Buyer shall assume, as of the Closing,
all obligations of Seller thereunder which arise at or after Closing.
(b) Anything in this Agreement to the contrary notwithstanding,
Seller shall not be obligated to sell, assign, transfer or convey or cause to be
sold, assigned, transferred or conveyed to Buyer any of Seller's rights in or to
any of the Contracts without first obtaining all necessary approvals, consents
or waivers. Seller shall use all reasonable efforts, and Buyer shall reasonably
cooperate with Seller, to obtain all necessary approvals, consents or waivers,
or to resolve any impracticalities of transfer necessary to assign or convey to
Buyer each such Contract. In the event Seller obtains consent to assignment of
a Contract prior to the Closing, Buyer shall assume, as of Closing, all
obligations of Seller thereunder which arise on or after the Closing Date, as
though no consent was required.
(c) To the extent that any of the approvals, consents or waivers
referred to in Section 1.5(b) have not been obtained by Seller as of the
Closing, or until any impracticalities of transfer are resolved, Seller shall,
during the remaining
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term of such Contracts, use all reasonable efforts to (i) obtain the consent of
any such third party with the filing fees and ordinary administrative charges
payable to such third party to be paid by Buyer; (ii) cooperate with Buyer in
any reasonable and lawful arrangements designed to provide the benefits of such
Contracts to Buyer, so long as Buyer fully cooperates with Seller in such
arrangements and indemnifies Seller and all affiliates of Seller fully and
completely for any actual out-of-pocket loss, damage, liability, obligation or
expense (including reasonable attorneys' fees) (collectively, "Losses") incurred
by them in connection with any such Contract arising from or relating to any
period on or after the Closing Date; and (iii) enforce, at the request of Buyer
and at the expense and for the account of Buyer, any rights of Seller arising
from such Contracts against such issuer thereof or the other party or parties
thereto (including the right to elect to terminate any such Contracts in
accordance with the terms thereof upon the request of Buyer), so long as Buyer
indemnifies Seller and all affiliates of Seller fully and completely for any
Losses incurred by them in connection with any such enforcement.
(d) To the extent that any Contract or any claim or right arising
thereunder or resulting therefrom is not capable of being sold, assigned,
transferred or conveyed without the approval, consent or waiver of the issuer
thereof or the other party thereto, or any third person (including a
Governmental Body), and Seller is unable to obtain such approval, consent or
waiver, or if such sale, assignment, transfer or conveyance or attempted
assignment, transfer or conveyance would constitute a breach thereof or a
violation of any law, decree, order, regulation or other governmental edict,
this Agreement shall not constitute a sale, assignment, transfer or conveyance
thereof, or an attempted assignment, transfer or conveyance thereof, nor shall
Seller have any obligation to complete any such sale, assignment, transfer or
conveyance.
1.6 LICENSES AND PERMITS
Seller will assign, transfer or convey, or cause to be assigned,
transferred or conveyed to Buyer at the Closing the Licenses and Permits which
can be assigned without having to obtain the consent of any third party with
respect thereto. Seller will cooperate with Buyer in obtaining any third party
consents necessary to the assignment or transfer of any other Licenses and
Permits used or held by Seller in connection with the Timberland Assets which
are so assignable or transferable; provided, however, that neither Seller nor
Buyer shall be obligated to pay any consideration therefor except for filing
fees and other ordinary administrative charges which shall be paid by Buyer to
the third party from whom such approval, consent or waiver is requested. Buyer
shall assume, as of the Closing, all obligations of Seller arising on or after
the Closing Date under those Licenses and Permits which can be
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transferred without having to obtain the consent of any third party and those
Licenses and Permits for which consent to transfer has been obtained prior to
the Closing. Subsequent to the Closing, to the extent permitted by law, Seller
shall have the right to cancel any Licenses and Permits or any bonds, guarantees
or undertakings by Seller applicable to the Timberland Assets to the extent such
are not so assigned or transferred to Buyer pursuant to Section 1.1(d) and this
Section 1.6.
2. PURCHASE PRICE
2.1 PURCHASE PRICE; DEPOSIT
The purchase price to be paid by Buyer to Seller in consideration for the
Timberland Assets (in addition to assumption of the Assumed Liabilities)
shall be one hundred fifty-two million five hundred thousand dollars
($152,500,000), subject to adjustment as provided in Section 6.4 (the
"Purchase Price"). Within two business days after the execution of this
Agreement, Buyer shall deposit into the Closing Escrow (as defined at Section
3.1 below) four million five hundred thousand dollars ($4,500,000) as a
nonrefundable (except as provided below) deposit toward the Purchase Price
(the "Deposit"); interest on the Deposit shall accrue to the benefit of
Buyer. At the Closing, Buyer shall deposit into the Closing Escrow (as
defined at Section 3.1 below) an amount that, when added to the balance of
the funds on deposit in the Closing Escrow, shall amount to $45,000,000, plus
all additional payments due to Seller at Closing (the "Down Payment"). The
Down Payment, less closing costs and prorations (if known) allowable to
Seller, shall be payable in cash at the Closing by wire transfer in
immediately available funds to an account or accounts designated by Seller
and the balance of the Purchase Price shall be payable by delivery of an
executed Purchase Price Note (as defined at Section 2.5 below); provided,
however, that Seller may require by written notice delivered to Buyer no
later than September 30, 1997, that the balance of the Purchase Price be paid
in cash at closing by wire transfer if Seller determines, in its sole
discretion, that it is not able to finance the Purchase Price Note with
Seller's lead commercial lender on terms and conditions acceptable to Seller;
provided, further, that the Target Closing Date (as defined at Section 3.1)
shall be extended by the number of days equal to the number of days between
the date of this Agreement and the date such written notice is delivered to
Buyer. In the event the Closing does not occur due to termination hereof by
Seller in accordance with Section 10.1(a) (as a result of a failure of any of
the conditions set forth in Section 8.2 or 8.4) or 10.1(c), the Deposit shall
be retained by Seller as a portion of the liquidated damages and the
consideration for the rights being granted to Buyer hereunder. In the event
the Closing does not occur for any reason other than due to termination
hereof by Seller in accordance with Section 10.1(a) (as a result of a
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failure of any of the conditions set forth in Section 8.2 or 8.4) or 10.1(c),
the Deposit shall be returned to Buyer.
2.2 ALLOCATION OF PURCHASE PRICE; TAX MATTERS
(a) The Purchase Price shall be allocated among the Timberland Assets
in accordance with Schedule 2.2. Seller and Buyer agree to complete IRS
form 8594 consistently with the foregoing allocation and to furnish each other
with a copy of such form prepared in draft form within thirty (30) days prior to
the filing due date for such form. Within thirty (30) days after the Closing,
Buyer shall submit to Seller a proposed detailed allocation schedule which is in
all respects consistent with Schedule 2.2. Thereafter, Buyer and Seller shall
use their respective best efforts to promptly agree to a final detailed
schedule. Neither Seller nor Buyer shall file any Tax return or take a position
with any taxing authority that is inconsistent with the foregoing allocation.
(b) For purposes of preparing Washington Real Estate Excise Tax
Affidavits provided for in RCW 82.45.150, the parties agree to use the
allocation set forth in Schedule 2.2. Washington Buyer agrees to execute at the
Closing a Notice of Continuance, incorporated in the Real Estate Excise Tax
Affidavits provided for in RCW 82.45.150, continuing the forest land
classification or designation of that portion of the Timberlands so classified
or designated as provided in RCW 84.33.140.
2.3 PRORATIONS
On the Closing Date, or as promptly as practicable following the Closing
Date, but in no event later than thirty (30) days thereafter, the real and
personal property Taxes, assessments or dues owing to the Washington Forest
Protection Association on a per acre basis for fire protection, water, gas,
electricity and other utility charges, local business or other license fees or
Taxes, and other similar periodic charges arising in connection with the
ownership and operation of the Timberland Assets shall be prorated between Buyer
and Seller retroactively effective as of the Closing Date, such that Buyer shall
be responsible for all periods from and after the Closing Date and Seller shall
be responsible for all periods prior thereto. If the real property Tax rate for
the current Tax year is not established by the Closing Date, the prorations
shall be made on the basis of the rate in effect for the preceding Tax year and
shall be adjusted when the exact amounts for the current Tax year are
determined. All such prorations shall be based on the most recent available
assessed value of the Timberlands prior to the Closing Date.
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2.4 CLOSING COSTS; TRANSFER TAXES
Buyer shall timely pay all Taxes imposed by reason of, and in connection
with, the transfers of the Timberland Assets provided hereunder and under the
other agreements, certificates, instruments and other documents contemplated
hereby (the "Transaction Documents"), as well as any penalties or interest
relating thereto, except that Seller shall pay the real estate excise tax
relating to the sale of the Timberlands, as contemplated by Section 2.2 and
Seller shall be solely responsible for any federal, state, or local income taxes
resulting from the transfers of the Timberland Assets to Buyer. Seller shall
provide a title insurance commitment on the Timberlands in accordance with
Section 3.4 and shall pay the premium for a standard coverage owners policy of
title insurance, issued by the Title Company (as defined in Section 3.1) with a
coverage amount equal to the Purchase Price, insuring fee simple title to the
Timberlands in Buyer, subject only to the Permitted Encumbrances (as defined in
Section 3.4(a)), the standard pre-printed exceptions to such policies, and any
liens or encumbrances suffered or created by Buyer. Buyer shall pay all other
premiums, costs, fees and expenses of any extended coverage title insurance,
surveys or further evidence of title it desires to obtain, as well as all filing
and recording fees. The parties shall each pay fifty percent (50%) of any
escrow fee incurred in connection with the Closing.
2.5 PURCHASE PRICE NOTE AND CONVERSION OPTION
The "Purchase Price Note" to be delivered by Buyer to Seller at Closing as
a component of the Purchase Price (unless Seller otherwise elects under Section
2.1) shall be a senior unsecured note payable to Seller or holder in due course
in the principal amount of $107,500,000 (or such other amount necessary to
satisfy the amount of the final Purchase Price in excess of the Down Payment),
substantially in the form of Exhibit 2.5 hereto.
Seller shall have the right at Seller's option, exercisable in writing
prior to January 5, 1998, to request that the Purchase Price Note be converted
into one or more notes in amounts totaling the amount of the Purchase Price Note
(the "Converted Notes"). If Seller so elects by notifying Buyer in writing by
January 5, 1998, then Buyer and Seller shall work together in good faith using
commercial best efforts to agree on the final form of the Converted Notes and
shall thereafter proceed to execute and substitute such notes for the Purchase
Price Note on or before the maturity date of the Purchase Price Note, including
any extensions thereof that Buyer and Seller may agree to. The term of the
Converted Notes shall not exceed five years, unless Seller and Buyer otherwise
consent to a longer term. The Converted Notes shall call for interest payable
monthly at a rate, inclusive of any points or loan fees, which shall be
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comparable to Buyer's lowest cost of funds rate, inclusive of any points or loan
fees, that would apply on the date the Converted Notes are issued on funds
borrowed under that certain Amended and Restated Credit Agreement dated as of
July 31, 1996, by and among Buyer, Bank of America N.T. & S.A., as agent, ABN
AMRO Bank, N.V. and Societe Generale, as co-agents, and the other financial
institutions party thereto, as amended, or, if it is no longer in effect, with
Buyer's lead commercial bank lender. The Converted Notes shall contain other
provisions, including but not limited to affirmative and negative covenants,
comparable to those provisions contained in the Purchase Price Note (subject to
amendment by Buyer and Seller upon negotiations in good faith). It is
understood and agreed that the Converted Notes shall not be issued, and the
Purchase Price Note shall be satisfied according to its terms, if Seller in its
sole and absolute discretion determines that Seller will not be able to pledge
the Converted Notes to Seller's lenders under borrowing terms acceptable to
Seller; Seller shall provide written notice of such determination to Buyer on or
before February 1, 1998. Both the Purchase Price Note and the Converted Notes
shall be assignable by Seller or by any subsequent holder thereof, whether by
pledge or by transfer of ownership.
3. CLOSING
3.1 CLOSING DATE
Subject to the terms and conditions of this Agreement, the Closing shall be
effected in escrow by Chicago Title Insurance Company (the "Title Company"),
acting as escrow agent, at its Bellingham, Washington office, in accordance with
written escrow instructions to be prepared jointly by the parties hereto (such
escrow, the "Closing Escrow"), as soon as practicable after the satisfaction or
waiver of the conditions to the Closing set forth in Sections 7 and 8, or at
such other location or time as the parties may agree, and shall be effective as
of 12:01 a.m. on the Closing Date.
Buyer and Seller shall use their commercially reasonable best efforts to
effect the Closing on or before October 15, 1997 (the "Target Closing Date");
provided, that in the event that the Closing occurs after November 14, 1997,
Buyer shall pay at Closing an amount equal to the Purchase Price plus interest
thereon calculated at 8% per annum from November 15, 1997 (or, if the delay in
Closing occurs as a result of a failure of Seller to fulfill Closing conditions
or terminate the Citifor Ground Lease (as defined at Section 6.4(c)), violations
of this Agreement by Seller or for Hart-Scott-Rodino or other regulatory
purposes, such later date as such failure or violation is cured or such
regulatory delay is resolved) through the Closing Date.
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3.2 DOCUMENTS TO BE DELIVERED BY SELLER AT CLOSING
At the Closing, Seller shall deliver or cause to be delivered to Buyer:
(a) resolutions of the Board of Directors of Seller authorizing the
execution and delivery of this Agreement and the performance of the transactions
contemplated hereby, certified by the Secretary or an Assistant Secretary of
Seller;
(b) a Secretary's Certificate attesting to the incumbency of Seller's
officers executing this Agreement and the other certificates and agreements
delivered by Seller at the Closing;
(c) an Officer's Certificate relating to the matters set forth in
Section 7.2;
(d) bargain and sale deeds substantially in the form of
Exhibit 3.2(d) transferring and conveying all of the Timberlands to Buyer
(including, without limitation, the cutting rights to the Glacier Timberlands
(as defined at Section 6.4(c))), except for those parcels, rights or claims
listed in Schedule 3.2(d) which shall be transferred and conveyed by quit claim
deed;
(e) a Bill of Sale substantially in the form of Exhibit 3.2(e)
transferring and conveying those of the Timberland Assets not included in the
Timberlands or the Contracts;
(f) a counterpart to an Assignment and Assumption Agreement,
substantially in the form of Exhibit 3.2(f) (the "Assignment and Assumption
Agreement");
(g) a counterpart to an Option Agreement with respect to an option by
Buyer to purchase approximately 15,000 acres of timberlands known as the Sultan
Hill timberlands, substantially in the form of Exhibit 3.2(g) (the "Option
Agreement"); and
(h) such other and further certificates, assurances, consents and
documents as may reasonably be required by Buyer in connection with the
consummation of the transactions contemplated hereby.
3.3 DOCUMENTS TO BE DELIVERED BY BUYER AT CLOSING
At the Closing, Buyer shall deliver or cause to be delivered to Seller:
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(a) resolutions of the Board of Directors of Buyer authorizing the
execution and delivery of this Agreement and the performance of the transactions
contemplated hereby, certified by the Secretary or an Assistant Secretary of
Buyer;
(b) a Secretary's Certificate attesting to the incumbency of Buyer's
officers executing this Agreement and the other certificates and agreements
delivered by Buyer at the Closing;
(c) an Officer's Certificate relating to the matters set forth in
Section 8.2;
(d) a counterpart to the Assignment and Assumption Agreement;
(e) the Purchase Price and Buyer's share of the closing costs
referred to in Section 2.4;
(f) a counterpart to the Option Agreement; and
(g) such other and further certificates, assurances, consents and
documents as may reasonably be required by Seller in connection with the
consummation of the transactions contemplated hereby.
