PLUM CREEK TIMBER COMPANY, L.P.
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
As of November 12, 1998
SDW Timber I, L.L.C.
c/o S.D. Xxxxxx Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned, Plum Creek Timber Company, L.P. (together with any
Person who succeeds to all or substantially all of Plum Creek Timber
Company, L.P.'s assets and business, herein called the "Company"), a
Delaware limited partnership, hereby agrees with SDW Timber I, L.L.C.
(the "Seller") as follows:
1. Authorization of Issue of Notes
The Company will authorize the issuance and delivery of $171,375,000
aggregate principal amount of its Senior Notes (the "Notes", such term
to include each Note delivered pursuant to any provision of this
Agreement and any such Notes issued in substitution therefor pursuant to
any such provision). The Notes will be issued in three separate series
which shall be entitled, shall be issued in such amounts, shall bear
interest (subject to adjustment as provided in paragraph 4D) and shall
mature as follows:
Title Principal Amount Interest Rate Maturity Date
Series E $71,406,250 -.--% February 12, 2007
Series F 49,984,375 -.--% February 12, 2009
Series G 49,984,375 -.--% February 12, 2011
The Notes shall be substantially in the form set out in Exhibit A, with
such changes therefrom, if any, (i) as provided in paragraph 4G and (ii)
as may be approved by the Seller and the Company. Certain capitalized
terms used in this Agreement are defined in paragraph 10; references to
a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement and references to
"this Agreement" shall mean this Agreement as it may from time to time
be amended or supplemented.
2. Issuance of Notes
The Company and S.D. Xxxxxx Company ("SDW") have entered into a Purchase
and Sale Agreement (the "Timber Contract"), dated as of October 5, 1998,
whereby (A) SDW has agreed to (i) transfer certain timberlands and
associated property located in the central portion of Maine, and assets
and rights appurtenant thereto, to its wholly-owned subsidiary, SDW
Timber II, L.L.C., a Delaware limited liability company ("SDW Timber
II"), (ii) transfer its limited liability interest in SDW Timber II (the
"LLC Interest") to the Seller and (iii) cause the Seller to sell,
transfer and deliver the LLC Interest to the Company, and (B) the
Company has agreed to purchase the LLC Interest from the Seller for
consideration which includes the Notes provided for herein. It is a
condition of the Timber Contract that the Company and the Seller shall
enter into this Agreement and that the Company shall issue its Notes to
the Seller in payment of a portion of the purchase price payable by the
Company under the Timber Contract (the "Property Purchase Price").
Accordingly, subject to the terms and conditions herein set forth, the
Company hereby agrees to issue to the Seller, and the Seller agrees to
accept from the Company, $171,375,000 aggregate principal amount of
Notes in payment of the portion of the Property Purchase Price
represented by the Notes. The Company will deliver to the Seller, at
the offices of Ropes & Xxxx, One International Place, Boston,
Massachusetts, on the "Closing Date" under the Timber Contract (herein
called the "closing" or the "date of closing") one or more Notes
registered in the Seller's name or in the name of its nominee,
evidencing the aggregate principal amount of Notes to be issued to the
Seller hereunder and in the denomination or denominations specified in
Schedule I.
3. Conditions of Closing
The obligation of the Company to issue the Notes hereunder, and the
obligation of the Seller to accept such Notes is, in each case, entirely
dependent upon the occurrence of the "Closing" under the Timber
Contract. The obligation of the Seller to accept the Notes to be issued
to it hereunder is subject to the satisfaction, on or before the date of
closing, of the following further conditions:
3A. Opinion of Company's General Counsel
The Seller shall have received from Xxxxx X. Xxxxx, Vice President,
General Counsel and Secretary for the Company, a favorable opinion
satisfactory to the Seller and substantially in the form of Exhibit B
attached hereto.
3B. Representations and Warranties; No Default
The representations and warranties contained in paragraph 8 shall be
true in all material respects on and as of the date of closing, except
to the extent of changes caused by the transactions herein contemplated;
there shall exist on the date of closing no Event of Default or Default;
and the Company shall have delivered to the Seller a certificate signed
by a Responsible Officer, dated the date of closing, to both such
effects.
3C. Insurance
The Company shall have delivered to the Seller an Officers' Certificate,
dated the date of closing, certifying that insurance with respect to its
properties and business complying with the provisions of paragraph 5G
(including, without limitation, the provisions of paragraph 5G
permitting the Company to self-insure) is in full force and effect.
3D. Proceedings
All proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incident thereto shall be
satisfactory in substance and form to the Seller, and the Seller shall
have received all such counterpart originals or certified or other
copies of such documents as it may reasonably request.
4. Prepayments and Acquisitions of Notes; Payment on Business Days;
Interest Rate Adjustment
4A. Prepayments
The Notes shall not be subject to any required prepayment prior to their
stated maturity. The Notes shall be subject to prepayment under the
circumstances set forth in paragraph 4B.
4B. Optional Prepayment With Yield-Maintenance Premium
The Notes shall be subject to prepayment on any Business Day, in whole
at any time or from time to time in part (other than in the case of any
prepayment pursuant to paragraph 6B(5)(viii) or 6B(6)), in multiples of
$5,000,000; provided that, if the Company shall so prepay the Notes in
part, such prepayment shall be made on each series ratably in accordance
with the unpaid principal amount of such series) at the option of the
Company, at 100% of the principal amount so prepaid plus interest
thereon to the prepayment date and the Yield-Maintenance Premium, if
any, with respect to each Note.
4C. Notice of Optional Prepayment
The Company shall give the holder of each Note irrevocable written
notice of any prepayment pursuant to paragraph 4B not less than 20
Business Days prior to the prepayment date, specifying such prepayment
date and the principal amount of the Notes, and of the Notes held by
such holder, to be prepaid on such date and stating that such prepayment
is to be made pursuant to paragraph 4B. Notice of prepayment having
been given as aforesaid, the principal amount of the Notes specified in
such notice, together with interest thereon to the prepayment date and
together with the premium, if any, herein provided, shall become due and
payable on such prepayment date. The Company shall deliver (i) two (2)
Business Days prior to each prepayment pursuant to paragraph 4B an
Officers' Certificate stating whether a Yield-Maintenance Premium is
payable in connection with such prepayment and setting forth the
calculations made in making such determination based on an estimate of
such Yield-Maintenance Premium and (ii) on the date of such prepayment,
an Officers' Certificate stating whether such Yield-Maintenance Premium
is payable and setting forth the actual calculation.
4D. Partial Payments Pro Rata
Upon any partial prepayment of the Notes the principal amount so prepaid
shall be allocated to all Notes at the time outstanding (including, for
the purpose of this paragraph 4D only, all Notes prepaid or otherwise
retired or purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates) in proportion to the respective outstanding
principal amounts thereof.
4E. Retirement of Notes
The Company shall not, and shall not permit any of its Subsidiaries or
Affiliates to, prepay or otherwise retire in whole or in part prior to
their stated final maturity (other than a prepayment pursuant to
paragraph 4B or upon acceleration of such final maturity pursuant to
paragraph 7A), or purchase or otherwise acquire, directly or indirectly,
Notes held by any holder unless the Company or such Subsidiary or
Affiliate shall have offered to prepay or otherwise retire or purchase
or otherwise acquire, as the case may be, the same proportion of the
aggregate principal amount of Notes held by each other holder of Notes
at the time outstanding upon the same terms and conditions. Any Notes
so prepaid or otherwise retired or purchased or otherwise acquired by
the Company or any of its Subsidiaries or Affiliates shall not be deemed
to be outstanding for any purpose under this Agreement, except as
provided in xxxxxxxxx 0X.
0X. Payments on Business Days
Anything in this Agreement or the Notes to the contrary notwithstanding,
any payment of principal of or interest on any Note that is due on a
date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the
computation of the interest payable on such next succeeding Business
Day.
4G. Interest Rate Adjustment
The interest rate on each Series of Notes is subject to adjustment 90
days (or earlier if the parties so elect) after the date of closing (the
"Adjustment Date"). The amount of the adjustment in the interest rate
on each Series of Notes, if any, will be the positive or negative result
of (a) the rate at which the Company could borrow through notes issued
at par in a hypothetical private placement to large US institutional
investors utilizing a special purpose structured debt vehicle on the
same terms as such Series of Notes, minus (b) the sum of (i) the yield
to maturity of U.S. treasury securities (determined as of the Adjustment
Date) used to price such Series of Notes plus (ii) 200 basis points.
The foregoing shall be determined jointly, as of the Adjustment Date, by
NationsBanc Xxxxxxxxxx Securities LLC and Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securites Corporation. Upon any such adjustment of interest rates, the
Company will issue to the holders of the Notes, new Notes reflecting the
adjusted interest rate upon surrender to the Company of the old Notes
held by such holders. The surrendered Notes shall be cancelled by the
Company.
5. Affirmative Covenants
5A. Financial Statements
The Company covenants that it will deliver to each Significant Holder in
duplicate:
(i) as soon as available, but not later than 90 days after
the end of each fiscal year, a copy of the audited combined balance
sheet of the Company and its combined Subsidiaries as of the end of such
year and the related combined statement of income and combined statement
of cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous fiscal year, and
accompanied by the opinion of PricewaterhouseCoopers LLP, or another
nationally recognized independent public accounting firm, which report
shall state that such combined financial statements present fairly the
financial position for the dates specified and the results of operations
for the periods indicated in conformity with generally accepted
accounting principles applied on a basis consistent with prior years;
(ii) as soon as available, but not later than 120 days
after the end of each fiscal year, a copy of a combining balance sheet
of the Company and each of its Subsidiaries as at the end of such fiscal
year and the related combining statement of income and combining
statement of cash flows for such fiscal year, all in reasonable detail
and satisfactory in scope to the Required Holder(s) and unaudited but
certified by an appropriate Responsible Officer as having been used in
connection with the preparation of the financial statements referred to
in clause (i) of this paragraph 5A;
(iii) as soon as available, but not later than 45 days
after the end of each fiscal quarter (other than the last fiscal
quarter) of each year, a copy of the unaudited combined balance sheet of
the Company and its combined Subsidiaries as of the end of such quarter
and the related combined statement of income and combined statement of
cash flows for the period commencing on the first day and ending on the
last day of such quarter, in each case setting forth in comparative form
figures for the corresponding period in the preceding fiscal year, all
in reasonable detail and satisfactory in scope to the Required Holder(s)
(information in detail and scope comparable to information required to
be included in a Quarterly Report on Form 10-Q shall be deemed to be
satisfactory for such purposes), such combined balance sheets to be as
of the end of such quarter and such combined statements of income and
combined statements of cash flows to be for such quarterly period and
for the period from the beginning of the fiscal year to the end of such
quarter, and certified by an appropriate Responsible Officer as being
complete and correct and presenting fairly the financial position for
the dates specified and the results of operations of the Company and the
Subsidiaries for the periods indicated in conformity with generally
accepted accounting principles applied on a consistent basis;
(iv) as soon as available, but not later than 45 days after
the end of each fiscal quarter (other than the last fiscal quarter) of
each year, a copy of the unaudited combining balance sheet of the
Company and each of its Subsidiaries, and the related combining
statement of income and combining statement of cash flows for such
quarter, in each case setting forth in comparative form figures for the
corresponding period in the preceding fiscal year, all in reasonable
detail and satisfactory in scope to the Required Holder(s), (information
in detail and scope that would normally be required on interim financial
statements, except as provided for in this paragraph, shall be deemed to
be satisfactory for such purposes), such combining balance sheets to be
as of the end of such quarter and such combining statements of income
and combining statements of cash flows to be for such quarterly period
and for the period from the beginning of the fiscal year to the end of
such quarter, and certified by an appropriate Responsible Officer of the
Company as having been used in connection with the preparation of the
financial statements referred to in clause (iii) of this paragraph 5A;
(v) to the extent not delivered pursuant to clauses (i),
(ii), (iii) and (iv) above, promptly upon transmission thereof, copies
of all such financial statements as are delivered to the Mortgage
Noteholders pursuant to the Mortgage Note Agreements;
(vi) to the extent not delivered pursuant to clause (i),
(ii), (iii), (iv) or (v), promptly upon transmission thereof, copies of
all such financial statements, proxy statements, notices and reports as
it sends to its public security holders and copies of all registration
statements (without exhibits) and all reports which it files with the
Securities and Exchange Commission and any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission;
(vii) as soon as practicable, and in any event within 10
Business Days after the Company, any of its Subsidiaries or any Related
Person knows of the occurrence or existence or expected occurrence or
existence of any event or condition or series of events or conditions
with respect to any Plan or Plans which are reasonably likely to result
in (a) a material liability to the Company, any of its Subsidiaries or
any Related Person pursuant to ERISA or the Code (other than liability
for PBGC premiums or regular periodic contributions to any such Plan or
Plans) or (b) the imposition of a Lien on any of the assets or other
properties of the Company, any of its Subsidiaries or any Related Person
pursuant to ERISA or the Code, the Company shall deliver to each
Significant Holder a statement signed by the chief financial officer of
the Company setting forth details respecting such event or condition or
series of events or conditions and the action, if any, that the Company,
any of its Subsidiaries or any Related Person proposes to take with
respect thereto (and a copy of any notice, report or other written
communication, or a written description of any oral communication, with
or from the PBGC, the Internal Revenue Service or the Department of
Labor with respect to such event or condition or series of events or
conditions.
Together with each delivery of financial statements required by clauses
(i) and (iii) above, the Company will deliver to each Significant Holder
an Officers' Certificate demonstrating (with computations in reasonable
detail) compliance by the Company and its Subsidiaries with the
provisions of paragraph 6 (including, without limitation, paragraph 6A)
and stating that there exists no continuing Event of Default or Default,
or, if any continuing Event of Default or Default exists, specifying the
nature and period of existence thereof and what action the Company
proposes to take or is taking with respect thereto. Together with each
delivery of financial statements required by clause (i) above, the
Company will deliver to each Significant Holder a certificate of such
accountants stating that, in making the audit necessary to the
certification of such financial statements, they have obtained no
knowledge of any Event of Default or Default continuing, or, if they
have obtained knowledge of any Event of Default or Default continuing,
specifying the nature and period of existence thereof. Such
accountants, however, shall not be required to engage in any auditing
procedures other than those procedures required by generally accepted
auditing standards, and shall not be liable to anyone by reason of their
failure to obtain knowledge of any Event of Default or Default which
would not be disclosed in the course of an audit conducted in accordance
with generally accepted auditing standards. Notwithstanding the
foregoing provisions of this paragraph 5A, the Company shall not be
required to deliver any financial statements or other documents (other
than documents or information which have become public information) to
any Person engaged in any Permitted Business in competition with the
Company or any Subsidiary. The Company also covenants that forthwith
upon the chief executive officer, principal financial officer or
principal accounting officer of the Company or the General Partner
becoming aware of an Event of Default and within 5 Business Days after
the chief executive officer, principal financial officer or principal
accounting officer of the Company or the General Partner becomes aware
of a Default, it will deliver to each Significant Holder an Officers'
Certificate specifying the nature and period of existence thereof and
what action the Company proposes to take with respect thereto, provided,
however, no such officer shall be obligated to provide a certificate
with respect to any such Event of Default or Default that has been cured
on or before the date upon which such officer becomes aware thereof.
5B. Inspection of Property
The Company covenants that at any time during the continuance of an
Event of Default it will permit any Person designated in writing by (a)
the Seller or (b) any Significant Holder or Significant Holders of not
less than 5% in aggregate principal amount of the Notes at the time
outstanding (other than any Person acting on behalf of any holder which
is engaged directly in any Permitted Business in competition with the
Company or any Subsidiary), at the expense of the Company, to visit and
inspect any of the properties of the Company and its Subsidiaries, to
examine the books and financial records of the Company and its
Subsidiaries and make copies thereof or extracts therefrom and to
discuss the affairs, finances and accounts of the Company or any of such
Subsidiaries with the principal officers of the Company and its
independent public accountants, all upon reasonable notice and at such
reasonable times and as often as such holder or holders may reasonably
request.
5C. Covenant to Secure Notes Equally
The Company covenants that, if it shall create or assume any Lien upon
any of its property or assets, whether now owned or hereafter acquired,
other than Liens permitted by the provisions of paragraph 6B(1) (unless
prior written consent to the creation or assumption thereof shall have
been obtained pursuant to paragraph 12C), it will make or cause to be
made effective provision whereby the Notes will be secured by such Lien
equally and ratably with any and all other Debt thereby secured so long
as any such other Debt shall be so secured; provided that, satisfaction
of the foregoing requirements with respect to any such Lien shall not
remedy the Event of Default resulting from such Lien.
5D. Partnership Existence, Etc.
Except as permitted by paragraph 6B(5) the Company covenants that it
will, and will cause each of its Restricted Subsidiaries to, at all
times preserve and keep in full force and effect its partnership or
corporate existence, as the case may be, and rights and franchises
material to its business, and those of each of its Restricted
Subsidiaries, and will qualify, and cause each of its Restricted
Subsidiaries to qualify, to do business in any jurisdiction where the
failure to do so would have a material adverse effect on the business,
condition (financial or other), assets, properties or operations of the
Company or the Company and its Restricted Subsidiaries taken as a whole,
provided that the corporate existence of any Restricted Subsidiary or
any rights and franchises of the Company or any Restricted Subsidiary
may be terminated if, in the good faith judgment of the Company, such
termination is in the best interests of the Company and would not have a
material adverse effect on the business, condition (financial or other),
assets, properties or operations of the Company or the Company and its
Restricted Subsidiaries taken as a whole.
5E. Payment of Taxes and Claims
The Company covenants that it will, and will cause each of its
Restricted Subsidiaries to, pay all material taxes, assessments and
other governmental charges imposed upon it or any of its properties or
assets or in respect of any of its franchises, business, income or
profits before any penalty accrues thereon, and all material claims
(including, without limitation, claims for labor, services, materials
and supplies) for sums which have become due and payable and which by
law have or may become a Lien upon any of its properties or assets,
provided that no such tax, assessment, charge or claim need be paid if
it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and if such accrual or other
appropriate provision, if any, as shall be required by generally
accepted accounting principles shall have been made therefor.
5F. Compliance with Laws, Etc.
The Company covenants that it will, and will cause each of its
Subsidiaries to, comply with the requirements of all applicable laws,
rules, regulations and orders of any governmental authority, the
noncompliance with which would materially adversely affect the business,
condition (financial or other), assets, properties or operations of the
Company or the Company and its Restricted Subsidiaries taken as a whole.
5G. Maintenance of Properties; Insurance
The Company covenants that it will maintain or cause to be maintained in
good repair, working order and condition (normal wear and tear excepted)
all properties used or useful in the business of the Company and its
Restricted Subsidiaries and from time to time will make or cause to be
made all appropriate repairs, renewals and replacements thereof except
where the failure to make such repair, renewal or replacement would not
have a material adverse effect on the business, condition (financial or
other), assets, properties or results of operations of the Company or
the Company and its Restricted Subsidiaries taken as a whole. The
Company will maintain or cause to be maintained, with financially sound
and reputable insurers, insurance with respect to its properties and
business and the properties and business of its Restricted Subsidiaries
against loss or damage of the kinds customarily insured against by
corporations of established reputation of similar size engaged in the
same or similar business and similarly situated, of such types and in
such amounts as are customarily carried under similar circumstances by
such other corporations, provided that the Company may self-insure with
respect to its properties and business and the properties and business
of its Restricted Subsidiaries to the extent consistent with the
practice of corporations of established reputation of similar size
engaged in the same or similar business and similarly situated.
6. Negative Covenants
6A. Restricted Payments
The Company covenants that it will not and will not permit any
Subsidiary to directly or indirectly pay, declare, order, make or set
apart any sum for any Restricted Payment, except that the Company may
make, pay or set apart during each calendar quarter one or more
Restricted Payments if
(i) such Restricted Payments are in an aggregate amount not
exceeding the amount by which Available Cash with respect to the
immediately preceding calendar quarter exceeds any amount contributed to
Available Cash with respect to such immediately preceding calendar
quarter by any Subsidiary if and to the extent that the payment of such
amount as a dividend or distribution to the Company has not been made
and is not at the time permitted by the terms of such Subsidiary's
charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to such Subsidiary, provided
that in determining Available Cash with respect to such immediately
preceding calendar quarter, the Company will include in the amount of
the reserves established during such quarter pursuant to clause (b)(iv)
of the definition of Available Cash an amount not less than (x) 50% of
the aggregate amount of all interest in respect of the Notes and the
Other Senior Notes to be paid on the interest payment date immediately
following such immediately preceding calendar quarter, and (y) 25% of
the aggregate amount of all principal in respect of the Series D Notes
and the 11 1/8% Senior Notes scheduled to be paid during the 12 calendar
months immediately following such immediately preceding calendar
quarter, and the Company will not reduce the amount of the reserves so
included, in determining Available Cash for any calendar quarter
subsequent to such immediately preceding calendar quarter pursuant to
clause (a)(iii) of the definition of Available Cash, unless and until
the amount of interest or principal, as the case may be, in respect of
which such amount has been reserved has in fact been paid, and
(ii) immediately after giving effect to any such proposed action
no condition or event shall exist which constitutes an Event of Default
or Material Default.
