EXHIBIT 10.1
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT (the "Agreement") dated as of March 22, 2000,
by and between PIONEER RESOURCES I, LLC, a Delaware limited liability company
("Pioneer"), and OLYMPIC RESOURCE MANAGEMENT LLC, a Washington limited
liability company ("ORM" or the "Manager").
RECITALS
A. ORM is an independent contractor engaged in the business of
acquiring, operating, maintaining, managing, and disposing of timberland
properties for third parties through its employees, agents and
sub-contractors.
B. Pioneer is interested in engaging ORM to take over
responsibility for all aspects of management of Pioneer, with primary
emphasis on management and potential disposition of its Timberlands and, in
connection therewith, Pioneer and Member are interested in appointing ORM as
Manager of Pioneer under the Operating Agreement.
C. ORM is prepared to accept such engagement and appointment as
Manager of Pioneer in accordance with the terms and conditions set forth
below and in the Operating Agreement.
AGREEMENT
The parties agree as follows:
SECTION 1. DEFINITIONS.
1.1 "ADDITIONAL SERVICES" has the meaning set forth in Section 4.3 below.
1.2 "ADMINISTRATIVE SERVICES" has the meaning set forth in Section 3.1
below.
1.3 "AGREEMENT" means this Management Agreement between Pioneer and ORM, as
it may be amended, supplemented or otherwise modified from time to time.
1.4 [Omitted Confidential Information has been filed separately with the
Securities and Exchange Commission]
1.5 [Omitted Confidential Information has been filed separately with the
Securities and Exchange Commission]
1.6 "CASH COLLATERAL ACCOUNT" has the meaning set forth in Section 9 below.
1.7 "CREDIT AGREEMENT" means the Replacement Credit Agreement dated as of
October 9, 1998, among Pioneer, the Lenders, First Union National Bank as
administrative agent, ABN AMRO Bank N.V. as syndication agent, and Bank of
America, N.A., as documentation agent, as [Omitted Confidential Information
has been filed separately with the Securities and Exchange Commission].
1.8 [Omitted Confidential Information has been filed separately with the
Securities and Exchange Commission]
1.9 "DISPOSITION SERVICES" has the meaning set forth in Section 5 below.
1.10 "FEES" means [Omitted Confidential Information has been filed
separately with the Securities and Exchange Commission]
1.11 "FRAUD" with respect to Manager means common law fraud, consisting of
(i) an intentional misrepresentation by Manager of material information
actually known by Manager to be false or (ii) material dishonesty or
defalcation in the management of the affairs of Pioneer, which action was
knowingly initiated, approved or permitted by Manager.
1.12 [Omitted Confidential Information has been filed separately with the
Securities and Exchange Commission]
1.13 "LENDERS" means the several banks and other financial institutions from
time to time parties to the Credit Agreement, and any successors and assigns
thereof.
1.14 "LOAN DOCUMENTS" means the collective reference to the Loan Documents
(as defined in the Credit Agreement), including without limitation, the
Credit Agreement and [Omitted Confidential Information has been filed
separately with the Securities and Exchange Commission].
1.15 "LOGS" means logs of any size or class harvested from the Timberlands.
1.16 "MANAGER" means ORM.
1.17 "MEMBER" means Strategic Timber Partners II, LP, a Georgia limited
partnership, the sole member of Pioneer.
1.18 "MISCONDUCT" with respect to Manager means the acts or omissions of
Manager which constitute (i) gross negligence, (ii) willful misconduct (which
shall include without limitation (A) subject to Section 2.5 hereof, the
willful failure of Manager to cause Pioneer to comply with the terms of the
Loan Documents, except to the extent it is outside the reasonable control of
Manager to cause such compliance; it being understood that compliance with
Section 2.6 hereof is within Manager's reasonable control and (B) the willful
failure of Manager to comply with the terms of Section 9(e) below) or (iii)
Fraud.
1.19 "OPERATING AGREEMENT" means the Fifth Amended and Restated Limited
Liability Company Agreement of Pioneer dated as of March 22, 2000, between
the Manager and the Member, as it may be amended, supplemented or otherwise
modified from time to time.
1.20 "OPTIONAL SERVICES" has the meaning set forth in Section 4.4 below.
1.21 "ORM" means Olympic Resource Management LLC, a Washington limited
liability company.
1.22 "PIONEER" means Pioneer Resources I, LLC, a Delaware limited liability
company.
1.23 "PROPERTY MANAGEMENT SERVICES" has the meaning set forth in Section 4.2
below.
1.24 "REPORTING REQUIREMENTS" means those requirements for the delivery of
periodic financial reports and other information as set forth in the Credit
Agreement and the [Omitted Confidential Information has been filed separately
with the Securities and Exchange Commission].
1.25 [Omitted Confidential Information has been filed separately with the
Securities and Exchange Commission]
1.26 [Omitted Confidential Information has been filed separately with the
Securities and Exchange Commission]
1.27 "TERMINATION FOR CAUSE" shall have the meaning set forth in Section
8.2(c) below.
1.28 "TIMBER" means the timber located on or harvested from the Timberlands,
whether standing or down and irrespective of size.
1.29 "TIMBERLANDS" means the entire Timberlands set forth in Exhibit 1, and
Timberland refers to an individual designated portion of the entire
Timberlands described in Exhibit 1.
SECTION 2. APPOINTMENT OF MANAGER.
2.1 ENGAGEMENT OF ORM AS MANAGER; SCOPE OF AUTHORITY. (a) Pioneer hereby
appoints ORM as manager of Pioneer in accordance with the terms of this
Agreement, and ORM accepts such appointment and agrees to act as manager of
Pioneer in accordance with, and comply in all respects with, the terms of
this Agreement and the Operating Agreement.
(b) As manager of Pioneer, Manager shall have the exclusive authority
and duty to direct, supervise, manage and operate the business, affairs and
properties of Pioneer, and Manager shall perform such duties in an efficient
and economical manner and in accordance with the terms of this Agreement and
the Operating Agreement. Except as otherwise provided in this Agreement or
the Operating Agreement, and subject to any non-waivable provisions of
applicable law, Manager shall have full, complete, and plenary authority,
power and discretion to manage and control the business, affairs and property
of Pioneer, and to make all decisions regarding those matters (including,
without limitation, the right to make and implement all decisions concerning
the business and affairs of Pioneer in the ordinary course of business and to
make and implement
any and all decisions on behalf of Pioneer regarding all major actions
outside the ordinary course of business) and to perform any and all acts or
activities customary or incident to the management of Pioneer's business,
affairs and property. Except as otherwise expressly provided herein or in the
Operating Agreement, Manager's authority shall include, but not be limited
to, the following specific authority to: bind Pioneer to obligations with
third parties; enforce Pioneer's rights under any contract, agreement, law,
or otherwise, including by legal action if necessary; pay and discharge debts
and obligations of Pioneer from any Pioneer funds available to pay and
discharge such debts and obligations; collect and deposit in Pioneer bank
accounts all amounts owing to Pioneer from any source; cause Pioneer to
comply with the terms of this Agreement, the Operating Agreement, the Loan
Documents and any other agreement or instrument to which Pioneer is a party;
in Pioneer's name, hire, pay, oversee, direct the conduct of, and fire
employees, agents, subcontractors, legal, accounting, and other
professionals, and other service providers; and otherwise act on Pioneer's
behalf without restriction or qualification except as limited by law or as
otherwise provided in this Agreement, the Operating Agreement or the Loan
Documents. Other than Manager, no person (including without limitation, the
Member), shall have any power or authority to bind Pioneer unless such person
has been authorized to do so by this Agreement, the Operating Agreement or
Manager.
(c) Manager shall manage, operate, maintain and supervise the business,
affairs and properties of Pioneer with due care, in good faith, and in a
manner normally associated with ORM's management, operation, maintenance and
supervision of timberlands and timberland businesses of a similar size, type
and location as that of Pioneer. Manager shall at all times exercise diligent
efforts to manage and operate the business, affairs and properties of Pioneer
in compliance with (i) this Agreement, (ii) the Operating Agreement, (iii)
the Loan Documents, (iv) all other agreements and instruments to which
Pioneer is a party, and (v) all applicable governmental rules, regulations,
requirements, orders, notices, determinations and ordinances and requirements
of law (including without limitation all environmental laws and all
regulations concerning timberlands). Without in any way limiting the
foregoing, in its management of the business, affairs and properties of
Pioneer, Manager shall provide to Pioneer (w) the Administrative Services in
accordance with the provisions of Section 3 of this Agreement, (x) the
Property Management Services in accordance with the provisions of Section 4.2
of this Agreement, (y) the Additional Services and Optional Services that
Manager performs pursuant to Sections 4.3 and 4.4 of this Agreement, and (z)
such other services that are reasonably required to perform its obligations
hereunder.