3.4 TITLE
(a) Seller has delivered to Buyer commitments for standard owner's
fee title insurance policies with respect to the Timberlands (the "Title
Commitments") from the Title Company, copies of which are attached hereto as
Schedule 3.4. Seller shall convey and Buyer shall accept title to the
Timberlands subject to (x) all title exceptions shown by the Title Commitments
and (y) any items listed below (such exceptions and other items referred to in
clauses (x) and (y) being defined as the "Permitted Encumbrances"):
(i) liens and assessments, both general and special, and other
governmental charges which are not yet due and payable as of the Closing;
(ii) all land use restrictions (including environmental,
endangered species and wetlands), building and zoning codes and ordinances, and
other laws, ordinances, regulations, rules, orders, licenses or determinations
of any Governmental Body, now or hereafter enacted, made or issued by any such
Governmental Body affecting the Timberlands;
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(iii) all easements (including conservation easements),
rights-of-way, road use agreements, covenants, conditions, restrictions,
reservations, licenses, agreements and other matters of record;
(iv) all encroachments, overlaps, overhangs, unrecorded
easements, variations in area or measurement, rights of parties in possession,
lack of access or any other matters not of record which would be disclosed by an
accurate survey or physical inspection of the Timberlands;
(v) all electric power, telephone, gas, sanitary sewer, storm
sewer, water and other utility lines, pipelines, service lines and facilities of
any nature on, over or under the Timberlands, and all licenses, easements,
rights-of-way and other agreements relating thereto;
(vi) all existing public and private roads and streets (whether
dedicated or undedicated), and all railroad lines and rights-of-way affecting
the Timberlands;
(vii) prior reservations or conveyances of mineral rights or
mineral leases of every kind and character;
(viii) inchoate mechanics' and materialmen's liens for
construction in progress and workmen's, repairmen's, warehousemen's, and
carrier's liens and other similar statutory liens arising in the ordinary course
of business;
(ix) all hunting, fishing, apiary, recreational or similar
leases or licenses or permits affecting the Timberlands which do not contain an
option to purchase and which (A) have a term of not longer than twelve (12)
months or (B) are terminable without premium or penalty by the owner of the
Timberlands upon not greater than ninety (90) days' notice;
(x) other imperfections of title, easements and encumbrances,
if any, which do not materially adversely affect the insurability of title to
the Timberlands or materially detract from the value of or materially interfere
with the use of the Timberlands as commercial timberlands;
(xi) all obligations under the Option Agreement dated August 1,
1997 between Seller and The Trust for Public Land regarding the option held by
The Trust for Public Land to purchase certain old growth timberlands situated on
timberlands known as the Canyon Lake Creek timberlands, whether or not such
obligations are currently of record;
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(xii) all obligations under the Kenney Creek Bald Eagle Roost
Conservation Easement, dated February 28, 1996, between Seller and Whatcom
County Land Trust affecting portions of Sections 22, 23 and 27 of township 39
North Range 5 East, Whatcom County, whether or not such obligations are
currently of record;
(xiii) the cutting rights subject to the Timber Purchase
Agreement (as described in Section 6.4(d) and attached hereto as
Exhibit 6.4(d)), as permitted under the Forest Practice Applications listed on
Schedule 3.4(a)(xiii) attached hereto; and
(xiv) the preprinted exceptions listed in Schedule B of the
Title Commitments provided by Seller hereunder.
(b) In the event of any modification of the Title Commitments by
the Title Company, after the date hereof and prior to the Closing, with
respect to any additional defects, exceptions or encumbrances that are not
Permitted Encumbrances, Buyer shall advise Seller in writing within ten (10)
days after notice to Buyer of such modification to the Title Commitment of
any such defects, exceptions or encumbrances subject to which Buyer is
unwilling to accept title (collectively, the "Unacceptable Encumbrances").
Failure of Buyer to provide such written notice within such ten (10) day
period shall be deemed an election by Buyer to waive any Unacceptable
Encumbrances and to accept such title as Seller is able to convey as
reflected in the Title Commitments as modified. Within ten (10) business
days after Seller's receipt of Buyer's notice of Unacceptable Encumbrances,
if any, Seller shall advise Buyer in writing whether it intends to correct
such Unacceptable Encumbrances. In the event Seller elects to correct all or
some of the Unacceptable Encumbrances, Seller, in its sole discretion, may
extend the Closing Date one or more times for up to ninety (90) days in the
aggregate in order to eliminate such Unacceptable Encumbrances. If Seller is
unable or unwilling to eliminate such Unacceptable Encumbrances in a manner
reasonably acceptable to Buyer and to convey title to the subject portion of
the Timberlands (the "Encumbered Property") in accordance with the terms of
this Agreement on or before the Closing Date (as such date may be extended),
Buyer shall elect on the Closing Date, as its sole remedy for such failure of
Seller to eliminate any Unacceptable Encumbrances, either (i) to accept title
to the Timberlands subject to such Unacceptable Encumbrances and receive no
credit against, or reduction of, the Purchase Price or (ii) to delete the
Encumbered Property from the Timberlands, deducting from the Purchase Price a
sum calculated in accordance with the procedures and formula set forth in
Schedule 3.4(b). Notwithstanding anything to the contrary contained in this
Section 3.4 or elsewhere in this Agreement, Seller shall not be obligated to
bring any action or proceeding, to
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make any payments or otherwise to incur any expense in order to eliminate any
of the Unacceptable Encumbrances identified by Buyer.
4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as follows in this
Section 4:
4.1 ORGANIZATION AND GOOD STANDING
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Washington. Seller has all requisite
corporate power and authority to own or lease and operate its assets, including
the Timberland Assets, and to carry on its business as it is now conducted.
4.2 AUTHORIZATION AND ENFORCEABILITY
Seller has full corporate power and authority to execute and deliver this
Agreement and the Transaction Documents to which it is a party and perform its
obligations hereunder and thereunder. The execution and delivery by Seller of
this Agreement and the Transaction Documents to which it is a party, the
performance by Seller of its obligations hereunder and thereunder and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization and
similar laws affecting creditors' rights or by equitable principles, and the
Transaction Documents to which Seller is a party, when executed and delivered by
Seller, will constitute valid and binding obligations of Seller, enforceable
against Seller in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization and similar laws affecting creditors' rights or by
equitable principles.
4.3 NO CONFLICT
The execution, delivery and performance of this Agreement and the
Transaction Documents by Seller and the consummation of the transactions
contemplated hereby and thereby will not (a) violate, conflict with, or result
in any breach of, any provision of Seller's Articles of Incorporation or Bylaws;
(b) violate or conflict with, result in a breach of, or constitute a default (or
an event that, with notice or lapse of time or both, would constitute a default)
under, any contract or any judgment, order, decree, stipulation or ruling of any
Governmental Body (a
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"Judgment") to which Seller is a party or by which it is bound or which relates
to the Timberland Assets; (c) result in the creation of any encumbrance on any
of the Timberland Assets; (d) violate any applicable law, statute, rule,
ordinance or regulation of any Governmental Body; or (e) violate or result in
the suspension, revocation, modification, invalidity or limitation of any
Licenses and Permits relating to the Timberland Assets; except as to clauses (b)
through (e) of this Section 4.3 above as would not, individually or in the
aggregate, have a material adverse effect on the value of the Timberland Assets,
taken as a whole, on the use or operation of the Timberlands as commercial
timberlands, or on Seller's ability to consummate the transactions contemplated
hereby (a "Material Adverse Effect").
4.4 CONSENTS AND APPROVALS
Except as set forth in Schedule 4.4, (a) no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required for the execution, delivery and performance by Seller of this
Agreement and the Transaction Documents to which it is a party and for the
consummation by Seller of the transactions contemplated hereby and thereby and
(b) no consent, approval or authorization of any third party is required for the
execution, delivery and performance by Seller of this Agreement and the
Transaction Documents to which it is a party and the consummation by Seller of
the transactions contemplated hereby and thereby.
4.5 TAXES
All Tax obligations of Seller with respect to the Timberland Assets have
been timely paid or are being contested in good faith.
4.6 ENVIRONMENTAL MATTERS
(a) Except as set forth on Schedule 4.6:
(i) To the Actual Knowledge of Seller (as defined below), no
Claim of Environmental Liability (as defined below) relating to the conditions
at or on the Timberlands is pending or threatened by any Governmental Body or
other third party and there exists no factual basis that an objective third
party would reasonably conclude was likely to result in such Claim of
Environmental Liability;
(ii) Seller has not received any written notice which remains
pending under any applicable Environmental Law (as defined below) concerning the
Timberlands and which notice relates to any substance that, as of the date
hereof, is a Hazardous Material (as defined below); and
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(iii) There is no proceeding against Seller, or, to the Actual
Knowledge of Seller, any pending investigation or inquiry with respect to
Seller, by any Governmental Body with respect to the presence on the Timberlands
of any material which is a Hazardous Material, or the migration thereof from or
to other property and, to the Actual Knowledge of Seller, no such proceeding,
investigation, or inquiry is threatened and there exists no factual basis that
an objective third party would reasonably conclude was likely to lead to such
proceeding, investigation or inquiry.
(b) As used in this Section 4.6, the following terms shall have the
following meanings:
(i) "Actual Knowledge of Seller" shall mean the actual
knowledge as of the Closing Date of any of the persons listed on
Schedule 4.6(b)(i).
(ii) "Claim of Environmental Liability" shall mean any and all
claims, liabilities, obligations, losses or damages suffered or incurred as a
result of (A) any suit, action, legal or administrative proceeding, or demand
asserted or threatened by any third party, including any Governmental Body,
arising under any Environmental Law, (B) requirements imposed by any
Environmental Laws, including all costs of remediation or costs otherwise
incurred in complying with applicable Environmental Laws, and (C) any and all
Judgments, courts costs, legal fees and other costs of discovery and defense
associated with (A) or (B) of this Section 4.6(b)(ii).
(iii) "Hazardous Material" shall mean any hazardous material,
hazardous wastes, or hazardous or toxic substances as defined in the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, the Resource Conservation and Recovery Act, as amended, and the
Toxic Substances Control Act, as amended.
(iv) "Environmental Law" shall mean any federal, state, local
or other law, statute, rule, ordinance or regulation or any common law (now or
hereafter in effect) pertaining to the natural environment, including without
limitation the Comprehensive Environmental Response, Compensation, and Liability
Act, as amended by the Superfund Amendments and Reauthorization Act; the
Resource Conservation and Recovery Act, as amended; the federal Clean Air Act;
the Federal Water Pollution Control Act; the federal Clean Water Act, as
amended; the Federal Insecticide, Fungicide, and Rodenticide Act; the Federal
Environmental Pesticide Control Act; the Toxic Substances Control Act; the
federal Safe Drinking Water Act; the Emergency Planning and Community
Right-To-Know Act; and the Endangered Species Act.
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4.7 CONTRACTS
All Contracts included in the Timberland Assets are valid and in full force
and effect, Seller has performed all material obligations imposed on it
thereunder, and there are not, under any of such Contracts, any
misrepresentations, defaults or events of default on the part of Seller or, to
Seller's knowledge, any other party thereto, that would have a Material Adverse
Effect. Except as set forth in Schedule 4.7, Seller has not received notice,
nor is Seller otherwise aware, that any party to any such Contract intends to
cancel, terminate or refuse to renew such Contract or to exercise or decline to
exercise any option or right thereunder.
4.8 CLAIMS AND LEGAL PROCEEDINGS
Except as set forth in Schedule 4.8, and except with respect to the matters
involving Environmental Laws which are addressed in Section 4.6 and as to which
no representations are made in this Section 4.8, there are no claims, lawsuits
or other judicial or administrative proceedings pending or, to Seller's
knowledge, threatened against Seller with respect to the ownership and operation
of the Timberland Assets before or by any Governmental Body or nongovernmental
department, commission, board, bureau, agency or instrumentality or any other
person, except as would not have a Material Adverse Effect, nor are there any
outstanding or unsatisfied Judgments to which Seller (with respect to the
Timberland Assets) is a party that involve the Timberland Assets or the
transactions contemplated hereby.
4.9 COMPLIANCE WITH LAWS
Seller is and has been in substantial compliance with all laws, statutes,
rules, ordinances and regulations promulgated by any Governmental Body and all
Judgments applicable to the ownership or operation of the Timberland Assets,
except where such noncompliance would not have a Material Adverse Effect.
Seller has not received any notice of any alleged violation of law (whether past
or present and whether remedied or not) by Seller with respect to the Timberland
Assets that would have a Material Adverse Effect, nor is Seller aware of any
basis for any claim of any such violation.
4.10 PERMITS AND QUALIFICATIONS
Except as would not have a Material Adverse Effect, all licenses, permits,
approvals and similar qualifications of Governmental Bodies that are required
under applicable laws for the ownership and operation of the Timberland Assets
have been obtained by Seller, are in full force and effect and are listed in
Schedule 1.1(d), with their expiration dates, if any. Except as set forth on
Schedule 4.10, Seller is and has
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been in compliance with all such licenses, permits, approvals and
qualifications, except as would not have a Material Adverse Effect, and Seller
has not received any notice of any alleged violation (whether past or present
and whether remedied or not) of, nor any threat of the suspension, revocation,
modification, invalidity or limitation of, any such license, permit, approval or
qualification that would have a Material Adverse Effect, except as set forth in
Schedule 4.10.
4.11 TITLE TO TIMBERLANDS
Seller has good, valid, and marketable fee simple title to the Timberlands
(other than the parcels thereof described on Schedule 3.2(d)), free and clear of
all liens, encumbrances, charges, and other exceptions to title suffered or
created by Seller other than the Permitted Encumbrances.
4.12 BROKERAGE
Except for Dillon, Read & Co. Inc. and BA Partners (the "Agents"), Seller
has not retained any broker or finder in connection with the transactions
contemplated by this Agreement and the Transaction Documents. All fees due to
the Agents in connection with the transactions contemplated by this Agreement
and the Transaction Documents shall be paid by Seller.
4.13 DISCLAIMER OF WARRANTIES AND REPRESENTATIONS FROM SELLER; "AS IS,
WHERE IS"
(a) Except as otherwise expressly set forth in this Agreement, this
Agreement is executed, and any personal property included in the Timberland
Assets shall be purchased and sold, without any warranty of title, either
express or implied, and without any express or implied warranty or
representation as to the merchantability or fitness for a particular purpose of
any personal property included in the Timberland Assets.
(b) Except as otherwise expressly set forth in this Agreement and the
Transaction Documents, this Agreement is executed, and the Timberlands shall be
purchased and sold, without any warranty of title, either express or implied,
except warranties (if any) contained in the deed(s) conveying the Timberlands
included in the Timberland Assets, and without any express or implied warranty
or representation as to the volume, age class, species or merchantability of any
of the Timberlands included in the Timberland Assets, or as to the acreage, tax
status, legal access, operations, encroachments, physical condition, zoning or
any other aspect of the Timberland Assets.
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(c) Except as otherwise expressly set forth in this Agreement and the
Transaction Documents, Buyer shall purchase the Timberlands and all other
Timberland Assets "as is, where is" and with all faults. Buyer certifies by
execution hereof that it has had an opportunity to inspect the Timberlands
(including the surface and subsurface thereto) prior to executing this
Agreement; that Buyer either has inspected or waived its right to inspect the
Timberlands and other Timberland Assets for all purposes and including but not
limited to conditions specifically related to the presence, release or disposal
of Hazardous Materials (or will do so prior to Closing pursuant to Section 6.6);
that it has not relied upon any information delivered by Seller or its agents
concerning the Timberlands and other Timberland Assets; and that it is relying
upon its own examination of the Timberlands and all other Timberland Assets in
entering into and in consummating this Agreement. Buyer further acknowledges
and agrees that, except as otherwise expressly set forth in this Agreement and
the Transaction Documents, neither Seller nor its agents have made any
representations, warranties or covenants whatsoever with respect to the quantity
or quality of the timber, the acreage, Tax status, legal access, operations,
encroachment, physical condition or any other aspect of the Timberland Assets,
except as expressly set forth in this Agreement, nor have they made any
representations, warranties, or covenants whatsoever concerning the presence,
release or disposal of Hazardous Materials thereon, except as so set forth.
