SCOTIA PACIFIC COMPANY LLC
AND
STATE STREET BANK AND TRUST COMPANY,
as Trustee
_______________
INDENTURE
Dated as of July 20, 1998
_______________
6.55% CLASS A-1 TIMBER COLLATERALIZED NOTES
7.11% CLASS A-2 TIMBER COLLATERALIZED NOTES
7.71% CLASS A-3 TIMBER COLLATERALIZED NOTES
DUE 2028
===============
Table of Contents
ARTICLE 1 DEFINITIONS; RULES OF CONSTRUCTION; INCORPORATION BY
REFERENCE OF TRUST INDENTURE ACT PROVISIONS 1
1.1 Definitions. 1
1.2 References to Instruments. 1
1.3 Incorporation by Reference of Trust Indenture Act. 1
1.4 Rules of Construction. 2
ARTICLE 2 THE NOTES 2
2.1 Form and Dating. 2
2.2 Execution and Authentication. 2
2.3 Registrar and Paying Agent. 3
2.4 Paying Agent to Hold Money in Trust. 3
2.5 Noteholder Lists. 3
2.6 Transfer and Exchange; Transfer Restrictions. 3
2.7 Replacement Notes. 11
2.8 Outstanding Timber Notes. 11
2.9 Cancellation. 11
2.10 Payments in Respect of the Notes. 11
2.11 Payments of Principal, Regular Interest and Default
Interest on Notes. 11
2.12 Premiums on Timber Notes. 12
2.13 Source and Manner of Payments on Notes. 12
2.14 Additional Timber Notes. 13
ARTICLE 3 OPTIONAL REDEMPTION AND OPTIONAL PREPAYMENT 14
3.1 Notices to Trustee. 14
3.2 No Partial Redemption of a Class. 14
3.3 Notice of Redemption. 14
3.4 Effect of Notice of Redemption. 15
3.5 Deposit of Redemption Price. 15
3.6 Redemption Price. 15
3.7 Optional Prepayment. 15
ARTICLE 4 COVENANTS 15
4.1 Payment of Notes. 15
4.2 Money for Timber Note Payments to Be Held in Trust. 15
4.3 SEC Reports. 15
4.4 Maintenance of Office or Agency; Existence; Payment
of Taxes and Other Claims, Etc. 16
4.5 Separate Existence and Formalities. 17
4.6 Reports, Notices and Certificates. 17
4.7 Access to Records. 18
4.8 Limitation on Liens on Company Owned Timberlands or
Company Timber Rights. 18
4.9 Limitation on Indebtedness. 18
4.10 Investments, Loans and Advances. 18
4.11 Limitation on Restricted Payments. 19
4.12 Certain Consents. 19
4.13 Restrictions on Consolidation, Etc. 19
4.14 No Other Business. 20
4.15 Transactions with Affiliates. 20
4.16 Insurance. 21
4.17 Company Timber Sales. 21
4.18 Opinion as to Mortgaged Property. 21
4.19 Performance of Obligations. 21
4.20 New Services Agreement; Operating Default; Termination
of New Services Agreement. 21
4.21 New Master Purchase Agreement; Purchase Agreement
Default; Termination of New Master Purchase Agreement. 22
4.22 Distributions from Accounts. 22
4.23 Status of the Deed of Trust. 22
4.24 No Other Agreements. 22
4.25 Relocation of Chief Executive Office, Etc. 22
4.26 Timber Harvesting Plans, Etc. 23
4.27 [Intentionally Omitted] 23
4.28 Sale of Company Timber or Logs. 23
4.29 GIS 23
4.30 [Intentionally Omitted] 23
4.31 Liquidity Reserve. 23
4.32 Deed of Trust Covenants. 23
ARTICLE 5 ACCOUNTS 24
5.1 Establishment of Accounts. 24
5.2 Initial Deposits. 24
5.3 Collection Account. 24
5.4 Expense Reserve; Payment of Expenses. 28
5.5 Deemed Production. 28
5.6 Investment of Accounts, Etc. 29
5.7 Withdrawals and Deposits on Note Payment Dates. 29
5.8 Title Insurance Policy Proceeds. 32
5.9 Release of Liquidity Account. 32
5.10 Releases from Prefunding Account. 33
5.11 Releases from Indebtedness Reserve Account. 34
ARTICLE 6 SALE OF COMPANY OWNED TIMBERLANDS OR COMPANY TIMBER
RIGHTS; CERTAIN TIMBER SALES; SUBSTITUTIONS 34
6.1 Release of Company Owned Timberlands or Company Timber
Rights. 34
6.2 Sale of Company Timber. 37
6.3 Sale of Pacific Lumber Timber Rights Property. 37
6.4 Release of Company Owned Timberlands or Company Timber
Rights Upon Substitution of Property. 38
6.5 Trust Indenture Act Requirements. 42
ARTICLE 7 DEFAULTS AND REMEDIES 42
7.1 Events of Default. 42
7.2 Acceleration of Maturity; Rescission and Annulment. 43
7.3 Collection of Indebtedness and Suits for Enforcement
by Trustee. 44
7.4 Trustee May File Proofs of Claim. 45
7.5 Trustee May Enforce Claims Without Possession of Notes.45
7.6 Remedies. 45
7.7 Application of Money Collected. 46
7.8 Limitation of Suits. 46
7.9 Unconditional Rights of Noteholders To Receive Principal
and Interest. 46
7.10 Restoration of Rights and Remedies. 47
7.11 Rights and Remedies Cumulative. 47
7.12 Delay or Omission Not a Waiver. 47
7.13 Control by Majority Holders. 47
7.14 Course of Dealing Not a Waiver. 47
7.15 Waiver of Stay or Extension Laws. 48
7.16 Action on Notes. 48
7.17 Waiver of Past Defaults. 48
7.18 Certain Limitations on Exercise of Remedies under
Deed of Trust. 48
ARTICLE 8 DEFEASANCE AND COVENANT DEFEASANCE 48
8.1 Issuer's Option to Effect Defeasance or Covenant
Defeasance. 48
8.2 Defeasance and Discharge. 48
8.3 Covenant Defeasance. 49
8.4 Conditions to Defeasance or Covenant Defeasance. 49
8.5 Deposited Money and U.S. Government Obligations to
be Held in Trust; Other Miscellaneous Provisions. 51
8.6 Reinstatement. 51
ARTICLE 9 THE TRUSTEE AND THE COLLATERAL AGENT 51
9.1 Duties of Trustee and Collateral Agent. 51
9.2 Rights of Trustee and Collateral Agent. 52
9.3 Individual Rights of Trustee and Collateral Agent. 53
9.4 Trustee's and Collateral Agent's Disclaimer. 53
9.5 Notice of Defaults. 53
9.6 Reports by Trustee to Noteholders. 53
9.7 Compensation and Indemnity. 53
9.8 Replacement of Trustee and Collateral Agent. 54
9.9 Successor Trustee or Collateral Agent by Merger. 54
9.10 Eligibility; Disqualification. 55
9.11 Preferential Collection of Claims Against Issuer. 55
9.12 Trustee and Collateral Agent. 55
9.13 Escrow Agreement. 55
ARTICLE 10 AMENDMENTS 55
10.1 Without Consent of Noteholders. 55
10.2 With Consent of Noteholders. 56
10.3 Compliance with Trust Indenture Act. 57
10.4 Effect of Consents and Waivers; No Revocation of
Consents. 57
10.5 Notation on or Exchange of Notes. 57
10.6 Trustee to Sign Amendments, Etc. 57
ARTICLE 11 LINE OF CREDIT 57
11.1 Line of Credit Agreement. 57
11.2 Advances Under Line of Credit Agreement. 58
11.3 Amendments to Line of Credit Agreement. 59
11.4 Replacement of Line of Credit Agreement. 59
ARTICLE 12 MISCELLANEOUS 60
12.1 Trust Indenture Act Controls. 60
12.2 Notices. 60
12.3 Communication by Holders with Other Noteholders. 62
12.4 Certificate and Opinion as to Conditions Precedent. 62
12.5 Statements Required in Certificate or Opinion. 62
12.6 When Timber Notes Disregarded. 63
12.7 Rules by Trustee, Paying Agent and Registrar. 63
12.8 Business Days. 63
12.9 GOVERNING LAW. 63
12.10 No Recourse Against Others. 63
12.11 Successors. 63
12.12 Severability. 63
12.13 Multiple Originals. 64
12.15 Benefits of Indenture. 64
12.16 Limitations on Bankruptcy Petition Against Issuer. 64
12.17 Entire Agreement. 64
12.18 Concerning Paying Agents, Registrars, Securities
Intermediaries and Collateral Agents 64
ARTICLE 13 DISCHARGE 64
13.1 Discharge. 64
Schedule A - Definitions
Schedule B - Scheduled Amortization and Minimum
Principal Amortization
Schedule C - Structuring Schedule
Exhibit A-1-1 - Form of Class A-1 Unrestricted Global Note
Exhibit A-1-2 - Form of Class A-1 Restricted Global Note
Exhibit A-1-3 - Form of Class A-1 Definitive Note
Exhibit A-2-1 - Form of Class A-2 Unrestricted Global Note
Exhibit A-2-2 - Form of Class A-2 Restricted Global Note
Exhibit A-2-3 - Form of Class A-2 Definitive Note
Exhibit A-3-1 - Form of Class A-3 Unrestricted Global Note