The Company will not, in any event, directly or indirectly declare,
order, pay or make any Restricted Payment except in cash.
6B. Lien, Indebtedness and Other Restrictions
The Company covenants that it will not, and will not permit any
Restricted Subsidiary to:
6B(1) Liens
Create, assume or suffer to exist any Lien upon any of its property or
assets, whether now owned or hereafter acquired, except
(i) Liens for taxes, assessments or other governmental
charges the payment of which is not at the time required by paragraph
5E,
(ii) Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers and materialmen and similar Liens
incurred in the ordinary course of business for sums not yet due or the
payment of which is not at the time required by paragraph 5E,
(iii) Liens incurred or deposits made incidental to the conduct of
its business or the ownership of its property including, without
limitation, (a) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security
legislation, (b) deposits to secure insurance, the performance of bids,
tenders, contracts, leases, licenses, franchises and statutory
obligations, each in the ordinary course of business, and (c) other
obligations which were not incurred or made in connection with the
borrowing of money, the obtaining of advances or credit or the payment
of the deferred purchase price of property and which do not in the
aggregate materially detract from the value of its property or assets or
materially impair the use of such property or assets in the operation of
its business,
(iv) any attachment or judgment Lien, unless the judgment
it secures shall not, within 45 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have
been discharged within 45 days after expiration of any such stay,
(v) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances,
which, in each case, and in the aggregate, do not materially interfere
with the ordinary conduct of the business of the Company or any
Restricted Subsidiary,
(vi) Liens on property or assets of any Restricted
Subsidiary securing obligations of such Restricted Subsidiary owing to
the Company or another Restricted Subsidiary,
(vii) any Lien existing prior to the time of acquisition upon any
property acquired by the Company or any Restricted Subsidiary after the
date of closing through purchase, merger or consolidation or otherwise,
whether or not assumed by the Company or such Subsidiary, or placed upon
property at (or within 30 days after) the later of the time of
acquisition or the completion of construction by the Company or any
Restricted Subsidiary to secure all or a portion of (or to secure Debt
incurred to pay all or a portion of) the purchase price thereof,
provided that (w) any such Lien does not encumber any other property of
the Company or such Restricted Subsidiary, (x) the Debt secured by such
Lien is not prohibited by the provisions of paragraph 6B(2), (y) the
aggregate principal amount of the Debt secured by any such Lien at no
time exceeds 80% of the cost to the Company and its Restricted
Subsidiaries of the property subject to such Lien, and (z) the aggregate
outstanding principal amount (without duplication) of the Debt secured
by all such Liens and the Debt of all Restricted Subsidiaries at no time
(a) during the period commencing on the date of closing and ending on
June 8, 1999 exceeds $25,000,000, (b) during the period commencing on
June 9, 1999 and ending June 8, 2004 exceeds $50,000,000, and (c)
thereafter exceeds $100,000,000,
(viii) Liens on the accounts, rights to payment for goods
sold or services rendered that are evidenced by chattel paper or
instruments, and rights against persons who guarantee payment or
collection of the foregoing, and on the Company's inventory and on the
proceeds (as defined in the Uniform Commercial Code in any applicable
jurisdiction) thereof securing the obligations of the Company under the
Revolving Credit Facility (and any extension, renewal, refunding or
refinancing thereof) permitted by paragraph 6B(2)(iv),
(ix) from and after the time that the Facilities Subsidiary
becomes a Restricted Subsidiary, Liens on the accounts, rights to
payment for goods sold or services rendered that are evidenced by
chattel paper or instruments, and rights against persons who guarantee
payment or collection of the foregoing, and on the Facilities
Subsidiary's inventory and on the proceeds (as defined in the Uniform
Commercial Code in any applicable jurisdiction) thereof securing the
obligations of the Facilities Subsidiary under the Facilities
Subsidiary's Revolving Credit Facility (and any extension, renewal,
refunding or refinancing thereof) permitted by paragraph 6B(2)(x),
(x) Liens existing on the property or assets of the
Company or any Subsidiary on the date of closing and set forth on
Exhibit D hereto, and
(xi) any Lien renewing, extending, refunding or refinancing
any Lien permitted by clause (vii) of this paragraph 6B(l), provided
that the principal amount secured is not increased and the Lien is not
extended to other property and further provided, that the maturity of
the Lien is not extended beyond the maturity date of the Debt which, at
the time the Lien was initially placed upon the property secured
thereby, Responsible Representatives declare would have been the
maturity date of Debt customary for the type of asset being financed,
6B(2) Debt
Create, incur, assume or suffer to exist any Funded or Current Debt,
except
(i) Funded Debt represented by the Notes and the Other
Senior Notes,
(ii) Funded Debt which is unsecured and is incurred by the
Company to finance the making of capital improvements, expansions and
additions to the Company's property (including Timberlands), plant and
equipment, provided that the aggregate outstanding principal amount of
such Funded Debt shall at no time exceed $20,000,000,
(iii) Funded or Current Debt of any Restricted Subsidiary owing to
the Company or to a Restricted Subsidiary,
(iv) Debt incurred by the Company pursuant to (a) the
Revolving Credit Facility (and any extension, renewal, refunding or
refinancing thereof, including any refunding or refinancing in an amount
in excess of the principal amount then outstanding under the Revolving
Credit Facility), or (b) a bank credit facility which is unsecured or is
secured by Liens permitted by paragraph 6B(1)(viii), provided that the
aggregate outstanding principal amount of all Debt permitted by this
clause (iv) shall at no time exceed $15,000,000, and provided, further,
that the Company shall not suffer to exist any Debt permitted by this
clause (iv) on any day unless there shall have been a period of at least
45 consecutive days within the 12 months immediately preceding such day
during which the Company shall have been free from all Debt permitted by
this clause (iv),
(v) Debt represented by the Guarantee in an amount not
greater than $112,000,000 at any time,
(vi) the Company's guarantee of obligations incurred by the
Facilities Subsidiary pursuant to the Facilities Subsidiary's Revolving
Credit Facility (and any extension, renewal, refunding or refinancing
thereof permitted by clause (iv) of paragraph 6B(2) of the Mortgage Note
Agreements), provided that the aggregate outstanding principal amount of
such Debt shall at no time exceed $20,000,000, and provided, further,
that such guarantee shall be subordinated to the Notes by subordination
provisions substantially the same as those contained in paragraph 7I of
the Mortgage Note Agreements,
(vii) the Company's guarantee of Funded Debt (and related
obligations not constituting Debt) incurred by the Facilities Subsidiary
to finance the making of capital improvements, expansions and additions
to the Facilities Subsidiary's properties pursuant to the Facilities
Subsidiary's Facility, provided that such guarantee shall be
subordinated to the Notes by subordination provisions substantially the
same as those contained in paragraph 7I of the Mortgage Note Agreements,
and provided, further, that the aggregate outstanding principal amount
of such Funded Debt shall at no time exceed $20,000,000,
(viii) Funded Debt of the Company or any Restricted
Subsidiary secured by a Lien permitted by clause (vii) of paragraph
6B(l), provided that immediately after the acquisition of the property
subject to such Lien or upon which such Lien is placed (or, if later,
the incurrence of the Debt secured by such Lien), the Company could
incur at least $1 of additional Funded Debt pursuant to clause (ix)
below,
(ix) Funded Debt of the Company (other than Funded Debt
owing to a Restricted Subsidiary) in addition to that otherwise
permitted by the foregoing clauses of this paragraph 6B(2), including
guarantees of Debt to the extent permitted by paragraph 6B(3) and not
otherwise permitted by the foregoing clauses of this paragraph 6B(2),
provided that, on the date the Company becomes liable with respect to
any such additional Funded Debt and immediately after giving effect
thereto and to the concurrent retirement of any other Funded Debt, the
ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest
Charges is not less than 2.25 to 1.0,
(x) from and after the time that the Facilities Subsidiary
becomes a Restricted Subsidiary, Debt incurred by the Facilities
Subsidiary pursuant to (a) the Facilities Subsidiary's Revolving Credit
Facility (and any extension, renewal, refunding or refinancing thereof,
including any refunding or refinancing in an amount in excess of the
principal amount then outstanding under the Facilities Subsidiary's
Revolving Credit Facility), or (b) a bank credit facility which is
unsecured or is secured by Liens permitted by paragraph 6B(1)(ix),
provided that the aggregate outstanding principal amount of all Debt
permitted by this clause (x) shall at no time exceed $20,000,000, and
provided, further, that to the extent that the Facilities Subsidiary is
a Restricted Subsidiary, the Facilities Subsidiary shall not suffer to
exist any Debt permitted by this clause (x) on any day unless there
shall have been a period of at least 45 consecutive days within the 12
months immediately preceding such day during which the Facilities
Subsidiary shall have been free from all Debt permitted by this clause
(x), and
(xi) from and after the time that the Facilities Subsidiary
or any Designated Immaterial Subsidiary becomes a Restricted Subsidiary,
Debt of the Facilities Subsidiary or any such Designated Immaterial
Subsidiary outstanding at the time the Facilities Subsidiary or such
Designated Immaterial Subsidiary becomes a Restricted Subsidiary,
provided that (a) immediately after the Facilities Subsidiary or any
such Designated Immaterial Subsidiary becomes a Restricted Subsidiary,
the Company could incur at least $1 of additional Funded Debt pursuant
to clause (ix) above (the Facilities Subsidiary or any such Designated
Immaterial Subsidiary shall be deemed to be a Restricted Subsidiary for
the four consecutive fiscal quarters immediately prior to its becoming a
Restricted Subsidiary for purposes of determining Pro Forma Free Cash
Flow), and (b) the aggregate amount (without duplication) of such Debt
and all other Debt which is secured by Liens and permitted by clause
(vii) of paragraph 6B(1) does not violate subc1ause (z) of the proviso
to such clause (vii),
provided that notwithstanding any other provision in this paragraph
6B(2), any guarantee issued by the Company of any Funded Debt or Current
Debt of any Subsidiary shall be subordinated to the Notes by
subordination provisions substantially the same as those contained in
paragraph 7I of the Mortgage Note Agreements;
6B(3) Loans, Advances, Investments and Contingent Liabilities
Make or permit to remain outstanding any loan or advance to, or
guarantee, endorse or otherwise be or become contingently liable,
directly or indirectly, in connection with the obligations, stock or
dividends of, or own, purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital
contribution to, any Person (all of the foregoing, other than Designated
Repurchases permitted by paragraph 6A hereof, being referred to herein
as "Investments"), except that the Company or any Restricted Subsidiary
may
(i) make Investments in the Facilities Subsidiary,
provided that the Company will not make or permit any Restricted
Subsidiary to make any such Investment (including any guaranty of
obligations of the Facilities Subsidiary not otherwise permitted by this
paragraph 6B(3)) unless (a) immediately after giving effect to such
Investment, no Event of Default or Default, or "Default" or "Event of
Default" as defined in the Mortgage Note Agreements, shall exist, (b)
immediately prior to giving effect to such Investment, no Default or
Event of Default (other than under clause (xvi) of paragraph 7A) shall
exist, and (c) immediately after giving effect to such Investment, the
ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest
Charges is not less than 2.5 to 1.0,
(ii) own, purchase or acquire real or personal property to
be used in the ordinary course of its business,
(iii) own, purchase or acquire Investments of the type specified
in, and in accordance with the requirements and limitations of, the
Investment Policy,
(iv) continue to own Investments owned on the date of
closing as set forth on Exhibit E,
(v) endorse negotiable instruments for collection in the
ordinary course of business,
(vi) become and be obligated under the Guarantee and under
the guarantees permitted by clauses (vi) and (vii) of paragraph 6B(2),
and acquire and own subordinated subrogation rights upon performance of
such guarantees,
(vii) make advances in the ordinary course of conducting the
business of the Company or any Restricted Subsidiary, including deposits
permitted under paragraph 6B(1)(iii), advances to employees for travel,
relocation and other employment related expenses, advances to
contractors performing services for the Company or such Restricted
Subsidiary, advances to owners of timber or timber properties to acquire
rights to harvest timber and other similar advances,
(viii) make Investments in Restricted Subsidiaries, or any
entity which immediately after such Investment will be a Restricted
Subsidiary, and
(ix) make Investments not otherwise permitted by this
paragraph 6B(3) in entities engaged solely in a Permitted Business,
provided that the cumulative aggregate amount of such Investments
(calculated at original cost and including the principal amount of any
obligations guaranteed to the extent such guarantees are not otherwise
permitted by this paragraph 6B(3)) outstanding from time to time made
pursuant to this clause (ix) between the date of closing and any date
thereafter shall not exceed the greater of $30,000,000 or 60% of the
average annual Pro Forma Free Cash Flow for the two fiscal years
preceding such date.
6B(4) Sale of Stock and Debt of Subsidiaries
Sell or otherwise dispose of, or part with control of, any shares of
stock or Debt of any Subsidiary, except to the Company or a Restricted
Subsidiary, and except that all shares of stock and Debt of any
Subsidiary (other than the Facilities Subsidiary) at the time owned by
or owed to the Company and its Restricted Subsidiaries may be sold as an
entirety for a cash consideration which represents the fair value (as
determined in good faith by the Responsible Representatives of the
General Partner) at the time of sale of the shares of stock and Debt so
sold- provided that the assets of such Subsidiary do not include any
assets which could not be disposed of pursuant to the provisions of
paragraph 6B(5) unless the conditions to the sale of such assets set
forth in paragraph 6B(5) are complied with, and further provided that,
at the time of such sale, such Subsidiary shall not own, directly or
indirectly, any shares of stock or Debt of any other Subsidiary (unless
all of the shares of stock and Debt of such other Subsidiary owned,
directly or indirectly, by the Company and its Subsidiaries are
simultaneously being sold as permitted by this paragraph 6B(4));
6B(5) Merger and Sale of Assets
Merge or consolidate with any other Person or sell, lease or transfer or
otherwise dispose of any assets (other than inventory sold in the
ordinary course of business) except that
(i) any Restricted Subsidiary may merge with the Company
(provided that the Company shall be the continuing or surviving entity)
or with any one or more other Restricted Subsidiaries,
(ii) any Restricted Subsidiary may sell, lease, transfer or
otherwise dispose of any of its assets to the Company or a Restricted
Subsidiary,
(iii) any Restricted Subsidiary may merge or consolidate with any
other entity, provided that, immediately after giving effect to such
merger or consolidation, (a) the continuing or surviving entity of such
merger or consolidation shall be a solvent corporation or partnership
organized under the laws of any State of the United States of America
and shall constitute a Restricted Subsidiary, (b) no Event of Default or
Material Default shall exist, and (c) following the merger, the entity
surviving the merger is not engaged in any business other than a
Permitted Business, provided that, after giving effect on a pro forma
basis to such merger or consolidation, the gross revenue contribution of
pulp and paper manufacturing activities of the Company and its
Subsidiaries on a combined basis for the 12 months preceding such merger
or consolidation does not exceed 33% of the total revenues of the
Company and its Subsidiaries on a combined basis,
(iv) the Company may merge or consolidate with, or sell or
dispose of all or substantially all of its assets to, any other entity,
provided that (a) either (X) the Company shall be the continuing or
surviving entity (in the case of any such merger), or (y) the successor
or acquiring entity shall be a solvent corporation or partnership
organized under the laws of any State of the United States of America
and shall expressly assume in writing all of the obligations of the
Company under this Agreement and on the Notes, including all covenants
herein and therein contained, and such successor or acquiring
corporation or partnership shall succeed to and be substituted for the
Company with the same effect as if it had been named herein as a party
hereto, provided, however, that no such sale shall release the Company
from any of its obligations and liabilities under this Agreement or the
Notes unless such sale is followed by the complete liquidation of the
Company and substantially all the assets of the Company immediately
following such sale are distributed in such liquidation, and (b)
immediately after such merger or consolidation or such sale or other
disposition, (x) no Event of Default or Material Default shall exist,
(y) the Company could incur at least $1 of additional Funded Debt
pursuant to paragraph 6B(2)(ix), and (z) the entity surviving the merger
or consolidation or to which such assets have been transferred is not
engaged in any business other than a Permitted Business, provided that,
after giving effect on a pro forma basis to such merger, consolidation
or sale, the gross revenue contribution of pulp and paper manufacturing
activities of the merged or consolidated entity and its Subsidiaries on
a combined basis for the 12 months preceding such merger, consolidation
or sale does not exceed 33% of total revenues of the Company or such
merged or consolidated entity, as the case may be, and its Subsidiaries
on a combined basis,
(v) the Company or any Restricted Subsidiary may sell
Designated Acres for the fair value thereof as reasonably determined in
good faith by the Responsible Representatives,
(vi) the Company and its Restricted Subsidiaries may
exchange Timberlands with other Persons in the ordinary course of
business, provided that (a) the fair value of the Timberlands plus any
net cash proceeds received in such exchange is, in the good faith
judgment of the Responsible Representatives, not less than the fair
value of Timberlands exchanged plus any other consideration paid, (b)
such exchange would not materially and adversely affect the business,
property or assets, condition or results of operations of the Company
and its Restricted Subsidiaries on a combined basis or of the Facilities
Subsidiary or impair the ability of the Company to perform its
obligations hereunder or under the Notes, and (c) any Timberlands so
exchanged shall be deemed sold to the extent of cash proceeds received
in such exchange and such sales shall be allowed only to the extent
otherwise permitted by this paragraph 6B(5),
(vii) the Company and its Restricted Subsidiaries may sell
properties for not less than the fair value thereof as determined in
good faith by the Responsible Representatives, provided that the
aggregate net proceeds of such sales in any calendar year do not exceed
an amount equal to one percent (1%) of Consolidated Total Assets,
determined as of the last day of the immediately preceding calendar
year, and
(viii) the Company and its Restricted Subsidiaries may
otherwise sell for cash properties in an amount not less than the fair
value thereof as determined in good faith by the Responsible
Representatives if and only if (a) immediately after giving effect to
such proposed sale, no condition or event shall exist which constitutes
an Event of Default or Material Default, (b) the net proceeds of any
such sale (x) are applied, within 180 days after such sale, to the
repayment of Qualified Debt selected by the Company, which, in the case
of the Notes, shall be a prepayment pursuant to paragraph 4B, or (y) are
applied, within 180 days after such sale, to the purchase of productive
assets in the same line of business, and (c) immediately after giving
effect to such sale (giving effect on a pro forma basis to any proposed
retirement of Qualified Debt out of the proceeds thereof), the Company
could incur $1 of additional Funded Debt pursuant to paragraph
6B(2)(ix); provided that, if (I) the net proceeds of any such sale
exceed $50,000,000 (and such proceeds are not immediately applied in
accordance with clause (b) above), or (II) the unapplied net proceeds of
all such sales exceed $100,000,000 in the aggregate at any time, all the
net proceeds of any such sale described in clause (I) and/or all the
unapplied net proceeds of such sales described in clause (II), as the
case may be, shall be placed immediately in an escrow or cash collateral
account or accounts, pursuant to an agreement or agreements in form and
substance reasonably satisfactory to the holders of greater than 50% of
the outstanding principal amount of Qualified Debt, for the purpose of
application in accordance with clause (b) above;
6B(6) Harvesting Restrictions
In any calendar year, harvest Timber on the Timberlands then owned by
the Company in excess of the amount set forth for such calendar year in
the following table:
Calendar Year Maximum Cunits to be Harvested
------------- ------------------------------
1998 through 2000 2330 MCCF
2001 and each calendar year thereafter 2270 MCCF
plus, in each year, the amount, if any, by which (a) the sum of (x) the
cumulative amount set forth in the table above for the years preceding
such year of determination and (y) 2,342 MCCF, exceeds (b) the
cumulative amount actually harvested in such years preceding such year
of determination;
unless the net cash proceeds from such excess harvest are either (i)
applied, within 180 days after any such excess harvest, to the repayment
of Qualified Debt selected by the Company, which, in the case of the
Notes, shall be a prepayment pursuant to paragraph 4B or (ii) applied,
within 180 days after any such excess harvest, to purchase Timber
(including Timber on Timberlands purchased) having a fair value (in the
good faith judgment of the Responsible Representatives) not less than
the fair value of the Timber subject to such excess harvest; provided
that, if the net proceeds of any such excess harvest exceed $50,000,000
(and such proceeds are not immediately applied in accordance with clause
(i) or (ii) above), all the net proceeds of such excess harvest shall be
placed immediately in an escrow or cash collateral account or accounts,
pursuant to an agreement or agreements in form and substance reasonably
satisfactory to the holders of greater than 50% of the outstanding
principal amount of Qualified Debt, for the purpose of application in
accordance with clause (i) or (ii) above;
6B(7) Sale and Lease-Back
Enter into any arrangement with any lender or investor or to which such
lender or investor is a party providing for the leasing by the Company
or any Restricted Subsidiary of real or personal property which has been
or is to be sold or transferred by the Company or any Restricted
Subsidiary to such lender or investor or to any Person to whom funds
have been or are to be advanced by such lender or investor on the
security of such property or rental obligations of the Company or any
Restricted Subsidiary, provided that this paragraph 6B(7) shall not
apply to any property sold pursuant to clause (vii) of paragraph 6B(5);
6B(8) Certain Contracts
Enter into or be a party to
(i) any contract providing for the making of loans,
advances or capital contributions to any Person or for the purchase of
any property from any Person, in each case in order primarily to enable
such Person to maintain working capital, net worth or any other balance
sheet condition or to pay debts, dividends or expenses, or
(ii) any contract for the purchase of materials, supplies
or other property or services if such contract (or any related document)
requires that payment for such materials, supplies or other property or
services shall be made regardless of whether or not delivery of such
materials, supplies or other property or services is ever made or
tendered, provided that nothing in this clause (ii) shall prevent the
Company from (a) entering into take-or-pay contracts in the ordinary
course of business with the United States Forest Service, the Bureau of
Land Management, the Washington Department of Natural Resources or
similar state or federal governmental agencies, or (b) making payments
in satisfaction of contracts with such Persons which contracts are
deemed by the Responsible Representatives to be disadvantageous to
perform, or
(iii) any contract to rent or lease (as lessee) any real or
personal property if such contract (or any related document) provides
that the obligation to make payments thereunder is absolute and
unconditional under conditions not customarily found in commercial
leases then in general use or requires that the lessee purchase or
otherwise acquire securities or obligations of the lessor, or
(iv) any contract for the sale or use of materials,
supplies or other property, or the rendering of services, if such
contract (or any related document) requires that payment for such
materials, supplies or other property, or the use thereof, or payment
for such services, shall be subordinated to any indebtedness (of the
purchaser or user of such materials, supplies or other property or the
Person entitled to the benefit of such services) owed or to be owed to
any Person, or
(v) any other contract which in economic effect, is
substantially equivalent to a guarantee
except as permitted by the provisions of clauses (i), (v), (vi), (vii),
(viii) or (ix) of paragraph 6B(3);
6B(9) Transactions with Affiliates
Directly or indirectly engage in any transaction (including, without
limitation, the purchase, sale or exchange of assets or the rendering of
any service) with any Affiliate except in the ordinary course of and
pursuant to the reasonable requirements of the Company's or such
Restricted Subsidiary's business and upon fair and reasonable terms that
are no less favorable to the Company or such Restricted Subsidiary, as
the case may be, than those which might be obtained in an arm's length
transaction at the time from Persons which are not such an Affiliate.