(d) Except as otherwise expressly set forth in this Agreement, Seller
makes no warranty or representation, express, implied, statutory or otherwise,
as to the accuracy or completeness of any data, reports, records, projections,
information or materials now, heretofore or hereafter furnished or made
available to Buyer in connection with this Agreement including without
limitation any description of the Timberland Assets, pricing assumptions,
harvest assumptions, volume estimates, description of environmental or
topographical conditions, presence or absence of endangered species, or any
other materials furnished or made available to Buyer by Seller or its agents or
representatives; any and all such data, records, reports, projections,
information and other materials furnished by Seller or otherwise made available
to Buyer are provided to Buyer as a convenience, and shall not create or give
rise to any liability of or against Seller; and any reliance on or use of the
same shall be at Buyer's sole risk. Without limiting the generality of the
foregoing, it is understood that all information, estimates, projections and
other material contained or referred to in any of the offering materials
provided to Buyer, including without limitation the Confidential Information
Memorandum provided to Buyer by one or more of the Agents, are not and shall not
be deemed to be representations or warranties of Seller. Seller makes no
representation as to the accuracy or completeness of the information contained
therein, Buyer assumes full responsibility for making its own evaluation of
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the adequacy and accuracy of such information, and no representations or
warranties are being made by Seller except as specifically set forth in this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows in this
Section 5:
5.1 ORGANIZATION AND GOOD STANDING
Buyer is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware. Buyer has all requisite power
and authority to own or lease and operate its assets and to carry on its
business as it is now conducted.
5.2 AUTHORIZATION AND ENFORCEABILITY
Buyer has full power and authority to execute and deliver this Agreement
and the Transaction Documents to which it is a party and perform its obligations
hereunder and thereunder. The execution and delivery by Buyer of this Agreement
and the Transaction Documents to which it is a party, the performance by Buyer
of its obligations hereunder and thereunder and the consummation by Buyer of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary partnership action. This Agreement constitutes a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization and similar laws affecting creditors'
rights or by equitable principles, and the Transaction Documents to which Buyer
is a party, when executed and delivered by Buyer, will constitute valid and
binding obligations of Buyer, enforceable against Buyer in accordance with their
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization and similar laws
affecting creditors' rights or by equitable principles.
5.3 FINANCIAL CAPABILITY
Buyer (a) has immediately available funds sufficient to consummate the
transactions contemplated by this Agreement and the Transaction Documents in
accordance with their respective terms or (b) has obtained from an established
lender or lenders firm financing commitments which, when combined with Buyer's
available resources, are sufficient to enable Buyer to timely consummate the
transactions contemplated by this Agreement and the Transaction Documents.
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5.4 NO CONFLICT
The execution, delivery and performance of this Agreement and the
Transaction Documents by Buyer and the consummation of the transactions
contemplated hereby and thereby will not (a) violate, conflict with, or result
in any breach of, any provision of Buyer's current agreement of limited
partnership or other constituent documents; (b) violate or conflict with, result
in a breach of, or constitute a default (or an event that, with notice or lapse
of time or both, would constitute a default) under, any contract, agreement,
license, order, lease or instrument, or any Judgment, to which Buyer is a party
or by which it is bound; (c) result in the creation of any encumbrance on any of
Buyer's assets; (d) violate any applicable law, statute, rule, ordinance or
regulation of any Governmental Body; or (e) violate or result in the suspension,
revocation, modification, invalidity or limitation of any license, permit,
approval or qualification necessary for the conduct of Buyer's business; except
as to clauses (b) through (e) of this Section 5.4 as would not have a material
adverse effect on Buyer's business, operations or financial condition or on
Buyer's ability to consummate the transactions contemplated hereby (a "Buyer
Adverse Effect").
5.5 CONSENTS AND APPROVALS
Except as set forth in Schedule 5.5, (a) no consent, approval or
authorization of, or declaration, filing or registration with, any Governmental
Body is required for the execution, delivery and performance by Buyer of this
Agreement and the Transaction Documents to which it is a party and for the
consummation by Buyer of the transactions contemplated hereby and thereby and
(b) no consent, approval or authorization of any third party is required for the
execution, delivery and performance by Buyer of this Agreement and the
Transaction Documents to which it is a party and the consummation by Buyer of
the transactions contemplated hereby and thereby.
5.6 CLAIMS AND LEGAL PROCEEDINGS
There are no claims, lawsuits or other judicial or administrative
proceedings pending or, to Buyer's knowledge, threatened against Buyer, before
or by any Governmental Body or nongovernmental department, commission, board,
bureau, agency or instrumentality, or any other person, nor are there any
outstanding or unsatisfied Judgments or stipulations to which Buyer is a party
that involve the transactions contemplated herein or that would have a Buyer
Adverse Effect.
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5.7 BROKERAGE
Buyer has not retained any broker or finder in connection with the
transactions contemplated by this Agreement and the Transaction Documents. Any
brokerage or finder's fee due to any broker or finder in violation of the
foregoing representation shall be paid by Buyer.
6. CERTAIN COVENANTS OF SELLER AND BUYER
6.1 ACCESS
(a) Prior to the Closing Date, Seller shall (i) give Buyer and its
accounting, legal, business, environmental and other authorized representatives
and advisors reasonable access, during normal business hours, to the Timberland
Assets for inspection (including environmental inspection), (ii) permit Buyer
and its authorized representatives and advisors to review all books, records and
Contracts relating to the Timberland Assets as may be reasonably requested by
Buyer and its authorized representatives and advisors, (iii) make available
Seller's employees and advisors who are responsible for the management of the
Timberland Assets, and cause Seller's employees and advisors to furnish Buyer
and its authorized representatives and advisors with such data and other
information with respect to the Timberland Assets as may be reasonably requested
by Buyer and its authorized representatives and advisors.
(b) Any information provided to or obtained by Buyer or its
representatives pursuant to or in connection with this Agreement shall be held
by Buyer and its representatives in accordance with, and shall be subject to the
terms of, the Confidentiality Agreement dated July 17, 1997, by and between
Seller and Buyer, a copy of which is attached as Exhibit 6.1(b).
6.2 REASONABLE EFFORTS
Subject to the terms and conditions herein provided, Seller and Buyer agree
to use 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 consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement and to cooperate with the other in connection with the foregoing,
including using reasonable efforts:
(a) to obtain all necessary waivers, consents, releases and approvals
from other parties for the transfer of the Contracts and the Licenses and
Permits;
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(b) to obtain all consents, approvals and authorizations that are
required to be obtained under any federal, state, local or foreign law or
regulation;
(c) to lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby;
(d) to effect all necessary registrations, filings and submissions of
information requested by governmental authorities; and
(e) to fulfill all conditions to this Agreement.
6.3 FURTHER ASSURANCES
From time to time, on or after the Closing Date, Seller and Buyer shall
execute and deliver such further instruments of conveyance and transfer and take
such other action as may be reasonably necessary to carry out the purpose and
intent of this Agreement including, without limitation, resolution of the items
described on Schedule 6.3 attached hereto; provided, however, that Buyer and
Seller agree that, notwithstanding the foregoing, failure to resolve any of the
issues described on Schedule 6.3 attached hereto does not constitute grounds for
termination of this Agreement or the basis of a claim for indemnification under
Section 9 hereof or breach of this Agreement.
6.4 CONDUCT OF SELLER'S TIMBERLANDS OPERATIONS PENDING CLOSING
(a) For so long as this Agreement shall remain in effect, Seller
shall not harvest, nor sell stumpage for harvest, any timber standing, lying or
situated upon the Timberlands.
(b) Between the date hereof and the Closing Date (but not
thereafter), Seller (directly or through an affiliate) shall make commercially
reasonable efforts to negotiate an agreement to purchase substantially all of
the outstanding capital stock or assets of Glacier Land Company, which owns a
fee interest in approximately 5,000 acres of timberlands located in the Glacier
tree farm of Seller (the "Glacier Timberlands"). If Seller is successful in
negotiating an agreement to purchase substantially all of the outstanding
capital stock or assets of Glacier Land Company prior to the Closing Date,
Buyer, at its sole discretion, may elect to have Seller assign, and Buyer will
assume, all rights and obligations under such agreement to purchase
substantially all of the outstanding capital stock or assets, as the case may
be, of Glacier Land Company.
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(c) Between the date hereof and the Closing Date, Seller, at its sole
expense, shall take such steps as may be necessary to terminate the ground lease
held by Citifor relating to approximately 3,000 acres of unharvested timberlands
(the "Citifor Ground Lease"). If the Citifor Ground Lease is not terminated on
or prior to the Target Closing Date, the Target Closing Date shall be extended
by 30 days, or until such earlier time as the Citifor Ground Lease is
terminated.
(d) Concurrent with the execution of this Agreement, Buyer and Seller
shall enter into the Timber Purchase Agreement, substantially in the form
attached hereto as Exhibit 6.4(d), pursuant to which Seller shall sell to Buyer
the standing and downed timber as permitted under the Forest Practice
Applications listed on Schedule 3.4(a)(xiii) attached hereto.
(e) At Closing, Seller shall reimburse Buyer $150 per acre for any
acre of the Timberland Assets that is specifically identified at Schedule 1.3(f)
as requiring manual replanting.
6.5 PUBLIC ANNOUNCEMENTS
Neither Seller nor Buyer shall make, nor permit any agent or affiliate to
make, any public statements, including, without limitation, any press releases,
with respect to the existence and terms of this Agreement and the transactions
contemplated hereby without the prior written consent of the other party hereto
except as may be required by law (and then only with prior written notice to the
other party, together with a draft of the proposed disclosure).
6.6 ENVIRONMENTAL AUDIT
(a) Within fifteen (15) days of the date of this Agreement, Buyer may
conduct, or cause to be conducted, at its sole cost and expense, such
environmental audits or surveys of the Timberlands, if any, as it may deem
reasonably necessary. The scope, methodology, timing and conduct of such
activities shall be subject to the prior written approval of Seller, which
approval shall not be unreasonably withheld and will be deemed given if not
refused within five (5) days of receipt by Seller of a request from Buyer. To
the extent practicable, such environmental audits or surveys shall be conducted
in a manner which will not disrupt the operation of the Timberland Assets, and
Buyer and Seller shall cooperate in scheduling the environmental audit work
performed at the Timberlands pursuant to this Section 6.6. Buyer will begin any
such environmental audits or surveys as soon as practicable and will cause all
such work to be completed within fifteen (15) days of the date hereof. If such
environmental audits or surveys identify any matter or matters which, in Buyer's
reasonable judgment, would, individually or in the aggregate, have
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a material adverse effect on the value, use, or operation of the Timberlands as
commercial timberlands after the Closing Date or could, individually or in the
aggregate, result in a material Claim of Environmental Liability (a "Material
Environmental Matter") and which Buyer intends to assert as the basis for a
claim of nonfulfillment of the condition to Buyer's obligation to close pursuant
to Section 7.4, Buyer shall provide Seller written notice of such matter
indicating such intention no later than October 2, 1997. Absent receipt of such
notice by Seller within such twenty (20) day period, Buyer may not assert any
matter identified in the environmental audits or surveys performed pursuant to
this Section 6.6 as the basis for nonfulfillment of the condition to Buyer's
obligation to close under Section 7.4 or otherwise, or as grounds for
termination under Section 10. Within ten (10) days following Seller's receipt
of any notice from Buyer of a Material Environmental Matter, Seller shall advise
Buyer in writing whether, to what extent, and by what means it intends to
correct such matter. In the event Seller elects to remediate or otherwise
correct a Material Environmental Matter, Buyer and Seller shall agree in writing
as to the specific actions to be taken, including any necessary postponement of
the Closing Date.
(b) In addition, Buyer shall deliver to Seller copies of all
environmental reports, surveys or audits (both drafts and final versions) which
Buyer obtains with respect to the Timberlands pursuant to this Section 6.6.
Buyer and Seller shall keep all environmental audit or survey reports and other
environmental information generated by or exchanged among the parties pursuant
to this Agreement confidential and not disclose or use for any purpose not
expressly contemplated by this Agreement, or permit any other party to use for
any purpose, any such reports or information concerning the Timberlands. Buyer
shall remedy, at Buyer's sole expense, any damage to the Timberlands which is
caused by any environmental audit or survey performed on Buyer's behalf pursuant
to this Section 6.6.
(c) As a condition of such right of entry, Buyer agrees to obtain
full and irrevocable lien releases from all contractors for work done or to be
done on the Timberlands by Buyer or its agents and deliver same to Seller
promptly after completion of any work, and, from time to time, at Seller's
request, to obtain further releases and deliver same to Seller; and Buyer agrees
to defend, indemnify and save Seller harmless from all liability, cost, damage
and expense (including, but not limited to, attorneys' fees) in connection with
all claims, suits and actions of every name, kind and description made or
brought against Seller, its agents or employees by any person or entity as a
result of or on account of actual or alleged injuries or damages to persons,
entities or property received or sustained, in any way arising out of, in
connection with, or as a result of the acts or omissions of Buyer, its agents or
employees, in exercising its rights under the right of entry granted herein.
Without
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limiting the generality of the foregoing, Buyer assumes all liability for
actions brought by its employees. Notwithstanding anything to the contrary in
this Agreement, the obligations set forth in this Section 6.6 will survive any
termination whatsoever of this Agreement.
6.7 RIGHT TO UPDATE
From time to time prior to the Closing, Seller shall have the right (but
not any obligation) to update or amend in any respect its disclosure of any
matter set forth or permitted to be set forth in any Exhibit or Schedule hereto.
If Buyer believes in good faith that the information in any such update or
amendment discloses any fact or circumstance that could have a Material Adverse
Effect or could constitute a Material Environmental Matter, then Buyer shall so
notify Seller in writing within five (5) business days after the date on which
Seller notifies Buyer of the proposed update or amendment. If Buyer fails to so
notify Seller within such five (5) business day period, the update or amendment
shall be deemed to have been accepted by Buyer. If Buyer does so notify Seller,
within five (5) business days of Seller's receipt of such notice, the parties
shall meet to attempt in good faith to negotiate an equitable resolution, by
adjustment of the Purchase Price or otherwise. If the parties are unable to
reach such a resolution within ten (10) business days of such meeting, Buyer may
terminate this Agreement by written notice to Seller. Effective as of the
Closing, except as the parties may otherwise expressly agree in connection with
any objection raised by Buyer pursuant to this Section 6.7, Buyer shall be
deemed to have waived its right to make any claim for indemnification under this
Agreement on the basis of any facts disclosed to Buyer prior to the Closing in
any update or amendment to the Exhibits or Schedules as discussed above.
6.8 REMOVAL OF TRADEMARKS
As promptly as practical after the Closing, and in no event later than
thirty (30) days after the Closing Date, Buyer shall delete, remove or otherwise
obliterate from the Timberland Assets all trade names, trademarks and service
marks of Seller and derivatives thereof and related logos.
6.9 GOVERNMENTAL APPROVALS
Each party shall use its reasonable best efforts to obtain all required
governmental approvals necessary to consummate the transactions contemplated
hereby in accordance with applicable law, including without limitation making or
causing to be made, at its own expense, as promptly as practicable after the
date of this Agreement, any and all any filings and submissions required under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); provided,
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however, that the parties shall each pay fifty percent (50%) of all filing fees
required under the HSR Act. Each party shall furnish to the other party such
necessary information and assistance as the other party may request in
connection with obtaining such approvals and preparing such filings and
submissions.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligation of Buyer to purchase the Timberland Assets at the Closing
shall be subject to the satisfaction at or prior to the Closing of each of the
following conditions, any one or more of which may be waived by Buyer in writing
delivered to Seller:
7.1 NO INJUNCTION OR LITIGATION; HSR ACT WAITING PERIOD
As of the Closing Date, there shall not be any claim, lawsuit or other
judicial or administrative proceeding or Judgment of any nature or type
threatened, pending or made by or before any Governmental Body that questions or
challenges the lawfulness of the transactions contemplated by this Agreement or
the Transaction Documents under any law or regulation or seeks to delay,
restrain or prevent such transactions, that could, in Buyer's reasonable
judgment, have a Material Adverse Effect, or that relates to a Material
Environmental Matter. The waiting period specified in the HSR Act, including
any extensions thereof, shall have expired or been terminated.