Exhibit A-3-2 - Form of Class A-3 Restricted Global Note
Exhibit A-3-3 - Form of Class A-3 Definitive Note
Exhibit B-1 - Form of Accountant's Letter Re: Compliance
Exhibit B-2 - Form of Accountant's Letter Re: No Defaults
Exhibit C - Form of Monthly Trustee Certificate
Exhibit D - Form of Monthly Noteholder Certificate
Exhibit E - Form of Note Payment Trustee Certificate
Exhibit F - Form of Note Payment Noteholder Certificate
Exhibit G - Form of Rule 144A Transfer Certificate
Exhibit H - Form of Regulation S Transfer Certificate
Exhibit I - Form of Regulation S Exchange Certificate
Exhibit J - Form of Rule 144A Exchange Certificate
Exhibit K - Form of Transferee Letter
Exhibit L - Form of Clearing System Certificate
Exhibit M -Form of Participant Certificate
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
------- -------
310(a)(1)......................................................9.10
(a)(2)......................................................9.10
(a)(3)......................................................N.A.
(a)(4)......................................................N.A.
(a)(5)......................................................7.10
(b)(1)-(8)..................................................N.A.
(b)(9)......................................................9.10
(b)(10).....................................................N.A.
(c).........................................................N.A.
311(a).........................................................9.11
(b).........................................................9.11
(c).........................................................N.A.
312(a).........................................................N.A.
(b).........................................................12.3
(c).........................................................12.3
313(a).........................................................9.6
(b)(1)......................................................9.6
(b)(2)......................................................9.6
(c).........................................................9.6; 12.2
(d).........................................................9.6
314(a).........................................................4.3; 4.6; 12.2
(b).........................................................N.A.
(c)(1)......................................................12.4
(c)(2)......................................................12.4
(c)(3)......................................................N.A.
(d).........................................................N.A.
(e).........................................................12.5
(f).........................................................N.A.
315(a).........................................................9.1
(b).........................................................9.5; 12.2
(c).........................................................9.1
(d).........................................................9.1
(e).........................................................N.A.
316(a)(last sentence)..........................................12.6
(a)(1)(A)...................................................7.13
(a)(1)(B)...................................................7.17
(a)(2)......................................................N.A.
(b).........................................................7.9
(c).........................................................10.4
317(a)(1)......................................................7.3
(a)(2)......................................................7.4
(b).........................................................2.4
318(a).........................................................12.1
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed part
of the Indenture.
INDENTURE dated as of July 20, 1998 between SCOTIA PACIFIC
COMPANY LLC, a Delaware limited liability company, having its principal
office at 000 Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000 (the
"Issuer"); and State Street Bank and Trust Company, a Massachusetts trust
company, as trustee, having its Corporate Trust Xxxxxx xx Xxx Xxxxxxxxxxxxx
Xxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Trustee").
WHEREAS, the Issuer, the Collateral Agent and the Deed of Trust
Trustee have entered into the Deed of Trust to xxxxx x xxxx on, and a
security interest in, the Mortgaged Property, as security for the
obligations of the Issuer under its 6.55% Class A-1 Timber Collateralized
Notes, 7.11% Class A-2 Timber Collateralized Notes and 7.71% Class A-3
Timber Collateralized Notes due 2028 (the "Timber Notes"), this Indenture
and the other Secured Obligations; and
WHEREAS, the Issuer has satisfied all conditions and taken all
actions necessary or appropriate for the issuance of the Notes;
NOW, THEREFORE, each party agrees, for the benefit of the other
parties and the equal and ratable benefit of the holders of the Notes, as
follows:
ARTICLE 1
DEFINITIONS; RULES OF CONSTRUCTION; INCORPORATION BY
REFERENCE OF TRUST INDENTURE ACT PROVISIONS
1.1 Definitions. For all purposes of this Indenture, unless the
context otherwise requires, all defined terms not defined herein shall have
the meaning set forth in Schedule A hereto, which is incorporated by
reference as if fully set forth herein.
1.2 References to Instruments. In the event that any Operative
Document is amended, modified or supplemented in accordance with the
provisions hereof, the provisions thereof and the provisions of the Deed of
Trust, as the case may be, reference herein to such Operative Document
shall be to such Operative Document as so amended, modified or
supplemented.
1.3 Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture notes" means the Timber Notes and any Additional
Timber Notes.
"indenture security holder" means a Noteholder or Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture notes means the Issuer and any other
obligor on the indenture notes.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
1.4 Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles as in effect on the date hereof;
(3) "or" is not exclusive;
(4) "including" means including, without limitation;
(5) words in the singular include the plural and words in
the plural include the singular;
(6) reference herein to "this Indenture" are to this
instrument as originally executed and delivered by the Issuer and the
Trustee unless an amendment shall have been entered into, in which
event references herein to "this Indenture" are to this instrument as
so amended; and
(7) the words "herein," "hereof," "hereunder" and other
words of similar import refer to this Indenture as a whole (including,
without limitation, the Exhibits and Schedules to this Indenture) and
not to any particular Section or other subdivision, and the terms
"Section," "Exhibit" and "Schedule," unless otherwise specified or
indicated by the context, mean the corresponding Section of, or the
corresponding Exhibit or Schedule to, this Indenture.
ARTICLE 2
THE NOTES
2.1 Form and Dating. The Class X-0, X-0 xxx X-0 Timber Notes
and the Trustee's certificate of authentication shall be substantially in
the form of Exhibits X-0-0, X-0-0, X-0-0, X-0-0, X-0-0, X-0-0, X-0-0, A-3-2
and A-3-3, respectively, which are hereby incorporated into this Indenture.