2.2 FEES. [Omitted Confidential Information has been filed separately with
the Securities and Exchange Commission]
2.3 LOAN DOCUMENTS. (a) Subject to Section 2.5 of this Agreement, and to
the extent reasonably within the control of Manager, Manager shall manage
Pioneer consistent with, and cause Pioneer to comply with, the terms and
conditions of, the Loan Documents so as to avoid the occurrence of an Event
of Default by Pioneer under the Loan Documents (other than Scheduled Defaults
(as defined in [Omitted Confidential Information has been filed separately
with the Securities and Exchange Commission])), including without limitation,
terms regarding (i) the preparation of financial forecasts and a "disposition
plan", (ii) Reporting Requirements and (iii) the entering into, amending or
terminating any stumpage agreement, timber contract or any
other agreement for the sale of any Timber, Logs or Timberlands (including
pursuant to timber purchase agreements), cutting rights or other real
property of Pioneer.
(b) If the Lenders (or any nominee thereof), pursuant to the exercise
of remedies under the Loan Documents, become the direct or indirect owners of
the membership interests in Pioneer (or otherwise exercise the voting rights
with respect thereto in accordance with the terms of the applicable Loan
Documents) or of all or substantially all of the Timberlands, or the Lenders
(or any such nominee) shall otherwise exercise Pioneer's rights under this
Agreement in accordance with the terms of the applicable Loan Documents, in
any such case such Lenders (or any such nominee) shall have the right to
terminate this Agreement, subject to (i) [Omitted Confidential Information
has been filed separately with the Securities and Exchange Commission], and
(ii) the payment of any other unpaid Fees and other fees, charges and
reimbursements due and payable (or accrued but not yet billed to Pioneer)
hereunder through the date of termination.
(c) (i) If the Lenders (or any nominee thereof), pursuant to the
exercise of remedies under the Loan Documents, become the direct or indirect
owners of the membership interests in Pioneer, or otherwise exercise the
voting rights with respect thereto in accordance with the terms of the
applicable Loan Documents, this Agreement, subject to the termination right
referenced in Section 2.3(b) above, shall remain in full force and effect;
provided however, in such circumstances, Manager and Pioneer shall use good
faith efforts to agree to an amendment to this Agreement to provide Pioneer
and its members with consent, approval and other rights commensurate with
such rights customarily afforded to owners and their members in similar
transactions.
(ii) If the Lenders (or any nominee thereof), pursuant to the
exercise of remedies under the Loan Documents, become the direct or indirect
owners of the Timberlands, at the request of the Lenders, Manager shall enter
into a new management agreement with the Lenders (or any such nominee) to
operate the Timberlands upon substantially same terms as provided herein,
except that (A) Manager shall provide the Lenders (or such nominee) with
consent, approval and other rights commensurate with such rights customarily
afforded to owners and their members in similar transactions, and (B)
[Omitted Confidential Information has been filed separately with the
Securities and Exchange Commission]
2.4 BANK ACCOUNTS; INCOME AND EXPENSES. Manager shall maintain Pioneer's
bank accounts in accordance with the terms of the Loan Documents and shall
deposit receipts of operations and pay expenses from such accounts in
accordance with the terms of the Loan Documents.
2.5 LIMITATION OF DUTIES. Notwithstanding any other provision of this
Agreement or the Operating Agreement, Manager shall not at any time have the
obligation or responsibility to expend or risk its own funds in the conduct
of Pioneer's business or the discharge of Manager's duties hereunder, and
Manager may decline or omit to take any action involving expenditures
chargeable to Pioneer for which funds of Pioneer are not readily available.
However, Manager shall provide Pioneer with notice promptly after Manager
becomes aware of any potential shortage of available funds of Pioneer. Under
no circumstances shall Manager be responsible for the raising of additional
equity capital or the arranging of additional financing on behalf of Pioneer.
Manager shall not be required to act in its own name or for its own account
in conducting the affairs and business of Pioneer, and need act only in the
name of Pioneer, in such activity and in discharging its responsibilities
under this Agreement. Manager shall not be
required to take any action or make any commitment that could, absent any
Misconduct of Manager, result in the personal liability or financial
obligation of Manager to any third party.
2.6 LIMITATION ON AUTHORITY WITH RESPECT TO THIS AGREEMENT AND TRANSACTIONS
WITH AFFILIATES. The Manager and Pioneer hereby expressly acknowledge that
Pioneer may not (and Manager shall not cause Pioneer to), without the prior
written consent of the Required Lenders (as defined in the Credit Agreement),
(a) change the compensation payable to Manager hereunder or otherwise amend,
supplement or otherwise modify this Agreement or the Operating Agreement in
any material respect, (b) waive any material provision of this Agreement, (c)
extend the term or terminate this Agreement, (d) consent to any assignment of
the rights or obligations of Manager under this Agreement, or assign any
rights or obligations under this Agreement, (e) (i) enter into any contract,
agreement or other arrangement with Manager (except as otherwise expressly
provided herein (including without limitation in Sections 4.3 and 4.4)), or
any affiliate of Manager or (ii) except in the ordinary course of business,
knowingly enter into any contract, agreement or other arrangement with any
direct or indirect owner of any portion of Pioneer or any entity controlling,
controlled by or under common control with any such direct or indirect owner,
(f) consent to the entering into of any contract under Sections 4.3 and 4.4
hereof for which Pioneer's consent is required, (g) consent to the entering
into of any contract under Section 5 hereof or (h) consent, pursuant to
Section 9 hereof, to the selection of any replacement Manager Mortgaged
Property (as defined in Section 9 below) or the arrangements with respect to
the establishment of the Cash Collateral Account (or any amendment of such
arrangements).
SECTION 3. ADMINISTRATIVE SERVICES.
3.1 GENERAL SERVICES. Manager shall manage, supervise, conduct and/or carry
out all of the business activities of Pioneer and provide such general
administrative and organizational services as shall be required by Pioneer's
assets and business (collectively, the "Administrative Services"). The
Administrative Services shall include, without limitation, administration of
the following: accounting, income tax accounting, financial reporting, filing
of any tax returns on behalf of Pioneer, capital expenditures, cash
management, collection of revenues, payment of expenses, public relations and
communications, legal matters, human resources, information services,
insurance pertaining to the assets and activities of Pioneer in accordance
with the terms of this Agreement, inventory of Pioneer's assets, estimate of
the aggregate value of Pioneer's assets and business, and other general and
administrative services necessary to manage and operate the business, affairs
and properties of Pioneer in accordance with the terms of this Agreement, the
Operating Agreement and, subject to the terms hereof, the Loan Documents. At
Pioneer's expense and for Pioneer's account, Manager may subcontract for,
oversee, and monitor the provision of Administrative Services of a type
which, in Manager's reasonable judgment (in light of the term of this
Agreement and the anticipated preparation of a disposition plan), a manager
of a business similar in size and nature to the business of Pioneer would not
typically personally perform.
3.2 OPERATIONS IN THE ABSENCE OF BUDGET APPROVAL. Prior to approval of any
forecast or budget for Pioneer in accordance with the terms of the Loan
Documents, Manager shall have the full power and authority to manage Pioneer
in accordance with its good faith exercise of its judgment and discretion
(and in a manner no less favorable to Pioneer than Pioneer's historical
practice) to the same extent as it may pursuant to an approved forecast or
budget. To the extent Manager deems feasible in the good faith exercise of
its judgment and discretion, during a period in which there is no approved
forecast or budget for Pioneer, Manager shall seek to limit capital
expenditures and optional activities of Pioneer that require expenditure of
funds.
SECTION 4. TIMBERLAND SERVICES.
4.1 PROPERTIES UNDER MANAGEMENT. Manager shall manage and operate the
Timberlands in accordance with the terms of this Agreement.
4.2 PROPERTY MANAGEMENT SERVICES. With respect to the Timberlands,
Manager's primary duties and responsibilities include the following services
(collectively, the "Property Management Services"):
(a) Manager shall prepare and administer budgets for the Timberlands,
including without limitation, causing Pioneer to timely prepare and deliver
budgets and forecasts as required pursuant to the terms of the Loan Documents.