7.2 REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) The representations and warranties of Seller made in this
Agreement, the Transaction Documents and any certificate furnished pursuant
hereto or thereto shall be true, complete and correct in all material respects
on and as of the Closing Date;
(b) Seller shall have performed and complied in all material respects
with the covenants and agreements required by this Agreement to be performed and
complied with by it on or prior to the Closing Date; and
(c) Seller shall have delivered to Buyer a certificate dated the
Closing Date to the foregoing effects, signed by a duly authorized officer of
Seller.
7.3 FILING AND CONSENTS
All registrations, filings, applications, notices, covenants, approvals,
waivers, authorizations, qualifications and orders required by this Agreement to
be filed, made
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or obtained by Seller shall have been filed, made or obtained, and copies
thereof shall have been delivered to Buyer.
7.4 ENVIRONMENTAL MATTERS
The results of any environmental audits or surveys of the Timberlands
described in Section 6.6 shall not have identified a Material Environmental
Matter or Matters as to which: (a) Buyer shall have given timely notice in
accordance with Section 6.6 of its intention to assert same as a breach of a
condition to Buyer's obligation to close under this Section 7.4; and (b) Seller
was unable or unwilling to remediate or otherwise correct at its sole expense
and to Buyer's reasonable satisfaction.
7.5 TAXES
All Taxes and other assessments applicable to the Timberland Assets that
are due and owing as of the Closing Date shall have been paid, except for Taxes
and assessments to be apportioned between the parties as of the Closing pursuant
to Section 2.3 or paid by Buyer pursuant to Section 2.4.
7.6 DELIVERY OF CLOSING DOCUMENTS
Seller shall have delivered to Buyer the documents listed in Section 3.2.
7.7 TITLE COMMITMENTS
The Title Company shall have provided Buyer with written assurance (such as
a signed counterpart to escrow instructions) confirming the Title Company's
irrevocable commitment to issue in Buyer's name owner's title insurance policies
insuring the Timberlands substantially in accordance with the Title Commitments,
subject to any modifications between the date hereof and the Closing Date that
either are not Unacceptable Encumbrances or have been cured or insured over by
Seller to Buyer's reasonable satisfaction.
7.8 NO MATERIAL ADVERSE CHANGE
There shall have been no material adverse change in the condition of the
Timberlands between the date of this Agreement and the Closing Date, except as
may be contemplated by the operations of the Timberland Assets by Seller in
accordance with Section 6.4.
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7.9 CONTINUANCE OF SPECIAL USE CLASSIFICATIONS
As of the Closing Date, the county assessor in each applicable county will
have approved of a continuation of the forest use or timberland classification
for all real estate assessment tax parcels in that county included within the
Timberland Assets.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to sell the Timberland Assets to Buyer at the
Closing shall be subject to the satisfaction at or prior to the Closing of each
of the following conditions, any one (1) or more of which may be waived by
Seller in writing delivered to Buyer:
8.1 NO INJUNCTION OR LITIGATION; HSR ACT WAITING PERIOD
As of the Closing Date, there shall not be any claim, lawsuit or other
judicial or administrative proceeding or Judgment of any nature or type
threatened, pending or made by or before any Governmental Body that questions or
challenges the lawfulness of the transactions contemplated by this Agreement or
the Transaction Documents under any law or regulation or seeks to delay,
restrain or prevent such transactions. The waiting period specified in the HSR
Act, including any extensions thereof, shall have expired or been terminated.
8.2 REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) The representations and warranties of Buyer made in this
Agreement, the Transaction Documents and any certificate furnished pursuant
hereto or thereto shall be true, complete and correct in all material respects
on and as of the Closing Date;
(b) Buyer shall have performed and complied in all material respects
with the covenants and agreements required by this Agreement to be performed and
complied with by it on or prior to the Closing Date; and
(c) Buyer shall have delivered to Seller a certificate dated the
Closing Date to the foregoing effects, signed by a duly authorized officer of
Buyer.
8.3 FILINGS AND CONSENTS
All registrations, filings, applications, notices, covenants, approvals,
waivers, authorizations, qualifications and orders required by this Agreement to
be filed, made or obtained by Buyer shall have been filed, made or obtained, and
copies thereof shall have been delivered to Seller.
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8.4 DELIVERY OF CLOSING DOCUMENTS
Buyer shall have delivered to Seller the documents listed in Section 3.3
and the Purchase Price.
8.5 CONTINUANCE OF SPECIAL USE CLASSIFICATIONS
As of the Closing Date, the county assessor in each applicable county will
have approved of a continuation of the forest use or timberland classification
for all real estate assessment tax parcels in that county included within the
Timberland Assets.
9. SURVIVAL AND INDEMNIFICATION
9.1 SURVIVAL
Subject to the specific limitations and other express provisions of this
Agreement, the representations and warranties of the parties contained in
Sections 4 and 5 shall remain in full force and effect for a period of one (1)
year after the Closing Date; provided, however, that the representations and
warranties of Buyer contained in Sections 4 and 5 shall not survive the Closing;
and provided, further, that if a party shall have made a claim for
indemnification pursuant to this Section 9 within the applicable aforesaid
survival period (an "Indemnity Claim"), the representations and warranties to
which such Indemnity Claim relate shall survive only for purposes of that
Indemnity Claim and no others until such Indemnity Claim is disposed of as
provided in this Section 9.
9.2 INDEMNIFICATION BY SELLER
From and after the Closing Date, Seller shall indemnify and hold Buyer and
its affiliates (including their directors, officers, employees, agents and
attorneys) harmless from and against, and shall reimburse Buyer and its
affiliates for, any and all Losses arising out of or in connection with:
(a) any inaccuracy in any representation or warranty made by Seller
in this Agreement or in the Transaction Documents or in any certificate
delivered pursuant hereto or thereto;
(b) any failure by Seller to perform or comply with any covenant
(except as provided in Section 6.3) or agreement in this Agreement or in the
Transaction Documents; and
(c) any Loss arising or resulting from the Excluded Assets or the
Excluded Liabilities.
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9.3 INDEMNIFICATION BY BUYER
From and after the Closing Date, Buyer shall indemnify and hold harmless
Seller and its affiliates (including their directors, officers, employees,
agents and attorneys) from and against, and shall reimburse Seller and its
affiliates for, any and all Losses arising out of or in connection with:
(a) any inaccuracy in any representation or warranty made by Buyer in
this Agreement or in the Transaction Documents or in any certificate delivered
pursuant hereto or thereto;
(b) any failure by Buyer to perform or comply with any covenant
(except as provided in Section 6.3) or agreement in this Agreement or the
Transaction Documents; or
(c) any failure on the part of Buyer to satisfy in full the Assumed
Liabilities.
9.4 THRESHOLD LIMITATIONS
(a) Seller shall not be obligated hereunder to indemnify Buyer with
respect to any Losses as to which Buyer is otherwise entitled to indemnification
under this Agreement unless and until the aggregate amount of indemnification so
asserted exceeds $200,000.00 (the "Threshold"), and thereafter Buyer shall be
entitled to indemnity from Seller hereunder only with respect to any amounts in
excess of the Threshold. Notwithstanding anything in this Agreement to the
contrary, Seller's maximum aggregate obligation to Buyer pursuant to Section 9.2
shall not exceed $10,000,000 (the "Indemnity Cap").
(b) Buyer shall not be obligated hereunder to indemnify Seller with
respect to any Losses as to which Seller is otherwise entitled to
indemnification under this Agreement unless and until the aggregate amount of
indemnification so asserted exceeds the Threshold, and thereafter Seller shall
be entitled to indemnity from Buyer hereunder only with respect to any amounts
in excess of the Threshold. Notwithstanding anything in this Agreement to the
contrary, Buyer's maximum aggregate obligation to Seller pursuant to Section 9.3
shall not exceed the Indemnity Cap.
(c) The liability of any indemnifying party under this Section 9
shall be offset dollar for dollar by: (i) any insurance proceeds received or
recoverable by the indemnified party after the Closing in respect of the Losses
involved; (ii) any other recovery made or recoverable by the indemnified party
from any third party on
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account of the Losses involved; and (iii) any Tax benefit realizable by the
indemnified party or any affiliate thereof on account of the item of Losses
involved, offset by any Tax cost attributable to recovery of the indemnified
amount.
9.5 PROCEDURE
(a) Any party hereto or any of its affiliates seeking indemnification
hereunder (in this context, the "indemnified party") shall notify the other
party (in this context, the "indemnifying party") in writing reasonably promptly
and in no event later than sixty (60) days after the assertion against the
indemnified party of any claim, lawsuit or other judicial or administrative
proceeding by a third party (a "Third-Party Claim") in respect of which the
indemnified party intends to base an Indemnity Claim hereunder. The failure or
delay so to notify the indemnifying party shall relieve it of any obligation or
liability that it may have to the indemnified party.
(b) (i) Subject to the provisions of Section 9.5(d), the
indemnifying party shall have the right, upon written notice given to the
indemnified party within thirty (30) days after receipt of the notice from the
indemnified party of any Third-Party Claim, to assume the defense or handling of
such Third-Party Claim, at the indemnifying party's sole expense, in which case
the provisions of Section 9.5(b)(ii) shall govern.
(ii) The indemnifying party shall select counsel reasonably
acceptable to the indemnified party in connection with conducting the defense or
handling of such Third-Party Claim, and the indemnifying party shall defend or
handle the same in consultation with the indemnified party, and shall keep the
indemnified party timely apprised of the status of such Third-Party Claim, and
shall not, without the prior written consent of the indemnified party, directly
or indirectly assume any position or take any action that would impose any
obligation of any kind on or restrict the actions of the indemnified party. The
indemnifying party shall not, without the prior written consent of the
indemnified party, agree to a settlement of any Third-Party Claim. The
indemnified party shall cooperate with the indemnifying party and shall be
entitled to participate in the defense or handling of such Third-Party Claim
with its own counsel and at its own expense.
(c) If the indemnifying party does not give written notice to the
indemnified party, within thirty (30) days after receipt of the notice from the
indemnified party of any Third-Party Claim, of the indemnifying party's election
to assume the defense or handling of such Third-Party Claim, the indemnified
party may, at the indemnifying party's expense, select counsel in connection
with conducting the defense or handling of such Third-Party Claim and defend or
handle such Third-Party Claim in such manner as it may deem appropriate;
provided, however, that the
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indemnified party shall keep the indemnifying party timely apprised of the
status of such Third-Party Claim and shall not settle such Third-Party Claim
without the prior written consent of the indemnifying party, which consent shall
not be unreasonably withheld. If the indemnified party defends or handles such
Third-Party Claim, the indemnifying party shall cooperate with the indemnified
party and shall be entitled to participate in the defense or handling of such
Third-Party Claim with its own counsel and at its own expense.
(d) In the case of any Third-Party Claim that is brought by any
customer or supplier with respect to the Timberland Assets acquired hereunder on
which Buyer or its affiliates intend to base an Indemnity Claim hereunder,
notwithstanding anything in Section 9.5(b) to the contrary, Buyer or its
affiliates may, at Seller's expense, select counsel and defend or handle such
Third-Party Claim in accordance with Section 9.5(b)(ii) and the provisions of
Section 9.5(b)(ii) shall govern.
(e) If the indemnified party intends to seek indemnification
hereunder, other than for a Third-Party Claim, then it shall notify the
indemnifying party in writing within six (6) months after its discovery of facts
upon which it intends to base its Indemnity Claim hereunder, but the failure or
delay so to notify the indemnifying party shall not relieve the indemnifying
party of any obligation or liability that the indemnifying party may have to the
indemnified party, except to the extent that the indemnifying party demonstrates
that the indemnifying party's ability to defend or resolve such Indemnity Claim
is adversely affected thereby.
(f) The indemnified party may notify the indemnifying party with
respect to an Indemnity Claim hereunder even though the amount thereof plus the
amount of other Indemnity Claims under this Section 9 previously notified by the
indemnified party aggregate less than the Threshold.
9.6 PROPORTIONAL LIABILITY FOR LOSSES
In the event any Losses referred to in this Section 9 are attributable to
or arise out of or in connection with the ownership and operation of the
Timberland Assets in part both before and after the Closing Date, each party
shall indemnify the other party and its affiliates against such Losses in
proportion to the extent to which the Losses resulted from such pre-Closing or
post-Closing activities.
9.7 SPECIFIC PERFORMANCE
The parties to this Agreement acknowledge that it may be impossible to
measure in money the damages that a party would incur if any covenant or
agreement
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contained in this Agreement were not performed in accordance with its terms and
agree that each of the parties hereto shall be entitled, during the period prior
to the Closing, to obtain an injunction to require specific performance of, and
prevent any violation of the terms of, this Agreement, in addition to any other
remedy available hereunder, except that in the event that the Closing does not
occur due to termination of this Agreement by Seller in accordance with Section
10.1(a) (as a result of a failure of any of the conditions set forth in Section
8.2 or 8.4) or 10.1(c), the Termination Payment (as defined in Section 10.2)
shall be Seller's sole remedy for such failure to close. In any such action
specifically to enforce any provision of this Agreement, each party hereby
waives any claim or defense therein that an adequate remedy at law or in damages
exists.
9.8 EXCLUSIVE REMEDIES
Except with respect to claims based on fraud in the inducement, the
indemnification and specific performance remedies set forth under this Section 9
shall constitute the sole and exclusive remedies of the parties with respect to
any matters arising under or relating to this Agreement.
10. TERMINATION
10.1 TERMINATION
This Agreement may be terminated before the Closing:
(a) by Seller, by giving written notice to Buyer at any time, if any
of the conditions set forth in Section 8 is not satisfied at the time at which
the Closing (as it may be deferred pursuant to any provision of this Agreement)
would otherwise occur, or if the satisfaction of any such condition is or
becomes impossible;
(b) by Buyer, by giving written notice to Seller at any time, if any
of the conditions set forth in Section 7 is not satisfied at the time at which
the Closing (as it may be deferred pursuant to any provision of this Agreement)
would otherwise occur, or if the satisfaction of any such condition is or
becomes impossible;
(c) by Seller, by giving written notice to Buyer at any time, if
Buyer has materially breached any representation, warranty, covenant or
agreement contained in this Agreement;
(d) by Buyer, by giving written notice to Seller at any time, if
Seller has materially breached any representation, warranty, covenant or
agreement contained in this Agreement;
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(e) by mutual written agreement of Seller and Buyer; and
(f) by Seller or Buyer, by giving written notice to the other, at any
time after December 15, 1997.
10.2 EFFECT OF TERMINATION
In the event of the termination of this Agreement pursuant to Section 10.1,
(a) each party shall return or destroy all documents containing confidential
information of the other party (and, upon request, certify as to the destruction
thereof), (b) no party hereto shall have any liability or further obligation to
the other party hereunder, except for obligations of confidentiality and nonuse
with respect to the other party's confidential information and any liability for
a breach of this Agreement occurring prior to the date of termination, which
shall survive the termination of this Agreement. In addition, in the event of
termination of this Agreement pursuant to Section 10.1(a) (as a result of a
failure of any of the conditions set forth in Section 8.2 or 8.4) or 10.1(c),
$10,000,000 (less the amount of the Deposit paid by Buyer pursuant to Section
2.1, which shall be retained by Seller) shall be paid by Buyer to Seller as
liquidated damages and as consideration for the rights granted Buyer hereunder
(such payment, the "Termination Payment").
11. MISCELLANEOUS
11.1 SEVERABILITY
If any court determines that any part or provision of this Agreement is
invalid or unenforceable, the remainder of this Agreement shall not be affected
thereby and shall be given full force and effect and remain binding upon the
parties. Furthermore, the court shall have the power to replace the invalid or
unenforceable part or provision with a provision that accomplishes, to the
extent possible, the original business purpose of such part or provision in a
valid and enforceable manner. Such replacement shall apply only with respect to
the particular jurisdiction in which the adjudication is made.