The Timber Notes may have notations, legends or endorsements required by
law, stock exchange rule, the Issuer's limited liability company agreement
or other agreements to which the Issuer is subject, if any, or usage
(provided that any such notation, legend or endorsement is in a form
acceptable to the Issuer). Each Timber Note shall be dated the date of its
authentication. The terms of the Timber Notes set forth in Exhibits A-1-1,
X-0-0, X-0-0, X-0-0, X-0-0, X-0-0, X-0-0, X-0-0 and A-3-3, respectively,
are part of the terms of this Indenture. The Timber Notes shall be
evidenced by one or more typewritten or printed notes representing the
entire aggregate original principal balance of the Timber Notes. The
Timber Notes sold within the United States to U.S. person(s) will be issued
in fully registered form without interest coupons (i) to qualified
institutional buyers meeting the requirements of Rule 144A under the
Securities Act, in the form of the beneficial interests in one or more
restricted global Notes (the "Restricted Global Notes"), deposited with the
Trustee as custodian for DTC (in such capacity the "DTC Custodian") or any
successor or (ii) to certain "institutional accredited investors" (for
purposes hereof, entities meeting the requirements of Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act), in certificated form
in minimum denominations of U.S. $100,000 or any integral multiple of
$1,000 in excess thereof (the "Definitive Notes"). The Timber Notes sold
in offshore transactions in reliance on Regulation S under the Securities
Act will be in the form of beneficial interests held by the DTC
participants for Euroclear and Cedel, in one or more unrestricted Global
Notes (the "Unrestricted Global Notes") deposited with the Custodian (the
Unrestricted Global Notes, together with the Restricted Global Notes, shall
collectively be hereafter referred to as the "Global Notes"). The Timber
Notes will not be issued in bearer form. Beneficial interest in the Global
Notes may be held in minimum denominations of U.S. $100,000 or any integral
multiple of $1,000 in excess thereof.
2.2 Execution and Authentication. Two officers shall sign the
Timber Notes for the Issuer by manual or facsimile signature.
If an officer whose signature is on a Timber Note no longer holds
that office at the time the Trustee authenticates the Timber Note, the
Timber Note shall be valid nevertheless.
A Timber Note shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Timber
Note. The signature shall be conclusive evidence that the Timber Note has
been authenticated under this Indenture.
The Trustee shall authenticate and deliver Class A-1, Class A-2
and Class A-3 Timber Notes for original issue in an aggregate principal
amount of up to $160,700,000, $243,200,000 and $463,348,000, respectively,
upon a written order of the Issuer signed by an Officer of the Issuer.
Such order shall specify the amount of the Timber Notes of each Class to be
authenticated and the date on which the original issue of Timber Notes is
to be authenticated. The aggregate principal amount of Timber Notes of
each Class outstanding at any time shall not exceed the amount set forth in
this paragraph except as provided in Sections 2.7 and 2.8.
The Trustee may appoint an authenticating agent acceptable to the
Issuer to authenticate the Timber Notes (the "Authenticating Agent").
Unless limited by the terms of such appointment, an authenticating agent
may authenticate Timber Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights
as any Registrar, Paying Agent or agent for service of notices and demands.
2.3 Registrar and Paying Agent. The Issuer shall maintain an
office or agency where Timber Notes may be presented for registration of
transfer or for exchange (the "Registrar") and an office or agency where
Timber Notes may be presented for payment (the "Paying Agent"). The
Registrar shall keep a register (the "Register") of the Timber Notes and of
their transfer and exchange. The Issuer may have one or more
co-registrars. The term "Registrar" includes any co-registrar.
The Issuer hereby initially appoints the Trustee and its
affiliate, State Street Bank and Trust Company N.A., in New York, New York,
as sole Paying Agents in respect of the Timber Notes and hereby initially
appoints the Trustee as Registrar in connection with the Timber Notes. The
Issuer shall enter into an appropriate agency agreement with any subsequent
Registrar which is not a party to this Indenture. The agreement shall
implement the provisions of this Indenture that relate to such agent. The
Issuer shall notify the Trustee of the name and address of any such agent.
If the Issuer fails to maintain a Registrar, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to
Section 9.7. The Issuer or any Affiliate of the Issuer may act as
Registrar or transfer agent.
2.4 Paying Agent to Hold Money in Trust. All amounts withdrawn
from the Payment Account on each Note Payment Date for application pursuant
to clauses (i), (ii), (iv), (v), (vi), (vii), (viii) or (ix) of Section
5.7(b) shall, pending application in the order provided in Section 5.7(b),
be held by the Paying Agent in trust for the benefit of Noteholders and, to
the extent applicable, the Liquidity Providers.
2.5 Noteholder Lists. The Trustee shall preserve in as current
a form as is reasonably practicable the most recent list available to it of
the names and addresses of the Noteholders. If the Trustee is not the
Registrar, the Issuer shall furnish to the Trustee, in writing at least
seven Business Days before each Note Payment Date as set forth in the
Timber Notes and at such other times as the Trustee may request in writing,
a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of the Noteholders.
2.6 Transfer and Exchange; Transfer Restrictions.
(a) The Timber Notes shall be issued in the form of (i) one or
more Unrestricted Global Notes evidencing Class A-1, Class A-2 and Class A-
3 Timber Notes, which Unrestricted Global Notes shall be substantially in
the forms of Exhibits A-1-1, A-2-1 and A-3-1, respectively, hereto, (ii)
one or more Restricted Global Notes evidencing Class A-1, Class A-2 and
Class A-3 Timber Notes, which Restricted Global Notes shall be
substantially in the forms of Exhibits A-1-2, A-2-2 and A-3-2,
respectively, hereto, and/or (iii) one or more Definitive Notes evidencing
Class A-1, Class A-2 and Class A-3 Timber Notes, which Definitive Notes
shall be substantially in the forms of Exhibits A-1-3, A-2-3 and A-3-3,
respectively, hereto, all in an aggregate original principal amount that
shall equal the aggregate original principal amount of the related Class of
Notes that are to be issued on the Closing Date.
The Global Notes (i) shall be delivered by the Registrar to DTC
acting as the Depository or, pursuant to DTC's instructions, shall be
delivered by the Registrar on behalf of DTC to and deposited with the DTC
Custodian, and in each case shall be registered in the name of Cede & Co.
and (ii) shall bear a legend substantially to the following effect:
"Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Registrar or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede &
Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein."
The Global Notes may be deposited with such other Depository as
the Registrar may from time to time designate, and shall bear such legend
as may be appropriate; provided that such successor Depository maintains a
book-entry system that qualifies to be treated as "registered form" under
Section 163(f)(3) of the Code.
(b) The Restricted Global Note, and Legended Definitive Notes
shall bear the following legend:
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
UNDER ANY STATE SECURITIES OR BLUE SKY LAW OF ANY STATE OF THE UNITED
STATES OR ANY FOREIGN SECURITIES LAW. THE HOLDER HEREOF, BY
PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF THE TRUSTEE AND THE
ISSUER THAT THIS NOTE MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER
APPLICABLE LAWS AND ONLY (1) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") TO AN INSTITUTIONAL INVESTOR THAT THE
HOLDER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER, WITHIN
THE MEANING OF RULE 144A ("QUALIFIED INSTITUTIONAL BUYER"), PURCHASING
FOR ITS OWN ACCOUNT OR A QUALIFIED INSTITUTIONAL BUYER, WHOM THE
HOLDER HAS INFORMED, IN EACH CASE, THAT THE REOFFER, RESALE, PLEDGE,
OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (2) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION
S UNDER THE SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT (IF
AVAILABLE), OR (4) IN CERTIFICATED FORM TO AN "INSTITUTIONAL
ACCREDITED INVESTOR" WITHIN THE MEANING THEREOF IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT PURSUANT TO
ANY OTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT, IN THE CASE OF TRANSFERS PURSUANT TO THIS
CLAUSE (4), TO THE RECEIPT BY THE REGISTRAR OF SUCH OTHER EVIDENCE
ACCEPTABLE TO THE REGISTRAR THAT SUCH REOFFER, RESALE, PLEDGE OR
TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE
LAWS OR (5) TO THE ISSUER OR ITS AFFILIATES.