(b) Manager shall maintain regular surveillance of the Timberlands to
detect weather damage, fire damage, insect infestation and disease, timber
trespass or any other detrimental occurrences.
(c) Manager shall manage matters affecting ownership interests in and
obligations with respect to the Timberlands, including the land, Timber
(whether growing or harvested), minerals, other commercial uses, and related
matters such as unauthorized cuttings, trespass, entries, encroachments,
adverse possession claims, right-of-way disputes, or any disputes respecting
taxes, charges, or assessments associated with the Timberlands.
(d) Manager shall manage and administer the sale of all Timber and
Logs from the Timberlands. All such sales shall be made pursuant to timber
sale contracts or log sale contracts between Pioneer and the Timber or Log
buyer. Manager's services in connection with Timber or Log sales shall
include advertising, processing and handling bids, control of contract
compliance of Timber harvested, inspection of cutting and logging operations,
collection of scale tickets, accounting for all Timber and Logs sold, and the
following timber sale layout services: marking cutting lines, engineering and
marking roads, and obtaining necessary permits (surveying is not included).
Manager shall also conduct a credit check on each Timber or Log purchaser.
Manager shall collect and maintain log scaling data from log grading and
scaling bureaus.
(e) Manager shall manage and administer the sale of all minerals, oil,
rock, forest products and gravel from the Timberlands. All such sales shall
be directly between Pioneer and the buyer. Manager's services in connection
with the mineral, oil or gravel sales shall include, as appropriate, the
following services: obtaining valuation opinions from appropriate
consultants, advertising, processing and handling bids, oversight of contract
compliance, inspection of mining and gravel, mineral and oil removal and
extraction, collection of scale tickets, and accounting for such contracted
sales.
(f) Manager shall monitor the activities of third parties who have a
fee, leasehold, license, mineral, or other interest in the Timberlands,
Timber, or Logs. Manager shall be responsible for processing all
documentation which is required or desirable with respect to the rights and
obligations of said third parties, including with respect to pipeline
easements; conditional and other land use permits, licenses, and
rights-of-way necessary for oil, gas or mineral exploration; permanent
easements; conservation easements; rights-of-way; and mineral or other
conveyances on behalf of Pioneer.
(g) Manager shall be responsible for administration of any hunting,
grazing, camping and other leases or licenses to which Pioneer is, or may
become, a party.
(h) Manager shall be responsible for administering, facilitating, and
monitoring all timberland management functions described in this Section 4.
(i) Manager shall maintain the property records supplied to it and
shall update them in accordance with activities occurring after the date of
this Agreement; provided, however, that Manager shall have no responsibility
for the accuracy, completeness or condition of the records received or for
changes occurring prior to the date of this Agreement not properly reflected
in the records, and Manager shall not be obligated to undertake any
comprehensive review to locate and correct errors in the records that Manager
receives.
(j) Manager shall be responsible for management of the property tax
records for each Timberland and, shall ensure that all taxes (including
without limitation ad valorem or other real property taxes, timber harvest
taxes, and personal property taxes) on the Timberlands are paid in a timely
manner. Manager shall ensure that all lease or other contractual payments
required to be made by Pioneer with respect to the Timberlands are made in a
timely manner.
(k) Manager shall develop a harvest strategy for the Timberlands,
including without limitation, determining whether an Option A plan for all or
a portion of the Timberlands located in California is appropriate or
desirable.
(l) Manager shall (i) subcontract for, oversee, and monitor the
provision of Additional Services and Optional Services in accordance with
Sections 4.3 and 4.4, (ii) solicit, receive and award suitable bids for
Additional Services and Optional Services, (iii) enter into, monitor and
enforce contracts for Additional Services and Optional Services, (iv) oversee
the completion of Additional Services and Optional Services and (v) oversee,
monitor and enforce any contract for disposition services entered into by
Pioneer and cooperate with any party engaged to perform such disposition
services.
(m) [Omitted Confidential Information has been filed separately with the
Securities and Exchange Commission]
(n) Manager shall maintain existing and subsequently developed forest
inventory data, GIS data and land records.
(o) Manager shall provide an overall inventory assessment based on
existing data and assess any additional inventory needs.
(p) Manager shall be responsible for such other property management
services typically personally performed by a property manager of timberlands
similar in size, nature and location to the Timberlands in light of the term
of this Agreement and the anticipated preparation of a disposition plan.
4.3 ADDITIONAL SERVICES. At Pioneer's expense and for Pioneer's account,
Manager shall subcontract for, oversee, and monitor the provision of
necessary or desirable contractual services of the type which, in Manager's
reasonable judgment (in light of the term of this Agreement and the
anticipated preparation of a disposition plan), a property manager of
property similar in size, nature and location to the Timberlands would not
typically personally perform (collectively, the "Additional Services").
Manager may not subcontract for Additional Services that are not within the
scope of the applicable approved forecast or budget without Pioneer's prior
consent. As set forth in Section 4.2(l) above, Manager's responsibilities
with respect to Additional Services shall include soliciting, receiving and
awarding suitable bids, entering into, monitoring and enforcing contracts in
conformity with budgetary allocations, and overseeing the completion of the
work to be performed. Although Manager's responsibility in connection with
Additional Services shall be as monitor and overseer in nature, Manager may
determine from time to time that it is more feasible or economical for
Manager or its affiliates to perform certain Additional Services; provided
however, that Pioneer's prior consent shall be required to permit Manager or
any affiliate of Manager to perform any Additional Services project which
Manager reasonably estimates will cost more than $75,000 to complete. In the
event that Manager or any affiliate of Manager, to the extent permitted
hereunder, shall perform such Additional Services, Pioneer shall pay Manager
for such Additional Services as additional fees at the billing rates set
forth in Exhibit 3 hereto pursuant to the terms of the form Professional
Services Agreement attached as Exhibit 4 hereto. Additional Services include,
without limitation, the following:
(a) Site preparation and planting.
(b) Road, bridge, gate and culvert construction and maintenance.
(c) Plowing and maintenance of firebreaks.
(d) Property boundary line maintenance (marking) and surveys.
(e) Vegetation management, chemical or mechanical.
(f) Prescribed burning.
(g) Hardwood control, chemical or mechanical.
(h) Insect and disease control.
(i) Aerial surveillance.
(j) Slash burning and fire suppression.
(k) Contract logging and trucking.
(l) Fertilization.
(m) Stocking control.
(n) Animal control.
(o) Appraisals of mineral, oil, rock and gravel sales.
(p) Monitoring of oil and gas activities.
(q) Surveying for threatened and endangered species.
(r) Archeological or other specialized surveys outside the scope of
services customarily provided by professional timberland managers in the area
in question.
(s) Processing of harvesting or other permits, licenses, and
entitlements.
(t) Timber marking.
(u) California timber harvest plan preparation and implementation.
(v) Stream survey preparation.
(w) Road plan preparation.
(x) Habitat assessment preparation.
(y) All other subcontract work described in a budget or forecast for
which Pioneer has obtained approval in accordance with the terms of the Loan
Documents.
4.4 SPECIAL OPTIONAL SERVICES. In the event that Manager believes that
certain special services (collectively, the "Optional Services") are
necessary or desirable for the benefit of Pioneer, then such services may be
performed by Manager or under Manager's direction and supervision; provided
however that Pioneer's prior consent shall be required for any Optional
Services project which Manager reasonably estimates will cost more than
$75,000 to complete. Manager's fee with respect to Optional Services provided
by Manager shall be billed at the billing rates set forth in Exhibit 3 hereto
or as otherwise mutually agreed in writing between Pioneer and Manager. The
fee for Optional Services performed by parties other than Manager shall be as
agreed between Pioneer and such other parties. Optional services may include,
but are not limited to:
(a) Development and updating of long-term harvest modeling and
planning.
(b) Development of new forest inventory data or enhancement of current
forest inventory data.
(c) Development of new land record information or data and enhancement
of existing land record information or data
(d) Development of new GIS data or enhancement of existing GIS data.
(e) Timber cruising, appraisal, or other special evaluations.
(f) Development of habitat conservation plans.
(g) Development of special regulatory implementation programs,
including without limitation the preparation, submission and implementation
of an Option A development plan in California, if applicable.