11.2 MODIFICATION AND WAIVER
This Agreement may not be amended or modified in any manner, except by an
instrument in writing signed by each of the parties hereto. The failure of any
party to enforce at any time any of the provisions of this Agreement shall in no
way be construed to be a waiver of any such provision, or in any way affect the
right of such party thereafter to enforce each and every such provision. No
waiver of any breach of this Agreement shall be deemed to be a waiver of any
other or subsequent breach.
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<PAGE>
11.3 NOTICES
All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be sent by facsimile
transmission, or mailed postage prepaid by first-class certified or registered
mail, or mailed by a nationally recognized express courier service, or
hand-delivered, addressed as follows:
if to Buyer: Crown Pacific Limited Partnership
121 S.W. Morrison Street, Suite 1500
Portland, OR 97204
Attention: Roger L. Krage
Fax: (503) 228-4875
with a copy to: Ball Janik LLP
101 S.W. Main Street, Suite 1100
Portland, OR 97204
Attention: William H. Perkins
Fax: (503) 226-3910
if to Seller: Trillium Corporation
425 Pike Street, Suite 600
Seattle, WA 98101
Attention: Paul S. Pien
Fax: (206) 389-4860
with copies to: Trillium Corporation
4350 Cordata Parkway
Bellingham, WA 98226
Attention: Steve Brinn
Fax: (360) 676-7736
and to:
Perkins Coie
1201 Third Avenue, 40th Floor
Seattle, WA 98101
Attention: Stewart M. Landefeld and David C. Clarke
Fax: (206) 583-8500
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<PAGE>
Either party may change the persons or addresses to which any notices or
other communications to it should be addressed by notifying the other party as
provided above. Any notice or other communication, if addressed and sent,
mailed or delivered as provided above, shall be deemed given or received three
(3) days after the date of mailing as indicated on the certified or registered
mail receipt, or on the next business day if mailed by express courier service,
or on the date of delivery or transmission if hand-delivered or sent by
facsimile transmission.
11.4 ASSIGNMENT
Neither Seller nor Buyer may assign any of its rights or obligations
hereunder without the prior written consent of the other party. Notwithstanding
the foregoing, Buyer may assign its rights and obligations under this Agreement
to any affiliate of Buyer, provided that Buyer shall continue to be jointly and
severally liable for the performance of such affiliate's obligations under this
Agreement. This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors and assigns.
11.5 CAPTIONS
The captions and headings used in this Agreement have been inserted for
convenience of reference only and shall not be considered part of this Agreement
or used in the interpretation thereof.
11.6 ENTIRE AGREEMENT
This Agreement constitutes the entire agreement and understanding between
the parties with respect to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations, representations and statements,
whether oral, written, implied or expressed, relating to such subject matter.
11.7 NO THIRD-PARTY RIGHTS
Nothing in this Agreement is intended, nor shall be construed, to confer
upon any person or entity other than Buyer and Seller (and only to the extent
expressly provided herein, their respective affiliates) any right or remedy
under or by reason of this Agreement.
11.8 COUNTERPARTS
This Agreement may be executed in one or more counterparts (including
facsimiles thereof), each of which shall be deemed to be an original, but all of
which shall constitute one agreement.
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11.9 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Washington as though made and to be fully performed in that
State.
11.10 TIME OF THE ESSENCE
Time is of the essence in the performance of this Agreement.
11.11 ATTORNEY'S FEES
If a suit, action, or other proceeding of any nature whatsoever (including
any proceeding under the U.S. Bankruptcy Code) is instituted in connection with
this Agreement or any of the Transaction Documents, or to interpret or enforce
any rights or remedies hereunder or thereunder, the prevailing party shall be
entitled to recover its reasonable attorneys' fees and all other fees, costs,
and expenses actually incurred and reasonably necessary in connection therewith,
as determined by the court at trial or on any appeal or review, in addition to
all other amounts provided by law.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective representatives hereunto authorized as of the day
and year first above written.
TRILLIUM CORPORATION
By
--------------------------------
Title
-----------------------------
CROWN PACIFIC LIMITED
PARTNERSHIP
By
--------------------------------
Title
-----------------------------
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<PAGE>
EXHIBIT 2.2
TIMBER PURCHASE AGREEMENT
THIS AGREEMENT is made this 12th day of September, 1997, by and between TRILLIUM
CORPORATION, a Washington corporation ("Seller"), and CROWN PACIFIC LIMITED
PARTNERSHIP, a Delaware limited partnership ("Purchaser").
RECITALS
A. Seller is the owner of certain timberlands located in Whatcom, Skagit and
Snohomish Counties, State of Washington (the "Property"). Purchaser
desires to purchase from Seller, and Seller desires to sell to Purchaser
all merchantable timber presently standing, lying or being upon the
Property that is permitted for cutting and contained within the Forest
Practices Permit cutting units set forth on Exhibit A. The cutting units
are referred to herein as the "Cutting Units" and the merchantable timber
contained in the Cutting Units is referred to herein as the "Timber."
B. The purchase and sale of the Timber pursuant to this Timber Purchase
Agreement ("Agreement") is being entered into in connection with a separate
Timberlands Purchase Agreement, by and between Seller and Purchaser, dated
September 12, 1997 (the "Timberlands Agreement").
C. The parties desire to set forth their agreement with respect to the
purchase and sale of the Timber on the terms and conditions set forth
below.
AGREEMENT
In consideration of the mutual promises and covenants contained herein, the
parties agree as follows:
1. PURCHASE AND SALE OF TIMBER.
Seller hereby sells to Purchaser and Purchaser hereby purchases from Seller
the Timber. The Timber will comprise an estimated 13.48 MMBF of inventory
volume on the Commencement Date (defined below), which volume is set forth on
Exhibit A. Purchaser shall be entitled to harvest any volume from the
Cutting Units to the extent the actual volume exceeds the estimated inventory
volume. Purchaser shall bear the risk that the actual volume of species mix
harvested from the Cutting Units is less or different than the estimated
inventory volume.
<PAGE>
2. PURCHASE PRICE AND PAYMENT.
2.1 PURCHASE PRICE. The purchase price to be paid by Purchaser for the
Timber and other rights granted hereunder is FOUR MILLION, ONE HUNDRED AND
FIFTY-ONE THOUSAND, FOUR HUNDRED DOLLARS ($4,151,400.00).
2.2 PAYMENT. The purchase price shall be paid in cash by wire transfer
on Monday, September 15, 1997.
3. TAXES.
3.1 SELLER. Seller shall pay all real estate excise and conveyance
taxes applicable to the conveyance of the Timber. All real estate ad valorem
taxes, and any and all other taxes applicable to the Property or Timber shall
be paid by Seller, provided that if the Timberlands Agreement closes, such
taxes shall be prorated in accordance with the terms thereof.
3.2 PURCHASER. Purchaser shall file all required notices, prepare and
file all required returns for, and pay when due, taxes due for the harvesting
and severance of the Timber pursuant to RCW 84.33, or otherwise, and all
business and occupation taxes applicable to sale of Logs by Purchaser.
Purchaser, or Purchaser's logging contractors or operators, shall pay any and
all workers' compensation, unemployment compensation, social security,
employee tax withholding, pension and other taxes and contributions imposed
by law or agreement, which become due and payable on account of Purchaser's
operations under this Agreement or the employment of labor to carry on such
provisions.
4. TERM.
4.1 COMMENCEMENT. This Timber Purchase Agreement shall commence upon
Purchaser's payment of the Purchase Price (the "Commencement Date") and shall
terminate by merger upon the closing of the Timberlands Agreement.
4.2 TERMINATION OF THE TIMBERLANDS AGREEMENT. In the event the
Timberlands Agreement is terminated for any reason, this Timber Purchase
Agreement shall remain in full force and effect and Purchaser's right to
remove the Timber from the Property shall terminate on July 1, 1998.
Notwithstanding the foregoing, Seller shall provide Purchaser with reasonable
extensions of time to remove any remaining Timber that Purchaser is unable to
harvest due to delays caused by events reasonably beyond Purchaser's control.
4.3 REMAINING TIMBER. Upon termination of this agreement, title to all
Timber remaining upon the Property shall vest in the owner of the Property.
<PAGE>
5. CESSATION OF SELLER'S, AND COMMENCEMENT OF PURCHASER'S, HARVESTING
ACTIVITIES.
5.1. CESSATION OF SELLER'S HARVESTING ACTIVITIES. Seller shall
continue its current harvesting and logging road construction activities
relating to harvesting operations on the Cutting Units through Friday,
September 12, 1997 (the "Cut-Off Date"). Any and all logs delivered for
scaling on or prior to the Cut-Off Date shall be Seller's property and shall
be scaled on Seller's account. Seller shall be responsible for any and all
logging and logging road construction costs through the Cut-Off Date.
5.2 COMMENCEMENT OF PURCHASER'S HARVESTING ACTIVITIES. Purchaser
shall have the right to harvest any timber remaining in the Cutting Units
following the Cut-Off Date. Purchaser shall assume and be responsible for
any and all logging and road construction costs associated with its
harvesting of the Cutting Units including the assumption of all rights and
obligations under all logging and logging road construction contracts between
Seller and its contractors as of the Cut-Off Date. A list of such contracts
is set forth as Exhibit B (the "Logging Contracts"). On the Commencement
Date, Seller shall assign to Purchaser all applicable Forest Practices
Applications/permits pertaining to the Cutting Units.
6. ACCESS.
Purchaser shall have the non-exclusive right to use all of the roads which
are owned or controlled by Seller to the extent that such use is necessary
for the harvesting and removal of the Timber from the Property and Cutting
Units.
7. REFORESTATION.
Purchaser shall be responsible for reforestation of all of the Cutting Units.
At the closing of the Timberlands Agreement, Purchaser shall be entitled to
the credit $75.00 per acre of the lands comprising the Cutting Units that
require manual replanting which is equal to $43,125.00 (the "Reforestation
Credit"). If the Timberlands Agreement fails to close, Purchaser shall pay
Seller an amount equal to Reforestation Credit and Seller shall assume all
reforestation obligations on the Cutting Units.
8. INSURANCE.
Purchaser, or Purchaser's logging contractors, shall obtain, and furnish
evidence of, before exercising any rights hereunder, and maintain during the
term hereof, from an insurer acceptable to Seller with endorsements requiring
thirty (30) days' notice to Seller prior to cancellation:
8.1 Comprehensive general liability insurance, automobile liability
insurance and Loggers Board Form insurance, all including coverage for
contractually assumed liabilities and third party fire and property damage
coverage, with combined single limits not less that Two Million Dollars
($2,000,000) per occurrence for bodily injury ,sickness and death for
property damage; and
<PAGE>
8.2 Private industrial accident insurance on all employees engaged in
operations hereunder not covered by state workers' compensation insurance.
Such insurance shall show Seller and its successors as additional insureds
without obligation for premium payment, reporting claims and other
obligations of a "named insured."
9. SELLER'S REPRESENTATION AND WARRANTIES.
Seller covenants, represents, and warrants, as of the date hereof and the close
of this Timber sale and thereafter as provided below, that:
9.1 COMPLIANCE WITH LAWS. To Seller's knowledge, neither the
Property, the Timber, nor the operation of harvesting and delivery of the
Timber hereunder, violates or will fail to comply with any land use,
environmental, or other laws, including, without limitation, Washington
Forest Practices Act requirements, fire protection requirements, and all
other regulations, covenants, conditions, or restrictions applicable to the
Property and the Timber presently in effect.
9.2 CONDEMNATIONS. Seller has not received any notice of any part
hereof, and has no knowledge of any condemnations actions being threatened or
contemplated.
9.3 AUTHORIZATION. This Agreement and all other documents executed
and delivered by Seller to Purchaser have been or will be duly authorized
and executed, and delivered by Seller, and when executed and delivered, will
be legal, valid and binding obligations of Seller, sufficient to convey
Seller's title to the Timber, enforceable in accordance with their respective
terms, and will not violate any provisions of any charter, articles, bylaws
or other agreements of Seller.
9.4 ACTIONS AND DEFAULTS. Seller has not received any notice of any
existing action, suit, proceeding, judgment, order outstanding against the
Timber, the Property, or Seller, or relating to Seller's business or other
assets or Seller's ability to perform its obligations under this Agreement,
and the documents to be executed in connection herewith, or the rights
granted to Purchaser in the Timber hereunder.
9.5 BREACHES OR AGREEMENTS. Execution of this Agreement and the full
and completed performance of the provisions hereof by Seller, shall not
violate or result in any breach of, or constitute a default under any
agreement, deed of trust, loan, or credit agreement, or other instrument to
which Seller is a party, or which Seller is bound. Seller is not in default
under any note, evidence of indebtedness, lease, contract, license,
undertaking or other agreement where the liability thereunder might adversely
affect Seller's ability to perform its obligations under this Agreement.
9.6 AGREEMENTS WITH GOVERNMENTAL AUTHORITIES. Other than existing
Department of Natural Resources permits, there are no agreements with
governmental
<PAGE>
authorities, agencies, utilities, or quasi-governmental entities which affect
the Property or the Timber.
9.7 NO JUDICIAL CONSENTS REQUIRED. No consent or approval of any
federal, state or local court, or federal, state or local government, bureau,
department, commission, or agency is required to permit Seller to execute,
deliver, or perform the transactions contemplated in the Agreement.
9.8 TITLE. Seller has good and sufficient title to the Timber, and
the Property, in fee simple, subject to no liens or encumbrances that would
impact Purchaser's interest in the Timber. There are no unrecorded
contracts, agreements, easements or licenses which might adversely affect
title to the Timber or Purchaser's rights thereto pursuant to this Agreement.
9.9 HAZARDOUS WASTE. To the best of Seller's knowledge, no hazardous,
toxic or dangerous waste, substance or material as defined in or for purposes
of the Comprehensive Environmental Response, Compensation and Liability Act,
any so-called "Superfund" or "Superlien" law or other environmental law has
ever been placed, held, located or disposed of on, under, or at the Property
nor has any part of the Property been used as a dump site or storage site for
such hazardous, toxic or dangerous waste, substance or material.
10. PURCHASER'S REPRESENTATIONS.
Purchaser covenants and represents and warrants that Purchaser is a limited
partnership that is duly organized and is in good standing under the laws of
the State of Delaware, and that this Agreement and all other documents
delivered by Purchaser to Seller at closing have been or will be duly
authorized, executed and delivered by Purchaser and when executed and
delivered, shall constitute legal, valid and binding obligations of
Purchaser, enforceable in accordance with their respective terms and will not
violate any provision of any charter, article, bylaws or other agreements of
Purchaser.
11. DEFAULT.
11.1 EVENTS OF DEFAULT. Any of the following shall be an event of
default:
A. Any material representation or warranty made by a party shall
prove to be false in any material respect.
B. Either party shall fail to perform any obligation of this
Agreement for a period of thirty (30) days after notice from the other party
of default.
11.2 REMEDY. In the event of a default by Seller, Purchaser shall be
entitled to specifically enforce this Agreement. The remedies described
herein shall not be exclusive of any other remedy provided herein or by law
or in equity but shall be cumulative.
<PAGE>
12. INDEMNITY.
12.1 DAMAGES TO PERSONS OR PROPERTY OF THIRD PARTIES. To the extent
permitted by law and except to the extent caused by the negligence of the
other, each party agrees to indemnify and hold harmless the other party
against any expenses incurred or liability for claims of third parties for
damages to persons or property, including timber trespass, arising out of the
negligence of a party, its employees, agents, contractors, and subcontractors
or out of the party's obligations in connection with or under this Agreement.
12.2 LIENS, ENCUMBRANCES. Seller shall indemnify, defend, and hold
Purchaser harmless against any and all claims and liens against the Timber
asserted by third parties , including attorneys' fees incurred by Purchaser
in proceedings brought by such third parties to enforce such claims or liens.
12.3 RISK OF LOSS. Risk of loss and damage to the Timber shall pass to
Purchaser only upon the Commencement Date.
13. PURCHASER'S LOGGING OBLIGATIONS.
13.1 LOGGING OPERATIONS. As to logging operations conducted by
Purchaser on the Property, the Purchaser shall:
A. At Seller's request, identify to the satisfaction of Seller
boundaries of the FPA harvesting unit prior to the time each parcel is
scheduled for logging. Purchaser shall be liable for all damages
attributable to timber trespass by Purchaser or its contractors on land owned
by Seller or third parties.