(c) The Unrestricted Global Note shall bear the following
legend:
PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD AND UPON RECEIPT OF
CERTIFICATION OF NON-U.S. OWNERSHIP FROM EUROCLEAR AND CEDEL ON BEHALF
OF THEIR MEMBER ORGANIZATIONS ONLY THE DTC PARTICIPANTS FOR EUROCLEAR
AND CEDEL MAY HOLD POSITIONS IN THIS NOTE AT DTC. NO INTEREST WILL BE
PAID ON THIS NOTE UNTIL THE EXPIRATION OF THE RESTRICTED PERIOD AND
UNTIL RECEIPT BY THE REGISTRAR OF CERTIFICATION OF NON-U.S. OWNERSHIP
AS SET FORTH IN SECTION 2.6 OF THE INDENTURE.
(d) If the Trustee has instituted or has been directed to
institute any judicial proceeding in a court to enforce the rights of the
Holders of the Class A-1, Class A-2 or Class A-3 Timber Notes, as the case
may be, and the Trustee has been advised by counsel that in connection with
such proceeding it is necessary or appropriate for the Trustee to obtain
possession of the Class A-1, Class A-2 or Class A-3 Timber Notes, the
Trustee may in its sole discretion determine that the Class A-1, Class A-2
or Class A-3 Timber Notes represented by Global Notes shall no longer be
represented by such Global Notes. In such event, the Trustee will execute,
the Authenticating Agent will authenticate and the Registrar will deliver,
in exchange for such Global Notes, Definitive Notes, of like Class and in
authorized denominations, in an aggregate principal balance equal to the
principal balance of such Global Notes.
(e) The Global Notes shall in all respects be entitled to the
same benefits under this Indenture as Definitive Notes authenticated and
delivered hereunder.
(f) A Timber Note may be transferred by the Holder thereof only
upon presentation and surrender of such Timber Note at the Corporate Trust
Office of the Registrar, duly endorsed or accompanied by an assignment duly
executed by such Holder or his duly authorized attorney-in-fact in such
form as shall be satisfactory to the Registrar. Upon the transfer of any
Timber Note in accordance with the preceding sentence and subject to the
provisions of this Section 2.6, the Trustee shall execute, the Issuer or
the Authenticating Agent shall authenticate and the Registrar shall deliver
to the transferee one or more new Timber Notes of like Class, in authorized
denominations, evidencing, in the aggregate, the same aggregate principal
balance as the Timber Notes transferred.
A Timber Note may be exchanged by the Holder thereof for any
number of new Timber Notes of like Class, in authorized denominations,
representing in the aggregate the same Timber Note as the Timber Note
surrendered, upon surrender of the Timber Note to be exchanged at the
Corporate Trust Office of the Registrar subject to the provisions of this
Section 2.6. Timber Notes delivered upon any such exchange will evidence
the same obligations under the Timber Notes and this Indenture, and will be
entitled to the same rights and privileges, as the Timber Notes
surrendered. Upon the exchange of any Timber Note in accordance with the
preceding sentence, the Trustee shall execute, the Issuer or Authenticating
Agent shall authenticate and the Registrar shall deliver to the exchanging
Holder one or more new Timber Notes of like Class, in authorized
denominations, evidencing, in the aggregate, the same aggregate principal
balance as the Timber Notes being exchanged.
(g) Subject to Section 2.6(f), no restrictions shall apply to
the transfer or registration of transfer of an Unlegended Definitive Note
to a transferee that takes delivery in the form of a Definitive Note. By
acceptance of a Legended Definitive Note, whether upon original issuance or
subsequent transfer, each holder of such a Note acknowledges the
restrictions on the transfer of such Note set forth in the Securities
Legend and agrees that it will transfer such a Timber Note only as provided
herein and therein. In addition to the provisions of Section 2.6(f), the
following restrictions shall apply with respect to the transfer and
registration of transfer of a Legended Definitive Note to a transferee that
takes delivery in the form of a Definitive Note:
(i) The Registrar shall register the transfer of a Legended
Definitive Note if the requested transfer is (x) to the Issuer or
an Affiliate of the Issuer or (y) being made by a transferor who
has provided the Registrar with a Rule 144A Transfer Certificate.
(ii) The Registrar shall register the transfer of a Legended
Definitive Note if the transferor has provided the Registrar with
a Regulation S Transfer Certificate.
(iii) The Registrar shall register the transfer of a
Legended Definitive Note if (x) the transferor has advised the
Registrar in writing that the Note is being transferred to an
Institutional Accredited Investor and (y) prior to transfer the
transferor furnishes to the Registrar a Transferee Letter,
provided that, (a) in lieu thereof, the transferee or proposed
transferor may furnish such other certifications, legal opinions
or other information as are reasonably satisfactory to the Issuer
and the Registrar to confirm that the proposed transfer is being
made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act
or (b) if based upon an Opinion of Counsel to the effect that the
delivery of (x) and (y) above are not sufficient to confirm that
the proposed transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration
requirements of the Securities Act, the Issuer and the Registrar
may as a condition of the registration of any such transfer
require the transferor to furnish other certifications, legal
opinions or other information prior to registering the transfer
of a Legended Definitive Note.
In each case described in clause (i), (ii) and (iii) above, the
Registrar shall deliver a Legended Definitive Note to the transferee unless
the Company has delivered an Officers Certificate to the Registrar
approving removal of the legends.
(h) Subject to Section 2.6(f), so long as any of the Global
Notes remains outstanding and is held by or on behalf of the Depository,
transfers of beneficial interests in any of such Global Notes, or transfers
by holders of Definitive Notes to transferees that take delivery in the
form of beneficial interests in such Global Notes, may be made only in
accordance with this Section 2.6 and in accordance with the rules of the
Depository and Euroclear or Cedel.
(i) Prior to the expiration of the Restricted Period, no
beneficial interest in the Unrestricted Global Note may at any time be
transferred to a transferee that takes delivery in the form of a
Definitive Note or Notes.
(ii) Prior to the expiration of the Restricted Period, a
beneficial interest in the Unrestricted Global Note may, to the extent
permitted by applicable law, be transferred to a person who takes
delivery in the form of a beneficial interest in the Restricted Global
Note upon receipt by the Registrar of a Rule 144A Transfer
Certificate. After the Restricted Period, no such certification will
be required with respect to such transfers.
(iii) Prior to the expiration of the Restricted Period, a
beneficial interest in the Unrestricted Global Note may only be held
by the DTC participants for Euroclear and Cedel until receipt by the
Registrar of a Clearing System Certificate from Euroclear or Cedel, as
applicable which clearing system certificate evidences receipt by
Euroclear and Cedel of certificates of non-U.S. ownership
(substantially in the form of Exhibit L to this Indenture) from their
respective member organizations for the aggregate principal amount
held by Euroclear and Cedel, respectively, relating to the appropriate
portion of the Unrestricted Global Note.
(iv) A beneficial interest in a Restricted Global Note may
be transferred to a transferee that takes delivery in the form of a
beneficial interest in an Unrestricted Global Note only upon receipt
by the Registrar of a Regulation S Transfer Certificate if such
transfer occurs prior the expiration of the Restricted Period, the
interest transferred will be held immediately thereafter through the
DTC participants for Euroclear and Cedel until the certification
process of (iii) above is completed.
(v) In the case of a beneficial interest in a Restricted
Global Note being transferred to an Institutional Accredited Investor,
such transferee shall be required to take delivery in the form of a
Definitive Note or Notes and the Registrar shall register such
transfer only upon compliance with the provisions of Section 2.6 (f)
and (g)(iii).
(vi) In the case of a beneficial interest in a Restricted
Global Note being transferred to a transferee that takes delivery in
the form of an Definitive Note or Notes, except as set forth in clause
(v) above, the Registrar shall register such transfer only upon
compliance with the provisions of Section 2.6 (f) and (g)(i) or (ii).