4.5 OPERATION AND MANAGEMENT RECORDS. Subject to Section 7.2 hereof with
respect to records received by Manager, Manager shall maintain full and
accurate records covering the operation and management of the Timberlands,
which records shall be sufficient to satisfy ordinary and necessary tax and
accounting reporting requirements, and the Reporting Requirements. Upon
termination of this Agreement, all records pertaining to the Timberlands and
the other assets and properties of Pioneer kept by Manager shall become or
remain the property of Pioneer and shall be turned over to Pioneer forthwith.
Any custom investment models or other custom computer software developed or
used by Manager shall be deemed the property of Manager, but any information
on such models relating to Pioneer or its business or properties shall be
turned over to, and become the property of, Pioneer. The reasonable costs
incurred by Manager in preparing and delivering such information shall be for
the account of Pioneer.
SECTION 5. DISPOSITION SERVICES. If Pioneer determines to sell some of its
Timberlands Pioneer may, but shall not have any obligation to, request the
assistance of Manager in connection with such sales. In the event that
Pioneer requests such assistance of Manager and Manager and Pioneer agree on
the scope of the services to be performed by Manager in connection with such
sales (the "Disposition Services") and the fees to be paid to Manager for its
performance of the Disposition Services (the "Disposition Fee"), Pioneer
shall engage Manager, and Manager shall agree, to provide the Disposition
Services, all in accordance with the terms of an amendment or supplement of
this Agreement. Manager shall comply with all applicable laws and
governmental regulations in carrying out Disposition Services, and Manager
may, if directed by Pioneer, engage qualified and licensed brokers and other
professionals in connection with the Disposition Services. [Omitted
Confidential Information has been filed separately with the Securities and
Exchange Commission]
SECTION 6. CONFIDENTIALITY AND CONFLICTS OF INTEREST.
6.1 CONFIDENTIALITY. The parties acknowledge and agree that matters set
forth in this Agreement, and certain information that the parties obtain as a
result of this Agreement, are strictly confidential, and Pioneer and Manager
shall make every reasonable effort to ensure that, without the consent of
each of the parties hereto, the information contained herein or the
confidential information obtained as a result of this Agreement is not
disclosed to any other person or entity other than as required by law or the
Loan Documents (including without limitation, [Omitted Confidential Information
has been filed separately with the Securities and Exchange Commission]), or to
any person or entity who needs to know such information to carry out the
provisions of this Agreement. The provisions of this Section 6.1 shall not
limit the rights and obligations of Manager (including to disclose certain
otherwise confidential information which Manager reasonably determines would
not be detrimental to Pioneer to disclose) with respect to public relations
services to be performed in accordance with this Agreement. Notwithstanding
the foregoing, but without disclosure of the financial terms of its
management
arrangement, ORM may disclose that it has been appointed the manager of
Pioneer and the scope of ORM's authority under this Agreement.
6.2 CONFLICTS OF INTEREST. Pioneer acknowledges that Manager is in the
business of acquiring, managing, and disposing of timberlands for its own
account and for the account of others as well as the business of forestry
consulting services, and is actively involved in the business of harvesting
and marketing timber, logs, timberlands and other products, in both the
domestic and export markets. Pioneer acknowledges that the markets for
Manager and affiliates and third parties for whom Manager acts may include
the same markets as those into which Pioneer may desire to sell its
Timberlands, Timber, and Logs. These activities of Manager may create a
conflict of interest with respect to the services which Manager is to provide
under this Agreement. Pioneer recognizes the existence of such conflict of
interest and acquiesces to it. Notwithstanding the foregoing, Manager agrees
that it will at all times act in good faith toward Pioneer with respect to
any such conflict or potential conflict in performing Manager's obligations
hereunder. Manager further agrees that, Manager, acting on its own behalf as
ORM, shall not (i) enter into any contract, agreement or other arrangement
with Pioneer (except as otherwise expressly provided herein (including
without limitation Sections 4.3 and 4.4 hereof)), or (ii) knowingly enter
into any contract, agreement or other arrangement with any affiliate of
Pioneer, any direct or indirect owner of any portion of Pioneer or any entity
controlling, controlled by, or under common control with, such direct or
indirect owner. This Agreement shall not otherwise limit or restrict in any
way Manager's ability to engage in timberland acquisition, management, or
disposition and/or the sale of logs and/or stumpage on its own behalf or on
behalf of others, or to engage in forestry consulting services on behalf of
any party, and, except to the extent expressly set forth in this Agreement,
Pioneer shall not assert that this Agreement or Manager's status as Manager
of Pioneer imposes limitations on Manager's ability to engage in activities
that are similar to and/or in competition with Pioneer. Further, in the
absence of Misconduct by Manager in the performance of Manager's duties under
this Agreement, Pioneer shall not assert at any time that any such activity
of Manager constitutes a breach of this Agreement and Manager shall not be
held liable for, or enjoined from, engaging in any competing activity or for
the manner in which such competing activity was conducted.
SECTION 7. INSURANCE, STANDARD OF PERFORMANCE, INDEMNITY.
7.1 INSURANCE AND BONDING.
(a) During the term of this Agreement, and subject to any additional
requirements which may be contained in the Loan Documents, Manager shall
maintain in full force and effect at least the following minimum levels of
insurance with carriers determined by Manager in the good faith exercise of
discretion to be financially stable insurance carriers:
(i) Manager shall maintain a policy of commercial general
liability insurance insuring Manager and Pioneer against any liability
for bodily injury or property damage claimed to have resulted from or
be in any way connected with Manager's operations under this Agreement,
in the minimum amount of $500,000 for each occurrence, $500,000 general
aggregate, plus umbrella coverage of $2,000,000. The premiums and other
costs of such
general liability insurance shall be paid by ORM as a cost associated
with the operations of Manager under this Agreement.
(ii) Manager shall maintain on behalf of Pioneer and at
Pioneer's expense a policy of automobile liability insurance, including
coverage for scheduled autos, hired autos and non-owned autos, insuring
Manager and Pioneer against any liability for bodily injury or property
damage claimed to have resulted from or be in any way connected with
Manager's operations under this Agreement, in the minimum of $1,000,000
for bodily injury per accident and $500,000 for property damage.
(iii) Manager shall maintain on behalf of Pioneer and at
Pioneer's expense Workers' Compensation Liability coverages as required
by law and Employer's Liability Insurance in the amount of $500,000.
Said policies shall contain a provision under which the insurer waives
any right of subrogation as against Pioneer and their respective agents
or employees, to the full extent allowed by law.
Manager may also acquire and maintain insurance and bonding on behalf of
Pioneer and at Pioneer's expense such other and additional insurance and
bonding as it shall deem prudent and appropriate.
(b) Manager shall require and use reasonable efforts to verify that
all contractors or subcontractors hired to perform any work relating to the
Timberlands acquire and maintain the following insurance requirements,
provided, that Pioneer hereby authorizes Manager, of its own volition and in
the exercise of good-faith discretion, to waive or adjust such insurance
requirements as Manager deems appropriate:
(i) Contractors or subcontractors shall maintain a policy
of commercial general liability insurance insuring contractor or
subcontractor, as the case may be, and Pioneer and Manager against
liability for bodily injury or property damage claimed to have resulted
from or be in any way connected with contractor's or subcontractor's
operations under this Agreement, in the minimum amount of $500,000 for
each occurrence and $1,000,000 general aggregate. The premiums and
other costs of such general liability insurance shall be paid for by
the contractor or subcontractor as a cost associated with their
operations. All other insurance required under this Section 7.1(b)
shall also be the obligation of contractor or subcontractor and shall
be paid for by contractor or subcontractor.
(ii) Contractors or subcontractors shall maintain a policy
of automobile liability insurance, including coverage for scheduled
autos, hired autos and non-owned autos, insuring contractor or
subcontractor and Pioneer and Manager against any liability for bodily
injury or property damage claimed to have resulted from or be in any
way connected with contractor's or subcontractor's operations as
contemplated by this Agreement, in the minimum of $500,000 for bodily
injury per accident and $250,000 for property damage.
(iii) Contractors or subcontractors shall maintain Workers'
Compensation Liability coverages as required by law and Employer's
Liability Insurance in the amount of
$500,000. Said policies shall contain a provision under which the
insurer waives any right of subrogation as against Pioneer and its
employees and Manager and its employees.