B. Cut only within boundaries of the harvesting unit as
designated and in accordance with a logging plan previously prepared by
Seller, or prepared by Purchaser and approved by Seller.
C. Operate in good and workmanlike manner to avoid breakage and
damage to reforestation and any other timber which is not to be harvested
under the Permits.
D. Reasonably comply with all applicable provisions of timber
harvesting permits and the Washington Forest Practices Act, Chapter 76.09 of
the Revised Code of Washington (RCW), and the rules and policies issued
thereunder.
E. Legibly mark all harvested Timber on one end with a mutually
agreed branding hammer before removal from the Property, unless waived by
Seller.
F. Pay all costs of labor and materials and keep the Property
free from liens caused by Purchaser, or created as a result of Purchaser's
failure to pay for same, except in the case of a bona fide dispute regarding
such payment, in which
<PAGE>
event Purchaser will provide Seller with security reasonably satisfactory to
Seller in an amount equal to the amount in dispute.
G. At Seller's request reasonably exercised, suspend operations
on the Property at any time when, because of weather conditions, such
operations would cause excessive damage to roads.
H. Maintain any private haul roads owned by Seller or third
parties which Purchaser uses for the removal of the Timber and the
transportation of equipment or personnel whether or not such roads are on the
Property.
I. Maintain all roads and landings used on the Property in
accordance with the Washington Forest Practices Act and the applicable
harvesting permit(s). At the minimum, Purchaser shall keep all roads,
ditches, culverts and ditch banks cleared of logging debris during and at the
completion of Purchaser's logging operations thereon, and maintain all roads
in original or better condition.
J. Allow Seller from time to time to inspect Purchaser's logging
operations on the Property to determine Purchaser's reasonable compliance
with the terms of this Agreement.
k. If reasonably required by Seller as to any logging operation,
Purchaser shall pile all debris adjacent to landings and roads and shall, if
reasonably requested by Seller, to the extent allowed by law, burn such
debris in such locations. Upon completion of logging on each tract to land,
Purchaser shall leave the land in a condition suitable for planting and
reforestation to allow for planting of seedling twelve feet (12') apart.
l. All roads shall be left ditched and shaped and in a well
maintained condition. All roads designated by Seller to be abandoned shall
be abandoned by Purchaser in accordance with a Department of Natural
Resources approved abandonment plan. At its option, Seller may require the
roads to be outsloped and waterbarred by Purchaser.
M. Upon completion of logging on each tract of land, Purchaser
shall remove all of its equipment from thereon.
13.2 PURCHASER'S FURTHER OBLIGATIONS. In addition, Purchaser:
A. Shall comply with all present and future governmental laws,
ordinances, orders and regulations concerning Purchaser's use of the
Property.
B. Shall not suffer, permit or commit any waste, or otherwise
allow, suffer or permit the Property or any use thereof to constitute a
nuisance.
<PAGE>
C. Shall not, and shall not permit any third party to, bring,
store, bury or use any toxic or hazardous substance on the Property.
Notwithstanding this Section to the contrary, Purchaser and/or its
contractors may bring, store, and/or use such materials on the Property as
reasonably necessary in the normal course of Purchaser's logging operations
as authorized hereunder, provided that Purchaser shall remove all such
materials from portions of the Property promptly after completion of logging
operations thereon, and shall be liable for, and indemnify Seller against any
and all demands, claims, actions or causes of actions, suits, losses,
damages, costs, expenses and attorneys' fees which Seller may suffer, sustain
or be subject to, directly or indirectly, in any manner whatsoever, caused
by, arising from, incident to, connected with, or in respect of such
operations.
14. FIRE PROTECTION.
Purchaser shall at all times conform to federal, state and municipal laws and
regulations pertaining to fire protection and suppression and shall:
14.1 HAZARDOUS FIRE WEATHER. During hazardous fire weather, furnish
and maintain on each logging site:
A. An instrument suitable for measuring the relative humidity of
the air within two percent (2%) accuracy.
B Tank truck of at least 600-gallon capacity, full of water,
with a suitable pump of a capacity of at least 50 g.p.m. at 150 p.s.i. and
sufficient 1 1/2-inch hose (at least 1,000 feet), fittings and nozzles, to
reach all parts of the setting, all in good condition and ready for use.
C. A filled and operable 5-pound dry fire extinguisher on each
yarder, shovel, tractor and skidder and in addition, a filled and operable
20-pound dry fire extinguisher on each yarder and shovel.
D. Personnel capable of operating the above equipment
14.2 SOURCES OF WATER. Furnish or develop sources of water including
access thereto suitable for filling said tank truck as reasonably approved by
seller.
14.3 SUSPENSION OF OPERATIONS. Suspend operations hereunder, except
fire prevention, suppression and control, whenever the relative humidity is
thirty percent (30%) or lower, or when in the reasonable judgment of Seller,
or responsible fire protection agencies, such suspension is necessary to
guard against fire on account of, but not limited to, the existence in the
vicinity of operations hereunder of an excessive amount of inflammable
debris, low humidity, low fuel moisture content, high wind or temperature, or
a combination of such conditions, and not resume said operations until
authorized to do so by Seller.
<PAGE>
14.4 NOTICE TO DNR. Upon discovery of a fire in the vicinity of
operations hereunder, immediately notify the Department of Natural Resources,
or the responsible fire protection agency, and Seller.
14.5 ABATEMENT OF HAZARDS. Purchaser shall abate any extreme fire
hazard(s) resulting from Purchaser's timber harvest operations.
15. NOTICES.
All notices and other communications required or permitted to be given under
this Agreement shall be in writing and shall be sent by facsimile
transmission, or mailed postage prepaid by first-class certified or
registered mail, or mailed by a nationally recognized express courier
service, or hand-delivered, addressed as follows:
if to Purchaser: Crown Pacific Limited Partnership
121 S.W. Morrison Street, Suite 1500
Portland, OR 97204
Attention: Roger L. Krage
Fax: (503) 228-4875
with a copy to: Ball Janik LLP
101 S.W. Main Street, Suite 1100
Portland, OR 97204
Attention: William H. Perkins
Fax: (503) 226-3910
if to Seller: Trillium Corporation
425 Pike Street, Suite 600
Seattle, WA 98101
Attention: Paul S. Pien
Fax: (206) 389-4860
with copies to: Trillium Corporation
4350 Cordata Parkway
Bellingham, WA 98226
Attention: Steve Brinn
Fax: (360) 676-7736
Either party may change the persons or addresses to which any notices or
other communications to it should be addressed by notifying the other party
as provided above. Any notice or other communication, if addressed and sent,
mailed or delivered as provided above, shall be deemed given or received
three (3) days after the date of mailing as indicated on the certified or
registered mail receipt, or on the next business day if mailed by express
courier service, or on the date of delivery or transmission if hand-delivered
or sent by facsimile transmission.
<PAGE>
16. MISCELLANEOUS.
16.1 SEVERABILITY. If any term or provision of this Agreement shall to
any extent be invalid and unenforceable, the remainder of the Agreement to
the application of such term or provision to persons and circumstances other
than those to which it is invalid or unenforceable shall not be affected
thereby and each term and provision of this Agreement shall be valid and be
enforced to the extent permitted by law.
16.2 WAIVER. The failure of a party to insist upon a strict
performance of any of the terms, conditions and covenants hereunder, shall
not be deemed a waiver of any rights or remedies that such party may have,
and shall not be deemed a waiver of any subsequent breach or default in the
terms, conditions and covenants herein contained.
16.3 MODIFICATION. No change in the provisions of this Agreement shall
be effective unless made in writing and signed by all parties to this
Agreement.
16.4 INTEGRATION. This Agreement supersedes any and all prior
agreements executed by or on behalf of the parties hereto regarding the
subject matter hereof.
16.5 GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Washington.
16.6 MEMORANDUM OF AGREEMENT. On the Commencement Date, Seller and
Purchaser shall execute and record a memorandum of this Agreement in the form
attached as Exhibit C. Purchaser shall promptly record a release of such
right or encumbrance upon completion of Purchaser's logging operations.
16.7 SURVIVAL OF WARRANTIES. The warranties and representations of
Purchaser and Seller shall survive the closing date hereof.
16.8 ATTORNEY'S FEES. if a suit, action, or other proceeding of any
nature whatsoever (including any proceeding under the U.S. Bankruptcy Code)
is instituted in connection with this Agreement, or to interpret or enforce
any rights or remedies hereunder, the prevailing party shall be entitled to
recover its reasonable attorneys' fees and all other fees, costs, and
expenses actually incurred and reasonably necessary in connection therewith,
as determined by the court at trial or on any appeal or review, in addition
to all other amounts provided by law.
<PAGE>
IN WITNESS WHEREOF, the parties have affixed their signatures on the date
first above written.
SELLER: PURCHASER:
TRILLIUM CORPORATION, CROWN PACIFIC LIMITED PARTNERSHIP,
a Washington corporation a Delaware limited partnership
By: By:
------------------------ ------------------------
Title: Title:
<PAGE>
STATE OF WASHINGTON)
) ss:
COUNTY OF KING )
On this 12th day of September, 1997, before me, the undersigned, a Notary
Public in and for the State of Washington, duly commissioned and sworn,
personally appeared ERIK J. ANDERSON to me known to be the chief Executive
Officer of Trillium Corporation, the corporation that executed the within and
foregoing instrument, and acknowledged the said instrument to be the free and
voluntary act and deed of said corporation for the uses and purposes therein
mentioned, and on oath stated that he is authorized to execute said
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the day and year first above written.
----------------------------------------
Notary Public in and for the State of
Washington residing at _______.
My commission expires ________.
STATE OF OREGON)
) ss:
COUNTY OF MULTNOMAH)
On this ________ day of ___________, 1997, before me, the undersigned, a
Notary Public in and for the State of Washington, duly commissioned and
sworn, personally appeared___________ to me known to be the ____________ of
Crown Pacific, the corporation that executed the within and foregoing
instrument, and acknowledged the said instrument to be the free and voluntary
act and deed of said corporation for the uses and purposes therein mentioned,
and on oath stated that he is authorized to execute said instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal
the day and year first above written.
----------------------------------------
Notary Public in and for the State of
Washington residing at _______.
My commission expires ________.
<PAGE>
EXHIBIT A
FPA CUTTING UNITS
ESTIMATED ESTIMATED ESTIMATED
TOTAL CUT THROUGH VOLUME
UNIT NAME ACRES VOLUME 9/12/97 REMAINING
- --------- ----- ---------- ----------- ----------
NON-OPERATING UNITS
Goodbye Phil 20 289.800
Linberry Divide 55 1247.875
Discus 5 72.450
Linberry Heights 27 511.137
Bear Claw 57 1209.807
Air Touch Alder 30 529.020
Midget 14 3.728
Triple L 43 1366.289
Anderson Cross 21 273.939
Anderson Point 32 965.529
South Todd 56 1633.516
360 8103.090 8103.09
OPERATING UNITS
Boulder Ridge 12 238.700 238.700
West MooseHead 6 106.020 87.5 18.520
East MooseHead 5 88.350 147.8 0.000
Dromedary 59 1107.531 1107.531
Bakerview 41 1000.996 112 888.996
Porter Creek 31 1142.148 256 886.148
Spar Tree 61 2814.052 1329.72 1484.332
215 6497.797 1933.02 4624.227
Total 575 12727.317
THINNING - 9/15 THRU 10/17
Three Mile Thin 437.500
Upper Falls Thin 313.750
751.250
TOTAL ESTIMATED VOLUME 13478.567
<PAGE>
EXHIBIT B
CONTRACTS
DATE
FPA PARTY FUNCTION EXECUTED
1922348 SPAR TREE ALRT RD & LOG 7/31/97
2800461 SOUTH TODD CRK PACIFIC LOG RD & LOG 9/12/97
2800325 DROMEDARY NIELSEN BROS. LOG 9/10/97
1922328 PORTER CREEK PACIFIC LOG LOG 9/12/97
1921291 WEST MOOSEHEAD ZENDER LOG LOG 9/6/97
1921727 BOULDER RIDGE ZENDER LOG LOG 9/6/97
1922123 BAKERVIEW ZENDER LOG LOG 9/6/97
1921979 MIDGET ZENDER LOG LOG 9/6/97
1921860 EAST MOOSEHEAD ZENDER LOG LOG 9/6/97
1922076 3-MILE THIN VANDYK & SON LOG 9/12/97
1921992 UPPER FALLS THIN A&R CABLE LOG 9/12/97
<PAGE>
MEMORANDUM OF AGREEMENT
1. A TIMBER PURCHASE AGREEMENT (the "Purchase Agreement") is made as of the
____ day of September, 1997, by and between TRILLIUM CORPORATION, a
Washington corporation ("Seller"), and CROWN PACIFIC LIMITED PARTNERSHIP, a
Delaware limited partnership ("Purchaser"), regarding the sale Seller to
Purchaser of timber located on certain timberlands located on property
legally described on the attached EXHIBIT A (the "Property").
2. The terms, provisions, covenants, conditions and agreements set forth in
the Purchase Agreement are incorporated herein by this reference.
3. The Purchase Agreement terminates on July 1, 1998.
4. This memorandum is executed for recording purposes only and is not
intended to be a summary of the Purchase Agreement, and the terms of the
Purchase Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Memorandum as of the day
and year first above written.
TRILLIUM CORPORATION,
a Washington corporation
By:
----------------------------------
Its:
--------------------------------
CROWN PACIFIC LIMITED PARTNERSHIP,
a Delaware limited partnership
By:
---------------------------------
Its: General Partner
<PAGE>
EXHIBIT 10.1
PURCHASE PRICE NOTE
(90 DAY)
$55,000,000 Seattle, Washington
October ____, 1997
For value received, CROWN PACIFIC LIMITED PARTNERSHIP, a Delaware limited
partnership ("Maker"), unconditionally promises to pay to the order of
TRILLIUM CORPORATION, a Washington corporation ("Holder"), the principal sum
of Fifty-five Million Dollars ($55,000,000), and to pay interest on the
outstanding principal amount hereof from the date hereof until repaid at the
rates set forth hereinafter. Principal and interest are payable to Holder by
wire transfer to Holder's account No. 67652-008 at Seafirst Bank (ABA No.
125000024), or to such other account or at such other place as Holder may
direct, in such coin or currency of the United States of America as at the
time of payment shall be legal tender for the payment of public and private
debts. Principal and interest shall be payable as hereinafter provided.
1. DEFINITIONS
For all purposes of this Note, "Crown Credit Agreement" means the Amended
and Restated Credit Agreement dated as of July 31, 1996, among the Maker,
various Banks and Co-Agents, and Bank of America National Trust and Savings
Association as Agent, as the same may be further amended, supplemented, or
modified from time to time. Unless otherwise defined herein or the context
otherwise requires, all capitalized terms used but not otherwise defined
herein, are used herein as defined in the Crown Credit Agreement; it being
understood that all defined terms incorporated from the Crown Credit
Agreement into this Note shall, to the extent such incorporated terms contain
terms specifically defined in this Note, be deemed to use such specifically
defined terms as defined herein.
For purposes of the provisions of this Note which incorporate provisions
of the Crown Credit Agreement, it is understood that (i) all capitalized
terms used in such provisions shall be incorporated into this Note, (ii) each
reference in such incorporated provisions to other sections of the Crown
Credit Agreement shall be deemed to incorporate such other sections into this
Note, (iii) any amendment, waiver, termination or other modification of the
Crown Credit Agreement which arises after
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<PAGE>
the date hereof shall be disregarded for purposes of this Note unless
otherwise expressly consented to in writing by Holder.