(vii) In the case of a Legended Definitive Note being
transferred to a transferee that takes delivery in the form of a
beneficial interest in the Restricted Global Notes, the Registrar
shall register such transfer if the transferor has provided the
Registrar with either (x) a Rule 144A Transfer Certificate or (y) if
such transfer occurs after the expiration of the Restricted Period, a
Regulation S Transfer certificate.
(viii) In the case of a Legended Definitive Note being
transferred to a transferee that takes delivery in the form of a
beneficial interest in the Unrestricted Global Notes, the Registrar
shall register such transfer if the transferor has provided the
Registrar with a Regulation S Transfer Certificate.
(ix) Prior to the expiration of the Restricted Period, no
Unlegended Definitive Notes may be transferred for beneficial
interests in the Unrestricted Global Notes.
(x) No restrictions shall apply with respect to the
transfer or registration of transfer of (x) a beneficial interest in a
Restricted Global Note to a transferee that takes delivery in the form
of a beneficial interest in the Restricted Global Note; (y) a
beneficial interest in an Unrestricted Global Note to a transferee
that takes delivery in the form of Definitive Notes after the
expiration of the Restricted Period or in the form of a beneficial
interest in the Unrestricted Global Note after the expiration of the
Restricted Period; or (z) an Unlegended Definitive Note or Notes to a
transferee that takes delivery in the form of a beneficial interest in
the Unrestricted Global Note after the expiration of the Restricted
Period.
(i) Subject to Section 2.6 (f), an exchange of a beneficial
interest in the Unrestricted Global Note for a beneficial interest in the
Restricted Global Note may be made only after the expiration of the
Restricted Period and only upon receipt by the Registrar of a Clearing
System Certificate from Euroclear or Cedel, as applicable.
(j) Subject to Section 2.6(h), an exchange of a beneficial
interest in any of the Global Notes for a Definitive Note or Notes, an
exchange of a Definitive Note or Notes for a beneficial interest in any of
the Global Notes and an exchange of a Definitive Note or Notes for another
Definitive Note or Notes (in each case, whether or not such exchange is
made in anticipation of subsequent transfer, and in the case of either
Global Note, so long as such Global Note remains outstanding and is held by
or on behalf of the Depository) may be made only in accordance with this
Section 2.6(h) and in accordance with the rules of the Depository and
Euroclear or Cedel.
(i) Prior to the expiration of the Restricted Period, no
holder of a beneficial interest in the Unrestricted Global Note may
exchange such beneficial interest for a Definitive Note or Notes.
(ii) A holder of a beneficial interest in the Restricted
Global Note may at any time exchange such beneficial interest for a
Legended Definitive Note or Notes.
(iii) After the expiration of the Restricted Period, a
holder of a beneficial interest in the Unrestricted Global Note may at
any time exchange such beneficial interest for an Unlegended
Definitive Note or Notes.
(iv) A holder of a Legended Definitive Note may exchange
such Note for a beneficial interest in the Restricted Global Notes if
such holder furnishes to the Registrar either (x) a Rule 144A Exchange
Certificate or (y) on and after the Restricted Period, a Regulation S
Exchange Certificate.
(v) A holder of a Legended Definitive Note may exchange
such Note for a beneficial interest in an Unrestricted Global Note, of
the same class if such holder furnishes to the Registrar a Regulation
S Exchange Certificate.
(vi) A holder of an Unlegended Definitive Note may exchange
such Timber Note for a beneficial interest in any Global Note of the
same class without any certification, except that prior to the
expiration of the Restricted Period in the case of a Restricted Global
Note, such holder must furnish to the Issuer and to the Registrar a
Rule 144A Exchange Certificate.
(vii) A holder of a Definitive Note may exchange such Timber
Note for an equal aggregate principal balance of Definitive Notes of
the same Class and in different authorized denominations without any
certification.
(k) (i) Upon acceptance for exchange or transfer of a
Definitive Note for a beneficial interest in any Global Note as provided
herein, the Registrar shall cancel such Definitive Note and shall (or shall
request the Depository to) adjust its books and records to reflect such
increase, evidencing the date of such exchange or transfer and an increase
in the aggregate principal amount of the applicable Global Note equal to
the aggregate principal amount of such Definitive Note exchanged or
transferred therefor.
(ii) Upon acceptance for exchange or transfer of a
beneficial interest in a Global Note for a Definitive Note as provided
herein, the Registrar shall (or shall request the Depository to) adjust its
books and records to reflect such decrease, evidencing the date of such
exchange or transfer and a decrease in the aggregate principal amount of
the applicable Global Note equal to the aggregate principal amount of such
Definitive Note issued in exchange therefor or upon transfer thereof.
(iii) Upon acceptance for transfer of a beneficial interest
in any Global Note for a beneficial interest in another Global Note as
provided herein, the Registrar shall (or shall request the Depository to)
adjust its books and records to reflect such increase or decrease,
evidencing the date of such transfer and (x) in the case of the Global Note
from which such transfer is made, a decrease in the aggregate principal
amount of such Global Note equal to the aggregate principal amount being
transferred and (y) in the case of the Global Note into which such transfer
is made, an increase in the aggregate principal amount of such Global Note
equal to the aggregate principal amount being transferred.
(l) The following provisions shall apply to the placement of the
Securities Legend on any Definitive Note issued in exchange for or upon
transfer of another Definitive Note or of a beneficial interest in any of
the Global Notes and to the removal of the Securities Legend from any
Legended Definitive Note.
(i) Until the Timber Notes have been registered pursuant to
an effective registration statement or the Registrar receives an
opinion of counsel stating that a Securities Legend is no longer
required, a Definitive Note issued upon transfer of or exchange for a
beneficial interest in the Restricted Global Notes shall bear the
Securities Legend.
(ii) A Definitive Note issued upon transfer of or exchange
for a beneficial interest in the Unrestricted Global Notes on or after
the expiration of the Restricted Period shall not bear the Securities
Legend.
(iii) Upon the transfer, exchange or replacement of a
Legended Definitive Note, or upon specific request of a holder of a
Legended Definitive Note for removal of the Securities Legend
therefrom, the Registrar shall deliver an Unlegended Definitive Note
or Notes if there is provided to the Registrar evidence reasonably
satisfactory to the Registrar and the Issuer (which may include an
Opinion of Counsel) as may reasonably be required by the Registrar and
the Issuer that neither the Securities Legend nor the restrictions on
transfer set forth therein are required to ensure compliance with the
provisions of the Securities Act.
(iv) Upon the transfer, exchange or replacement of an
Unlegended Definitive Note for a Definitive Note, the Registrar shall
deliver an Unlegended Definitive Note or Notes, as the holder may
request.
(m) Subject to the restrictions on transfer and exchange set
forth in this Section 2.6, the holder of any Definitive Note may transfer
or exchange the same in whole or in part (in an initial aggregate principal
amount equal to the minimum authorized denomination of U.S. $100,000 or any
integral multiple of $1,000 in excess thereof) by surrendering such
Definitive Note at the Corporate Trust Office of the Registrar or at the
office of any other transfer agent, together with an executed instrument of
assignment and transfer satisfactory in form and substance to the Registrar
in the case of transfer and a written request for exchange in the case of
exchange, together with all transfer documentation required in Section
2.6(f) hereof in form and substance satisfactory to the Registrar and the
Company. The holder of a beneficial interest in a Global Note may, subject
to the rules and procedures of the Depository, cause the Depository (or its
nominee) to notify the Registrar in writing of a request for transfer or
exchange of such beneficial interest for a Definitive Note or Notes.