(c) During the term of this Agreement, Manager may also acquire and
maintain, at Pioneer's expense, a policy of insurance insuring Manager and
Pioneer against any liability on account of errors and omissions by Manager,
which policy shall provide such coverage as is reasonably acceptable to
Manager, but in no event shall the cost of any such policy exceed $60,000 per
year; PROVIDED that Manager may also acquire and maintain, at Pioneer's
expense, "tall" coverage on such policy that extends beyond the term of this
Agreement, but in no event shall the cost to Pioneer of any such "tail"
coverage exceed $30,000.
7.2 LIMITATION OF LIABILITY. Notwithstanding any other provision of this
Agreement, Manager shall have no liability to Pioneer, the Member or the
Lenders (as intended third party beneficiaries of this Agreement) for a
breach of this Agreement or otherwise with respect to its management of the
business, affairs and properties of Pioneer pursuant to this Agreement or the
Operating Agreement except to the extent resulting from the Misconduct of
Manager. Manager shall have no liability or responsibility for any acts or
omissions of Pioneer or any prior manager of Pioneer, or any circumstances
applicable to Pioneer, in each case that occurred or existed prior to the
date of this Agreement; provided however that, subject to the limitations on
its liabilities set forth in this Section 7.2, Manager's duties under this
Agreement shall be applicable to any such situation after Manager becomes
aware thereof. Manager shall not be responsible for the condition of any
records or other information maintained by Pioneer prior to the date of this
Agreement and, further, shall have no responsibility or liability for errors,
omissions, or other failures, shortcomings, or defaults in the management and
administration of the business and affairs of Pioneer that result in whole or
in part from the inaccuracy, inadequacy, or other deficiency in the records
or other information received by Manager from Pioneer, the prior manager,
and/or any other party unless, subject to the limitations on its liabilities
set forth in this Section 7.2, Manager discovered, or was notified of, such
errors, omissions, failures, shortcomings or defaults. Manager shall be
justified in reliance on the provisions of Section 2.5 as a basis for
refusing or failing to take action on behalf of Pioneer and shall not be
subject to liability to any party for any such refusal or failure.
7.3 INDEMNITY. (a) To the maximum extent permitted by law, Pioneer shall
indemnify and hold harmless Manager and every employee, officer, director,
shareholder, partner, member and agent of Manager from and against any and
all claims, demands, liabilities, judgments, settlements, penalties, fines,
or expenses (including reasonable attorneys' fees and other costs)
(collectively, "Manager Claims") suffered or incurred in any manner directly
or indirectly as a result of Manager's status as Manager or performance in
the role of Manager pursuant to this Agreement or the Operating Agreement,
including performance of any and all activities conducted in the exercise of
Manager's authority and the discharge of Manager's responsibilities under
this Agreement and the Operating Agreement, except if resulting from the
Misconduct of Manager (including of any employee, officer, director,
shareholder, partner, member or agent of Manager); provided, this
indemnification of the employees, officers, directors, shareholders,
partners, members and agents of Manager shall not be applicable to any claim
asserted or proceeding maintained by Manager against any such person. This
indemnification and hold harmless commitment of Pioneer shall include as a
separate obligation the commitment of Pioneer to pay all
of the expenses (including reasonable attorneys' fees and other costs)
incurred by Manager and any employee, officer, director, shareholder,
partner, member and agent of Manger in any proceeding for Manager Claims as
incurred and in advance of the final disposition of such proceeding (and
despite any allegation of the Misconduct of Manager or any such other party),
provided such indemnified party commits in writing to reimburse Pioneer for
the amounts Pioneer has paid to such indemnified party under this sentence if
a court of competent jurisdiction determines in a final, non-appealable
judgment that such Manager Claims are a result of the Misconduct of Manager
(including of any employee, officer, director, shareholder, partner, member
or agent of Manager), and thus, such indemnified party was not entitled to
indemnification hereunder.
(b) To the maximum extent permitted by law, Manager shall indemnify
and hold harmless Pioneer and every employee, officer, director, shareholder,
partner, member and agent of Pioneer from and against any and all claims,
demands, liabilities, judgments, settlements, penalties, fines, or expenses
(including reasonable attorneys' fees and other costs) (collectively,
"Pioneer Claims") suffered or incurred in any manner directly or indirectly
as a result of the Misconduct of Manager (including of any employee, officer,
director, shareholder, partner, member or agent of Manager).
SECTION 8. TERM AND TERMINATION.
8.1 TERM. [Omitted Confidential Information has been filed separately with
the Securities and Exchange Commission]
8.2 TERMINATION OF MANAGER. (a) Subject to the required consent under the
Loan Documents, Pioneer may terminate this Agreement and Manager's rights and
obligations hereunder at any time and for any reason whatsoever upon no less
than 10 days prior written notice to Manager; provided that in the event of a
Termination For Cause, no advance notice to Manager shall be required and
this Agreement shall terminate when directed by Pioneer.
(b) [Omitted Confidential Information has been filed separately
with the Securities and Exchange Commission]
(c) [Omitted Confidential Information has been filed separately
with the Securities and Exchange Commission]
8.3 TERMINATION BY MANAGER. In the event that, (i) as a result of a
shortage of funds available to Pioneer (after consideration of any amounts on
deposit in the Cash Collateral Account, but without consideration of [Omitted
Confidential Information has been filed separately with the Securities and
Exchange Commission]), Pioneer fails to pay to Manager any due and payable
Fees, fees for Additional Services or fees for Optional Services, in each
case within 45 days after Pioneer has received notice of such failure, and
(ii) Manager is not in default of its obligations under this Agreement,
Manager may terminate this Agreement and resign as Manager, [Omitted
Confidential Information has been filed separately with the Securities and
Exchange Commission] and all other Fees and other fees, charges and
reimbursements due and payable hereunder at the time of such termination.
Except as expressly provided in this Section 8.3,
Manager shall not be entitled to terminate this Agreement or resign as
Manager at any time prior to the Termination Date.
8.4 OBLIGATIONS FOLLOWING TERMINATION. Upon the expiration or termination
of this Agreement for any reason whatsoever, Manager shall do, execute and/or
deliver to Pioneer the following promptly after termination or as soon
thereafter as reasonably practicable:
(a) a final accounting of the business of Pioneer during the period
from the date hereof through the date of termination;
(b) any monies of Pioneer held by Pioneer or Manager;
(c) all books, records, contracts, leases, bills, papers and documents
of Pioneer and its business;
(d) all documents necessary to transfer to Pioneer all licenses,
permits, leases, contracts, warranties and other items, instruments and
agreements of Pioneer or its business or properties which may be in Manager's
name; and
(e) such further actions as Pioneer may reasonably request to assure
an orderly transition of the business, affairs and properties of Pioneer.
The reasonable costs incurred by Manager in performing the foregoing
obligations in this Section 8.4 shall be for the account of Pioneer.
SECTION 9. SENIOR LIEN FOR PIONEER SECURED OBLIGATIONS. For purposes of this
Agreement and this Section 9, the following terms shall have the following
meanings:
"CASH COLLATERAL ACCOUNT" has the meaning set forth in Section 9(b)
below.
"FEE RELEASE DATE" means the date on which all Pioneer Secured Fee
Obligations are paid in full.
"INDEMNITY RELEASE DATE" means the first anniversary of the date of
termination of this Agreement, unless written notice of potential indemnity
obligations under Section 7.3(a) hereof (together with a copy of a third
party lawsuit or threatened claim) has been delivered by Manager to Pioneer
on or prior to such first anniversary, in which case the Indemnity Release
Date shall be the date upon which the claims against Manager giving rise to
the potential indemnity obligations referenced in any such notice are
dismissed or resolved entirely in the Manager's favor by final judgment(s)
(after expiration of all applicable appeal periods), or such indemnity
obligations are paid to Manager up to the amount of the Pioneer Secured
Indemnity Obligations on the date of such payment
"MANAGER MORTGAGE" means a deed of trust or mortgage in favor of
Manager, substantially in the form attached hereto as Exhibit 5 (including
any replacement mortgage referenced in Section 9(b) below) encumbering the
Manager Mortgaged Property,
"MANAGER MORTGAGED PROPERTY" means certain real property owned by
Pioneer and located in the State of California, and constituting a portion of
the property commonly known as "Commander" tract, which shall be encumbered
by the Manager Mortgage pursuant to Section 9(a) below, or upon any sale or
other disposition of such property, any other real property owned by Pioneer
which may be substituted therefor and encumbered by the Manager Mortgage
pursuant to such Section 9(b) below.