The foregoing shall not prohibit Designated Repurchases otherwise
permitted by this Agreement.
6C. Conduct of Business
The Company covenants that it will not, and will not permit any
Subsidiary to, engage in any business other than Permitted Businesses.
6D. Issuance of Stock by Subsidiaries
The Company covenants that it will not permit any Subsidiary (either
directly, or indirectly by the issuance of rights or options for, or
securities convertible into, such shares) to issue, sell or otherwise
dispose of any shares of any class of its stock or partnership or other
ownership interests (other than directors' qualifying shares) except to
the Company or a Restricted Subsidiary and except to the extent that
holders of minority interests may be entitled to purchase stock by
reason of preemptive rights.
7. Events of Default
7A. Acceleration
If any of the following events shall occur and be continuing for any
reason whatsoever (and whether such occurrence shall be voluntary or
involuntary or come about or be effected by operation of law or
otherwise):
(i) the Company defaults in the payment of any principal
or of premium on any Note when the same shall become due, either by the
terms thereof or otherwise as herein provided; or
(ii) the Company defaults in the payment of any interest on
any Note for more than 10 days after the date due; or
(iii) the Company or any Restricted Subsidiary (a) defaults in any
payment of principal of or interest on any other obligation for money
borrowed (or any payment obligation under the Guarantee, any Capital
Lease Obligation, any obligation under a conditional sale or other title
retention agreement, any obligation issued or assumed as full or partial
payment for property whether or not secured by a purchase money mortgage
or any obligation under notes payable or drafts accepted representing
extensions of credit) beyond any period of grace provided with respect
thereto, or (b) fails to perform or observe any other agreement, term or
condition contained in any agreement under which any such obligation is
created within any applicable grace period provided therein (or if any
other event thereunder or under any such agreement shall occur and be
continuing) and the effect of such failure or other event is (x) to then
cause such obligation to become due prior to any stated maturity or (y)
to then permit the holder or holders of such obligation (or a trustee on
behalf of such holder or holders) to cause such obligation to become due
prior to any stated maturity, provided that the aggregate outstanding
principal amount of all obligations as to which such payment defaults
shall occur and be continuing or such failures or other events causing
or permitting acceleration shall occur and be continuing exceeds
$5,000,000; or
(iv) any representation or warranty made by the Company
herein or in any writing furnished in connection with or pursuant to
this Agreement shall be false in any material respect on the date as of
which made; or
(v) the Company fails to perform or observe any agreement
contained in the last sentence of paragraph 5A or in paragraph 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall not
be remedied within 30 consecutive days after written notice thereof
shall have been received by the Company from any holder of any Note; or
(vii) the Company or the General Partner or any Restricted
Subsidiary makes a general assignment for the benefit of creditors or is
generally not paying its debts as such debts become due; or
(viii) any decree or order for relief in respect of the
Company or the General Partner or any Restricted Subsidiary is entered
under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debt, dissolution or liquidation or similar
law, whether now or hereafter in effect (herein called the "Bankruptcy
Law"), of any jurisdiction; or
(ix) the Company or the General Partner or any Restricted
Subsidiary petitions or applies to any tribunal for, or consents to, the
appointment of, or taking possession by, a trustee, receiver, custodian,
liquidator or similar official of the Company or the General Partner or
any Restricted Subsidiary, or of any substantial part of the assets of
the Company or the General Partner or any Restricted Subsidiary, or
commences a voluntary case under the Bankruptcy Law of the United States
or any proceedings (other than proceedings for the voluntary liquidation
and dissolution of a Restricted Subsidiary) relating to the Company or
the General Partner or any Restricted Subsidiary under the Bankruptcy
Law of any other jurisdiction; or
(x) any such petition or application is filed, or any such
proceedings as described in clause (ix) above are commenced, against the
Company or the General Partner or any Restricted Subsidiary and the
Company or the General Partner or such Restricted Subsidiary by any act
indicates its approval thereof, consent thereto or acquiescence therein,
or an order, judgment or decree is entered appointing any such trustee,
receiver, custodian, liquidator or similar
(xi) official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in
effect for more than 60 consecutive days; or
(xii) any order, judgment or decree is entered in any proceedings
against the Company or the General Partner or any Restricted Subsidiary
decreeing the dissolution, winding-up or liquidation of the Company or
the General Partner or any Restricted Subsidiary and such order,
judgment or decree remains unstayed and in effect for more than 60
consecutive days; or
(xiii) any order, judgment or decree is entered in any
proceedings against the Company or any Restricted Subsidiary decreeing a
split-up of the Company or such Restricted Subsidiary which requires the
divestiture of assets representing a substantial part, or the
divestiture of the stock of or partnership or other ownership interest
in a Subsidiary whose assets represent a substantial part, of the
combined assets of the Company and its Restricted Subsidiaries
(determined in accordance with generally accepted accounting principles)
or which requires the divestiture of assets, or stock of or partnership
or other ownership interest in a Subsidiary, which shall have
contributed a substantial part of the combined net income of the Company
and its Restricted Subsidiaries (determined in accordance with generally
accepted accounting principles) for any of the three fiscal years then
most recently ended, and such order, judgment or decree remains unstayed
and in effect for more than 60 consecutive days; or
(xiv) a final judgment (which is non-appealable or has not been
stayed pending appeal or as to which all rights to appeal have expired
or been exhausted) in an amount in excess of $5,000,000 is rendered
against the Company or any Restricted Subsidiary and, within 60
consecutive days after entry thereof, such judgment is not discharged or
execution thereof stayed pending appeal, or within 60 consecutive days
after the expiration of any such stay, such judgment is not discharged;
or
(xv) this Agreement shall at any time, for any reason,
cease to be in full force and effect or shall be declared to be null and
void in whole or in any material part by the final judgment (which is
nonappealable or has not been stayed pending appeal or as to which all
rights to appeal have expired or been exhausted) of any court or other
governmental or regulatory authority having jurisdiction in respect
thereof, or the validity or the enforceability of this Agreement shall
be contested by or on behalf of the Company, or the Company shall
renounce this Agreement, or deny that it is bound by the terms hereof or
has any further liability hereunder; or
(xvi) any "Event of Default" as defined in the Mortgage Note
Agreements shall exist; or
(xvii) the Facilities Subsidiary, any Subsidiary of the
Facilities Subsidiary or any Designated Immaterial Subsidiary,
immediately after they become Restricted Subsidiaries under the
definition of "Restricted Subsidiary" contained in paragraph 10B, shall
have any Debt outstanding which is not permitted by clause (x) or (xi)
of paragraph 6B(2) insofar as it relates to such Facilities Subsidiary,
Subsidiary of the Facilities Subsidiary or Designated Immaterial
Subsidiary; or
(xviii) if any of the events or conditions or series of events
or conditions described in subparagraph (vii) of paragraph 5A occurs
which events or conditions or series of events or conditions have, or
could reasonably be expected to have, a material adverse effect on the
business, condition (financial or other), assets, properties or
operations of the Company or the Company and its Restricted Subsidiaries
taken as a whole;
then (a) if such event is an Event of Default specified in clause
(viii), (ix) or (x) of this paragraph 7A with respect to the Company,
all of the Notes at the time outstanding shall automatically become
immediately due and payable at par together with interest accrued
thereon, without presentment, demand, protest or notice of any kind, all
of which are hereby waived by the Company, and (b) if such event is any
other continuing Event of Default, the holder or holders of a majority
of the aggregate principal amount of the Notes at the time outstanding
may at its or their option, by notice in writing to the Company, declare
all of the Notes to be, and all of the Notes shall thereupon be and
become, immediately due and payable together with interest accrued
thereon and together with the Yield-Maintenance Premium, if any, with
respect to each Note, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Company and
the Company shall give notice in writing of such declaration to the
other holders, provided that (x) if such event is a continuing Event of
Default specified in clause (i) or (ii) of this paragraph 7A in respect
of any Note, any Significant Holder may, at its option, by notice in
writing to the Company, declare all of the Notes held by such
Significant Holder to be, and all of such Notes shall thereupon be and
become, immediately due and payable together with interest accrued
thereon and together with the Yield-Maintenance Premium, if any, with
respect to each such Note, without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Company, (y)
if any Significant Holder shall have declared all of the Notes held by
such Significant Holder to be due and payable pursuant to clause (x) of
this proviso, then the Company shall give notice in writing of such
declaration to the other holders and any other holder may at any time
thereafter and until the later of (A) the expiration of 60 days after
such other holder shall have received notice from the Company of such
declaration and (B) the date on which all Events of Default and Defaults
have been cured or waived pursuant to paragraph 12C, by notice in
writing to the Company, declare all of the Notes held by such other
holder to be immediately due and payable, together with interest accrued
thereon and together with the Yield-Maintenance Premium, if any, with
respect to each such Note without presentment, demand, protest or any
other notice of any kind, all of which are hereby waived by the Company,
and (z) the Yield-Maintenance Premium, if any, with respect to each Note
shall be due and payable upon any such declaration only if (1) such
event is a continuing Event of Default specified in any of clauses (i)
through (vi), inclusive, (xiii), (xiv), (xv), (xvi) and (xvii) of this
paragraph 7A, (2) the holder or holders effecting such declaration shall
have given to the Company, at least 10 Business Days before such
declaration, written notice stating its or their intention so to declare
the Notes to be immediately due and payable and identifying one or more
such Events of Default whose occurrence on or before the date of such
notice permits such declaration and (3) one or more of the Events of
Default so identified shall be continuing at the time of such
declaration. Notwithstanding the foregoing, so long as the Seller (or
an SDW Affiliate) is the holder of the Notes (and the Notes are not
pledged to secure any obligation) no acceleration of the Notes as a
consequence of an Event of Default specified in any of clauses (iii),
(iv), (v), (vi), (vii), (xiv), (xvi), (xvii) and (xviii) of this
paragraph 7A shall be effective unless the maturity of one or more
issues of the Other Senior Notes shall have been accelerated as a
consequence of an analogous "Event of Default" under the relevant Other
Senior Note Agreements (a "Coordinate Acceleration").
At any time after the principal of, and interest accrued on, any or all
of the Notes are declared due and payable, the holders of not less than
66 2/3% aggregate principal amount of the Notes then outstanding, by
written notice to the Company, may rescind and annul any such
declaration and its consequences if (x) the Company has paid all overdue
interest on the Notes, the principal of and premium, if any, on any
Notes which have become due otherwise than by reason of such
declaration, and interest on such overdue principal and premium and (to
the extent permuted by applicable law) any overdue interest in respect
of such Notes of each series at a rate per annum from time to time equal
to the greater of (i) one percent over the rate of interest borne by the
Notes of such series or (ii) the rate of interest publicly announced by
Xxxxxx Guaranty Trust Company of New York from time to time in New York
as its Prime Rate plus 2.0%, (y) all Events of Default and Defaults,
other than non-payment of amounts which have become due solely by reason
of such declaration, have been cured or waived pursuant to paragraph
12C, and (z) no judgment or decree has been entered for the payment of
any monies due pursuant to the Notes or this Agreement; but no such
rescission and annulment shall extend to or affect any subsequent Event
of Default or Default or impair any right consequent thereon. If the
acceleration of Notes was a Coordinate Acceleration (as defined in
paragraph 7A) and if the acceleration of all of the Other Senior Notes
that were accelerated in connection therewith has been rescinded and
annulled, then the acceleration of Notes hereunder shall be similarly
rescinded and annulled without any requirement of any action by the
holders of the Notes hereunder, provided only that the conditions
specified in clauses (x), (y) and (z) of the preceding sentence are
satisfied and the Company is in compliance with the provisions of
paragraph 12Q.
7B. Other Remedies
If any Event of Default shall occur and be continuing, the holder of any
Note may proceed to protect and enforce its rights under this Agreement
and such Note by exercising such remedies as are available to such
holder in respect thereof under applicable law, either by suit in equity
or by action at law, or both, whether for specific performance of any
covenant or other agreement contained in this Agreement or in aid of the
exercise of any power granted in this Agreement. No remedy conferred in
this Agreement upon the holder of any Note is intended to be exclusive
of any other remedy, and each and every such remedy shall be cumulative
and shall be in addition to every other remedy conferred herein or now
or hereafter existing at law or in equity or by statute or otherwise.
8. Representations, Covenants and Warranties
The Company represents, covenants and warrants:
8A. Organization
The Company is a limited partnership duly organized, validly existing
and in good standing under the Delaware Revised Uniform Limited
Partnership Act and has all requisite partnership power and authority to
own and operate its properties, to conduct its business as currently
conducted, to enter into this Agreement, to issue and sell the Notes and
to carry out the terms of this Agreement and the Notes.
8B. General Partner Net Worth
On the date of closing the General Partner will have a net worth
(excluding its interest in the Company and any notes receivable from or
payable to the Company) at least equal to the amount sufficient to meet
the tax requirements for a general partner of a Delaware limited
partnership (based on the fair market value of its assets).
8C. Subsidiaries
The General Partner owns 2% and the Company owns 98% of the limited
partnership interest in Manufacturing. The General Partner owns 4% and
the Company owns 96% of the issued and outstanding stock of Marketing.
The Facilities Subsidiary Stock has been duly authorized and validly
issued, is fully paid and non-assessable and is owned free and clear of
any Liens. The Facilities Subsidiary has issued no rights, warrants or
options to acquire or instruments convertible into or exchangeable for
any equity interest in the Facilities Subsidiary. On the date of
closing the Company will have no Subsidiaries other than the Facilities
Subsidiary and those listed on Exhibit 8C.
8D. Partnership Interests
The only general partner of the Company is the General Partner, which on
the date of closing will own a 2% interest in the Company.
8E. Qualification
The Company is duly qualified or registered for the transaction of
business and in good standing as a foreign limited partnership in each
of the State of Arkansas, the State of Idaho, the State of Louisiana,
the State of Maine, the State of Montana, the State of Texas and the
State of Washington, which are the only jurisdictions in which the
failure so to qualify or be registered would have a material adverse
effect on the business, property or assets, condition, or results of
operations of the Company, or on the ability of the Company to perform
its obligations under this Agreement and the Notes.
8F. Business; Financial Statements
(a) The Company and its Subsidiaries have not engaged in any
business or activities prior to the date of this Agreement other than
(i) owning, acquiring and disposing of Timber and Timberlands, and (ii)
owning and operating lumber xxxxx, plywood and fiberboard manufacturing
plants, and wood chip plants. The Company and its Subsidiaries do not
have any significant assets other than Timber, Timberlands and the
facilities described in clause (ii) above, and on the date of closing
will not have any significant liabilities other than the Notes, the
Other Senior Notes, the Guarantee, the Mortgage Notes and indebtedness
under the Bank of America Revolving Credit Agreement.
(b) The Company has delivered or caused to be delivered to each
Purchaser complete and correct copies of (i) the Company's Annual Report
on Form 10-K as filed with the Securities and Exchange Commission on
March 9, 1998 (fiscal year ended December 31, 1997), the Company's
Quarterly Reports on Form 10-Q as filed with the Securities and Exchange
Commission on May 12, 1998 (quarter ended March 31, 1998) and August 13,
1998 (quarter ended June 30, 1998) and the Company's Current Reports on
Form 8-K dated April 17, 1998 ( filed on April 20, 1998), June 5, 1998 (
filed on June 8, 1998), July 20, 1998 ( filed on July 20, 1998) and
October 6, 1998 (filed on October 13, 1998) (together, the "1934 Act
Reports") and (ii) the Preliminary Proxy/Statement Prospectus, dated
September 29, 1998, relating to the Conversion Transaction (as defined
in paragraph 11A) (the "Proxy/Statement Prospectus"). The annual
financial statements and schedules included in the 1934 Act Reports have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods
specified and present fairly the financial position for the dates
specified, and the results of their operations and cash flows of the
Company for the respective periods specified. The quarterly financial
statements and schedules included in the 1934 Act Reports present fairly
the financial position for the dates specified and the results of
operations for the quarterly periods presented. The unaudited pro forma
condensed consolidated financial statements of the Corporation (as
defined in paragraph 11A) contained in the Proxy Statement/Prospectus
(the "Pro Forma Statements") comply as to form in all material respects
with the applicable accounting requirements of the Securities Act of
1933 and the Securities Exchange Act of 1934 and the published rules and
regulations thereunder and the assumptions on which the pro forma
adjustments reflected in the Pro Forma Statements are based provide a
reasonable basis for presenting the significant effects of the
transactions contemplated by the Pro Forma Statements and such pro forma
adjustments give appropriate effect to such assumptions and are properly
applied in the Pro Forma Statements.
8G. Changes, etc
Except as contemplated by this Agreement or disclosed in Exhibit 8G or
the Proxy/Statement Prospectus, subsequent to December 31, 1997, (a)
neither the Company nor the Facilities Subsidiary has incurred any
material liabilities or obligations, direct or contingent, or entered
into any material transactions not in the ordinary course of business,
and (b) there has not been (i) any material adverse change in the
financial condition or operations of the Company or the Facilities
Subsidiary or (ii) any Restricted Payment of any kind declared, paid or
made by the Company.
8H. Tax Returns and Payments
The Company and each of its Restricted Subsidiaries has filed all tax
returns required by law to be filed by it (or obtained extensions with
respect thereto) and has paid all material taxes, assessments and other
material governmental charges levied upon it, or any of its properties,
assets, income or franchises which are due and payable by it, other than
those which are not past due or delinquent or the nonpayment of which is
permitted by paragraph 5E.
8I. Franchises, Licenses, Agreements, etc.
Except as disclosed in Exhibit 8R, the Company is in possession of and
operating in substantial compliance with all franchises, grants,
authorizations, approvals, licenses, permits, easements, consents,
certificates and orders required to own or lease its properties and to
permit the conduct of its business, except for those franchises, grants,
authorizations, approvals, licenses, permits, easements, consents,
certificates and orders the failure of which to be obtained, given or
complied with would not individually or in the aggregate materially and
adversely affect the business, property or assets, condition or
operations of the Company or impair the ability of the Company to
perform its obligations hereunder or under the Notes or impair the
validity or enforceability of this Agreement or the Notes.
8J. Actions Pending
There is no action, suit, investigation or proceeding pending or, to the
knowledge of the Company, threatened against the Company, or any
properties or rights of the Company, by or before any court, arbitrator
or administrative or governmental body which questions the validity of
this Agreement or the Notes or any action taken or to be taken pursuant
to this Agreement or the Notes or which would be reasonably likely to
result in any material adverse change in the business, property or
assets, condition or operations of the Company, or in the inability of
the Company to perform its obligations hereunder or under the Notes.
8K. Title to Properties
Except as disclosed in Exhibit 8K, the Company has good title to its
real properties (other than properties which it leases) and good title
to all of its other properties and assets, subject to no Lien of any
kind except Liens permitted by paragraph 6B(l), and except such Liens as
do not materially interfere with the full ownership and enjoyment of
such properties and assets. All leases necessary in any material
respect for the conduct of the respective businesses of the Company and
its Subsidiaries are valid and subsisting and are in full force and
effect.
8L. Compliance with Other Instruments, etc.