Following a proper request for transfer or exchange, together with the
documentation required by this Section 2.6, the Registrar shall, within
five Business Days of such request if made at such Corporate Trust Office,
or within 10 Business Days if made at the office of another transfer agent
(other than the Registrar), cause the Trustee to execute and the
Authenticating Agent to authenticate, and the Registrar shall deliver at
such Corporate Trust Office or such transfer agent, as the case may be, to
the transferee (in the case of transfer) or holder (in the case of
exchange) or send by first class mail at the risk of the transferee (in the
case of transfer) or holder (in the case of exchange) to such address as
the transferee or holder, as applicable, may request, a Definitive Note or
Notes, as the case may require, of like Class and for a like aggregate Note
Balance and in such authorized denomination or denominations as may be
requested. The presentation for transfer or exchange of any Definitive
Note shall not be valid unless made at the Corporate Trust Office of the
Registrar or other transfer agent by the registered holder in person, or by
a duly authorized attorney-in-fact. The Issuer shall not be required to
make, and the Registrar need not register, transfers or exchanges of Timber
Notes called for redemption or for a period of 15 days before such Timber
Notes are to be redeemed or 15 days before a Note Payment Date, as set
forth in the Timber Notes.
(n) Transfer, registration and exchange shall be permitted as
provided in this Section 2.6 without any charge to the Holder except for
the expenses of delivery (if any) not made by regular mail and except, if
the Registrar shall so require, the payment of a sum sufficient to cover
any stamp duty, tax or governmental charge or insurance charge that may be
imposed in relation thereto; provided that any Opinions of Counsel or
certificates required by this Section 2.6 shall be at the expense of the
Holder or its proposed transferee. Registration of the transfer of a
Timber Note by the Registrar shall be deemed to be the acknowledgment of
such transfer on behalf of the Issuer.
(o) the Issuer and the Trustee may deal with the Clearing Agency
and the Clearing Agency Participants for all purposes (including the making
of distributions on the Timber Notes ) as the authorized representatives of
the Note Owners:
(i) to the extent that the provisions of this Section
2.6(o) conflict with any other provisions of this Indenture, the
provisions of this Section 2.6(o) shall control;
(ii) the rights of Note Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and
shall be limited to those established by law and agreements between
such Note Owners and the Clearing Agency and/or the Clearing Agency
Participants. Pursuant to the Clearing Agency Agreement, (except the
Definitive Notes), the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit distributions of principal of, premium, if any, and interest
on the Timber Notes (except the Definitive Notes) to such Clearing
Agency Participants; and
(iii) whenever a notice, report or other communication to
the Noteholders is required under this Indenture, the Trustee shall
give all such notices and communications specified herein to be given
to Noteholders (except those to be given to the holders of Definitive
Notes) to the Clearing Agency.
(p) In the event that:
(i)(A) the Issuer or the Clearing Agency advises the
Trustee in writing that the Clearing Agency is no longer willing
or able to discharge properly its responsibilities as Clearing
Agency, and (B) the Trustee or the Issuer is unable to locate a
qualified successor within 90 days,
(ii) the Issuer, at its option, with the consent of Note
Owners representing not less than 51% of the aggregate principal
balance of outstanding Timber Notes, advises the Trustee in
writing that it elects to terminate the book-entry system through
the Clearing Agency, or
(iii) during the continuance of an Event of Default, Note
Owners representing not less than 51% of the aggregate principal
balance of outstanding Timber Notes advise the Trustee and the
Clearing Agency through the Clearing Agency Participants in
writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of the Note
Owners,
the Trustee shall notify all Note Owners, through the Clearing Agency, of
the occurrence of any such event and of the availability of Definitive
Notes to Note Owners requesting the same. Upon surrender to the Trustee of
the Timber Notes by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Trustee shall
issue the Definitive Notes. Neither the Issuer nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively
rely on, and shall be protected in relying on, such instructions. The
Issuer shall arrange for, and will bear the costs of, printing and issuance
of any Definitive Notes. Upon the issuance of Definitive Notes, all
references herein to obligations imposed upon or to be performed by the
Clearing Agency shall be deemed to be imposed upon and performed by the
Trustee, to the extent applicable with respect to such Definitive Notes,
and the Trustee shall recognize the Holders of the Definitive Notes as
Holders of Timber Notes hereunder.
(q) Prior to the due presentation for registration of transfer
of any Timber Note, the Issuer, the Paying Agent or the Registrar may deem
and treat the person in whose name a Timber Note is registered as the
absolute owner of such Timber Note for the purpose of receiving payment of
principal of and interest on such Timber Note and for all other purposes
whatsoever, and none of the Issuer, the Trustee, the Paying Agent or the
Registrar shall be affected by notice to the contrary.
(r) The Timber Notes of each Class may be exchanged for Exchange
Timber Notes of the corresponding Class pursuant to the terms of the
Registered Exchange Offer. The Trustee shall make the exchange upon
receipt of an Officer's Certificate of the Issuer certifying that (A) a
registration statement filed with the SEC covering the Timber Notes has
been declared effective and (B) all conditions precedent to the exchange
have been complied with.
Upon receipt by the Trustee of such Officer's Certificate
and an Officer's Certificate requesting that the principal amount of Timber
Notes of each Class accepted for exchange in the Exchange Offer that are
represented by Restricted Global Notes, Unrestricted Global Notes and
Definitive Notes shall be cancelled in exchange for the issuance of an
equal aggregate principal amount of Exchange Timber Notes of such Class and
form, the Trustee shall authenticate (A) one or more Global Notes for each
Class and form of Global Note of Exchange Timber Notes in aggregate
principal amount equal to the aggregate principal amount of the
corresponding Class and form of Global Note of Timber Notes represented by
the Global Notes which will be simultaneously cancelled as indicated in
such Officer's Certificate as having been accepted for exchange and (B)
Definitive Notes representing Exchange Timber Notes registered in the names
of, and in the principal amounts indicated in, such Officer's Certificate.
If the principal amount of the Restricted Global Notes or
the Unrestricted Global Notes of the Exchange Timber Notes is less than the
aggregate principal amount of the Restricted Global Notes or the
Unrestricted Global Notes, respectively, of the Timber Notes for which they
were exchanged, the Trustee shall adjust its books and records to reflect
the reduction of the principal amounts represented thereby.
The Trustee shall deliver any Definitive Notes delivered as
Exchange Timber Notes to the holders thereof as indicated in such Officer's
Certificate.
Following the exchange of Timber Notes for Exchange Timber
Notes, the Exchange Timber Notes of each Class will be treated for purposes
of the Indenture as the Timber Notes of such Class.
2.7 Replacement Notes. If a mutilated Timber Note is
surrendered to the Registrar or if the Holder of a Timber Note claims that
the Timber Note has been lost, destroyed or wrongfully taken, the Issuer
shall issue and the Trustee shall authenticate a replacement Timber Note if
the Trustee's requirements are met. If required by the Trustee or the
Issuer, such Noteholder shall furnish an indemnity bond sufficient in the
judgment of the Issuer and the Trustee to protect the Issuer, the Trustee,
the Paying Agent and the Registrar from any loss which any of them may
suffer if a Timber Note is replaced. The Issuer and the Trustee may charge
the Noteholder for their expenses in replacing a Timber Note.
Every replacement Timber Note is an additional obligation of the
Issuer.
2.8 Outstanding Timber Notes. Timber Notes outstanding at any
time are all Timber Notes authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described
in this Section as not outstanding. Subject to the last clause of the
definition of the term "outstanding," a Timber Note does not cease to be
outstanding because the Issuer or an Affiliate of the Issuer holds the
Timber Note.
If a Timber Note is replaced pursuant to Section 2.7, it ceases
to be outstanding unless the Trustee and the Issuer receive proof
satisfactory to them that the replaced Timber Note is held by a bona fide
purchaser.
If the Paying Agent segregates and holds in trust, in accordance
with this Indenture, on a redemption date or maturity date money sufficient
to pay Timber Notes payable on that date and the Paying Agent is not
prohibited from paying such money to the Noteholders on that date pursuant
to the terms of this Indenture, then on and after that date such Timber
Notes cease to be outstanding and interest on them ceases to accrue.