"PIONEER SECURED FEE OBLIGATIONS" means (without duplication) the
collective reference to Pioneer's obligations to the Manager under, and in
accordance with the terms of, this Agreement on account of (i) all accrued
and unpaid Fees (including the Termination Fee if applicable), (ii) any
amounts to be (but not yet) billed to Pioneer for services performed by
Manager pursuant to Sections 4.3 or 4.4 and, to the extent applicable,
Section 5 hereof, and (iii) all other fees, charges and reimbursements from
time to time payable by Pioneer to Manager.
"PIONEER SECURED INDEMNITY OBLIGATIONS" means, as determined from time
to time, Pioneer's indemnity obligations to Manager under Section 7.3(a)
hereof up to an amount which shall not exceed (i) prior to the first
anniversary of the date of termination of this Agreement, [Omitted
Confidential Information has been filed separately with the Securities and
Exchange Commission], and (ii) after such date, the lesser of (A) [Omitted
Confidential Information has been filed separately with the Securities and
Exchange Commission] and (B) an amount equal to Manager's reasonable estimate
of Pioneer's potential indemnity obligations owing to Manager in respect of
the claims or other matters described in the notice(s) delivered by Manager
to Pioneer as contemplated by the definition of "Indemnity Release Date."
"PIONEER SECURED OBLIGATIONS" means the collective reference to the
Pioneer Secured Fee Obligations and the Pioneer Secured Indemnity Obligations.
"PIONEER SECURED OBLIGATIONS AMOUNT" means, as of the date of
determination thereof, an amount reasonably determined by Manager to be equal
to the sum (without duplication) of (i) the Pioneer Secured Fee Obligations
as of such date, (ii) the aggregate amount of all Incentive Fees which may
become payable to Manager after such date, (iii) the maximum potential amount
of Pioneer Secured Indemnity Obligations as of such date, and (iv) the
aggregate amount of all Base Fees scheduled to accrue after such date.
"RELEASE DATE" means the later of (i) the Fee Release Date and (ii) the
Indemnity Release Date.
(a) In order to secure the full and timely payment of the Pioneer
Secured Obligations, Pioneer shall execute and deliver to Manager, on or
within 10 days after the date hereof, a Manager Mortgage encumbering the
Manager Mortgaged Property. Pioneer shall pay the cost of the preparation and
recording of the Manager Mortgage and provide at its sole cost a standard
form mortgagee's title policy in respect thereof in the amount of the Pioneer
Secured Obligations Amount as of the date of the Manager Mortgage and
otherwise insuring the lien of the Manager Mortgage subject only to such
title exceptions (and with endorsements) as may be in form and substance
reasonably satisfactory to Manager.
(b) In connection with any sale or other disposition of the Manager
Mortgaged Property prior to the Release Date, the net cash proceeds thereof
shall be paid to Manager to the extent of any Pioneer Secured Obligations
then due and payable. In addition, on or prior to the consummation of any
sale or other disposition of the Manager Mortgaged Property, Pioneer shall
execute and deliver to Manager, in substitution and replacement of the
initial Manager Mortgage, a new Manager Mortgage (substantially in the form
of the initial Manager Mortgage, and with the payment by Pioneer of the costs
of preparation, recording and title insurance obtained in respect thereof in
the manner set forth in paragraph (a) above) covering a new Manager Mortgaged
Property selected by Manager and Pioneer and which, in the reasonable
judgment of Manager, has a value equal to or greater than the Pioneer Secured
Obligations Amount at such time; provided that if the Manager reasonably
determines that Pioneer's then remaining real property does not have a value
equal to or greater than the Pioneer Secured Obligations Amount at such time
(or if Manager and Pioneer are unable to agree on the selection of a new
Manager Mortgaged Property), then the net cash proceeds from the sale or
other disposition of the existing Manager Mortgaged Property (remaining after
payment of any Pioneer Secured Obligations then due and payable) shall be
deposited by Manager into a cash collateral account (the "CASH COLLATERAL
ACCOUNT"), pursuant to customary cash collateral arrangements reasonably
satisfactory to Manager and Pioneer, to secure first, the Pioneer Secured
Obligations and second, the Obligations (as defined in the Credit Agreement).
(c) To the extent that, on any determination date, the amount on
deposit in the Cash Collateral Account exceeds the Pioneer Secured
Obligations Amount on such date (which determination will be made on the date
of the funding of the Cash Collateral Account, from time to time thereafter
(no less often than monthly), and on the Fee Release Date and the Indemnity
Release Date), Manager and Pioneer will transfer the amount of any such
excess to the administrative agent under the Credit Agreement for application
in accordance with the terms thereof. If Pioneer fails to pay any of the
Pioneer Secured Obligations when due, and such failure continues unremedied
for 30 days following written notice thereof to Pioneer, Manager shall be
entitled to immediately withdraw such amount from the Cash Collateral Account
and apply it to the payment of such unpaid amount of the Pioneer Secured
Obligations.
(d) Pioneer and Manager acknowledge that [Omitted Confidential
Information has been filed separately with the Securities and Exchange
Commission] (and the related lien Subordination Agreement in recordable form
to be executed by the Lenders in respect of any Manager Mortgage) will
evidence the agreement of the Lenders that (i) any Manager Mortgage (and, if
applicable, the Manager's lien on the Cash Collateral Account) shall be
senior and shall have priority over any mortgage or deed of trust in favor of
the Lenders encumbering the Manager Mortgaged Property (and, if applicable,
the Lenders' lien on the Cash Collateral Account) regardless of the time or
order of recording of any Manager Mortgage, the execution or delivery of any
security agreement or any other applicable law or rule for determining the
relative priorities of secured creditors and (ii) the Lenders will not
exercise any remedies against the Cash Collateral Account until after the
Release Date. In the event that the Lenders subordinate, pursuant to clause
(ii) of Section 13.3 of the Credit Agreement, their lien on the Manager
Mortgaged Property to easements, possessory rights, cutting rights or
permitted sales of stumpage and timber rights, the lien of the Manager
Mortgage shall be automatically subordinated to such matters, and Manager
shall execute such subordination documents reasonably requested
by Pioneer or the Lenders to evidence such subordination. On the Release
Date, the lien of the Manager Mortgage and any security interest of the
Manager in the Cash Collateral Account shall be deemed to have been released,
provided, however, that the lien shall be reinstated automatically at the
time, and to the extent, that any Pioneer Secured Obligations which have been
paid to Manager are recovered from Manager as a result of an action in
bankruptcy.
(e) Subject to Manager's prior and superior rights to receive payment
of the Pioneer Secured Obligations from the net cash proceeds of any sale or
other disposition of the Manager Mortgaged Property, Manager acknowledges and
agrees solely for the benefit of the Lenders that (i) Manager shall not take
any action to enforce any Manager Mortgage or otherwise exercise any right or
remedy in respect thereof, including without limitation, any judicial,
nonjudicial or similar proceedings unless Pioneer fails to pay any Pioneer
Secured Obligations when due and such failure continues unremedied for at
least twelve months following written notice thereof to Pioneer and the
administrative agent under the Credit Agreement and (ii) as between Manager
and the Lenders, the Lenders shall have the sole right to consent to any
proposed sale or other disposition of any Manager Mortgaged Property, whether
at private sale or pursuant to foreclosure, bankruptcy or other judicial or
non-judicial proceedings (provided that the Lenders' consent shall not be
required in connection with any sale pursuant to a foreclosure proceeding
commenced by Manager in respect of the Manager Mortgaged Property), and
Manager shall be deemed to have consented to any such sale or other
disposition and the Manager Mortgage shall be automatically extinguished upon
such sale or other disposition so long as (A) the Lenders have consented
thereto in accordance with the terms of the Loan Documents; and (B) the net
cash proceeds thereof are applied first to pay any Pioneer Secured
Obligations then due and payable.