The Company is not in violation of any term of the Partnership Agreement
or of any term of any other agreement or instrument to which it is a
party or by which it or any of its properties is bound or any term of
any applicable law, ordinance, rule or regulation of any governmental
authority or any term of any applicable order, judgment or decree of any
court, arbitrator or governmental authority, the consequences of which
violation would be reasonably likely to have a material adverse effect
on its business, property or assets, condition or operations or on the
ability of the Company to perform its obligations under this Agreement
or the Notes, and the execution, delivery and performance by the Company
of this Agreement and the Notes will not result in any violation of or
be in conflict with or constitute a default under any such term or
result in the creation of (or impose any obligation on the Company to
create) any Lien (other than the Liens contemplated by this Agreement)
upon any of the properties or assets of the Company, pursuant to any
such term except for Liens permitted by paragraph 6B(l); and there is no
such term which materially adversely affects or in the future would be
likely to materially adversely affect the business, property or assets,
condition or operations of the Company, or the ability of the Company to
perform its obligations under this Agreement or the Notes.
8M. Governmental Consent
No consent, approval or authorization of, or declaration or filing with,
any governmental authority is required for the valid execution, delivery
and performance by the Company of this Agreement or the valid offer,
issue, sale and delivery of the Notes pursuant to this Agreement.
8N. Offering of Notes
Neither the Company nor any agent acting on behalf of the Company has,
directly or indirectly, offered the Notes or any similar security of the
Company for sale to, or solicited any offers to buy the Notes or any
similar security of the Company from, or otherwise approached or
negotiated with respect thereto with any Person other than the Seller,
and neither the Company nor any agent acting on behalf of the Company
has taken or will take any action which would subject the issuance of
the Notes to the provisions of section 5 of the Securities Act or to the
provisions of any securities or Blue Sky law of any applicable
jurisdiction.
8O. ERISA
(a) Neither the Company nor any of its Subsidiaries has breached
the fiduciary rules of ERISA or engaged in any prohibited transaction
which, in any such case, could reasonably be expected to result in any
direct or indirect material liability (including, without limitation, as
a result of an indemnification obligation) to the Company or any of its
Subsidiaries in connection with a suit for damages or pursuant to
section 409, 502(i) or 502(l) of ERISA or section 4975 of the Code,
which liability, either individually or in the aggregate, has had or
could reasonably be expected to have a material adverse effect on the
business, condition (financial or other), assets, properties or
operations of the Company or the Company and its Restricted Subsidiaries
taken as a whole.
(b) None of the Company, any of its Subsidiaries or any Related
Person has incurred any direct or indirect material liability
(including, without limitation, as a result of an indemnification
obligation) under or pursuant to Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee benefit plans,
which liability has had or could reasonably be expected to have a
material adverse effect on the business, condition (financial or other),
assets, properties or operations of the Company or the Company and its
Restricted Subsidiaries taken as a whole. No event, transaction or
condition has occurred or exists or, to the Company's Knowledge, is
expected to occur or exist with respect to any Plan that could
reasonably be expected to result in any direct or indirect material
liability to the Company, any of its Subsidiaries or any Related Person
(including, without limitation, as a result of an indemnification
obligation) under or pursuant to Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee benefit plans,
which liability has had or could reasonably be expected to have a
material adverse effect on the business, condition (financial or other),
assets, properties or operations of the Company or the Company and its
Restricted Subsidiaries taken as a whole. There has been no reportable
event (within the meaning of section 4043(b) of ERISA), other than
reportable events for which the notification requirements have been
waived in regulations or other pronouncements issued by the PBGC, or any
other event or condition with respect to any Plan which presents a risk
of the termination of, or the appointment of a trustee to administer,
any such Plan by the PBGC.
(c) Full payment (made in a timely manner such that any
incidental delay in making a payment, if any, has not resulted in any
Lien or any material liability to the Company, any of its Subsidiaries
or any Related Person) has been made of all amounts which the Company,
any of its Subsidiaries or any Related Person is required under
applicable law, the terms of each Plan or any collective bargaining
agreement to have paid as contributions to each such Plan, and no
accumulated funding deficiency (as defined in section 302 of ERISA or
section 412 of the Code), whether or not waived, exists or is expected
to exist with respect to any Plan (other than a Multiemployer Plan).
(d) The present value of the accumulated benefit obligations
(whether or not vested) under each Plan (other than a Multiemployer
Plan), determined as of the end of each such Plan's most recently ended
Plan year on the basis of the actuarial assumptions specified for
funding purposes in each such Plan's actuarial valuation report for such
Plan year, each of which assumptions is reasonable and in compliance
with section 412 of the Code, did not exceed the current value of the
assets of each such Plan allocable to such accumulated benefit
obligations by an amount which could have a material adverse effect on
the business, condition (financial or other), assets, properties or
operations of the Company or the Company and its Restricted Subsidiaries
taken as a whole, and no event has occurred since such date that could
reasonably be expected to cause the present value of such accumulated
benefit obligations to increase by a material amount. The terms
"present value" and "current value" shall have the meanings assigned to
such terms in section 3 of ERISA, and the term "accumulated benefit
obligations" shall have the meaning assigned to such term in Statement
of Financial Accounting Standards No. 87.
(e) None of the Company, any of its Subsidiaries or any Related
Person has incurred or expects to incur any withdrawal liability under
Title IV of ERISA with respect to any Multiemployer Plan or any Plan
that is a "multiple employer plan" within the meaning of section 4063 or
4064 of ERISA, which liability has had or could reasonably be expected
to have a material adverse effect on the business, condition (financial
or other), assets, properties or operations of the Company or the
Company and its Restricted Subsidiaries taken as a whole. The aggregate
withdrawal liability of the Company, its Subsidiaries and the Related
Persons with respect to all Multiemployer Plans and Plans that are
"multiple employer plans" within the meaning of section 4063 or 4064 of
ERISA, determined as if a complete withdrawal had occurred on the date
hereof, does not exceed $25,000,000. To the Company's Knowledge, no
Multiemployer Plan is insolvent or in reorganization within the meaning
of section 4241 or 4245 of ERISA.
(f) The "expected postretirement benefit obligation" (determined
as of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its
Subsidiaries under Plans which are "employee welfare benefit plans" (as
defined in section 3(l) of ERISA) did not exceed $25,000,000.
(g) The execution and delivery of this Agreement and the
issuance and sale of the Notes hereunder will not involve any
transaction which is subject to the prohibitions of section
406(a)(1)(A)-(D) of ERISA or in connection with which a tax could be
imposed on the Company pursuant to section 4975(c)(1)(A)-(D) of the
Code.
As used in this paragraph 8O, the terms "employee benefit plan" and
"party in interest" have the respective meanings assigned to such terms
in section 3 of ERISA.
8P. Status Under Certain Federal Statutes
The Company is not (i) an "investment company" or a company "controlled"
by an "investment company", within the meaning of the Investment Company
Act of 1940, as amended, (ii) a "holding company" or a "subsidiary
company" of a "holding company", or an "affiliate" of a "holding company
or of a "subsidiary company" of a "holding company", as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended,
(iii) a "public utility" as such term is defined in the Federal Power
Act, as amended, nor (iv) a "rail carrier" or a person controlled by or
affiliated with a ,.rail carrier", within the meaning of Title 49,
U.S.C., and neither the Company, the General Partner nor the Facilities
Subsidiary is a "carrier" to which 49 U.S.C. Section 11301(b)(1) is
applicable.
8Q. Environmental Matters
(a) Except as disclosed in Exhibit 8Q, to the Company's
Knowledge, the Company and its Subsidiaries are in compliance in all
material respects with all Environmental Laws applicable to them or to
real property owned or leased by them, or to the ownership, use,
operation or occupancy thereof except where the failure to be in
compliance with such Environmental Laws would not result in liability of
the Company or any of its Subsidiaries in an aggregate amount in excess
of $25,000,000. To the Company's Knowledge, neither the Company, its
Subsidiaries nor any other Person acting at the direction of or on
behalf of the Company has engaged in any activity in violation of any
provision of any applicable Environmental Laws, which violation could
reasonably be expected to have a material adverse effect on the
business, condition (financial or other), assets, properties or
operations of the Company or the Company and its Restricted Subsidiaries
taken as a whole.
(b) Except as permitted by paragraph 8I or as disclosed in
Exhibit 8Q, the Company has or will have on the date of closing all
environmental permits or licenses necessary for the conduct of its
business as conducted on the date of closing and, as to any such permit
or license that has expired or is about to expire or is needed for the
proposed conduct of its business, the Company has or will have timely
and properly applied for renewal or receipt of the same. Exhibit F
lists all material notices from Federal, state or local environmental
agencies to the Company citing environmental violations that have not
been finally resolved and disposed of; no such violation, individually
or in the aggregate, is reasonably expected to have a material adverse
effect on the business, property or assets, condition or operations of
the Company, and the Company is acting in compliance with all such
notices. Notwithstanding any such notice, the Company is currently
operating in compliance with the limits set forth in such environmental
permits or licenses except for such noncompliance as would not
reasonably be expected to have a material adverse effect on the
business, condition (financial or other), assets, properties or
operations of the Company or the Company and its Restricted Subsidiaries
taken as a whole and to the Company's Knowledge there are no threatened
or pending proceedings for the revocation, loss or termination of any
such environmental permits or licenses.
Neither the Company nor any of its Subsidiaries is subject to any order
or decree of any governmental authority under any Environmental Laws,
which order or decree would reasonably be likely to result in a material
adverse effect on the business, condition (financial or other), assets,
properties or operations of the Company or the Company and its
Restricted Subsidiaries taken as a whole, nor is there any basis for
such order or decree.
(c) All facilities located on the real property owned by the
Company or the Facilities Subsidiary on the date of closing which are
subject to regulation by the Federal Resource Conservation and Recovery
Act, as in effect on the date hereof, are and to the knowledge of the
Company have been operated in material compliance with such Act and the
Company (or the Facilities Subsidiary, as the case may be) has not
received or, to the knowledge of the Company, has not been threatened
with, a notice of violation under such Act regarding such facilities
which can reasonably be expected to have a material adverse effect on
the business, property or assets, conditions or operations of the
Company (or the Facilities Subsidiary, as the case may be), or the
ability of the Company to perform its obligations under this Agreement
or the Notes.
(d) Except as disclosed in Exhibit 8Q, with respect to the real
property owned by the Company (or the Facilities Subsidiary, as the case
may be) on the date of closing, there has not occurred to the knowledge
of the Company (i) any Release of any Hazardous Substance in a
Reportable Quantity, (ii) any discharge of any substance into ground,
surface, or navigable waters for which a notice of violation has been
received or threatened under any Federal, state or local laws, rules or
regulations concerning water pollution, or (iii) any assertion of any
Lien pursuant to Federal, state or local environmental law resulting
from any use, spill, discharge or clean-up of any hazardous or toxic
substance or waste, which occurrence can reasonably be expected to have
a material adverse effect on the business, property or assets, condition
or operations of the Company (or the Facilities Subsidiary, as the case
may be). As used in this paragraph, the terms "Release," "Hazardous
Substance," and "Reportable Quantity" shall have the meanings assigned
such terms under the Comprehensive Environmental Response Compensation
and Liability Act (CERCLA) as in effect on the date thereof.
8R. Disclosure
Neither this Agreement, the Proxy Statement/Prospectus, the 1934 Act
Reports nor any other document, certificate or statement furnished to
the Seller by or on behalf of the Company in writing, in connection
herewith contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements
contained herein and therein not misleading. There is no fact peculiar
to the Company which materially adversely affects or in the future may
(so far as the Company can now reasonably foresee) materially adversely
affect the business, property or assets, condition or results of
operations of the Company and which has not been set forth in this
Agreement, the Proxy Statement/Prospectus, or the 1934 Act Reports or in
the other documents, certificates and statements in writing furnished to
the Seller by or on behalf of the Company prior to the date hereof in
connection with the transactions contemplated hereby.
9. Representations of the Seller
The Seller represents, and in issuing the Notes to the Seller it is
expressly understood and agreed between the Company and the Seller, that
the Seller is not acquiring the Notes hereunder with a view to or for
sale in connection with any distribution thereof within the meaning of
the Securities Act. The Seller understands that the Notes have not been
registered under the Securities Act and may be resold only if registered
pursuant to the provisions of the Securities Act or if an exemption from
registration is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
10. Definitions
For the purpose of this Agreement, the terms defined in paragraphs 1, 2
and 11 shall have the respective meanings specified therein, and the
following terms shall have the meanings specified with respect thereto
below.
10A. Yield-Maintenance Terms
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City are required or
authorized to be closed.
"Called Principal" shall mean, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to paragraph 4B (including
partial prepayments made pursuant to paragraphs 6B(5)(viii) and 6B(6))
or is declared to be immediately due and payable pursuant to paragraph
7A, as the context requires.
"Discounted Value" shall mean, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on a semiannual basis) equal to 50 basis points
above the Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called Principal of
any Note, the yield to maturity implied by (i) the yields reported, as
of 10:00 a.m.. (New York City time) on the Business Day next preceding
the Settlement Date with respect to such Called Principal, on the
display designated as "Page PX1" in the Bloomberg Financial Markets
Service (or such other display as may replace Page PX1 in the Bloomberg
Financial Markets Service) for actively traded U.S. Treasury securities
having a maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date, or if such yields shall not be
reported as of such time or the yields reported as of such time shall
not be ascertainable, including by way of interpolation, (ii) the
Treasury Constant Maturity Series yields reported, for the latest day
for which such yields shall have been so reported as of the Business Day
next preceding the Settlement Date with respect to such Called
Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied
yield shall be determined, if necessary, by (a) converting U.S. Treasury
xxxx quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between reported
yields.
"Remaining Average Life" shall mean, with respect to the Called
Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) which will elapse between the Settlement Date with
respect to such Called Principal and the stated maturity of such Note.
"Remaining Scheduled Payments" shall mean, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date.
"Settlement Date" shall mean, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid
pursuant to paragraph 4B (including partial prepayments made pursuant to
paragraphs 6B(5)(viii) and 6B(6)) or is declared to be immediately due
and payable pursuant to paragraph 7A, as the context requires.
"Yield-Maintenance Premium" shall mean, with respect to any Note, a
premium equal to the excess, if any, of the Discounted Value of the
Called Principal of such Note over the sum of (i) such Called Principal
plus (ii) interest accrued thereon as of (including interest due on) the
Settlement Date with respect to such Called Principal. The Yield-
Maintenance Premium shall in no event be less than zero.
10B. Other Terms
"Affiliate" shall mean any Person directly or indirectly controlling,
controlled by, or under direct or indirect common control with, the
Company, except a Restricted Subsidiary. A Person shall be deemed to
control a corporation or other entity if such Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of such corporation or other entity, whether
through the ownership of voting securities, by contract or otherwise.
"Available Cash" shall mean, with respect to any calendar quarter, (a)
the sum of:
(i) the Company's net income (or net loss) (excluding gain
on the sale of any Capital Asset) for such quarter,
(ii) the amount of depletion, depreciation, amortization
and other noncash charges utilized in determining net income of the
Company for such quarter,
(iii) the amount of any reduction in reserves of the Company of
the types referred to in clause (b)(iv) below,
(iv) proceeds received by the Company from the sale of
Designated Acres, and
(v) any Cash from Capital Transactions received by the
Company during such quarter in specific contemplation that such Cash
from Capital Transactions will be used to refund or refinance any
payment of Debt of the type specified in clause (b)(i) below which was
made in either of the two immediately preceding quarters,
less (b) the sum of:
(i) all payments of principal on Debt made by the Company
in such quarter (excluding any payments of principal on Debt made with
Cash from Capital Transactions received by the Company during such
quarter or, to the extent such Cash from Capital Transactions remains
available, received by the Company during the four immediately preceding
quarters),
(ii) capital expenditures made by the Company during such
quarter (excluding any capital expenditures for such quarter made with
Cash from Capital Transactions received by the Company during such
quarter or, to the extent such Cash from Capital Transactions remains
available, received by the Company during the four immediately preceding
quarters, and capital expenditures which the General Partner reasonably
anticipates will be financed with Cash from Capital Transactions within
90 days from the end of such quarter),
(iii) the amount of any capital expenditures made by the Company
in a prior quarter which was anticipated would be financed from Cash
from Capital Transactions but which have not been financed from such
source within 90 days from the end of such quarter,
(iv) the amount of any reserves of the Company established
during such quarter which are necessary or appropriate (A) to provide
funds for the future payment of items of the types specified in clauses
(b)(i) and (b)(ii) above, (B) to provide additional working capital, (C)
to provide funds for cash distributions with respect to any one or more
of the next four quarters, or (D) to provide funds for the future
payment of interest in an amount equal to the interest to be accrued in
the next quarter,
(v) the amount of any noncash items of income utilized in
determining net income of the Company for such quarter,
(vi) the amount of any Investments (other than guarantees,
contingent liabilities or endorsements, except to the extent payments
are actually made under such guarantees, contingent liabilities or
endorsements) made by the Company during such quarter pursuant to clause
(i), (viii) or (ix) of paragraph 6B(3) (or in the case of any
Subsidiary, Investments (other than guarantees, contingent liabilities
or endorsements, except to the extent payments are actually made under
such guarantees, contingent liabilities or endorsements) of similar
type) to the extent not included in capital expenditures or payments on
principal on Debt made by the Company during such quarter (excluding any
such Investments for such quarter made with Cash from Capital
Transactions received by the Company during such quarter or, to the
extent such Cash from Capital Transactions remains available, received
by the Company during the four immediately preceding quarters, and
Investments which the General Partner reasonably anticipates will be
financed with Cash from Capital Transactions within 90 days from the end
of such quarter), and
(vii) the amount of any Investments (other than guarantees,
contingent liabilities or endorsements, except to the extent payments
are actually made under such guarantees, contingent liabilities or
endorsements) made by the Company in a prior quarter pursuant to clause
(i), (viii) or (ix) of paragraph 6B(3) (or in the case of any
Subsidiary, Investments (other than guarantees, contingent liabilities
or endorsements, except to the extent payments are actually made under
such guarantees, contingent liabilities or endorsements) of similar
type) to the extent not included in capital expenditures made by the
Company during such quarter which was anticipated would be financed from
Cash from Capital Transactions but which have not been financed from
such source within 90 days from the end of such quarter.
Notwithstanding the foregoing, "Available Cash" shall not take into
account any reductions in reserves or disbursements made or reserves
established after commencement of the dissolution and liquidation of the
Company. In determining "Available Cash", (i) all items under clauses
(a)(i), (ii), (iii), (iv) and (v) above and all items under clauses
(b)(i), (ii), (iii), (iv), (v), (vi) and (vii) above shall be calculated
on a combined basis with any Subsidiary of the Company whose income is
accounted for on a consolidated or combined basis with the Company and,
in accordance therewith, "Available Cash" shall include a percentage of
each such item of each such Subsidiary equal to the Company's percentage
ownership interest in such Subsidiary, provided, however, that the items
under clauses (a)(i), (ii), (iii), (iv) and (v) above shall only be
included in Available Cash to the extent that the General Partner
determines such amount to be legally available for dividends or
distributions to the Company by such Subsidiary; (ii) the amount of net
income and the amount of depletion, depreciation, amortization and other
noncash charges, utilized in determining net income shall be determined,
with respect to the Company, by the General Partner in accordance with
generally accepted accounting principles and, with respect to any
Subsidiary, by its Board of Directors (or by such other body or Person
which has the ultimate management authority of such Subsidiary) in
accordance with generally accepted accounting principles (iii) the net
income of any Subsidiary shall be determined on an after-tax basis (iv)
the amount of any reductions in, or additions to, reserves for purposes
of clauses (a)(iii) and (b)(iv) above shall be determined, with respect
to the Company, by the General Partner in its reasonable good faith
judgment and, with respect to any Subsidiary, by its Board of Directors
(or by such other body or Person which has the ultimate management
authority of such Subsidiary) in its reasonable good faith judgment and
(v) any determination of whether any capital expenditures or Investments
are financed, or anticipated to be financed, with Cash from Capital
Transactions for purposes of clause (b) (ii) or (b) (vi) above shall be
made, with respect to the Company, by the General Partner in its
reasonable good faith judgment and, with respect to any Subsidiary, by
its Board of Directors (or by such other body or Person which has the
ultimate management authority of such Subsidiary) in its reasonable good
faith judgment.
"Bank of America Revolving Credit Agreement" shall mean the revolving
credit agreement between the Company, Bank of America National Trust and
Savings Association, as Administrative Agent, and certain other lenders
pursuant to which the lenders thereunder provide credit facilities to
the Company in an aggregate principal amount not to exceed $225,000,000
and any extension, renewal, refunding or refinancing thereof.
"Bankruptcy Law" shall have the meaning specified in clause (viii) of
paragraph 7A.
"Board Foot" shall mean a unit of measurement one foot square and one
inch thick.
"Business Day" shall mean any day other than a Saturday, Sunday or other
day on which commercial banking institutions in New York, New York or
Seattle, Washington are authorized or required by law, regulation or
executive order to be closed.
"Capital Asset" shall mean any asset on the Company's or any
Subsidiary's balance sheet, as the case may be, other than inventory,
accounts receivable or any other current asset and assets disposed of in
connection with normal retirements or replacements.