2.9 Cancellation. The Issuer at any time may deliver Timber
Notes to the Trustee for cancellation. The Registrar shall forward to the
Trustee any Timber Notes surrendered to it for transfer, exchange or
payment. The Trustee and no one else shall cancel and destroy all Timber
Notes surrendered for transfer, exchange, payment or cancellation and
deliver a certificate of such destruction to the Issuer unless the Issuer
directs the Trustee to deliver canceled Timber Notes to the Issuer. The
Issuer may not issue new Timber Notes to replace Timber Notes it has
redeemed, paid or delivered to the Trustee for cancellation.
2.10 Payments in Respect of the Notes. The Issuer agrees to
cause each payment in respect of each outstanding Timber Note to be made in
accordance with the provisions of Section 5.7. Such payments shall be made
to the Noteholders on the Record Date immediately preceding the respective
Note Payment Date.
2.11 Payments of Principal, Regular Interest and Default Interest
on Notes.
(a) The aggregate unpaid principal amount of the outstanding
Timber Notes shall become due and payable on the Final Maturity Date unless
the aggregate unpaid principal amount of the outstanding Timber Notes shall
have earlier become due and payable.
(b) Subject to the limitation of Section 2.11(d), on each Note
Payment Date that precedes the Final Maturity Date, there shall become due
and payable an aggregate unpaid principal amount of the outstanding Timber
Notes of each Class equal to any Minimum Principal Amortization Amount for
such Class at such Note Payment Date.
(c) Subject to the limitation of Section 2.11(d), on each Note
Payment Date that precedes the Final Maturity Date, there shall become due
and payable, in addition to any aggregate unpaid principal amount of the
outstanding Timber Notes of each Class that becomes due and payable on that
Note Payment Date pursuant to Section 2.11(b), an aggregate unpaid
principal amount of the outstanding Timber Notes equal to any Depletion
Amortization Amount at such Note Payment Date.
(d) The principal amount due and payable on each Class of Timber
Notes pursuant to Sections 2.11(b) and 2.11(c) shall not exceed the amount
available for the payment of principal on the Timber Notes set forth in
Section 5.7.
(e) Accrued and unpaid Regular Interest, and accrued and unpaid
Default Interest, if any, on Timber Notes shall become due and payable on
each Note Payment Date.
2.12 Premiums on Timber Notes.
(a) If, on any date (including any redemption date), the amount
of principal paid to the holders of any Class of Timber Notes on such date
exceeds the Scheduled Amortization Amount for such Class on such date, a
Premium shall become payable on such date to the Holders of the Timber
Notes of such Class with respect to the lesser of (i) the amount of such
excess and (ii) the amount of principal paid to the Holders of such Class
of Timber Notes on such date (such lesser amount, an "Excess Payment").
Such Premium shall be in an amount equal to the Prepayment Premium Amount
with respect to such Excess Payment.
(b) If the Scheduled Amortization Amount for any Class of Timber
Notes at any Note Payment Date exceeds the aggregate principal amount of
such Class of Timber Notes paid on that Note Payment Date, then (i) the
amount of such excess shall constitute a "Payment Deficiency" for the
period from and including that Note Payment Date to but excluding the next
succeeding Note Payment Date and (ii) on the next succeeding Note Payment
Date, there shall become payable to the holders of such Class of Timber
Notes a Premium in an amount equal to the Deficiency Premium Amount with
respect to such Payment Deficiency. For purposes of Section 2.11(e), this
Section 2.12(b), Section 2.12(c) and Section 2.12(d), if any portion of the
principal amount of any Timber Note remains unpaid after the Final Maturity
Date, and, if the Timber Notes shall not have been accelerated pursuant to
Section 7.2, the last day of each month that occurs after such Final
Maturity Date and prior to the date on which the entire unpaid principal
amount of such Timber Note is paid shall be deemed to constitute a Note
Payment Date.
(c) Upon the occurrence of any Registration Default with respect
to a Class of Timber Notes or any portion thereof, a Non-Registration
Premium equal to an amount of interest (computed on the basis of a 360-day
year of twelve 30-day months) at a rate of 0.50% per annum on the
outstanding principal amount of the Timber Notes with respect to which a
Registration Default is continuing will accrue until all Registration
Defaults are cured. Non-Registration Premiums, if any, will be payable on
each Note Payment Date as provided in Section 5.7.
(d) Any unpaid portion of Premium for the outstanding Timber
Notes of any Class that has accrued shall bear interest (computed on the
basis of a 360-day year of twelve 30-day months) from the date such Premium
became payable until such Premium is paid at a rate per annum equal to the
Note Rate for such Class. The Issuer shall cause such interest to be paid
on such amount on the date or dates provided for in this Indenture.
2.13 Source and Manner of Payments on Notes. All amounts payable
pursuant to Sections 2.11 and 2.12 shall be payable from funds to be
withdrawn from the Payment Account pursuant to Section 5.7 in the priority
set forth therein. All payments on Definitive Notes shall be made (i) by
U.S. dollar checks drawn on a bank in New York City or Boston,
Massachusetts mailed to the Holders at their registered addresses or (ii)
upon application by a Holder of at least U.S. $5,000,000 in principal
amount of Definitive Notes to a Paying Agent not later than five Business
Days prior to the related Record Date, by wire transfer in immediately
available funds to a U.S. dollar account maintained by such Holder with a
bank in New York City or Boston, Massachusetts. All payments to any Holder
of a Global Note shall be made (i) by a U.S. dollar check drawn on a bank
in New York City or Boston, Massachusetts delivered to the registered owner
of such Global Note at its registered address or (ii) by wire transfer in
immediately available funds to a U.S. dollar account maintained by such
registered owner with a bank in New York City or Boston, Massachusetts.
2.14 Additional Timber Notes.
(a) Subject to satisfaction of the conditions described below, the
Issuer may issue Additional Timber Notes secured by the Lien of the Deed of
Trust. Such Additional Timber Notes and the Timber Notes shall be equally
and ratably secured by the Mortgaged Property and other collateral for
payment of the Timber Notes. Prior to or simultaneously with the issuance
of Additional Timber Notes, the following conditions must be satisfied:
(i) After giving effect to the issuance of such Additional
Timber Notes (including any amendment or supplement to the Indenture
or the other Operative Documents in connection with such issuance),
the Rating Agency Condition shall be satisfied with respect to each
Class of Timber Notes then outstanding (other than any Class of Timber
Notes then being called for redemption or paid in full);
(ii) The Scheduled Amortization Amount for each Class of Timber
Notes shall be zero on the date of issuance of such Additional Timber
Notes, after giving effect to any payments of principal to be made to
the Holders of Timber Notes on such date and any redemption of any
Timber Notes called, on or prior to such date, for redemption
(including any payment of principal or redemption to be made with the
proceeds of the issuance of such Additional Timber Notes);
(iii) The amount available under the Line of Credit Agreement
plus the funds on deposit in the Liquidity Account shall equal or
exceed the Required Liquidity Amount (as such amount may be modified
in connection with such issuance) after giving effect to the issuance
of such Additional Timber Notes;
(iv) Each issuance of Additional Timber Notes shall be in a
principal amount of at least $100,000,000.
(v) The Additional Timber Notes shall be rated at least as high
as "Baa2" by Xxxxx'x and "BBB" by S&P;
(vi) No Class A-1 Timber Notes shall be outstanding or,
simultaneously with the issuance of such Additional Timber Notes, all
outstanding Class A-1 Timber Notes shall be paid in full or called for
redemption; and
(vii) The issuance of the Additional Timber Notes shall not
violate the Line of Credit Agreement.