SECTION 10. NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be effective at the earlier of the time when
actually received by the other party, regardless of the method of delivery,
or one (1) day after mailing if by reputable overnight courier or three (3)
days after mailing if by certified United States mail, to the parties at the
following addresses (or to such other addresses as either party may designate
from time to time in a writing delivered to the other):
AS TO PIONEER: Pioneer Resources, LLC
c/o Olympic Resource Management LLC, its Manager
00000 Xxxxx Xxxxxx XX
P. O. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Senior Vice President-Finance
AS TO MANAGER: Olympic Resource Management LLC
00000 Xxxxx Xxxxxx XX
P. O. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Senior Vice President-Finance
In the event that the last day for giving any notice hereunder falls upon a
Sunday or legal holiday, the last day shall be deemed to be the next business
day which is neither a Sunday nor a legal holiday. Any party may change its
notice address by notice to all of the parties hereto pursuant to this
Agreement. For so long as the Loan Documents remain in effect, no notice
hereunder shall be deemed delivered or received by any party hereto unless
such notice has also been delivered to First Union National Bank, as
administrative agent under the Credit Agreement, in the manner specified in
this Section 10 for notices to the parties, at the following address: First
Union National Bank, 000 Xxxxx Xxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxxxx, Xxxxx
Xxxxxxxx 00000-0000, Attention: Xxxxx Santa Xxxx and Xxx Xxxxxxx.
SECTION 11. TITLE TO TIMBERLANDS AND TIMBER. Manager shall not by reason of
this Agreement acquire title to the Timberlands or any Timberland or any
timber or other asset associated therewith.
SECTION 12. MISCELLANEOUS.
12.1 This Agreement shall be governed by the laws of the State of Delaware,
without regard to principles of conflicts of law thereof.
12.2 This Agreement shall be binding upon the parties hereto and their
successors and permitted assigns.
12.3 Neither party may assign this Agreement or any part thereof without
the express written consent of the other party, which consent shall not be
unreasonably withheld.
12.4 This Agreement may not be changed orally but may only be modified by
an Agreement in writing executed by the parties hereto.
12.5 The headings in this Agreement are for purposes of reference only and
shall not limit or define the meaning of this Agreement.
12.6 If any term of this Agreement shall be held to be invalid, illegal or
unenforceable, the validity of the other terms of this Agreement shall in no
way be affected thereby.
12.7 This Agreement and the Operating Agreement constitute the entire
Agreement between Pioneer and Manager and supersede (i) all previous
agreements between Pioneer and Manager relating to the subject matter hereof,
and (ii) all prior drafts of and negotiations relating to this Agreement.
This Agreement may be executed in any number of counterparts, each of which
shall be an original but all of which together shall constitute but one
instrument.
12.8 In the event legal action shall be commenced by either party to
enforce or interpret the provisions of this Agreement, the parties agree that
venue shall lie exclusively in the state and federal courts located in King
County, Washington, and that such action must be brought in such courts. Each
party hereby irrevocably submits and consents to the personal jurisdiction of
such courts.
12.9 In the event of any conflict between the provisions of this Agreement
and the Operating Agreement, the terms of this Agreement shall control.
SECTION 13. NON-DISCRIMINATION. During the term of this Agreement, Manager
shall not unlawfully discriminate against any employee or applicant for
employment because of race, religion, color, national origin, ancestry,
physical handicap, medical condition, marital status, age, or sex.
SECTION 14. THIRD PARTY BENEFICIARY. The Manager and Pioneer acknowledge and
agree that the Lenders shall be and are intended third party beneficiaries of
this Agreement. The Manager and Pioneer hereby further acknowledge and agree
that all of the rights of Pioneer under this Agreement constitute Contract
Rights (as defined in the applicable Loan Documents) and, therefore, all such
rights are subject to being exercised by the Lenders at the times and in the
manner set forth in the Loan Documents.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement as of the date first written above.
PIONEER RESOURCES I, LLC, OLYMPIC RESOURCE MANAGEMENT LLC,
a Delaware limited liability company a Washington limited liability
company
By: Strategic Timber Partners II, LP, By: /s/ Xxxx X. Xxxxxx
its sole member ---------------------------
Xxxx X. Xxxxxx
Its President & Chief
Executive Officer
By: Strategic Timber Two Operating Co., LLC,
a Georgia limited liability company,
its general partner
By: Strategic Timber Trust II, LLC, a Georgia
limited liability company, its sole member
By: /s/
-------------------------
Name:
Its:
EXHIBIT A
WORK AUTHORIZATION
1. PROFESSIONAL SERVICES AGREEMENT.
This Work Authorization Number ___________ is issued pursuant to
the Professional Services Agreement between Olympic Resource
Management LLC ("Contractor") and Pioneer Resources I, LLC
("Company") dated as of _____________, 2000.
2. EFFECTIVE DATE OF THIS WORK AUTHORIZATION.
This Work Authorization is effective upon execution by both parties.
3. REFERENCE TITLE FOR SERVICES UNDER THIS WORK AUTHORIZATION.
The reference title for Services under this Work Authorization is
______________.
4. SERVICES TO BE PERFORMED:
5. DELIVERABLES AND SCHEDULE OF PERFORMANCE.
Detailed descriptions of the deliverables for the Services performed
under this Work Authorization are set forth below:
6. COMPENSATION AND PAYMENT SCHEDULE FOR SERVICES:
7. ACCEPTANCE CRITERIA.
The Acceptance Criteria that will be used to determine if the
Contractor has satisfactorily delivered the specified Deliverables are
set forth below:
8. CHANGES.
Any amendment or modification of this Work Authorization shall be
agreed in writing by both parties ("Change Order").
Agreed to and accepted by:
COMPANY CONTRACTOR
Pioneer Resources I, LLC Olympic Resource Management LLC
By By
----------------------------- ----------------------------
Title Title
-------------------------- -------------------------
Date Date
--------------------------- --------------------------
EXHIBIT 1
PIONEER PROPERTY DESCRIPTION
A. FEE OWNERSHIP
The major portion of the Subject Property is located within the
following Geographic areas: eastern Oregon, western Washington, and
northern California. A brief description of each of the various
timberland tracts within these general areas is as follows:
EASTERN OREGON
KINZUA
This timberland is generally located south of the towns of Heppner and
Condon, primarily in Xxxxxxx and Xxxxxx Counties. Pioneer currently owns an
estimated 116,554 acres. The Kinzua property has been divided into three
tracts as follows: (1) Block 2; 60,491 acres; (2) Block 3; 41,112 acres; and
(3) Xxxxxxx Creek; 14,951 acres.
PILOT ROCK
This property is approximately 92,000 acres. The tract is located in
Umatilla, Grant and union Counties, south of Pendleton on both sides of
Highway 395. The Pilot Rock Block has been divided into eleven tracts as
follows: Brush Creek, Buckaroo, Desolation, Elk Grove, Indian Creek, Xxxxxx,
Texas Bar, River, Tip Top, Ukiah, and Xxxxxxx.
ROGABELL TRACT
This property is 5,804 acres in size and is locate din Xxxxxxx County,
approximately 20 miles southeast of the town of Fossil. The parcel is
continuous with Kinzua Block 2.
BLAKE RANCH
The Blake Ranch contains 1,523 acres and is located in Xxxxxx County, Oregon.
BAPTIST
The Baptist tract is 280 acres in size and is located in Walla Walla County,
Washington. It is the only Pioneer property located in southeastern
Washington.
XXXXX RANCH
The ranch is located in Xxxxxx County, Oregon, and approximately 20 miles
south of Heppner and adjoins Pioneers ownership in Kinzua Block 3. The
property contains 4,552 acres located in two main blocks and five additional
closely separated parcels.
WESTERN WASHINGTON
XXXXX LAKE
The Xxxxx Lake tract is 4,900 acres in size and is located in Xxxxx County,
Washington, approximately five to eight miles south of the town of Xxxxxx. It
is also just south of Xxxxx Lake, a reservoir on the Cowlitz River.
ALOHA TRACT
The Aloha tract is 5,777 acres in size and is located in the northwest of
Aberdeen in Grays Harbor County, Washington. All the property lies within
five miles of the Pacific Ocean.
NORTHERN CALIFORNIA
COMMANDER
The 43,313 acre Commander tract is locate din the Mendocino Mountains of the
coast range and is divided into three administrative blocks. The southern
block is located primarily in Xxxxx County, however, there is a minor amount
in Lake County to the south and Mendocino County to the west. The south block
is relatively contiguous and generally surrounded by National Forest
(Mendocino N.F.). The central block is a narrow band of scattered parcels
located primarily in Tehama County and is also nearly surrounded by national
forest land. The northern tract is in Tehama County, is comprised of small
contiguous units and scattered parcels. The northwestern corner of the block
is adjacent
to the Xxxxx Xxxxx Middle Eel Wilderness area. Much of this block is also
bordered by National Forest. However, the northern portion is bordered by
other private land, primarily that of Crane Xxxxx Co.