"Capital Lease Obligation" shall mean, with respect to any Person, any
rental obligation which, under generally accepted accounting principles,
is or will be required to be capitalized on the books of such Person,
taken at the amount thereof accounted for as indebtedness (net of
interest expenses) in accordance with such principles.
"Capital Transaction" shall mean (i) borrowings and sales of debt
securities (other than for working capital purposes and other than for
items purchased on open account in the ordinary course of business) by
the Company, (ii) sales of equity interests by the Company and (iii)
sales or other voluntary or involuntary dispositions of any assets of
the Company (other than (x) sales or other dispositions of inventory in
the ordinary course of business, (y) sales or other dispositions of
other current assets including receivables and accounts and (z) sales or
other dispositions of assets as a part of normal retirements or
replacements), in each case prior to the commencement of the dissolution
and liquidation of the Company provided, that in determining Cash from
Capital Transactions, items (i), (ii) and (iii) above shall include,
with respect to each Subsidiary of the Company whose income is accounted
for on a consolidated or combined basis with the Company, a percentage
of each such item of such Subsidiary equal to the Company's percentage
ownership interest in such Subsidiary.
"Cash from Capital Transactions" shall mean at any date, such amounts of
cash as are determined by the General Partner to be cash made available
to the Company from or by reason of a Capital Transaction.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company's Knowledge" or "knowledge of the Company" shall mean the
actual knowledge of Xxxx X. Xxxxxx, President and Chief Executive
Officer, Xxxxxxx X. Xxxxxxx, Executive Vice President, Xxxxx X. Xxxxxx,
Vice President and Chief Financial Officer, Xxxxx X. Xxxxx, Vice
President, General Counsel and Secretary, Xxxxxxx X. Xxxxx, Vice
President, Human Resources, Xxxxxxx X. Xxxxx, Vice President, Strategic
Business Development, Xxxxxxx X. Xxxxxxxx, Vice President, Southern
Region, Xxxxxxx X. Xxxxx, Vice President, Resources, and Xxxxxxxx Xxx,
Environmental Engineer and any successor to the offices and officers,
such persons being the principal persons employed by the Company
ultimately responsible for environmental operations and compliance,
ERISA and legal matters relating to the Company.
"Consolidated Total Assets" shall mean the total amount of all the
assets of the Company and its Restricted Subsidiaries, determined on a
combined basis in accordance with generally accepted accounting
principles.
A "Cunit" is equal to 100 cubic feet of wood. For purposes of
conversion of Timber in the Company's northwest region, one MMBF shall
equal 2.1 MCCF.
"Debt" shall mean, as to any Person, as of any date of determination,
without duplication, (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services, (ii)
all amounts owed by such Person to banks or other Persons in respect of
reimbursement obligations under letters of credit, surety bonds and
other similar instruments guaranteeing payment or other performance of
obligations by such Person, (iii) all indebtedness for borrowed money or
for the deferred purchase price of property or services secured by any
Lien on any property owned by such Person, to the extent attributable to
such Person's interest in such property, even though such Person has not
assumed or become liable for the payment thereof, (iv) lease obligations
of such Person which, in accordance with generally accepted accounting
principles, should be capitalized, (y) lease obligations of such Person
under leases which have a term (including any option to renew
exercisable at the discretion of the lessee thereunder) longer than 10
years or under leases under which the lessor, pursuant to an agreement
with such Person, has acquired the property specifically for the purpose
of leasing it to such Person, (vi) obligations payable out of the
proceeds of production from property of such Person, even though such
Person has not assumed or become liable for the payment thereof, and
(vii) any obligations of any other Person of the type described in the
above clauses (i) through and including (vi), inclusive, which are
guaranteed or in effect guaranteed by such Person through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the
payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition
of the obligor of such obligation, or to make payment for any products,
materials or supplies or for any transportation or services regardless
of the non-delivery or nonfurnishing thereof, in any such case if the
purpose or intent of such agreement is to provide assurance that such
obligation will be paid or discharged, or that any agreements relating
thereto will be complied with, or that the holders of such obligation
will be protected against loss in respect thereof.
"Designated Acres" shall mean up to an aggregate of 150,000 acres owned
by the Company which (based on the good faith determination of the
Responsible Representatives that such acres have at the time such
determination is made a higher value as recreational, residential,
grazing or agricultural property than for timber production) may be
reasonably designated by the General Partner at the time of the sale
thereof as constituting Designated Acres (such aggregate number of acres
to be determined over the term of existence of this Agreement).
"Designated Immaterial Subsidiary" shall mean any entity which would
otherwise be a Restricted Subsidiary and which at any time is designated
by the Company as a Designated Immaterial Subsidiary, provided that no
such designation of any entity as a Designated Immaterial Subsidiary
shall be effective unless (i) at the time of such designation, such
entity does not own any shares of stock or Debt of any Restricted
Subsidiary which is not simultaneously being designated as a Designated
Immaterial Subsidiary, (ii) immediately after giving effect to such
designation, (a) the Company could incur at least $1 of additional
Funded Debt pursuant to clause (ix) of paragraph 6B(2), and (b) no
condition or event shall exist which constitutes an Event of Default or
Material Default, (iii) the Company is permitted to make the Investment
in such entity resulting from such designation pursuant to, and within
the limitations specified in, clause (ix) of paragraph 6B(3), treating
the aggregate book value (including equity in retained earnings) of the
Investments of the Company and its Subsidiaries in such entity
immediately prior to such designation as the cost of such Investment,
and provided, further, that if at any time all Designated Immaterial
Subsidiaries on a combined basis would be a "significant subsidiary"
(assuming the Company is the registrant) within the meaning of
Regulation S-X (17 CFR Part 210) the Company shall designate one or more
Designated Immaterial Subsidiaries which are directly owned by the
Company and its Restricted Subsidiaries as Restricted Subsidiaries such
that the condition in this proviso is no longer applicable and the
entities so designated shall no longer be Designated Immaterial
Subsidiaries. Any entity which has been designated a Designated
Immaterial Subsidiary shall not thereafter become a Restricted
Subsidiary except pursuant to a designation required by the last proviso
in the preceding sentence, and any Designated Immaterial Subsidiary
which has been designated a Restricted Subsidiary pursuant to the last
proviso of the preceding sentence shall not thereafter be redesignated
as a Designated Immaterial Subsidiary.
"Designated Repurchases" shall mean and include purchases, redemptions
or other acquisitions, in each case at a price not to exceed fair market
value, of the publicly traded limited partnership interests in the
Company, which are retired by the Company within six months of such
purchase, redemption or other acquisition.
"8.73% Senior Note Agreements" shall mean the Note Agreements, dated as
of August 1, 1994 and amended as of October 15, 1995, May 31, 1996 and
April 15, 1997, providing for the issuance and sale by the Company of
its 8.73% Senior Notes to the purchasers listed in the schedule of
purchasers attached thereto.
"8.73% Senior Notes" shall mean the 8.73% Senior Notes Due August 1,
2009 of the Company issued and sold pursuant to the 8.73% Senior Note
Agreements.
"11 1/8% Senior Note Agreements" shall mean the Note Agreements, dated
as of May 31, 1989 and amended as of January 1, 1991, April 22, 1993,
September 1, 1993, May 20, 1994, May 31, 1996 and April 15, 1997,
providing for the issuance and sale by the Company of its 11 1/8% Senior
Notes to the purchasers listed in the schedule of purchasers attached
thereto.
"11 1/8% Senior Notes" shall mean the 11 1/8% Senior Notes Due June 8,
2007 of the Company issued and sold pursuant to the 11 1/8% Senior Note
Agreements.
"Environmental Laws" shall mean Federal, state, local and foreign laws,
rules or regulations relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, chemicals or
industrial, toxic or hazardous substances or wastes into the environment
(including, without limitation, air, surface water, ground water or
land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of pollutants, contaminants, chemicals or industrial, toxic or hazardous
substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"Event of Default" shall mean any of the events specified in paragraph
7A, provided that there has been satisfied any requirement in connection
with such event for the giving of notice, or the lapse of time, or the
happening of any further condition, event or act, and "Default" shall
mean any of such events, whether or not any such requirement has been
satisfied.
"Facilities Subsidiary" shall mean, collectively, Manufacturing and
Marketing.
"Facilities Subsidiary's Facility" shall mean any facility pursuant to
which the Facilities Subsidiary may incur Debt for purposes of making
capital improvements, additions to, or expansions of, property, plant
and equipment of the Facilities Subsidiary or its Subsidiaries.
"Facilities Subsidiary's Revolving Credit Facility" shall mean any
facility pursuant to which the Facilities Subsidiary may obtain
revolving credit, takedown credit, the issuance of standby and payment
letters of credit and backup for the issuance of commercial paper.
"Facilities Subsidiary Stock" shall mean, collectively, the limited
partner interest of the Company in Manufacturing and the capital stock
of Marketing that is owned by the Company.
"Funded Debt" shall mean, without duplication, any Debt payable more
than one year from the date of the creation thereof. "Current Debt"
shall mean, without duplication, any Debt payable on demand or within a
period of one year from the date of the creation thereof, provided that
any Debt shall be treated as Funded Debt, regardless of its term, if
such Debt is renewable pursuant to the terms thereof or of a revolving
credit or similar agreement effective for more than one year after the
date of the creation of such Debt, or may be payable out of the proceeds
of similar Debt pursuant to the terms of such Debt or of any such
agreement.
"General Partner" shall mean Plum Creek Management Company, L.P., a
limited partnership organized and existing under the laws of the State
of Delaware, and its successors and assigns.
"Guarantee" shall mean the guarantee in paragraph 7 of the Mortgage Note
Agreements.
"Investment Policy" shall mean the Corporate Investment Policy of the
Company, as it exists on April 5, 1993 and as attached hereto as
Schedule 10B(1).
"Investments" shall have the meaning specified in paragraph 6B(3).
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement, any
lease in the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction).
"Manufacturing" shall mean Plum Creek Manufacturing, L.P., a Delaware
limited partnership.
"Marketing" shall mean Plum Creek Marketing, Inc., a Delaware
corporation.
"Material Default" shall mean any continuing Default as to which a
written notice of such Default (which notice has not been rescinded)
shall have been received by the Company or the General Partner from any
holder of any Note, or any continuing Event of Default.
"Maximum Pro Forma Annual Interest Charges" shall mean, as of any date,
the highest total amount payable during any period of four consecutive
fiscal quarters, commencing with the fiscal quarter in which such date
occurs and ending with the fiscal quarter in which November, 2010
occurs, by the Company and its Restricted Subsidiaries on a combined
basis, after eliminating all intercompany transactions, in respect of
interest charges ((a) including amortization of debt discount and
expense and imputed interest on Capital Lease Obligations and on other
obligations included in Debt which do not have stated interest, (b)
assuming, in the case of fluctuating interest rates which cannot be
determined in advance, that the rate in effect on such date will remain
in effect throughout such period, and (c) treating the principal amount
of all Debt outstanding as of such date under a revolving credit or
similar agreement as maturing and becoming due and payable on the
scheduled maturity date thereof, without regard to any provision
permitting such maturity date to be extended) on all Debt of the Company
and its Restricted Subsidiaries outstanding on such date (excluding the
Guarantee and the guarantees of the Facilities Subsidiary's Facility and
the Facilities Subsidiary's Revolving Credit Facility but including, to
the extent not already included, all other Debt outstanding on such date
which is guaranteed or in effect guaranteed by the Company or any
Restricted Subsidiaries), after giving effect to any Debt proposed to be
created on such date and to the concurrent retirement of any other Debt.
"MCCF" shall mean one thousand Cunits.
"MMBF" shall mean one million Board Feet.
"Mortgage Note Agreements" shall mean the Note Agreements, dated as of
May 31, 1989 and amended as of January 1, 1991, April 22, 1993,
September 1, 1993, May 20, 1994, June 15, 1995, May 31, 1996 and April
15, 1997, providing for the issuance and sale by the Facilities
Subsidiary of its 11 1/8% First Mortgage Notes to the purchasers listed
in the schedule of purchasers attached thereto.
"Mortgage Noteholder" shall mean and include each holder from time to
time of a Mortgage Note issued under the Mortgage Note Agreements.
"Mortgage Notes" shall mean the 11 1/8% First Mortgage Notes of the
Facilities Subsidiary issued and sold pursuant to the Mortgage Note
Agreements.
"Multiemployer Plan" shall mean any Plan which is a "multiemployer plan"
(as such term is defined in section 4001 (a)(3) of ERISA).
"1934 Act Reports" is defined in paragraph 8F(b).
"Officers' Certificate" shall mean, as to any corporation, a certificate
executed on its behalf by the Chairman of the Board of Directors (if an
officer) or its President or one of its Vice Presidents and its
Treasurer, or Controller or one of its Assistant Treasurers or Assistant
Controllers, and, as to any partnership, a certificate executed on
behalf of such partnership by its general partner in a manner which
would qualify such certificate as an Officers' Certificate of such
general partner hereunder.
"Other Senior Notes" means the Company's outstanding 8.73% Senior Notes
due August 1, 2009, 11 1/8% Senior Notes due June 8, 2007 and Senior
Notes, Series A, B, C and D, due November 13, 2006, 2008, 2011 and 2013,
respectively.
"Other Senior Note Agreements" means the Note Agreements relating to the
Other Senior Notes.
"Partnership Agreement" shall mean the Amended and Restated Agreement of
Limited Partnership of the Company, as in effect on the date of closing,
and as the same may, from time to time, be amended, modified or
supplemented in accordance with the terms thereof.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
governmental authority succeeding to any of its functions.
"Permitted Business" shall mean any business engaged in by the Company
or the Facilities Subsidiary on the date of closing, pulp and paper
manufacturing, and any business substantially similar or related to any
such business.
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
"Plan" shall mean an "employee benefit plan" (as defined in section 3(3)
of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Company, any of its
Subsidiaries or any Related Person or with respect to which the Company,
any of its Subsidiaries or any Related Person may have any liability.
"Pro Forma Free Cash Flow" as of any date shall mean (i) net income of
the Company and its Restricted Subsidiaries on a combined basis
(excluding (a) gain on the sale of any Capital Asset, (b) noncash items
of income, and (c) any distributions or other income received from, or
equity of the Company or any Restricted Subsidiary in the earnings of,
any entity which is not a Restricted Subsidiary) for the period of four
consecutive fiscal quarters immediately prior to such date (such period
of four consecutive fiscal quarters being the "Measurement Period"),
determined in accordance with generally accepted accounting principles
plus depreciation, depletion, amortization and other noncash charges,
interest expense on Debt and provision for income taxes, minus (ii)
capital expenditures made by the Company and its Restricted Subsidiaries
during the Measurement Period, to maintain their respective operations,
provided, however, if (A) the Company or a Restricted Subsidiary is
acquiring a Restricted Subsidiary or assets and (B) Pro Forma Free Cash
Flow is being determined in connection therewith, such Restricted
Subsidiary shall be considered to have been a Restricted Subsidiary
during the entire Measurement Period and such assets shall be considered
to have been owned by the Company during the entire Measurement Period
if net income attributable to such Restricted Subsidiary or such assets
(as the case may be) for the entire Measurement Period is readily
determinable and confirmed pursuant to an audit or a certification
prepared in good faith by the Company's chief financial officer; further
provided, however, that portion of Pro Forma Free Cash Flow allocable to
such Restricted Subsidiary or assets shall be reduced on a pro rata
basis to the extent Timber has been harvested by such Restricted
Subsidiary or from such assets during the Measurement Period at a rate
greater than the rate at which the Company has harvested Timber from its
Timberlands during the Measurement Period, as certified in good faith by
the chief financial officer of the Company; and finally provided,
however, if Pro Forma Free Cash Flow is being determined for any
Measurement Period and a Restricted Subsidiary or assets have been sold
or otherwise disposed of at any time during such Measurement Period by
the Company or any Restricted Subsidiary, such Restricted Subsidiary
shall not be considered to have been a Restricted Subsidiary during any
part of such Measurement Period and such assets shall not be considered
to have been owned by the Company during any part of such Measurement
Period, and the net income that otherwise would have been attributable
to such Restricted Subsidiary or asset during such Measurement Period
shall be certified in good faith by the chief financial officer of the
Company.
"Qualified Debt" shall mean, as to the Company, as of any date of
determination, without duplication, all outstanding indebtedness of the
Company for borrowed money, including, without limitation, Debt
represented by the Notes and the Other Senior Notes.
"Related Person" shall mean, as of any date of determination, any trade
or business, whether or not incorporated, which, together with the
Company or any of its Subsidiaries, is treated as a single employer
under section 414(b) or (c) of the Code or the regulations promulgated
thereunder.
"Required Holder(s)" shall mean the holder or holders of greater than
50% of the aggregate principal amount of the Notes from time to time
outstanding; provided that at any time that the Notes are subject to a
pledge that is not precluded by the provisions of paragraph 12E,
"Required Holder(s)" shall mean the holder or holders of greater than
50% of the aggregate principal amount of the obligations secured by such
pledge of the Notes.
"Responsible Officer" means the chief executive officer, the president
or any vice president of the General Partner, or any other officer
having substantially the same authority and responsibility; or, with
respect to compliance with financial covenants, the chief financial
officer or the treasurer of the General Partner, or any other officer
having substantially the same authority and responsibility.
"Responsible Representatives" shall mean (a) in the case of any
transaction in which the value of any assets disposed of or received
have a value of less than $5,000,000 or in which payments made are less
than $5,000,000, the chief executive officer, chief financial officer or
chief operating officer of the Company, and (b) in the case of any other
transaction, the Board of Directors of the General Partner.
"Restricted Payment" shall mean (a) any payment or other distribution,
direct or indirect, in respect of any partnership interest in the
Company, except a distribution payable solely in additional partnership
interests in the Company, and (b) any payment, direct or indirect, on
account of the redemption, retirement, purchase or other acquisition of
any partnership interest in the Company including, without limitation,
any Designated Repurchase; or, if the Company is at any time reorganized
as or changed (by merger, sale of assets or otherwise) into a
corporation, (i) any dividend or other distribution, direct or indirect,
on account of any shares of any class of stock of the Company now or
hereafter outstanding, except a dividend payable solely in shares of
stock of the Company, and (ii) any redemption, retirement, purchase or
other acquisition, direct or indirect, of any shares of any class of
stock of the Company, now or hereafter outstanding, or of any warrants,
rights or options to acquire any such shares, except to the extent that
the consideration therefor consists of shares of stock of the Company.
"Restricted Subsidiary" shall mean any Wholly-Owned Subsidiary other
than (a) any Designated Immaterial Subsidiary and (b) the Facilities
Subsidiary or any Subsidiary directly or indirectly owned by the
Facilities Subsidiary, provided that after the Mortgage Notes shall have
been paid in full and retired, the Facilities Subsidiary and its
Subsidiaries shall become and be Restricted Subsidiaries.
"Revolving Credit Facility" shall mean any facility pursuant to which
the Company may obtain revolving credit, take-down credit, the issuance
of standby and payment letters of credit and back-up for the issuance of
commercial paper.
"SDW" is defined in paragraph 2.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series D Notes" shall mean the Company's 8.05% Senior Notes Due
November 13, 2016, Series D, outstanding in the original aggregate
principal amount of $25,000,000.
"Significant Holder" shall mean (i) the Seller (and any Person
controlling or controlled by or under common control with the Seller or
SDW - an "SDW Affiliate") so long as it (or such SDW Affiliate) shall
hold any Note, or (ii) any insurance company, bank, financial
institution, public or governmental retirement or pension fund or other
similar institutional holder of Notes, whether acting for itself or in a
trust, agency or other fiduciary capacity. A Person shall be deemed to
control a corporation or other entity if such Person possesses, directly
or indirectly, the power to direct or cause the direction of the
management and policies of such corporation or other entity, whether
through the ownership of voting securities, by contract or otherwise.
"Subsidiary" shall mean any corporation, partnership or other entity a
majority of (i) the total combined voting power of all classes of Voting
Stock of which or (ii) the outstanding equity interests of which shall,
at the time as of which any determination is being made, be owned by the
Company either directly or through Subsidiaries.
"Timber" shall mean standing trees not yet harvested.
"Timberlands" shall mean the timberlands owned by the Company as of the
date of closing and any timberlands acquired by the Company or any
Subsidiary after the date of closing.
"Ton" shall mean 2,000 pounds of green saw logs and pulpwood. For
purposes of conversion of Timber in the Company's Maine timberlands, one
million Tons shall equal 355 MCCF.
"Transferee" shall mean any direct or indirect transferee of all or any
part of any Note purchased by the Seller under this Agreement.
"Voting Stock" shall mean, with respect to any corporation or other
entity, any shares of stock or other ownership interests of such
corporation or entity whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
or to manage any such other entity (irrespective of whether at the time
stock or ownership interests of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
"Western Europe" shall mean Belgium, Denmark, France, Germany, Greece,
Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and the United
Kingdom.
"Wholly-Owned Subsidiary" shall mean any Subsidiary organized under the
laws of any state of the United States of America which conducts the
major portion of its business in the United States of America and all of
the stock or other ownership interests of every class of which, except
director's qualifying shares, and except in the case of the Facilities
Subsidiary not more than 5% of the outstanding Voting Stock shall, at
the time as of which any determination is being made, be owned by the
Company either directly or through Wholly-Owned Subsidiaries.