2. INTEREST RATES
(a) Principal shall bear interest from the date hereof for the initial
one month Interest Period (the period commencing on the date hereof and
ending on the date one month thereafter) at the Offshore Rate (determined two
Business Days prior to the date hereof) plus the Applicable Margin (for
Offshore Rate Loans) for a one month Interest Period (as defined in the Crown
Credit Agreement) and subject to adjustment as set forth in Sections 2(b) and
(c) below. On the last day of the initial one month Interest Period and on
the last day of each one month Interest Period thereafter, the interest rate
shall automatically adjust to the Offshore Rate for a one-month Interest
Period (determined two Business Days prior to each such date) plus the
Applicable Margin (for Offshore Rate Loans). For purposes hereof, the
Applicable Margin shall be adjusted retroactively as set forth in Section 1.1
of the Crown Credit Agreement under the definition of "Applicable Margin."
(b) If the financial reports of Maker delivered pursuant to subsections
6.1(a) and (b) and the certificate delivered pursuant to subsection 6.2(b) of
the Crown Credit Agreement when delivered with respect to any fiscal quarter
indicate that the Applicable Margin for any such period should have been
higher than the Applicable Margin for such period pursuant to the definitions
of such terms, and the interest that would have been collected hereunder
based upon the actual Applicable Margin exceeds the interest actually
collected hereunder, then the Maker shall pay to Holder on or before the
third Business Day after delivery of such financial reports and certificate
an amount equal to such excess.
(c) If (1) the financial reports of Maker delivered pursuant to
subsections 6.1(a) and (b) and the certificate delivered pursuant to
subsection 6.2(b) of the Crown Credit Agreement when delivered with respect
to any fiscal quarter indicate that the Applicable Margin for any such period
should have been lower than the Applicable Margin assumed for such period
pursuant to the definitions of such terms, and (2) the interest actually
collected hereunder exceeds the interest that would have been collected
hereunder based upon the actual Applicable Margin, then the Holder shall
credit such excess to interest owing hereunder during the calendar quarter
when such financial reports and certificate were delivered and, if all such
excess is not credited by the end of such calendar quarter, upon request of
Maker, Holder, if no Default or Event of Default exists, shall refund to
Maker the amount of such excess.
PAGE 2
<PAGE>
3. PAYMENT
Maker shall pay all outstanding principal plus all accrued unpaid
interest on the date that is 90 calendar days from the date of this Note;
provided, however, that on not less than 30 days prior written notice to
Holder, Maker may extend the maturity date to the date that is 120 calendar
days from the date of this Note. In addition, Maker will pay monthly
payments of accrued unpaid interest on the outstanding principal on the last
day of each one month Interest Period. Interest on this Note is computed on
a 360-day year. Unless otherwise agreed or required by applicable law,
payments will be applied first to accrued unpaid interest, then to principal,
and any remaining amount to any unpaid collection costs and late charges.
4. PREPAYMENT
Maker may not prepay the whole or any part of any principal or accrued
interest without the prior written consent of Holder. Prepayments will not,
unless agreed by Holder in writing, relieve Maker of Maker's obligation to
continue to make payments of accrued unpaid interest.
5. DEFAULT RATE
Following the maturity date or acceleration of this Note by reason of
Maker's default, interest will be payable at a default rate equal to the Base
Rate (as defined in the Crown Credit Agreement) plus 2.75 percent per annum,
changing as the Base Rate changes.
6. TAXES, YIELD PROTECTION AND ILLEGALITY
Maker agrees with Holder that Maker will perform the obligations and
Holder is entitled to the benefits and protections of Article III of the
Crown Credit Agreement with the same effect as if those provisions were set
forth herein in full; provided, however, that (i) the references in such
Article to "Agent", "Banks", and "Required Banks" are deemed to be references
to Holder or the holder of this Note, (ii) the references in such Articles to
"Loan" and "Loans" are deemed to be references to the loan evidenced by this
Note, (iii) the references in such Articles to "Note" and "Notes" are deemed
to be references to this Note, (iv) the references in such Articles to the
"Company" are deemed to be references to "Maker", (v) the references in such
Articles to "Closing Date" are deemed to be references to the date of this
Note, and (vi) notwithstanding the foregoing, Maker shall not be obligated to
reimbuse Holder for any Washington Business and Occupation tax payable by
Holder on any amounts received by Holder hereunder. Maker's obligations
under this Section 6 shall continue
PAGE 3
<PAGE>
notwithstanding payment in full of all obligations under the Crown Credit
Agreement and termination of the Crown Credit Agreement.
7. OUT-OF-POCKET COSTS REIMBURSEMENT
Maker will pay on demand all reasonable costs incurred by Holder in
enforcing the obligations evidenced by this Note, including reasonable
attorneys' fees, whether or not a civil action or similar proceeding
(including claims and adversary proceedings in the bankruptcy court) is
commenced or pursued to judgment or an appeal thereof is filed or pursued to
completion. Interest will accrue on the unpaid balance of such costs at the
default rate from the 10th day following the demand until such costs are paid.
8. MAKER'S WAIVERS
Maker waives notice of acceptance, notice, presentment, demand, protest,
dishonor, and notice of dishonor.
9. HOLDER'S PREROGATIVES
Holder may (a) extend the maturity date or renew this Note one or more
times on such terms as Holder may specify and to which Maker agrees and (b)
forbear from exercising its remedies hereunder without affecting the
liability of Maker or any other cosigner or guarantor. Holder's forbearance
or other failure to exercise any right or remedy upon Maker's default shall
not constitute a waiver or grounds for the claim of estoppel with respect to
the default or the term involved while such default continues or in
connection with any future default.
10. MAKER'S REPRESENTATIONS AND WARRANTIES
In order to induce Holder to make the loan evidenced by this Note, Maker
represents and warrants to Holder that the following statements are true,
correct, and complete:
(a) Maker has all corporate power and authority to enter into this Note
and carry out the transactions contemplated hereby;
(b) The representations and warranties contained in Article V of the
Crown Credit Agreement are and will be true, correct, and complete in all
material respects on and as of the date of this Note to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which they were
true, correct, and complete in all material respects on and as of such
earlier date; and
PAGE 4
<PAGE>
(c) No Default or Event of Default under the Crown Credit Agreement has
occurred and is continuing on the date hereof.
11. MAKER'S COVENANTS
Maker agrees with Holder that, until this Note has been paid in full in
cash, Maker will perform the obligations set forth in Sections 6.1, 6.2, 6.3,
6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.12 and 7.1 through 7.16, inclusive, of
the Crown Credit Agreement with the same effect as if such obligations were
set forth herein in full; provided, however, that (i) the references in such
sections to "Agent", "Banks", and "Required Banks" are deemed to be
references to Holder or the holder of this Note, (ii) the references in such
sections to "Loan" and "Loans" are deemed to be references to the loan
evidenced by this Note, (iii) the references in such sections to "Note" and
"Notes" are deemed to be references to this Note, (iv) the references in such
sections to the "Company" are deemed to be references to "Maker", (v) the
references in such sections to "Closing Date" are deemed to be references to
the date of this Note. Maker's obligations under this Section 11 shall
continue notwithstanding payment in full of all obligations under the Crown
Credit Agreement and termination of the Crown Credit Agreement.
12. EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute an "Event
of Default":
(a) Failure of Maker to pay (i) any principal under this Note when due,
or (ii) any interest or other amount due under this Note, within five days
after the date due; or
(b) Failure of Maker to pay, or the default in the payment of, any
amount due under or in respect of any note, instrument, credit agreement,
indenture or other agreement or instrument relating to any indebtedness owing
to Holder or any other party by Maker in excess of $5,000,000 (including
undrawn committed or available amounts and including amounts owing to all
creditors under any combined or syndicated facility), to which Maker is a
party or by which Maker or any of its property or assets is bound beyond any
grace or cure period provided by the terms of such agreement or instrument;
or the occurrence of any other event or circumstance which, with notice or
lapse of time or both, would permit acceleration of such indebtedness; or
PAGE 5
<PAGE>
(c) Any representation or warranty made or deemed made by Maker to
Holder hereunder is incorrect in any material respect on or as the date made
or deemed made; or
(d) An "Event of Default" shall exist as defined in the Crown Credit
Agreement determined on the basis of the covenants and other provisions of
the Crown Credit Agreement in effect on the date of this Note; or an "Event
of Default" shall exist thereunder on the basis of covenants or other
provisions thereof which have been amended or otherwise modified since the
date of this Note and the Lenders under the Crown Credit Agreement have not
waived such Event of Default or elected to forbear their remedies therefor; or
(e) Failure of Maker to perform or observe any term, covenant, or
agreement on its part to be performed or observed pursuant to Section 6.3 or
6.9 or in Article VII of the Crown Credit Agreement as incorporated herein by
Section 11 of this Note; or
(f) Failure of Maker to perform or observe any other term, covenant or
agreement on its part to be performed or observed pursuant to this Note and
such failure shall continue unremedied for a period of 20 days after the
earlier of (i) the date upon which a Responsible Officer knew or reasonably
should have known of such failure or (ii) the date upon which written notice
thereof is given to Maker by Holder; or
(g) A court having proper jurisdiction shall enter a decree or order for
relief in respect of Maker or in an involuntary case under Title 11 of the
United States Code entitled "Bankruptcy" (as now and hereinafter in effect,
or any successor thereto, the "Bankruptcy Code") or any applicable
bankruptcy, insolvency, or other similar law now or hereafter in effect,
which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or
(h) An involuntary case shall be commenced against Maker under any
applicable bankruptcy, insolvency, or other similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises
for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian, or other officer having similar powers over Maker or all or a
substantial part of its property shall have been entered; or the involuntary
appointment of an interim receiver, trustee, or other custodian of Maker for
all or a substantial part of its property shall have occurred; or a warrant
of attachment, execution, or similar process shall have been issued against
any substantial part of the property of Maker and any such proceeding,
decree, order, petition, or appointment shall not be dismissed, or such
warrant of attachment,
PAGE 6
<PAGE>
execution, or similar process shall be released, vacated or fully bonded
within 60 days after commencement, filing or levy; or
(i) An order for relief shall be entered with respect to Maker, or Maker
shall commence a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency, or other similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or
to the conversion of an involuntary case to a voluntary case, under any such
law, or shall consent to the appointment of or taking possession by a
receiver, trustee, or other custodian for all or a substantial part of its
property; or Maker shall make an assignment for the benefit of creditors; or
Maker shall be unable or fail, or shall admit in writing its inability, to
pay its debts as such debts become due; or any partner of Maker shall
authorize action to approve any of the foregoing; or
(j) Maker shall challenge, or institute any proceedings to challenge,
the validity, binding effect, or enforceability of this Note or any
endorsement or assignment of this Note.
13. REMEDIES
After the occurrence and during the continuation of an Event of Default,
Holder may, but shall not be obligated to, immediately demand payment of this
Note and may immediately proceed to exercise all rights and remedies that
Holder may have against Maker; provided, that upon the occurrence of any
event specified in subsection (g) or (i) of Section 12 or upon expiration of
the 60-day period specified in subsection (h) of Section 12, this Note and
all amounts owing hereunder shall automatically become due and payable
without further act of Holder. All rights and remedies of Holder are
cumulative and not exclusive and the commencement or partial exercise of any
such right or remedy shall not preclude Holder from the exercise of any other
right or remedy until the debts evidenced by this Note are paid in full.
Holder's rights specifically include the right of setoff against any
obligations owed by Holder to Maker against Maker's obligations to Holder as
evidenced by this Note.
14. PARTICIPATIONS; NO MAKER ASSIGNMENT; SUCCESSORS AND ASSIGNS
Holder shall have the unconditional right to assign, pledge, and sell
participation interests in this Note. Maker shall not have the right to
assign its rights or obligations under this Note and any attempted assignment
also shall be a default by Maker under this Note. Subject to the foregoing
restrictions on Maker assignment, this Note shall bind and inure to the
benefit of the respective successors and assigns of Maker and Holder.
PAGE 7
<PAGE>
15. INTEGRATION; SUPPLEMENTING DOCUMENTS
This Note is the final and complete expression of the agreement of the
parties and are intended to supersede any prior or contemporaneous oral or
written understandings and agreements relating to this Note.
16. CHOICE OF LAW
Maker and Holder have selected Washington law, except for any of its
choice of law provisions that would make the law of another jurisdiction
applicable to this Note, to govern the construction and enforcement of this
Note.
17. JURISDICTIONAL CONSENT
Maker hereby submits to the jurisdiction of any state or federal court
sitting in Seattle, Washington, in any action or proceeding relating to this
Note and hereby waives any claim that such a forum is inconvenient or that
there is a more convenient forum.
18. SAVINGS CLAUSE
If any term of this Note is hereafter determined to be illegal or
unenforceable, that term will be deemed deleted without invalidating the
remaining terms and, to the fullest extent permitted by law, Maker hereby
waives any provision of law which renders any term illegal or unenforceable.
In the event that (a) the amount of interest and fees payable by Maker under
this Note is later determined to be usurious and (b) Maker is not prohibited
from pleading the defense of usury or maintaining any action thereon or
therefor, any such interest in excess of the maximum allowable rate
automatically shall be deemed to have been applied to principal.
19. POSSIBLE CONVERSION OF NOTE
Holder shall have the right at Holder's option, exercisable in writing
prior to December 31, 1997, to request that the outstanding principal this
Note, or any portion thereof, be converted into one or more notes in amounts
totaling the principal amount of this Note that the Holder has elected to
convert (the "Converted Notes") with a term not exceeding the term of a
private placement note issued by Holder and an interest rate not exceeding
125 percent of the interest rate on the private placement note issued by
Holder. If Holder so elects by notifying Maker in writing by December 31,
1997, then Maker and Holder shall work together in good faith using
commercial best efforts to agree on the final form of the Converted Notes
and, if they are able to reach such agreement, shall thereafter proceed to
execute and substitute such notes for this Note on or before the maturity
date of this Note. Maker
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<PAGE>
acknowledges and agrees that Holder has no obligation and has not made, and
does not hereby make, any commitment orally or in writing to convert this
Note as set forth above and that nothing contained herein shall be construed
to give to Maker any right to extend the maturity date of this Note, except
as expressly provided in Section 3 herein.
20. STATUTORY DISCLAIMER
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
CROWN PACIFIC LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Crown Pacific Management Limited
Partnership, a Delaware limited
partnership, its general partner
By
-------------------------------
Title
----------------------------
PAGE 9
<PAGE>
EXHIBIT 10.2
PURCHASE PRICE NOTE
(455 Day)
$52,500,000 Seattle, Washington
October ____, 1997
For value received, CROWN PACIFIC LIMITED PARTNERSHIP, a Delaware limited
partnership ("Maker"), unconditionally promises to pay to the order of TRILLIUM
CORPORATION, a Washington corporation ("Holder"), the principal sum of Fifty-two
Million Five Hundred Thousand Dollars ($52,500,000), and to pay interest on the
outstanding principal amount hereof from the date hereof until repaid at the
rates set forth hereinafter. Principal and interest are payable to Holder by
wire transfer to Holder's account No. 67652-008 at Seafirst Bank (ABA
No. 125000024), or to such other account, or at such other place as Holder may
direct, in such coin or currency of the United States of America as at the time
of payment shall be legal tender for the payment of public and private debts.
Principal and interest shall be payable as hereinafter provided.
1. DEFINITIONS
For all purposes of this Note, "Crown Credit Agreement" means the Amended
and Restated Credit Agreement dated as of July 31, 1996, among the Maker,
various Banks and Co-Agents, and Bank of America National Trust and Savings
Association as Agent, as the same may be further amended, supplemented, or
modified from time to time. Unless otherwise defined herein or the context
otherwise requires, all capitalized terms used but not otherwise defined herein,
are used herein as defined in the Crown Credit Agreement; it being understood
that all defined terms incorporated from the Crown Credit Agreement into this
Note shall, to the extent such incorporated terms contain terms specifically
defined in this Note, be deemed to use such specifically defined terms as
defined herein.
For purposes of the provisions of this Note which incorporate provisions of
the Crown Credit Agreement, it is understood that (i) all capitalized terms used
in such provisions shall be incorporated into this Note, (ii) each reference in
such incorporated provisions to other sections of the Crown Credit Agreement
shall be deemed to incorporate such other sections into this Note, (iii) any
amendment, waiver, termination or other modification of the Crown Credit
Agreement which arises after
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the date hereof shall be disregarded for purposes of this Note unless otherwise
expressly consented to in writing by Holder.