WILLITS XXXXX/XXXXXXXX RANCH
The Willits Xxxxx and Xxxxxxxx Ranch tracts are locate din Mendocino County,
California southwest of the town of Willits. The two tracts contain a total
of 18,718 acres.
LONGVIEW
The Longview tract is located in Mendocino and Sonoma Counties, California,
generally west of the town of Cloverdale. The tract contains a total of
60,308 acres.
B. TIMBER DEEDS
The subject appraisal includes 7 timber deeds.
All the deeded timber is located in Eastern Oregon with the exception
of the Xxxxx deed, which located in Walla Walla County, Washington. The
largest of the deeds, Cherry Ranch, is approximately 20,655 acres in
size. The ranch is located in Xxxxxxx County south of Fossil, Oregon.
The Xxxxxx Xxxxxx parcel is located wet of the Cherry Ranch tract. The
termination dates for several of the timber deeds are listed below:
Xxxx Forth 10/31/2011
Xxxxxx Ranch 12/31/2018
Xxxxxxxxx Cr. 12/31/2018
Devin/Xxxxxx 12/31/2047
The termination dates for the others are unknown.
EXHIBIT 2
[Omitted Confidential Information has been filed separately with the
Securities and Exchange Commission]
EXHIBIT 3
ORM BILLING RATES FOR PIONEER RESOURCES, LLC
1. COMPENSATION FOR TIME:
-------------------------------------------------------------------------------------------------------
POSITION CLASS HOURLY BILLING RATE
-------------------------------------------------------------------------------------------------------
Clerk I/Technician I [Omitted Confidential Information has
Clerk II/Technician II been filed separately with the
Clerk III/Technician III Securities and Exchange Commission]
Clerk IV/Technician IV/Admin Assistant I
Clerk V/Technician V/Admin Assistant II
Exec Assistant I/Technician VI/Professional I
Technician VII/Professional II
Professional III/Manager I
Professional IV/Manager II
Professional V/Manager III
Professional VI/Manager IV
Professional VII/Manager V
Professional VIII/Manager VI
Manager VII
Executive
-------------------------------------------------------------------------------------------------------
2. COMPENSATION FOR COSTS OF MATERIALS AND CONTRACTED SERVICES OTHER THAN
WORK CONTRACTED OUT THROUGH A BID PROCESS: 1.2 times actual cost
3. MILEAGE CHARGES: $0.325 per mile
4. WORK CONTRACTED OUT THROUGH A BID PROCESS: 1.0 times actual cost
EXHIBIT 4
PROFESSIONAL SERVICES AGREEMENT
This AGREEMENT FOR PROFESSIONAL SERVICES ("Agreement") made and entered into
this day _____________ of______________ , 2000, is between PIONEER RESOURCES
I, LLC, a Delaware limited liability company ("COMPANY") and OLYMPIC RESOURCE
MANAGEMENT LLC, a Washington limited liability company ("CONTRACTOR").
COMPANY and CONTRACTOR agree as follows:
1. SERVICES. CONTRACTOR is currently the manager of the COMPANY pursuant
to a Management Agreement, dated ______________, 2000 (the "Management
Agreement"). Pursuant and subject to the Management Agreement,
CONTRACTOR may from time-to-time provide Additional Services and/or
Optional Services as defined therein ("Services"). During the term
of this Agreement, CONTRACTOR shall make itself available to perform
the Services in accordance with executed Work Authorizations entered
into from time-to-time, which Work Authorizations shall be in the
form attached hereto as Exhibit A and incorporated herein by
reference ("Work Authorization"). Rates charged for services shall
be as set forth in the applicable Work Authorization or, if
applicable, in accordance with the rate schedule attached to the
Management Agreement as Exhibit 3 ("Rate Schedule"), if applicable.
The rates shown on the Rate Schedule shall apply, without change,
for the term of this Agreement unless otherwise specifically
provided in this Agreement. All requests for services shall be
accompanied by a completed and executed Work Authorization. Upon
execution by both parties, each Work Authorization shall be deemed
incorporated herein by reference.
2. TERM. CONTRACTOR shall make itself available to perform the Services
for a period commencing on the date this Agreement is executed by both
parties and ending on the date that the Management Agreement is
terminated, unless extended in writing by mutual agreement of the
parties or terminated as provided herein. COMPANY may terminate this
Agreement at any time, with or without cause, upon three (3) business
days advance written notice to CONTRACTOR. Upon termination, COMPANY
shall not be obligated to CONTRACTOR, its successors or assigns, for
any payment hereunder other than for services actually performed or
authorized expenses incurred prior to the date of termination.
3. PAYMENT. Payment for services and expenses shall be in accordance with
the applicable Work Authorization.
4. TRAVEL AND MISCELLANEOUS EXPENSES. CONTRACTOR will be reimbursed by
COMPANY for reasonable travel expenses incurred directly in connection
with the performance of Services only to the extent that all such
travel expenses have been approved in advance by COMPANY or the travel
expenses are provided for in the Work Authorization. CONTRACTOR shall
provide COMPANY with a detailed monthly statement of travel and
miscellaneous expenses incurred.
5. INDEPENDENT CONTRACTOR. CONTRACTOR, in performing the services pursuant
to this Agreement, shall act solely as an independent contractor.
CONTRACTOR, and any employees or agents of CONTRACTOR, shall under no
circumstances be treated as, or deemed to be, employees of COMPANY.
Nothing in this Agreement shall be construed to create a partnership,
agency, joint venture or employer-employee relationship between the
parties. CONTRACTOR understands that COMPANY has no federal, state, or
local obligations regarding employee liability or insurance or
otherwise with respect to CONTRACTOR's employees.
6. TAXES. CONTRACTOR shall be responsible for and pay all costs associated
with governmental compliance of its business, including, but not
limited to, city, county, state or federal licenses, permits, taxes or
assessments of any kind. CONTRACTOR shall be responsible for payment of
its income taxes, employment taxes and employee withholding, Social
Security taxes and workers' compensation premiums. CONTRACTOR shall
indemnify COMPANY and hold it harmless from paying such business costs
or taxes.
7. COMPLIANCE WITH LAW. In the event that rendition of the Services
provided for herein requires CONTRACTOR to be located at facilities of
COMPANY, CONTRACTOR shall comply with all applicable federal or state
laws and regulatory requirements and all safety and health regulations
prescribed
by COMPANY for its own personnel. CONTRACTOR shall comply with all
applicable federal, state and local laws and regulations with regard
to the services rendered hereunder.
8. NOTICES. All notices authorized or required to be given hereunder shall
be in writing and shall be deemed effective when delivered to the
parties as follows:
COMPANY: Pioneer Resources I, LLC
c/o Olympic Resource Management LLC
00000 Xxxxx Xxxxxx XX
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Senior Vice President - Finance
CONTRACTOR: Olympic Resource Management LLC
00000 Xxxxx Xxxxxx XX
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Senior Vice President - Finance
In the event that the last day for giving any notice hereunder falls
upon a Sunday or legal holiday, the last day shall be deemed to be the
next business day which is neither a Sunday nor a legal holiday. Any
party may change its notice address by notice to all of the parties
hereto pursuant to this Agreement. For so long as the Management
Agreement remains in effect, no notice hereunder shall be deemed
delivered or received by any party hereto unless such notice has also
been received by First Union National Bank, 000 Xxxxx Xxxxxxx Xxxxxx,
0xx Xxxxx, Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000, Attention: Xxxxx Santa
Xxxx and Xxx Xxxxxxx.
9. SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable by a court of competent jurisdiction, such invalidity or
unenforceability shall not affect any other provision of this
Agreement.
10. GOVERNING LAW AND VENUE. This Agreement shall be interpreted in
accordance with Delaware law. Venue for any litigation shall be the
Superior Court of King County, Washington.
11. ENTIRE AGREEMENT. This Agreement, including executed Work
Authorizations, constitutes the entire agreement between the parties
rendered pursuant to this Agreement. Any changes to this Agreement must
be agreed to by both parties in writing.
IN WITNESS WHEREOF, the parties have executed this Agreement on or about the
date set forth above.
COMPANY CONTRACTOR
Pioneer Resources I, LLC Olympic Resource Management LLC
By By
----------------------------- ----------------------------
Title Title
-------------------------- -------------------------
Date Date
--------------------------- --------------------------