11. REIT Reorganization
The Company proposes to reorganize its business to be carried on by an
entity (the newly formed "Corporation " described in paragraph 11A
below) which will elect to be treated as a real estate investment trust
for Federal income tax purposes. In connection with that transaction
the Company and the Seller agree that the following amendments to, and
consents and waivers under and in respect of, this Agreement shall
become effective as provided in, and subject to the terms and provisions
of, this paragraph 11.
11A. Conversion Transaction
The Company proposes to convert its outstanding ownership interests into
shares of stock of Plum Creek Timber Company, Inc., a Delaware
corporation (the "Corporation"), through the merger (the "Merger") of the
Company with and into Plum Creek Acquisition Partners, L.P., a Delaware
limited partnership (the "Operating Partnership"). Prior to the Merger,
Manufacturing will form Plum Creek Manufacturing Holding Company, Inc.
("Holding") and will contribute a nominal amount to Holding in exchange for
96 percent of Holding's outstanding common stock (which will be non-voting
stock), and management of the Company will purchase (the "Management Stock
Purchase") the remaining 4 percent of such outstanding common stock
(which will be voting stock). Manufacturing and Holding will then form
four new Subsidiaries of Holding (the "New Subsidiaries"). Immediately
prior to the Merger, Manufacturing will contribute an undivided 75
percent interest in substantially all of its assets (allocated in
varying proportions) to the New Subsidiaries in exchange for 75 percent
(valued on a fair market value basis at the time of transfer) of the
outstanding capital stock of each of the New Subsidiaries (which stock
will be non-voting preferred stock) and will contribute an undivided 25
percent interest in substantially all of its assets to Holding.
Immediately thereafter, Holding will contribute such undivided 25
percent interest (allocated in the same proportion as Manufacturing's
contribution of its undivided interest) to each of the New Subsidiaries
in exchange for 25 percent (valued on a fair market value basis at the
time of transfer) of the outstanding capital stock of each of the New
Subsidiaries (which stock will be voting common stock). The formation
of Holding and the New Subsidiaries and the issuance of the capital
stock by such entities as described above is herein referred to as the
"Facilities Subsidiary Reorganization." The contribution of assets of
Manufacturing to Holding and the New Subsidiaries as described above is
herein referred to as the "Manufacturing Asset Transfer". Immediately
following the Merger, Marketing will become a subsidiary of
Manufacturing, with 75 percent of the outstanding capital stock (which
will be non-voting preferred stock) owned by Manufacturing and 25
percent of the outstanding capital stock (which will be voting common
stock) owned by Holding (the "Marketing Stock Transfer"). In addition,
it is proposed that Marketing will be released as an obligor on the
Company's 11 1/8% Senior Notes due June 8, 2007 (the "11 1/8% Senior
Notes") and the First Mortgage Notes and Marketing and the New
Subsidiaries will each assume and become obligated in respect of varying
percentages of the Debt represented by the 11 1/8% Senior Notes and the
First Mortgage Notes (the "Subsidiary Note Assumption"). The foregoing
transactions (herein collectively called the "Conversion Transaction")
are to be effected (i) as provided in the Agreement and Plan of
Conversion (the "Conversion Agreement"), dated as of June 5, 1998, and
amended on July 17, 1998, among the Company, the Corporation and Plum
Creek Management Company, L.P. (the sole general partner of the
Company), and (ii) as described in the Proxy Statement/Prospectus.
After the effectiveness of the Conversion Transaction, the Corporation
will elect to be treated as a real estate investment trust for Federal
income tax purposes. The Seller acknowledges and agrees that changes in
the Conversion Transaction which are acceptable to and approved by the
percentage of the holders of the Other Senior Notes which is necessary
to effect amendments to the Other Senior Note Agreements shall also be
acceptable to the Seller and any SDW Affiliate which is a holder of
Notes without any requirement of any further action on the part of the
holders of the Notes hereunder, provided that (i) the Notes are not
then pledged to secure any obligation, (ii) as a result of the
consummation of the Conversion Transaction the issuer and obligor on the
Notes will be the direct owner of substantially all of the timber
properties currently directly owned by the Company, (iii) the negative
covenants in paragraph 6 shall remain in substance as set forth therein
with only such changes as are necessary to accommodate the structure of
the Conversion Transaction and (iv) the Notes shall remain pari passu
with the Other Senior Notes in right of payment.
11B. Amendments to Note Agreement
The following amendments to this Agreement shall become effective as
provided in paragraph 11D:
(a) Paragraph 5A of this Agreement shall be amended by adding the
following paragraph at the end thereof.
In preparing the financial statements, computations and reports provided
for herein the Facilities Subsidiary and its Subsidiaries shall be
considered as consolidated or combined subsidiary entities of the
Company (and not accounted for on the equity method of accounting or as
an investment)notwithstanding that the Voting Stock thereof shall not be
owned by the Company, either directly or indirectly, and without regard
to whether they would be considered as such subsidiary entities under
generally accepted accounting principles.
(b) The following definitions set forth in paragraph 10B of this
Agreement shall be amended in their entirety to read as follows:
"Company" means Plum Creek Acquisition Partners, L.P., successor to Plum
Creek Timber Company, L.P. pursuant to the Merger, and its successors
and assigns as permitted by the provisions of paragraph 6B(5).
"Facilities Subsidiary's Facility" shall mean any facility pursuant to
which Manufacturing may incur Debt for purposes of making capital
improvements, additions to, or expansions of, property, plant and
equipment of the Facilities Subsidiary or its Subsidiaries
"Facilities Subsidiary" shall mean, collectively, Manufacturing,
Marketing, Holding, and the New Subsidiaries.
"General Partner" shall mean Plum Creek Timber Company I, L.L.C., a
limited liability company organized and existing under the laws of the
State of Delaware, and its successors and assigns as General Partner of
the Company.
"Merger" shall mean the merger of Plum Creek Timber Company, L.P.
("PCTC") with and into Plum Creek Acquisition Partners, L.P. ("PCAP") as
provided in the Agreement and Plan of Conversion, dated as of June 5,
1998, and amended on July 17, 1998, among Plum Creek Timber Company,
Inc., PCTC and PCAP.
"Mortgage Note Agreements" shall mean the Note Agreements, dated as of
May 31, 1989 and amended as of January 1, 1991, April 22, 1993,
September 1, 1993, May 20, 1994, June 15, 1995 May 31, 1996 and April
15, 1997, providing for the issuance and sale of $160,000,000 original
aggregate principal amount of the 11 1/8% First Mortgage Notes of of the
Facilities Subsidiary to the purchasers listed in the schedule of
purchasers attached thereto.
"Partnership Agreement" shall mean the Agreement of Limited Partnership
of the Company, as in effect at the time of and after giving effect to
the Merger, and as the same may, from time to time, be amended, modified
or supplemented in accordance with the terms thereof.
"Restricted Payment" shall mean (a) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of or
other ownership interests in the Company or any shares of Voting Stock
of a Facilities Operating Subsidiary held by a member of the Management
Voting Group, now or hereafter outstanding, except a dividend payable
solely in shares of stock of or ownership interests in the Company, and
(b) any redemption, retirement, purchase or other acquisition, direct or
indirect, of any shares of any class of stock of or other ownership
interests in the Company or any shares of Voting Stock of a Facilities
Operating Subsidiary held by a member of the Management Voting Group,
now or hereafter outstanding, or of any warrants, rights or options to
acquire any such shares or interests, except to the extent that the
consideration therefor consists of shares of stock of or other ownership
interests in the Company.
"Wholly-Owned Subsidiary" shall mean any Subsidiary organized under the
laws of any state of the United States of America which conducts the
major portion of its business in the United States of America and (i) in
the case of any Subsidiary other than the Facilities Subsidiary all the
stock and other ownership interests of which are owned by the Company
either directly or indirectly through Wholly-Owned Subsidiaries (other
than the Facilities Subsidiary or one or any of its Subsidiaries) and
(ii) at such time as the Mortgage Notes shall have been paid in full and
retired, (x) Manufacturing provided that all the stock and other
ownership interests thereof are owned by the Company either directly or
indirectly through Wholly-Owned Subsidiaries (other than a Facilities
Operating Subsidiary or one of its Subsidiaries), (y) Holding provided
that all the outstanding stock and ownership interests thereof (other
than Voting Stock) are owned by the Company either directly or
indirectly through Wholly-Owned Subsidiaries (other than Marketing, any
New Subsidiary or one of their respective Subsidiaries) and the Voting
Stock of which (to the extent it is not so owned) is owned by the
Management Voting Group (the Voting Stock so owned by the Management
Voting Group (either directly or indirectly) to account for no more than
4% of the equity ownership of Holding (or, through such ownership, more
than 1% of the indirect equity ownership of Marketing or any New
Subsidiary) and no more than 20% of such Voting Stock to be owned by any
one individual), and (z) Marketing and the New Subsidiaries provided
that all the outstanding stock and ownership interests thereof (other
than Voting Stock) are owned by the Company either directly or
indirectly through Holding or Wholly-Owned Subsidiaries and the Voting
Stock of which (to the extent it is not so owned) is owned by Holding.
(c) The following new defined terms shall be added to paragraph
10B of this Agreement in proper alphabetical order:
"Facilities Operating Subsidiaries" shall mean Marketing, Holding and
the New Subsidiaries and "Facilities Operating Subsidiary" shall mean
one of them.
"Holding" shall mean Plum Creek Manufacturing Holding Company, Inc.
"Management Voting Group" shall mean, at any time, a group consisting of
five or more individuals who are current officers of the Company who
legally and beneficially own in the aggregate not less than 51% of the
outstanding Voting Stock of Holding.
"New Subsidiaries" shall mean Plum Creek Northwest Lumber Company, Inc.,
Plum Creek Northwest Plywood Company, Inc., Plum Creek MDF Company,
Inc., and Plum Creek Southeast Lumber Company, Inc., and "New
Subsidiary" shall mean one of them.
11C. Consent and Waiver
The Seller (on behalf of itself and each other holder from time to time
of the Notes) hereby consents to the consummation of the Manufacturing
Asset Transfer, the Management Stock Purchase, the Marketing Stock
Transfer, the Facilities Subsidiary Reorganization and the Subsidiary
Note Assumption (provided the same is effected in the manner specified
in paragraph 11D hereof) and the formation of Holding and the New
Subsidiaries
and hereby waives compliance by the Company with the provisions of
paragraphs 6B(3) (Loans, Advances, Investments and Contingent
Liabilities), 6B(4) (Sale of Stock and Debt of Subsidiaries), 6B(9)
(Transactions with Affiliates), and 6D (Issuance of Stock by
Subsidiaries) of this Agreement solely for purposes of effectuating (and
only to the extent necessary to effectuate) such transactions in the
context of consummating the entire Conversion Transaction as described
in and as contemplated by the Conversion Agreement and the Proxy
Statement/Prospectus. The effectiveness of this Agreement shall not,
except as expressly provided herein, operate as a waiver of any right,
power or remedy of any of the holders of the Notes under this Agreement,
nor constitute a waiver of any other provision of this Agreement.
11D. Conditions to Effectiveness.
The amendments, consents and waivers set forth in paragraphs 11B and 11C
hereof shall become effective at the "Effective Time" (as defined in the
Conversion Agreement), subject to the fulfillment to the satisfaction of
(or waiver by) the Required Holders (as defined in the Other Senior Note
Agreements) of the Other Senior Notes (as hereinafter defined) of the
following conditions:
A. Other Senior Notes. The Note Agreements (the "Other Senior
Note Agreements") relating to the Other Senior Notes shall have been
amended by amendment agreements (the "Senior Note Amendments") executed
by the holders of such Notes (the "Other Senior Noteholders") having the
same substantive effect (as to such Other Senior Note Agreements) and
all amendments, waivers and consents provided for in such amendment
agreements shall have become effective. The Noteholders shall have
received true and correct copies of the Senior Note Amendments.
B. Opinion of Company's Counsel. The holders of the Notes (the
"Noteholders") shall have received favorable opinions from counsel to
the Company and the Corporation, substantially in the respective forms
attached to, or otherwise provided for in, the Senior Note Amendments
(or such other forms of opinions as may be actually delivered to the
Other Senior Noteholders on the date of the Effective Time), addressed
to the Noteholders, dated the date of the Effective Time and otherwise
satisfactory in substance and form to the Required Holders (as defined
in the Other Senior Note Agreements) of the Other Senior Notes.
C. Opinion of Noteholders' Counsel. The Noteholders shall have
received a favorable opinion from Xxxxxxx Xxxx & Xxxxxxxxx, special
counsel for the Other Senior Noteholders, substantially in the form
attached to, or otherwise provided for in, the Senior Note Amendments
(or such other form of opinion as may be actually delivered to the Other
Senior Noteholders on the date of the Effective Time), addressed to the
Noteholders, dated the date of the Effective Time and otherwise
satisfactory in substance and form to the Required Holders (as defined
in the Other Senior Note Agreements) of the Other Senior Notes.
D. Merger.
The Merger shall have become effective in the manner provided for in the
Conversion Agreement and the Operating Partnership shall have executed
and delivered an Assumption Agreement as approved by the Required
Holders (as defined in the Other Senior Note Agreements) of the Other
Senior Notes in conformity with the provisions of clause (iv) of
paragraph 6B(5) of this Agreement (together with an Officers'
Certificate specifying compliance with the matters referred to in said
clause (iv)). No provision of the Conversion Agreement shall have been
amended, nor compliance with any provision thereof, or satisfaction of
any condition to the Conversion Transaction set forth therein, shall
have been waived, without the consent of the Required Holders (as
defined in the Other Senior Note Agreements) of the Other Senior Notes
E. Assumption of Certain Notes. Manufacturing, Marketing and
each New Subsidiary shall have executed and delivered a Subsidiary
Assumption Agreement (a "Subsidiary Assumption Agreement") substantially
in the form attached to or otherwise provided for in, the Senior Note
Amendments thereby becoming an obligor in respect of a portion of the
First Mortgage Notes (in the case of the Facilities Operating
Subsidiaries) and the 11 1/8% Senior Notes.
F. First Mortgage Notes. The Mortgage Note Agreements shall
have been amended by an amendment agreement in substantially the form of
agreement delivered to the Other Senior Noteholders in connection with
the execution and delivery of the Senior Note Amendments (a copy of
which shall have been delivered to the Noteholders) by the Company and
all amendments, waivers and consents provided for therein shall have
become effective.
G. Rating of Notes. The Notes shall have received an
investment grade rating from one of the four Nationally Recognized
Statistical Rating Organizations and the Noteholders shall have received
evidence that such rating remains in effect at the Effective Time.
H. Representations and Warranties; No Default. The
representations and warranties contained in paragraph 11E hereof shall
be true in all material respects on and as of the date of the Effective
Time; there shall exist on the date of closing no Event of Default or
Default; and the Company shall have delivered to you an Officers'
Certificate, dated the date of the Effective Time, to both such effects.
I. Proceedings. All proceedings taken or to be taken in
connection with the transactions contemplated hereby and all documents
incident thereto shall be satisfactory in substance and form to the
Required Holders (as defined in the Other Senior Note Agreements) of the
Other Senior Notes, and the Noteholders shall have received all such
counterpart originals or certified or other copies of such documents as
the Required Holders (as defined in the Other Senior Note Agreements) of
the Other Senior Notes may reasonably request.
11E. Representations and Warranties.
The Company (the term "Company" as used herein including both Plum Creek
Timber Company, L.P. and the Operating Partnership as its successor in
the Merger)represents and warrants as follows:
A. Organization. The Company is a limited partnership duly
organized, validly existing and in good standing under the Delaware
Revised Uniform Limited Partnership Act and has all requisite
partnership power and authority to own and operate its properties, to
conduct its business as now conducted and as proposed to be conducted
and to enter into and perform its obligations under this Agreement and
(after giving effect to the Merger) the Assumption Agreement, the this
Agreement, the Notes and the Subsidiary Assumption Agreement to which it
is a party. As of the Effective Time the Facilities Operating
Subsidiaries will each be a duly organized and validly existing
corporation and in good standing under its jurisdiction of incorporation
with all requisite corporate power and authority to own and operate its
properties, to conduct its business as proposed to be conducted and to
enter into and perform its obligations under the Subsidiary Assumption
Agreement to which it is a party.
B. Qualification. Each of the Company and its Subsidiaries is
duly qualified or registered for transaction of business and in good
standing as a foreign limited partnership or corporation in each
jurisdiction in which the failure so to qualify or be registered would
have a material adverse effect on the business, property or assets,
condition (financial or other), operations or prospects of the Company
and its Subsidiaries taken as a whole, or on the ability of the Company
to perform its obligations under this Agreement, or (after giving effect
to the Merger) the Assumption Agreement, the this Agreement or the
Notes, or in the ability of the parties to the Subsidiary Assumption
Agreements to perform their obligations thereunder.
C. Financial Statements. The Company has delivered to the
Seller a complete and correct copy of the Proxy Statement/Prospectus
(which for the purposes of this paragraph 11E shall include only those
documents incorporated by reference as of the date hereof). The
unaudited pro forma condensed consolidated financial statements of the
Corporation contained in the Proxy Statement/Prospectus (the "Pro Forma
Statements") comply as to form in all material respects with the
applicable accounting requirements of the Securities Act of 1933 and the
Securities Exchange Act of 1934 and the published rules and regulations
thereunder and the assumptions on which the pro forma adjustments
reflected in the Pro Forma Statements are based provide a reasonable
basis for presenting the significant effects of the transactions
contemplated by the Pro Forma Statements and such pro forma adjustments
give appropriate effect to such assumptions and are properly applied in
the Pro Forma Statements. Inasmuch as the Corporation at the Effective
Time will be entirely a holding company owning the Operating
Partnership, with no substantial assets or liabilities apart from the
Operating Partnership, the Pro Forma Statements substantially reflect
the pro forma position of the Operating Partnership and its Subsidiaries
after giving effct to the Merger.
D. Subsidiaries. As of the Effective Time the Company will
own, directly or indirectly, all of the issued and outstanding equity
interests of all of its Subsidiaries except, in the case of Holding, the
Voting Stock owned by the Management Voting Group, which interests will
have been duly authorized and validly issued, fully paid and non-
assessable and be owned free and clear of any Liens (except for Liens on
the shares of Voting Stock owned by the Management Voting Group in favor
of the Company or Holding as security for the unpaid subscription price
for such shares of Voting Stock). As of the Effective Time there will be
outstanding no warrants or options to acquire, or instruments
convertible into or exchangeable for, any equity interest in any such
Subsidiary.
E. Changes, etc. Since the date of the Proxy
Statement/Prospectus (a) the Company and its Subsidiaries have not
incurred any material liabilities or obligations, direct or contingent,
or entered into any material transactions not in the ordinary course of
business except for those transactions described in the Proxy
Statement/Prospectus as constituting a part of the Conversion
Transaction, and (b) there has not been (i) any material adverse change
in the business, property or assets, condition (financial or other),
operations or prospects of the Company and its Subsidiaries taken as a
whole, or (ii) any Restricted Payment of any kind declared, paid or made
by the Company.
F. Actions Pending. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened
against the Company or any Susidiary, or any properties or rights of the
Company or any Subsidiary, by or before any court, arbitrator or
administrative or governmental body which questions the validity of this
Agreement, the Assumption Agreement or the Subsidiary Assumption
Agreements or any action taken or to be taken pursuant to any thereof,
which would be reasonably likely to result in any material adverse
change in the business, properties or assets, condition (financial or
other), operations or prospects of the Company and its Subsidiaries
taken as a whole, or in the ability of the Company to perform its
obligations under this Agreement or (after giving effect to the Merger)
the Assumption Agreement, the this Agreement or the Notes, or in the
ability of the parties to the Subsidiary Assumption Agreements to
perform their obligations thereunder.
G. Compliance with other Instruments, etc. Neither the Company
nor any Subsidiary of the Company is in violation of any provision of
the Partnership Agreement or of any term of any agreement or instrument
to which it is a party or by which it or its properties is bound or any
term of any applicable law, ordinance, rule or regulation of any
governmental authority or any term of any applicable order, judgment or
decree of any court, arbitrator or governmental authority, the
consequences of which violation would be reasonably likely to have a
material adverse effect on its business, properties or assets,
condition( financial or other), operations or prospects of the Company
and its Subsidiaries taken as a whole or on the ability of the Company
to perform its obligations under this Agreement, or (after giving effect
to the Merger) the Assumption Agreement, this Agreement or the Notes, or
on the ability of the parties to the Subsidiary Assumption Agreements to
perform their obligations thereunder. The execution, delivery and
performance by the Company of this Agreement and (after giving effect to
the Merger) the Assumption Agreement, this Agreement and the Notes, and
the execution of the Subsidiary Assumption Agreements by the parties
thereto, will not in any case result in any violation of or be in
conflict with or constitute a default under any such term or result in
the creation of (or impose any obligation on the Company or any such
party to create) any Lien upon any of the properties or assets of the
Company or any of its Subsidiaries, pursuant to any such term.