2. INTEREST RATES
(a) Principal shall bear interest from the date hereof for the initial one
month Interest Period (the period commencing on the date hereof and ending on
the date one month thereafter) at the Offshore Rate (determined two Business
Days prior to the date hereof) plus the Applicable Margin (for Offshore Rate
Loans) for a one-month Interest Period (as defined in the Crown Credit
Agreement) and subject to adjustment as set forth in Sections 2(b) and (c)
below. On the last day of the initial one month Interest Period and the last
day of each one month Interest Period thereafter through the date three calendar
months from the date of this Note, the interest rate shall automatically adjust
to the Offshore Rate for a one-month Interest Period (determined two Business
Days prior to each such date) plus the Applicable Margin. On the date that is
three calendar months from the date of this Note, the interest rate shall
automatically adjust to the Base Rate (as defined in the Crown Credit Agreement)
plus the then Applicable Margin (for Base Rate Loans), changing as the Base Rate
changes, unless Maker ten Business Days before such date by written notice to
Holder selects the Offshore Rate plus the then Applicable Margin (for Offshore
Rate Loans) for an Interest Period to apply to the principal hereof. If the
Offshore Rate option is selected by Maker then ten Business Days prior to the
end of the applicable Interest Period Maker may elect to continue the Offshore
Rate at the then Applicable Margin (for Offshore Rate Loans) for another
Interest Period. If Maker at any time fails to select the Offshore Rate
interest option to apply to the principal hereof, then the Base Rate plus the
then Applicable Margin (for Base Rate Loans) shall apply to the principal
hereof, changing as the Base Rate changes. For purposes hereof, the Applicable
Margin shall be adjusted retroactively as set forth in Section 1.1 of the Crown
Credit Agreement under the definition of Applicable Margin. Notwithstanding the
foregoing (a) no Interest Period shall extend beyond the date any principal
payment is due hereunder, (b) if Maker fails to give Holder notice of the
interest rate option selected as required above, then the Base Rate plus the
then Applicable Margin (for Base Rate Loans) shall apply, changing as the Base
Rate changes, and (c) if the Offshore Rate option is selected, then the rate
shall be fixed for the Interest Period selected.
(b) If the financial reports of Maker delivered pursuant to
subsections 6.1(a) and (b) and the certificate delivered pursuant to
subsection 6.2(b) of the Crown Credit Agreement when delivered with respect to
any fiscal quarter indicate that the Applicable Margin for any such period
should have been higher than the Applicable Margin for such period pursuant to
the definitions of such terms, and the interest that
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would have been collected hereunder based upon the actual Applicable Margin
exceeds the interest actually collected hereunder, then the Maker shall pay to
Holder on or before the third Business Day after delivery of such financial
reports and certificate an amount equal to such excess.
(c) If (1) the financial reports of Maker delivered pursuant to
subsections 6.1(a) and (b) and the certificate delivered pursuant to
subsection 6.2(b) of the Crown Credit Agreement when delivered with respect to
any fiscal quarter indicate that the Applicable Margin for any such period
should have been lower than the Applicable Margin assumed for such period
pursuant to the definitions of such terms, and (2) the interest actually
collected hereunder exceeds the interest that would have been collected
hereunder based upon the actual Applicable Margin, then the Holder shall credit
such excess to interest owing hereunder during the calendar quarter when such
financial reports and certificate were delivered and, if all such excess is not
credited by the end of such calendar quarter, upon request of Maker, Holder, if
no Default or Event of Default exists, shall refund to Maker the amount of such
excess.
3. PAYMENT
Maker shall pay all outstanding principal plus all accrued unpaid interest
on the date that is 455 calendar days from the date of this Note (the "Maturity
Date"). In addition, Maker will pay monthly payments of accrued unpaid interest
on the outstanding principal on the last day of each Interest Period; provided
that if the Interest Period exceeds one month or if the loan bears interest
based on the Base Rate, then on the last day of each calendar month. Interest
on this Note is computed on a 360-day year. Unless otherwise agreed or required
by applicable law, payments will be applied first to accrued unpaid interest,
then to principal, and any remaining amount to any unpaid collection costs and
late charges.
4. PREPAYMENT
Maker may not prepay the whole or any part of any principal or accrued
interest without the prior written consent of Holder. Prepayments will not,
unless agreed by Holder in writing, relieve Maker of Maker's obligation to
continue to make payments of accrued unpaid interest.
5. DEFAULT RATE
Following the Maturity Date or acceleration of this Note by reason of
Maker's default, interest will be payable at a default rate equal to Base Rate
(as defined in the
<PAGE>
Crown Credit Agreement) plus 2.75 percent per annum, changing as the Base Rate
changes.
6. TAXES, YIELD PROTECTION AND ILLEGALITY
Maker agrees with Holder that Maker will perform the obligations and Holder
is entitled to the benefits and protections of Article III of the Crown Credit
Agreement with the same effect as if those provisions were set forth herein in
full; provided, however, that (i) the references in such Article to "Agent",
"Banks", and "Required Banks" are deemed to be references to Holder or the
holder of this Note, (ii) the references in such Articles to "Loan" and "Loans"
are deemed to be references to the loan evidenced by this Note, (iii) the
references in such Articles to "Note" and "Notes" are deemed to be references to
this Note, (iv) the references in such Articles to the "Company" are deemed to
be references to "Maker", (v) the references in such Articles to "Closing Date"
are deemed to be references to the date of this Note, and (vi) notwithstanding
the foregoing, Maker shall not be obligated to reimbuse Holder for any
Washington Business and Occupation tax payable by Holder on any amounts received
by Holder hereunder. Maker's obligations under this Section 6 shall continue
notwithstanding payment in full of all obligations under the Crown Credit
Agreement and termination of the Crown Credit Agreement.
7. OUT-OF-POCKET COSTS REIMBURSEMENT
Maker will pay on demand all reasonable costs incurred by Holder in
enforcing the obligations evidenced by this Note, including reasonable
attorneys' fees, whether or not a civil action or similar proceeding (including
claims and adversary proceedings in the bankruptcy court) is commenced or
pursued to judgment or an appeal thereof is filed or pursued to completion.
Interest will accrue on the unpaid balance of such costs at the default rate
from the 10th day following the demand until such costs are paid.
8. MAKER'S WAIVERS
Maker waives notice of acceptance, notice, presentment, demand, protest,
dishonor, and notice of dishonor.
9. HOLDER'S PREROGATIVES
Holder may (a) extend the maturity date or renew this Note one or more
times on such terms as Holder may specify and to which Maker agrees and
(b) forbear from exercising its remedies hereunder without affecting the
liability of Maker or any other cosigner or guarantor. Holder's forbearance or
other failure to exercise any right or
<PAGE>
remedy upon Maker's default shall not constitute a waiver or grounds for the
claim of estoppel with respect to the default or the term involved while such
default continues or in connection with any future default.
10. MAKER'S REPRESENTATIONS AND WARRANTIES
In order to induce Holder to make the loan evidenced by this Note, Maker
represents and warrants to Holder that the following statements are true,
correct, and complete:
(a) Maker has all corporate power and authority to enter into this Note
and carry out the transactions contemplated hereby;
(b) The representations and warranties contained in Article V of the Crown
Credit Agreement are and will be true, correct, and complete in all material
respects on and as of the date of this Note to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which they were true, correct, and
complete in all material respects on and as of such earlier date; and
(c) No Default or Event of Default under the Crown Credit Agreement has
occurred and is continuing on the date hereof.
11. MAKER'S COVENANTS
Maker agrees with Holder that, until this Note has been paid in full in
cash, Maker will perform the obligations set forth in Sections 6.1, 6.2, 6.3,
6.4, 6.5, 6.6, 6.7, 6.8, 6.9, 6.10, 6.12 and 7.1 through 7.16, inclusive, of the
Crown Credit Agreement with the same effect as if such obligations were set
forth herein in full; provided, however, that (i) the references in such
sections to "Agent", "Banks", and "Required Banks" are deemed to be references
to Holder or the holder of this Note, (ii) the references in such sections to
"Loan" and "Loans" are deemed to be references to the loan evidenced by this
Note, (iii) the references in such sections to "Note" and "Notes" are deemed to
be references to this Note, (iv) the references in such sections to the
"Company" are deemed to be references to "Maker", and (v) the references in such
sections to "Closing Date" are deemed to be references to the date of this Note.
Maker's obligations under this Section 11 shall continue notwithstanding payment
in full of the obligations under the Crown Credit Agreement and termination of
the Crown Credit Agreement.
<PAGE>
12. EVENTS OF DEFAULT
The occurrence of any of the following events shall constitute an "Event of
Default":
(a) Failure of Maker to pay (i) any principal under this Note when due, or
(ii) any interest or other amount due under this Note, within five days after
the date due; or
(b) Failure of Maker to pay, or the default in the payment of, any amount
due under or in respect of any note, instrument, credit agreement, indenture or
other agreement or instrument relating to any indebtedness owing to Holder or
any other party by Maker in excess of $5,000,000 (including undrawn committed or
available amounts and including amounts owing to all creditors under any
combined or syndicated facility), to which Maker is a party or by which Maker or
any of its property or assets is bound beyond any grace or cure period provided
by the terms of such agreement or instrument; or the occurrence of any other
event or circumstance which, with notice or lapse of time or both, would permit
acceleration of such indebtedness; or
(c) Any representation or warranty made or deemed made by Maker to Holder
hereunder is incorrect in any material respect on or as the date made or deemed
made; or
(d) An "Event of Default" shall exist as defined in the Crown Credit
Agreement determined on the basis of the covenants and other provisions of the
Crown Credit Agreement in effect on the date of this Note; or an "Event of
Default" shall exist thereunder on the basis of covenants or other provisions
thereof which have been amended or otherwise modified since the date of this
Note and the Lenders under the Crown Credit Agreement have not waived such Event
of Default or elected to forbear their remedies therefor; or
(e) Failure of Maker to perform or observe any term, covenant, or
agreement on its part to be performed or observed pursuant to Section 6.3 or 6.9
or in Article VII of the Crown Credit Agreement as incorporated herein by
Section 11 of this Note; or
(f) Failure of Maker to perform or observe any other term, covenant or
agreement on its part to be performed or observed pursuant to this Note and such
failure shall continue unremedied for a period of 20 days after the earlier of
(i) the date upon which a Responsible Officer knew or reasonably should have
known of
<PAGE>
such failure or (ii) the date upon which written notice thereof is given to
Maker by Holder; or
(g) A court having proper jurisdiction shall enter a decree or order for
relief in respect of Maker or in an involuntary case under Title 11 of the
United States Code entitled "Bankruptcy" (as now and hereinafter in effect, or
any successor thereto, the "Bankruptcy Code") or any applicable bankruptcy,
insolvency, or other similar law now or hereafter in effect, which decree or
order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or
(h) An involuntary case shall be commenced against Maker under any
applicable bankruptcy, insolvency, or other similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian, or
other officer having similar powers over Maker or all or a substantial part of
its property shall have been entered; or the involuntary appointment of an
interim receiver, trustee, or other custodian of Maker for all or a substantial
part of its property shall have occurred; or a warrant of attachment, execution,
or similar process shall have been issued against any substantial part of the
property of Maker and any such proceeding, decree, order, petition, or
appointment shall not be dismissed, or such warrant of attachment, execution, or
similar process shall be released, vacated or fully bonded within 60 days after
commencement, filing or levy; or
(i) An order for relief shall be entered with respect to Maker, or Maker
shall commence a voluntary case under the Bankruptcy Code or any applicable
bankruptcy, insolvency, or other similar law now or hereafter in effect, or
shall consent to the entry of an order for relief in an involuntary case, or to
the conversion of an involuntary case to a voluntary case, under any such law,
or shall consent to the appointment of or taking possession by a receiver,
trustee, or other custodian for all or a substantial part of its property; or
Maker shall make an assignment for the benefit of creditors; or Maker shall be
unable or fail, or shall admit in writing its inability, to pay its debts as
such debts become due; or any partner of Maker shall authorize action to approve
any of the foregoing; or
(j) Maker shall challenge, or institute any proceedings to challenge, the
validity, binding effect, or enforceability of this Note or any endorsement or
assignment of this Note.
13. REMEDIES
After the occurrence and during the continuation of an Event of Default,
Holder may, but shall not be obligated to, immediately demand payment of this
Note
<PAGE>
and may immediately proceed to exercise all rights and remedies that Holder may
have against Maker; provided, that upon the occurrence of any event specified in
subsections (g) or (i) of Section 12 or upon expiration of the 60-day period
specified in subsection (h) of Section 12, this Note and all amounts owing
hereunder shall automatically become due and payable without further act of
Holder. All rights and remedies of Holder are cumulative and not exclusive and
the commencement or partial exercise of any such right or remedy shall not
preclude Holder from the exercise of any other right or remedy until the debts
evidenced by this Note are paid in full. Holder's rights specifically include
the right of setoff against any obligations owed by Holder to Maker against
Maker's obligations to Holder as evidenced by this Note.
14. PARTICIPATIONS; NO MAKER ASSIGNMENT; SUCCESSORS AND ASSIGNS
Holder shall have the unconditional right to assign, pledge, and sell
participation interests in this Note. Maker shall NOT have the right to assign
its rights or obligations under this Note and any attempted assignment also
shall be a default by Maker under this Note. Subject to the foregoing
restrictions on Maker assignment, this Note shall bind and inure to the benefit
of the respective successors and assigns of Maker and Holder.
15. INTEGRATION; SUPPLEMENTING DOCUMENTS
This Note is the final and complete expression of the agreement of the
parties and are intended to supersede any prior or contemporaneous oral or
written understandings and agreements relating to this Note.
16. CHOICE OF LAW
Maker and Holder have selected Washington law, except for any of its choice
of law provisions that would make the law of another jurisdiction applicable to
this Note, to govern the construction and enforcement of this Note.
17. JURISDICTIONAL CONSENT
Maker hereby submits to the jurisdiction of any state or federal court
sitting in Seattle, Washington, in any action or proceeding relating to this
Note and hereby waives any claim that such a forum is inconvenient or that there
is a more convenient forum.
<PAGE>
18. SAVINGS CLAUSE
If any term of this Note is hereafter determined to be illegal or
unenforceable, that term will be deemed deleted without invalidating the
remaining terms and, to the fullest extent permitted by law, Maker hereby waives
any provision of law which renders any term illegal or unenforceable. In the
event that (a) the amount of interest and fees payable by Maker under this Note
is later determined to be usurious and (b) Maker is not prohibited from pleading
the defense of usury or maintaining any action thereon or therefor, any such
interest in excess of the maximum allowable rate automatically shall be deemed
to have been applied to principal.
19. POSSIBLE CONVERSION OF NOTE
Holder shall have the right at Holder's option, exercisable in writing
prior to December 31, 1997, to request that the outstanding principal this Note,
or any portion thereof, be converted into one or more notes in amounts totaling
the principal amount of this Note that the Holder has elected to convert (the
"Converted Notes") with a term not exceeding the term of a private placement
note issued by Holder and an interest rate not exceeding 125 percent of the
interest rate on the private placement note issued by Holder. If Holder so
elects by notifying Maker in writing by December 31, 1997, then Maker and Holder
shall work together in good faith using commercial best efforts to agree on the
final form of the Converted Notes and, if they are able to reach such agreement,
shall thereafter proceed to execute and substitute such notes for this Note on
or before the maturity date of this Note. Maker acknowledges and agrees that
Holder has no obligation and has not made, and does not hereby make, any
commitment orally or in writing to convert this Note as set forth above and that
nothing contained herein shall be construed to give to Maker any right to extend
the maturity date of this Note.
<PAGE>
20. STATUTORY DISCLAIMER
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON
LAW.
CROWN PACIFIC LIMITED PARTNERSHIP, a
Delaware limited partnership
By: Crown Pacific Management Limited
Partnership, a Delaware limited
partnership, its general partner
By
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Title
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