H. Governmental Consent. No consent, approval or authorization
of, or declaration or filing with, any governmental authority is
required for the valid execution, delivery and performance by the
Company of this Agreement,
or,after giving effect to the Merger, the Assumption Agreement, this
Agreement or the Notes, or by any party thereto of the Subsidiary
Assumption Agreements.
I. Franchises, Licenses, Agreements, etc. At the Effective
Time the Company and its Subsidiaries will each be in possession of and
operating in substantial compliance with all franchises, grants,
authorizations, approvals, licenses, permits, easements, consents,
certificates and orders required to own or lease its respective
properties and to permit the conduct of its business, except for those
franchises, grants, authorizations, approvals, licenses, permits,
easements, consents, certificates and orders (collectively, "Permitted
Exceptions") (i) which are routine in nature and are expected to be
obtained or given in the ordinary course of business after the date of
closing, (ii) which are administrative in nature and which are expected
to be obtained or given in the ordinary course of business after the
date of closing, or (iii) the failure of which to be obtained or given
would not individually or in the aggregate materially and adversely
affect the business, property or assets, condition (financial or other),
operations or prospects of the Company and its Subsidiaries taken as a
whole, or impair the ability of the Partnership to perform its
obligations under this Agreement, the Assumption Agreement or the Notes,
or in the ablity of the parties to the Subsidiary Assumption Agreements
to perform their respective obligations thereunder.
J. Title to Properties. At the Effective Time the Company and
its Subsidiaries will have good title to their real properties (other
than properties which are leased) and good title to all of their other
properties and assets, subject to no Lien of any kind except Liens
permitted by paragraph 6B(1) of this Agreement. All leases necessary in
any material respect for the conduct of the businesses of the Company
and its Subsidiaries, are valid and subsisting and are in full force and
effect
K. Environmental Matters.
(a) Other than as disclosed in Exhibit 8Q hereto, at the
Effective Time the Company and its Subsidiaries will have all
environmental permits or licenses necessary for the conduct of its
business as to be conducted as of the Effective Time and, as to any such
permit or license that has expired or is about to expire, or is needed
for the proposed conduct of its business, the Company has or will have
timely and properly applied for renewal or receipt of the same. The
Company and its Subsidiaries are currently operating in material
compliance with the limits set forth in such environmental permits or
licenses and any noncompliance with such permits or licenses will not
result in any material liability or penalty to the Company or any of its
Subsidiaries and the Company has no any knowledge of any threatened or
pending proceeding for the revocation, loss or termination of any such
environmental permits or licenses.
(b) All facilities located on the real property owned by the
Company and its Subsidiaries at the Effective Time after giving effect
to the Conversion Transaction which are subject to regulation by the
Federal Resource Conservation and Recovery Act, as in effect on the date
hereof, are and have been operated by the Company and its Subsidiaries
in material compliance with such Act and to the knowledge of the Company
neither the Company nor any of its Subsidiaries, has received or, to the
knowledge of the Company, been threatened with, a notice of violation
regarding such facilities which reasonably can be expected to have a
material adverse effect on the business, properties or assets, condition
(financial or other), operations or prospects of the Company and its
Subsidiaries taken as a whole.
(c) With respect to the real property to be owned by the Company
and its Subsidiaries as of the Effective Time, there has not occurred to
the best knowledge of the the Company (i) any Release of any Hazardous
Substance in a Reportable Quantity, (ii) any discharge of any substance
into ground, surface, or navigable waters for which a notice of
violation has been received or threatened under any federal, state or
local laws, rules or regulations concerning water pollution, or (iii)
any assertion of any Lien pursuant to federal, state or local
environmental law resulting from any use, spill, discharge or clean-up
of any hazardous or toxic substance or waste, which occurrence can
reasonably be expected to have a material adverse effect on the
business, properties or assets, condition (financial or other),
operations or prospects of the Company and its Subsidiaries taken as a
whole. As used in this paragraph, the terms "Release", "Hazardous
Substance", and "Reportable Quantity" shall have the meanings assigned
such terms under the Comprehensive Environmental Response Compensation
and Liability Act (CERCLA).
L. Status under Certain Statutes.
Neither the Company nor any Subsidiary is subject to regulation under
the Investment Company Act of 1940, the Public Utility Holding Company
Act of 1935, the Transportation Acts or the Federal Power Act, in each
case as amended.
M. Year 2000.
With respect to the Company and its Subsidiaries (after giving effect to
the Conversion Transaction), (a) a review and assessment has been
initiated of all areas within the Company's and its Subsidiaries'
business and operaions (including those affected by suppliers, vendors
and customers) that could be adversely affected by the "Year 2000
Problem" (that is, the risk that computer applications used by the
Company or any of its Subsidiaries (or suppliers, vendors and customers)
may be unable to recognize and properly perform date-sensitive functions
involving certain dates prior to and any date after December 31, 1999),
(b) a plan and timetable has been developed for addressing the Year 2000
Problem on a timely basis, and (c) to date, that plan has been
implemented in accordance with that timetable. Any reprogramming
required to avoid a Year 2000 Problem will be completed by June 30,
1999, except where failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a material adverse effect
on the business, properties or assets, condition (financial or other),
operations or prospects of the Company and its Subsidiaries taken as a
whole. The cost to the Company and its Subsidiaries of such
reprogramming and testing and of the reasonably foreseeable consequences
of the Year 2000 Problem to the Company and its Subsidiaries (including
reprogramming errors and the failure of others' systems or equipment)
will not result in a Default or a material adverse effect on the
business, properties or assets, condition (financial or other),
operations or prospects of the Company and its Subsidiaries taken as a
whole. Except for such reprogramming referred to in the preceding
sentence as may be necessary, the computer and management information
systems of the Company and its Subsidiaries are and, with ordinary
course upgrading and maintenance, will continue through the final
maturity date of the Notes to be sufficient to permit the Company and
its Subsidiaries to conduct their respective businesses without a
reasonable likelihood of resulting in a material adverse effect on the
business, property or assets, condition (financial or other) or results
of operations or prospects of the Company and its Subsidiaries taken as
a whole.
N. Disclosure.
The Proxy Statement/Prospectus fairly describes, in all material
respects, the general nature of the business and principal properties of
the Company and its Subsidiaries after giving effect to the Conversion
Transaction. Neither this Agreement, nor any other document,
certificate or statement furnished to you by or on behalf of the Company
in connection herewith contains any untrue statement of a material fact
or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no
fact peculiar to the Company which materially adversely affects or in
the future may (so far as the Company can now reasonably foresee)
materially adversely affect the businesses, property or assets,
condition (financial or other) or results of operations or prospects of
the Company and its Subsidiaries and which has not been set forth in
this Agreement, or in the Proxy Statement/Prospectus.
12. Miscellaneous
12A. Note Payments
The Company agrees that, so long as the Seller shall hold any Note, it
will make payments of principal thereof and premium, if any, and
interest thereon, which comply with the terms of this Agreement, by wire
or electronic funds transfer of immediately available funds for credit
to the Seller's account or accounts as specified in the Schedule I
attached hereto, or such other account or accounts in the United States
as the Seller may designate in writing, notwithstanding any contrary
provision herein or in any Note with respect to the place of payment.
The Seller agrees that, before disposing of any Note, it will make a
notation thereon (or on a schedule attached thereto) of all principal
payments previously made thereon and of the date to which interest
thereon has been paid. The Company agrees to afford the benefits of
this paragraph 12A to any Transferee which shall have made the same
agreement as the Seller has made in this paragraph 12A.
12B. Expenses
The Company will pay all costs and expenses incurred by the Seller in
connection with any amendments, waivers or consents under or in respect
of this Agreement or the Notes requested by the Company (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or
defending (or determining whether or how to enforce or defend) any
rights under this Agreement or the Notes, and (b) the costs and
expenses, including financial advisors' fees, incurred in connection
with the insolvency or bankruptcy of the Company or in connection with
any work-out or restructuring of the transactions contemplated hereby
and by the Notes. The obligations of the Company under this paragraph
12B shall survive the transfer of any Note or portion thereof or
interest therein by a holder of Notes or any Transferee and the payment
of any Note.
12C. Consent to Amendments
This Agreement (including, without limitation, paragraph 5, paragraph 6
and clauses (iii) through (xvii) of paragraph 7A) may be amended, and
the Company may take any action herein prohibited, or omit to perform
any act herein required to be performed by it, if the Company shall
obtain the written consent (the "Required Consent") to such amendment,
action or omission to act, of the Required Holder(s); provided that so
long as the Notes are held by the Seller (or an SDW Affiliate), and are
not then pledged to secure any obligation (i) such consent may not be
unreasonably withheld, and (ii) if consent to such amendment, action or
omission to act has been requested by the Company from the holders of
the Other Senior Notes in respect of the analogous provisions of the
Other Senior Note Agreements and if the consent of the requisite
percentage of the holders of the Other Senior Notes necessary to make
such consent effective under the Other Senior Note Agreements shall have
been received by the Company, then in any such case the Required Consent
shall have been deemed to have been given hereunder in respect of such
amendment, action or omission to act, as the case may be (provided that
the Company shall be in compliance with the provisions of paragraph
12Q). Notwithstanding the foregoing, without the written consent of the
holder or holders of all Notes at the time outstanding (including,
without limitation, the Seller or an SDW Affiliate), no amendment to
this Agreement shall change the maturity of any Note, or change the
principal of, or the rate or time of payment of any scheduled payment of
principal pursuant to paragraph 4B or payment of interest or any premium
payable with respect to, any Note, or alter or amend the right of any
Significant Holder to declare all of the Notes held by such Significant
Holder to be due and payable in accordance with the provisions of
paragraph 7A, or change the proportion of the principal amount of the
Notes required with respect to any consent. Each holder of any Note at
the time or thereafter outstanding shall be bound by any consent
authorized by this paragraph 12C, whether or not such Note shall have
been marked to indicate such consent, but any Notes issued thereafter
may bear a notation referring to any such consent. No course of dealing
between the Company and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a
waiver of any rights of any holder of such Note. As used herein and in
the Notes, the term "this Agreement" and references thereto shall mean
this Agreement as it may from time to time be amended or supplemented.
12D. Solicitation of Holders of Notes
The Company will not solicit, request or negotiate for or with respect
to any proposed waiver or amendment of any of the provisions of this
Agreement or the Notes unless each holder of any Note shall concurrently
be informed thereof in writing by the Company and shall be afforded the
opportunity to consider the same and shall be supplied by the Company
with sufficient information to enable it to make an informed decision
with respect thereto. Executed or true and correct copies of any waiver
or consent effected pursuant to the provisions of paragraph 12C shall be
delivered by the Company to each holder of outstanding Notes forthwith
following the date on which the same shall have been executed and
delivered by the holder or holders of the requisite percentage of
outstanding Notes. In the event that the holder of a Note is a nominee
for another Person, any request for such amendment, waiver or consent
shall be delivered to both the nominee and such other Person, and, if
acceptable to such other Person, such amendment, waiver or consent shall
be executed by such other Person. The Company will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any holder of
any Note as consideration for or as an inducement to the entering into
by any such holder of any Note of any waiver or amendment of any of the
terms and provisions of this Agreement or the Notes unless such
remuneration is concurrently paid, on the same terms, ratably to each
holder of the then outstanding Notes.
12E. Form, Registration, Transfer and Exchange of Notes; Lost
Notes
The Notes are issuable as registered notes without coupons in minimum
denominations equal to the lesser of (a) $1,000,000 and (b) the
aggregate principal amount of Notes purchased by each Purchaser
hereunder (the "Minimum Note Amount"). The Company shall keep at its
principal office a register in which the Company shall provide for the
registration of Notes and of transfers of Notes. In the event that the
holder is a nominee for another Person (and such fact is known to the
Company), the name and address of such other Person shall also be noted
on the register. Upon surrender for registration of transfer of any
Note at the principal office of the Company, the Company shall, at its
expense, execute and deliver one or more new Notes of like series and
tenor and of a like aggregate principal amount, registered in the name
of such transferee or transferees, provided that no transfer shall be
made to any Transferee engaged in a Permitted Business (other than to an
SDW Affliate) or to a Transferee which does not acquire Notes in a
principal amount equal to not less than the lesser of the Minimum Note
Amount or the entire principal amount of the Notes owned by the
transferor thereof, and no holder shall transfer any Notes if thereafter
such holder retains ownership of Notes and the aggregate principal
amount retained is less than the Minimum Note Amount. At the option of
the holder of any Note, such Note may be exchanged for other Notes of
like series and tenor and of any authorized denominations, of a like
aggregate principal amount, upon surrender of the Note to be exchanged
at the principal office of the Company. Whenever any Notes are so
surrendered for exchange, the Company shall, at its expense, execute and
deliver the Notes which the holder making the exchange is entitled to
receive. Every Note surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer duly executed, by the holder of such Note or such
holder's attorney duly authorized in writing. Any Note or Notes issued
in exchange for any Note or upon transfer thereof shall carry the rights
to unpaid interest and interest to accrue which were carried by the Note
so exchanged or transferred, so that neither gain nor loss of interest
shall result from any such transfer or exchange. Upon receipt of
written notice from the holder of any Note of the loss, theft,
destruction or mutilation of such Note and, in the case of any such
loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon
surrender and cancellation of such Note, the Company will make and
deliver a new Note, of like series and tenor, in lieu of the lost,
stolen, destroyed or mutilated Note. Notwithstanding any provision to
the contrary contained in this Agreement, (x) the Notes may not be
pledged to or for the benefit of any Person engaged in a Permitted
Business, and (y) in the event that the Notes are pledged to a Person
not engaged in a Permitted Business, all rights of the holders of the
Notes under this Agreement arising out of or related to consents,
waivers, amendments, and the exercise of remedies (including, without
limitation, acceleration) shall be delegated to the Required Holders.
Any pledge or encumbrance in violation of the preceding sentence shall
be void.
12F. Persons Deemed Owners; Participations
Prior to due presentment for registration of transfer, the Company may
treat the Person in whose name any Note is registered as the owner and
holder of such Note for the purpose of receiving payment of principal of
and premium, if any, and interest on such Note and for all other
purposes whatsoever, whether or not such Note shall be overdue, and the
Company shall not be affected by notice to the contrary. The Seller may
without the consent of the Company sell participations in principal
amounts of not less than the Minimum Note Amount or, in the case of any
sale by a holder holding Notes in an aggregate principal amount less
than the Minimum Note Amount, such aggregate principal amount of Notes
so held, to one or more Persons who agree to be bound by the provisions
of paragraph 12J in all or a portion of its rights in the Note or Notes
held by it.
12G. Non-Recourse Nature of Liability
Notwithstanding anything to the contrary contained in this Agreement,
the Seller hereby acknowledges and agrees that neither the General
Partner nor any general partner or limited partner, stockholder,
officer, employee, servant, controlling Person, executive, director or
agent, as such, of the General Partner, nor any past, present or future
general partner or limited partner, as such, of the General Partner,
shall have any liability to the Seller or any Transferee (such
liability, including such as may arise by operation of law, being hereby
expressly waived) for the payment of any sums now or hereafter owing by
the Company under this Agreement or under the Notes or for the
performance of any of the obligations of the Company contained herein.
12H. Survival of Representations and Warranties; Entire
Agreement
All representations and warranties contained herein or made in writing
by or on behalf of the Company in connection herewith shall survive the
execution and delivery of this Agreement and the Notes, the transfer by
the Seller of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any Transferee,
regardless of any investigation made at any time by or on behalf of the
Seller or any Transferee. All representations, warranties and covenants
contained herein made by the Seller or any holder shall survive the
execution and delivery of this Agreement and the Notes, and may be
relied upon by the Company and its successors and assigns. No holder of
any Notes (including the Seller) shall be responsible for the truth,
correctness or performance of the representations or warranties of any
other holder (including any Transferee). Subject to the preceding
sentences, this Agreement and the Notes embody the entire agreement and
understanding between the Seller and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof.
12I. Successors and Assigns
All covenants and other agreements in this Agreement contained by or on
behalf of any of the parties hereto shall bind and inure to the benefit
of the respective successors and assigns of the parties hereto
(including, without limitation, any Transferee) whether so expressed or
not.
12J. Disclosure to Other Persons
The Seller agrees to use its best efforts to keep any information (other
than information which has become public information) delivered or made
available by the Company or the General Partner to the Seller (including
any information obtained pursuant to paragraph 5A or 5B) in connection
with or pursuant to this Agreement which is proprietary in nature and
clearly indicated to be confidential information, confidential from any
one other than Persons employed or retained by the Seller who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Notes; provided that nothing herein shall prevent any
holder of any Notes from disclosing such information to (i) such
holder's trustees, directors, officers, employees, agents and
professional consultants, (ii) any other holder of any Notes, (iii) any
Person to whom such holder offers to sell such Note or any part thereof
which has agreed in writing to be bound by the provisions of this
paragraph 12J, (iv) any Person to whom such holder sells or offers to
sell a participation in all or any part of such Notes who has agreed in
writing to be bound by the provisions of this paragraph 12J, (v) any
federal or state regulatory authority having jurisdiction over such
holder, (vi) the National Association of Insurance Commissioners or any
similar organization or (vii) any other Person to whom such delivery or
disclosure may be necessary or appropriate (a) in compliance with any
law, rule, regulation or order applicable to such holder, (b) in
response to any subpoena or other legal process, (c) In connection with
any litigation to which such holder is a party or (d) in order to
protect such holder's investment in such Note to the extent reasonably
required in connection with the exercise of any remedy hereunder.
12K. Notices
All written communications provided for hereunder shall be sent by first
class mail, if promptly confirmed by facsimile transmission (to the
extent the recipient has provided a facsimile telephone number) and by
telephone, or nationwide overnight delivery service (with charges
prepaid) and (i) if to the Seller, addressed to the address specified
for such communications in Schedule I attached hereto, or at such other
address as the Seller shall have specified to the Company in writing,
(ii) if to any other holder of any Note, addressed to such other holder
at such address as such other holder shall have specified to the Company
in writing or, if any such other holder shall not have so specified an
address to the Company, then addressed to such other holder in care of
the last holder of such Note which shall have so specified an address to
the Company, and (iii) if to the Company, addressed to it at 000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxxxx 00000, or at such other address
as the Company shall have specified to the holder of each Note in
writing; provided, however, that any such communication to the Company
may also, at the option of the holder of any Note, be delivered by any
other means either to the Company at its address specified above or to
any officer of the Company.
12L. Descriptive Headings
The descriptive headings of the several paragraphs of this Agreement are
inserted for convenience only and do not constitute a part of this
Agreement.
12M. Satisfaction Requirement
If any agreement, certificate or other writing, or any action taken or
to be taken, is by the terms of this Agreement required to be
satisfactory to the Seller or to the Required Holder(s), the
determination of such satisfaction shall be made by the Seller or the
Required Holder(s), as the case may be, in the sole and exclusive
judgment (exercised in good faith) of the Person or Persons making such
determination.
12N. Governing Law
This Agreement shall be construed and enforced in accordance with, and
the rights of the Parties shall be governed by, the law of the State of
New York.
12O. Counterparts
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
12P. Severability
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted
by law) not invalidate or render unenforceable such provision in any
other jurisdiction.
12Q. Actions in Respect of Other Senior Notes
So long as the Seller or an SDW Affiliate is the holder of the Notes
(and the Notes are not then pledged to secure any obligation), the
Company will not amend, or seek consents under, the Other Senior Note
Agreements, or agree to extend any financial accommodations to the
holders of the Other Senior Notes in connection with any such amendment
or consent or in connection with any "Event of Default" or rescission or
acceleration under any of the Other Senior Note Agreements (by payment
of any fees, accelerated amortization or increased interest rates or
otherwise) unless the Company shall offer to amend the provisions of
this Agreement in the same manner, shall seek the same consents and
extend the same financial accommodations to the Seller (or any such SDW
Affiliate) as holder of Notes hereunder. Notwithstanding any provisions
of this Agreement to the contrary, the holders of the Notes shall not be
entitled to any financial accommodations related to consents, waivers or
amendments arising out of or related to the REIT reorganization
described in paragraph 11, unless there are material modifications to
the structure of the REIT reorganization from the stucture described in
paragraph 11 after the date of any pledge of the Notes that is not
prohibited by paragraph 12E.
The execution hereof by the Seller shall constitute a contract among the
Company and the Seller for the uses and purposes herein above set forth.
Very truly yours,
PLUM CREEK TIMBER COMPANY, L.P.
By: Plum Creek Management Company,L.P.,
its General Partner
By: ____________________________
Name:
Title:
The foregoing Agreement is
accepted as of the date first
above written
SDW TIMBER I, L.L.C.
By: S.D. Xxxxxx Company,
its sole member
By:______________________
Name:
Title:
SCHEDULE I
INFORMATION RELATING TO SELLER
Name and Address of Seller
SDW Timber I, L.L.C.
c/o S.D. Xxxxxx Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
(1) All payments on the Notes shall be made by wire transfer of
immediately available funds to:
[Name of Bank]
ABA #
for credit to A/C #
Reference:
with sufficient information to identify the source and application
of such funds.
(2) All notices of payments and written confirmations of such wire
transfers shall be sent to the above address, Attention:
(3) All other communications shall be sent to the above address,
Attention::
(4) Taxpayer ID No.:
Exhibit A
Plum Creek Timber Company, L.P.
__ __% Senior Note, Series __, due February 12, ____
No. R-______
$_________________ November ___, 1998
For Value Received, the undersigned, Plum Creek Timber Company, L.P.
(the "Company"), a limited partnership duly organized under the Delaware
Revised Uniform Limited Partnership Act, hereby promises to pay
to_____________________________, or registered assigns, the principal
sum of _______________________ Dollars on February 12, __1__, with
interest (computed on the basis of a 360-day year consisting of twelve
30-day months) (a) on the unpaid balance thereof at the rate of __1__ %
per annum from the date hereof, payable quarterly on the 12th day of
February, May, August and November in each year, commencing with the
February 12, May 12 , August 12 or November 12 next succeeding the date
hereof, until the principal hereof shall have become due and payable,
and (b) on any overdue payment (including any overdue prepayment) of
principal, any overdue payment of premium and, to the extent permitted
by applicable law, any overdue payment of interest, payable quarterly as
aforesaid (or, at the option of the registered holder hereof, on
demand), at a rate per annum from time to time equal to the greater of
(i) __ __ % or (ii) the rate of interest publicly announced by Xxxxxx
Guaranty Trust Company of New York from time to time in New York City as
its Prime Rate plus 2.0%.
Payments of principal, premium, if any, and interest are to be made at
the main office of Xxxxxx Guaranty Trust Company of New York in New York
City or at such other place as the holder hereof shall designate to the
Company in writing, in lawful money of the United States of America.
This Note is one of the Company's __1__ % Senior Notes, Series ____, due
February 12, ____ (the "Notes") issued pursuant to that certain Senior
Note Agreement, dated as of November 12, 1998 (the "Agreement"), between
the Company and the original holder of the Notes named therein and is
entitled to the benefits thereof. As provided in the Agreement, this
Note is subject to prepayment, in whole or from time to time in part,
with such premium as is specified in the Agreement, and this Note is not
otherwise subject to prepayment.
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee.
Prior to due presentment for registration of transfer, the Company may
treat the person in whose name this Note is registered as the owner
hereof for the purpose of receiving payment and for all other purposes,
and the Company shall not be affected by any notice to the contrary.
In case an Event of Default, as defined in the Agreement, shall occur
and be continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner and with the effect
provided in the Agreement.
This Note is intended to be performed in the State of New York, and this
Note and the Agreement shall be construed and enforced in accordance
with the law of the State of New York.
PLUM CREEK TIMBER COMPANY, L.P.
By: Plum Creek Management Company, L.P.,
its General Partner
By:
Title:
Exhibit B
November 12, 1998
SDW Timber I, L.L.C.
c/o S.D. Xxxxxx Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Re: $171,375,000 Senior Notes, Series E, F and G of
Plum Creek Timber Company, L.P.
Dear Seller:
I am the Vice President, General Counsel and Secretary of Plum Creek
Management Company, L.P. (the "General Partner"), which serves as the
general partner of Plum Creek Timber Company, L.P., a Delaware limited
partnership (the "Company"). In such capacity I have acted as counsel
to the Company and as such I am familiar with the transactions
contemplated by the Senior Note Agreement, dated as of November 12, 1998
(the "Note Agreement"), between the Company and you (the "Seller").
Capitalized terms used in this opinion without definition have the
respective meanings specified in the Note Agreement.
In so acting, I have examined the following documents:
(a) the Notes, and
(b) the Note Agreement.
The Notes and the Note Agreement are sometimes herein collectively
referred to as the "Loan Documents." This opinion is being delivered to
you pursuant to paragraph 3B of the Note Agreement.
For purposes of this opinion, I have (a) investigated such questions of
law, (b) examined such certificates of public officials and of officers
of the Company and other documents, as in my judgment are necessary or
appropriate to enable me to render the opinions expressed below, and (c)
relied upon the representations and warranties as to factual matters
contained in or made pursuant to the Loan Documents. In addition, I
have, with your approval, assumed (i) the genuineness of the signatures
of Persons signing all Loan Documents in connection with which this
opinion is rendered on behalf of parties thereto (other than Persons
signing on behalf of the Company or the General Partner), (ii) the
authority of all Persons signing all documents on behalf of the parties
thereto (other than Persons signing on behalf of the Company or the
General Partner), (iii) the authenticity of all documents submitted to
me as originals, (iv) the conformity to authentic original documents of
all documents submitted to me as certified, conformed or photostatic
copies, (v) that the Seller has all requisite power and authority to
execute, deliver and perform the Loan Documents and (vi) the due
authorization, execution and delivery of the Loan Documents by the
Seller.
Based upon the foregoing, and subject to the further assumptions and
qualifications hereinafter set forth, I am of the opinion that:
1. The Company is a limited partnership duly organized, validly
existing and in good standing under the Delaware Revised Uniform Limited
Partnership Act and has all requisite partnership power and authority to
own and operate its properties, to conduct its business as currently
conducted, to execute and deliver the Loan Documents, to issue and sell
the Notes and to carry out the terms of the Note Agreement and the
Notes. The Company has been qualified or registered and is in good
standing as a foreign limited partnership for the transaction of
business under the laws of the States of Arkansas, Idaho, Louisiana,
Montana, Texas, Maine and Washington, which are the only jurisdictions
in which the failure so to qualify or register would be likely, in my
reasonable judgment, to subject the Company to any liability or
disability which would be material to the financial condition or
operations of the Company or to have a material adverse effect upon the
ability of the Company to perform its obligations under the Loan
Documents.
2. The Note Agreement and the Notes have been duly authorized by all
necessary partnership action on the part of the Company. The Note
Agreement and the Notes have been duly executed and delivered on behalf
of the Company, and constitute the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, subject to the qualifications that (a) such
enforceability may be limited by bankruptcy, insolvency, reorganization
and other similar laws of general applicability relating to or affecting
creditors' rights generally, (b) such enforceability may be limited by
public policy, and (c) the enforceability of equitable rights and
remedies is subject to equitable defenses and judicial discretion and
such enforceability may be limited by general equitable principles.
3. The Company is not in violation of any term of the Partnership
Agreement or, to my knowledge, of any term of any other agreement or
instrument to which it is a party or by which it or any of its
properties is bound or, to my knowledge, of any term of any applicable
law, ordinance, rule or regulation of any governmental authority or, to
my knowledge, of any term of any applicable order, judgment or decree of
any court, arbitrator or governmental authority, the consequences of
which violations, individually or in the aggregate, would be reasonably
likely to have a material adverse effect on its business, property or
assets, condition or operations or on the ability of the Company to
perform its obligations under the Loan Documents. The execution,
delivery and performance by the Company of the Loan Documents will not
result in any violation of or be in conflict with or constitute a
default under or result in the creation of (or impose any obligation on
the Company to create) any Lien (other than the Liens required by
paragraph 5C of the Note Agreement) upon any of the properties of the
Company pursuant to the provisions of the Company's Partnership
Agreement or (i) any other agreement or instrument known to me (it being
understood that all agreements and instruments filed by the Company with
the Securities and Exchange Commission are known to me), to which the
Company is a party or by which the Company or any of its properties is
bound, (ii) any term of any applicable law, ordinance, rule or
regulation of any governmental authority, or (iii) to my knowledge, any
term of any applicable order, judgment or decree of any court,
arbitrator or governmental authority.
4. No consent, approval or authorization of, or declaration or filing
with, or the taking of any other action in respect of, any commission,
authority, governmental agency or body of the United States of America
or the States of Arkansas, Delaware, Idaho, Louisiana, Montana, Texas,
Maine or Washington is required for the valid execution, delivery and
performance by the Company of the Loan Documents or the valid offer,
issue and delivery of the Notes pursuant to the Note Agreement except
such consents, approvals or authorizations as have been obtained and
such filings as may be required under state securities laws or Blue Sky
Laws in connection with the offer, issue and delivery of the Notes.
5. There are no legal or governmental proceedings to which the
Company is a party or to which any property or assets of the Company is
subject or which is pending or, to my knowledge, threatened against the
Company which questions the validity of the Loan Documents or any
actions pursuant thereto or which would be reasonably likely to result
in any material adverse change in the business, property or assets,
condition or operations of the Company.
6. The Company is not an "investment company" as defined under the
Investment Company Act of 1940, as amended, nor is the Company or the
offer, issue and delivery of the Notes by the Company subject to
regulation thereunder.
7. Based upon the representations of the Seller contained in the Note
Agreement the offer, issue and delivery of the Notes under the
circumstances contemplated by the Note Agreement constitute exempt
transactions under the registration provisions of the Securities Act of
1933, as amended, and neither the registration of the Notes thereunder
nor the qualification of an indenture in respect of the Notes under the
Trust Indenture Act of 1939, as amended, is required in connection with
such offer, issue and delivery.
The opinions expressed herein are based upon and limited exclusively to
the laws of the State of Washington, the Delaware Revised Uniform
Limited Partnership Act, and federal laws of the United States of
America insofar as any of such laws are applicable, and I render no
opinion with respect to any other laws, except that the opinions
expressed in paragraphs 1, 2, 3 and 4 cover the laws of the State of
Delaware, New York, Arkansas, Idaho, Louisiana, Montana, Maine or Texas,
in each case, insofar as any such laws are applicable; provided that,
with respect to my opinions relating to the laws of Arkansas, Idaho,
Louisiana, Montana, Maine and Texas, please note that I am not licensed
to practice law in those states and such opinions are based solely upon
a general review of the partnership law and commercial law of those
states and discussions with local counsel in such states.
This opinion is solely for your benefit in connection with the
transactions contemplated by the Note Agreement and may not be relied
upon by any Person other than you or any transferee of any Note. This
opinion is not to be quoted in whole or in part or otherwise referred to
(except in a list of closing documents in connection with the
transactions described herein), nor shall it be filed with any
governmental agency or other Person without my prior written consent. I
express no opinion with respect to any matter not expressly set forth in
this opinion.
Very truly yours,
Xxxxx X. Xxxxx
Vice President, General Counsel and Secretary
EXHIBIT D
Liens
Mortgage, Security Agreement and Fixture Filings dated June 8, 1989
recorded in Flathead, Lake and Lincoln Counties, Montana as supplemented
and amended by Mortgage Recording Supplements and Security Agreement and
Fixture Filings dated January 1, 1991; and Deed of Trust, Security
Agreement and Fixture Filing dated June 8, 1989 recorded in Kittitas
County, Washington; all of which were executed by Plum Creek
Manufacturing, Inc. in favor of First Interstate Bank of Washington,
N.A., as Trustee; and Mortgage, Security Agreement and Fixture Filing
dated June 17, 1997, recorded in Union County, Arkansas, in favor of
Xxxxx Fargo Bank, National Association, successor by merger to First
Interstate Bank of Washington, N.A., as Trustee; to secure the
indebtedness evidenced by the Mortgage Note Agreement dated May 31, 1989
among Plum Creek Manufacturing, Inc., Plum Creek Timber Company, L.P. as
guarantor, and each of the purchasers of the Mortgage Notes, as amended
by (a) the Mortgage Note Agreement Amendment, Consent and Waiver dated
as of January 1, 1991 among Plum Creek Manufacturing, Inc., Plum Creek
Timber Company, L.P., Plum Creek Merger Company, Inc., Plum Creek
Manufacturing, L.P., and the several holders of the 11-1/8% First
Mortgage Notes.; (b) the letter agreement dated April 22, 1993, (c) the
Mortgage Note Agreement Amendment dated as of September 1, 1993, (d) the
Mortgage Note Agreement Amendment dated as of May 20, 1994, (e) the
Amendment to Mortgage Note Agreement dated as of June 15, 1995, (f) the
Mortgage Note Agreement Amendment dated as of May 31, 1996, (g) Mortgage
Note Agreement, Consent and Waiver dated as of September 10, 1996, and
(h) Mortgage Note Agreement Amendment dated as of April 15, 1997 (as
amended, the "Mortgage Note Agreement").
EXHIBIT E
Plum Creek Timber Company, L.P. Permitted Investments
1 Plum Creek Manufacturing, L.P. (98% interest)
2. Plum Creek Marketing, Inc. (96% interest)
3. Plum Creek Land Company (100% interest)
4. PCTC Limited Liability Company (100% interest, 99%
direct and 1 % indirect)
5. For purposes of effecting the Company's 1031 tax deferred
exchanges, PCTC Limited Liability Company has made a loan to the
following purchaser of real property from the Company, in the amount
listed below. The loan is evidenced by a Promissory Note secured by a
Deed of Trust in Favor of PCTC Limited Liability Company:
a.First South Properties, L.L.C. ($5,039.29)
6. In conjunction with the Company's in-xxxxx chipping operations,
the Company has made loans to its contractors in order that such
contractors could purchase chipping equipment, in the following amounts:
a. C & F Forest Products, L.L.C. ($295,042.05)
x. Xxxxxxxx Logging, Inc. ($113,996.34)
7. Subject to a 5-year loan agreement (maturing 8/31/01), the Company
has agreed to make loans to provide financial support to a co-operative
of forest nurseries, in the amount listed below:
a. IFA Nurseries, Inc. ($129,938.00)
EXHIBIT 8C
Other Subsidiaries
Plum Creek Land Company (100% interest)
PCTC Limited Liability Company (100% direct and indirect interest)
Plum Creek Foreign Sales Corporation (inactive Guam corporation) 100%
interest held by Plum Creek Marketing, Inc.)
Plum Creek Remanufacturing, Inc. (100% interest held by Plum Creek
Marketing, Inc.)
Plum Creek Plywood, L.L.C. (100% owned by Plum Creek Manufacturing,
L.P.)
EXHIBIT 8G
Material Transactions and Changes
Subsequent to December 31, 1997, neither the Company nor the Facilities
Subsidiary has incurred any material liabilities or obligations or
entered into any material transactions not in the ordinary course of
business, other than the pending sale of Company's chipping facility in
Cle Elum, Washington for $750,000, expected to close prior to December
31, 1998, and the acquisition of the Meridian, Idaho remanufacturing
facility in May of 1998 for $9.4 million.
Subsequent to December 31, 1997, there has not been any material adverse
change in the financial condition or operations of the Company or the
Facilities Subsidiary.
Subsequent to December 31, 1997, there have been the following
Restricted Payments declared, paid or made by the Company:
1. Fourth Quarter 1997 Distribution of Available Cash in the
amount of $34.0 million paid to Unitholders in the first
quarter of 1998;
2. First Quarter 1998 Distribution of Available Cash in the
amount of $35.5 million paid to Unitholders in the second
quarter of 1998;
3. Second Quarter 1998 Distribution of Available Cash in the
amount of $35.5 million paid to Unitholders in the third
quarter of 1998; and
4. Third Quarter 1998 Distribution of Available Cash in the
amount of $35.5 million payable to Unitholders on November
24, 1998.
EXHIBIT 8K
Property Title
The Company's title to the timberlands it acquired during its
formation in 1989 includes the related hard rock mineral interests but
does not include the oil and gas mineral interests. The Company did not
obtain the hard rock mineral interest or the oil and gas mineral
interests to most of the 865,000 acres of timberland purchased in 1993
from Champion International Corporation. The Company's title to the
timberlands it acquired from Riverwood International Corporation in 1996
includes the hard rock mineral interests. However, the oil and gas
interest on the majority of such properties is owned by unrelated
parties. Under Louisiana law, such oil and gas rights may revert to the
Company under certain conditions beginning in 2004. The title to all of
the Company's timberlands is subject to presently existing easements,
rights of way, flowage and flooding rights, servitudes, cemeteries,
camping sites, hunting and other leases, licenses and permits, none of
which materially adversely affect the value of the timberlands or
materially restrict the harvesting of timber or other operations of the
Company.
EXHIBIT 8Q
Environmental Matters
Environmental notices from Federal, State and Local Environmental
Agencies to the Company citing environmental violations that have not
been finally resolved and disposed of:
1. The State of Washington Department of Ecology ("DOE") alleged in
March 1990 that a release or threatened release of a hazardous substance
had occurred in an area designated "The Old Landsburg Mine," which is
owned by Xxxxxx Coking Coal Company ("Xxxxxx") and Plum Creek. Plum
Creek and other parties are required to respond to the DOE regarding a
high priority clean up of the site under the model Toxics Control Act.
The Plum Creek portion of the site was leased to Xxxxxx from 1978
through 1983 by Burlington Northern Railroad and its successors for
disposal of certain demolition debris. From 1991 to the present, Plum
Creek has participated on a Potentially Liable Party ("PLP") task force
which cooperated with the DOE and voluntarily conducted removal of
barrels and fencing from the site. In 1992, Plum Creek participated in
negotiations regarding an Agreed Order and in planning for a Remedial
Investigation/Feasibility Study ("RI/FS"). From 1993 to 1996, Plum
Creek participated in the ongoing RUFS. The proposed remedy for the
site is a low permeability soil cap with on-going monitoring to be
conducted. It is anticipated that the first remedial actions will be
implemented in 1999. Plum Creek does not believe it will be ultimately
liable for disposal of barrels or hazardous waste at the site and is
vigorously defending its position. Plum Creek believes that it is an
innocent landowner and that any liability will ultimately be borne by
the parties responsible for the waste disposal. To the extent liability
is assessed against Plum Creek as a landowner, the Company believes that
Xxxxxx, by virtue of the terms of the lease, and/or Burlington Northern
Inc., by virtue of an indemnity contained in the deed that transferred
the property to Plum Creek, will be responsible. It is not known at
this time what the cost of ultimate cleanup will be or what portion, if
any, will be funded by Plum Creek.
EXHIBIT R
Environmental Permits and Licenses
(None)
SCHEDULE 10B(1)
Corporate Investment Policy
I. Objective
This policy provides guidelines for the management of the Company's
cash. It is essential that these assets be invested in a high quality
portfolio which:
-Preserves principal
-Meets liquidity needs
-Allows for appropriate diversification of
investments
-Delivers good yield in relationship to the
guidelines and market conditions
The Company is adverse to incurring market risk or credit risk, and will
generally sacrifice yield in the interest of safety. Care must always
be taken to insure that the Company's reported financial statements are
never materially affected by decreases in the market value of securities
held.
II. Maturity or Put
Within the constraints provided throughout this document, or by addendum
to this document, the maximum maturity or put of any investment
instrument will be within two years from the purchase settlement date;
however, the total portfolio must have an average maturity of less than
12 months.
III. Permissible Investments
A. Investments will be made in U.S. dollars only.
B. The Company may own, purchase or acquire marketable
direct obligations in the following:
1. Obligations (fixed and floating rate) issued by, or
unconditionally guaranteed by the U.S. Treasury, or any agency thereof,
or issued by any political subdivision of any state or public agency.
2. Commercial paper rated as A-1 or better by Standard & Poor's, and
P-1 or better by Moody's (or equivalent).
3. Floating rate and fixed rate obligations of corporations, banks
and agencies including: medium term notes and bonds, deposit notes, and
euro dollar/yankee notes and bonds.
4. Certificates of deposit, bankers acceptances and time deposits of
commercial banks, domestic or foreign, whose short term credit ratings
are A-1 /P-1 (or equivalent).
5. Repurchase agreements collateralized by U.S. Treasury and agency
securities.
6. Insurance company Funding Agreements, Investment Contracts, or
similar obligations.
7. Asset backed and mortgage backed securities.
8. Master Notes.
9. Taxable money market preferreds.
10. Tax exempt securities including municipal bonds/notes, money
market preferreds, and variable rate demand notes.
C. Issuing institutions shall be Corporations, Trusts, Partnerships,
and Banks domiciled in the U.S., Canada, Japan and Western Europe, or
Insurance Companies domiciled in the U.S.
IV. Credit Requirements
Safety shall always be a primary consideration in structuring the
Company's investment portfolio. Credit ratings should be tied to
duration as prescribed below in order to combine safety, liquidity and
acceptable market performance,
Duration Minimum Credit Rating
S&P Moody's
6 months or less X- X0
0-00 xxxxxx XX Xx0
00 months or more AAA Aaa
Original issue securities allowable under this policy with less than
twelve months to maturity may substitute the issuers, short term credit
rating if that rating is A-1/P-1 or better.
V. Diversification
To diversify risk, no more than $2 million or 10% of the portfolio can
be invested with any one issuer. Exceptions are issues of the U.S.
Treasury or agency securities, insured or government collateralized
issues and daily money market funds.
Attachments to Senior Note Agreement
Schedule I -- Seller Information
Exhibit A -- Form of Note
Exhibit B -- Form of Opinion of Company's General
Counsel
Exhibit D -- Liens
Exhibit E -- Investments
Exhibit F -- Environmental Notices
Exhibit 8C -- Other Subsidiaries
Exhibit 8G -- Material Transactions
Exhibit 8K -- Property Titles
Exhibit 8R -- Environmental Permits and Licenses
Schedule 10B(1) -- Investment Policy
The Senior Notes will be issued in Series E, F and G, due February 12,
2007, February 12, 2009 and February 12, 2011, respectively, and bearing
interest at the rate____%, ____% and ____% per annum, respectively.
A rate equal to 1 % over the interest rate borne by such series of
Senior Notes.