(b) If each of the conditions specified in Section 2.14(a) is
satisfied,the Indenture and the other Operative Documents and the Line of
Credit Agreement may be amended or supplemented, without the consent of the
Noteholders, as necessary or required to effect the issuance of such
Additional Timber Notes. Such amendments may, among other things, modify
the Required Liquidity Amount and provide for the use of the Line of Credit
Agreement (or other liquidity arrangement) to make such liquidity available
to pay interest on the Additional Timber Notes or change the basis upon
which the actual amortization of the Timber Notes is calculated. No such
amendment or supplement, however, may, except as otherwise permitted by the
provisions of Section 10.1, without the consent of Noteholders (i) effect
any of the changes referred to in Section 10.2(b), (ii) extend the Minimum
Principal Amortization Schedule or change the Scheduled Amortization
Schedule for any Class of then outstanding Timber Notes, (iii) cause any
Additional Timber Notes or other Indebtedness (except Indebtedness arising
pursuant to a liquidity facility that supports the payment of interest, but
not the payment of principal, premiums, or interest on premiums, on the
Timber Notes and/or on any Additional Timber Notes) to have a Lien senior
to the Lien securing the Timber Notes under the Deed of Trust, (iv) permit
any payments of principal on any Additional Timber Notes while any Timber
Notes are outstanding (unless the Timber Notes and the Additional Timber
Notes have been accelerated), (v) change the Note Payment Dates or provide
that the Note Payment Dates for the payment of interest on Additional
Timber Notes will, so long as any Timber Notes are outstanding, be
different from the Note Payment Dates for the Timber Notes, (vi) change the
definition of "Cash Retention Event" in a manner adverse to the interests
of the Holders of the Timber Notes, (vii) during the continuance of a Cash
Retention Event, permit the release of any funds to the Company free and
clear of the Lien of the Deed of Trust (except as contemplated by clauses
(i), (ii) and (x) of Section 5.3(c) (as modified by Section 5.3(d)), (viii)
modify any covenant contained in Sections 4.5, 4.8, 4.9, 4.10, 4.11, 4.12,
4.13, 4.14, 4.15, 4.17, 4.18, 4.19, 4.20, 4.21, 4.23, 4.24, 4.25, 4.26,
4.28 and 4.31 of the Indenture (except for any modification that is to cure
any ambiguity, omission, defect or inconsistency, or to add to the
covenants of the Company for the benefit of the Holders of the Timber Notes
and any Additional Timber Notes), (ix) amend the definition of Event of
Default (except for any amendment that is to cure any ambiguity, omission,
defect or inconsistency, or to add to the Events of Default for the benefit
of the Holders of the Timber Notes and any Additional Timber Notes) under
the Indenture or provide for any event of default or remedy with respect to
the Additional Timber Notes that is not, while any Timber Notes are
outstanding, substantially identical to the Events of Default and remedies
with respect to the Timber Notes or (x) except to the extent necessary or
appropriate to secure the Additional Timber Notes on a pari passu basis, or
to make the Indebtedness represented by the Additional Timber Notes pari
passu, with the Timber Notes, modify the provisions of any Operative
Document other than the Indenture in a manner that would have a material
adverse effect on the Holders of the Timber Notes.
ARTICLE 3
OPTIONAL REDEMPTION AND OPTIONAL PREPAYMENT
3.1 Notices to Trustee. If the Issuer elects to redeem Timber
Notes of any Class pursuant to paragraph 6 of the Timber Notes of such
Class, it shall notify the Trustee in writing of the redemption date and
the principal amount of Timber Notes of such Class to be redeemed. The
Issuer shall give each notice to the Trustee provided for in this Section
at least 15 days (or 30 days if a 30-day notice to Holders is required
pursuant to Section 3.3) before the redemption date (unless a shorter
notice period shall be satisfactory to the Trustee).
3.2 No Partial Redemption of a Class. The Timber Notes of any
Class may be redeemed in whole, but not in part, at the option of the
Issuer, on any day after the date of this Indenture. The Class A-3 Timber
Notes may not be redeemed unless after giving effect to all principal
payments (including payments of principal in the redemption) occurring on
the redemption date, the Class A-1 and Class A-2 Timber Notes shall no
longer be outstanding. The Class A-2 Timber Notes may not be redeemed
unless, after giving effect to all principal payments (including payments
of principal in the redemption) occurring on the redemption date, the Class
A-1 Timber Notes shall no longer be outstanding.
3.3 Notice of Redemption. At least 15 days (or 30 days if
legally required by DTC) but not more than 60 days before a date for
redemption of any Class of Timber Notes, the Issuer shall mail a notice of
redemption by first-class mail to each Holder of Timber Notes to be
redeemed.
The notice shall identify the Class or Classes of Timber Notes to
be redeemed and shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Timber Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price; and
(5) that, unless the Issuer defaults in making such redemption
payment, interest on Timber Notes called for redemption ceases to
accrue on and after the redemption date.
At the Issuer's request, the Trustee shall give the notice of
redemption in the Issuer's name and at the Issuer's expense. In such
event, the Issuer shall provide the Trustee with the information required
by clauses (1) through (3) at least 15 days prior to the date on which such
a notice of redemption is to be given by the Trustee (unless a shorter
notice period shall be satisfactory to the Trustee).
3.4 Effect of Notice of Redemption. Once notice of redemption
is mailed, Timber Notes called for redemption become due and payable on the
redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent, such Timber Notes shall be paid at the
redemption price stated in the notice, computed as provided in Section 3.6.
3.5 Deposit of Redemption Price. On or prior to Noon, New York
City time, on the redemption date, the Issuer shall deposit with the Paying
Agent an amount of money which, when added to all amounts deposited on such
redemption date pursuant to Section 5.7(a) and all other amounts on deposit
in the Payment Account (if all outstanding Timber Notes and any Additional
Timber Notes are to be redeemed on the redemption date), would be
sufficient to pay the redemption price of and all other amounts payable in
respect of all Timber Notes to be redeemed on that date. All money earned
on such funds held in trust by the Trustee shall be remitted to the Issuer.
3.6 Redemption Price. The Timber Notes of any Class shall be
redeemed at a redemption price equal to (i) all unpaid principal amounts
thereof as of the redemption date, (ii) all accrued and unpaid Premium
thereon as of the redemption date (prior to taking into account the
redemption), (iii) all accrued and unpaid Regular Interest, Default
Interest and interest on Premium thereon as of the redemption date and (iv)
a redemption premium computed as provided in the definition of Prepayment
Premium Amount, as if the excess of (a) the aggregate principal amount of
the Timber Notes of such Class to be redeemed over (b) the Scheduled
Amortization Amount for such Class of Timber Notes as of the redemption
date, constituted an "Excess Payment" as set forth in such definition.
3.7 Optional Prepayment. The Issuer may, at its option, prepay
the Timber Notes, in whole or in part, on any Note Payment Date as provided
in Section 5.7.
ARTICLE 4
COVENANTS
4.1 Payment of Notes. The Issuer shall promptly pay the
principal of, Premium, if any, and interest on the Timber Notes on the
dates and in the manner provided in the Timber Notes and in this Indenture.
Principal and interest shall be considered paid on the date due to the
extent on such date the Trustee holds in accordance with this Indenture
money sufficient to pay all principal and interest then due, and the
Trustee is not prohibited from paying such money to the Noteholders on that
date pursuant to the terms of this Indenture or otherwise.
The Issuer shall pay Default Interest on overdue principal at the
Default Rate, and it shall pay interest on overdue installments of Regular
Interest at the Default Rate to the extent lawful.
4.2 Money for Timber Note Payments to Be Held in Trust. The
Issuer shall, on or prior to each Note Payment Date, deposit or cause to be
deposited in the Payment Account such amount, if any, as is required under
the terms of this Indenture to be so deposited to pay principal, Regular
Interest, Default Interest, Premium or interest on Premium then owing on
the Timber Notes and interest and principal then owing to the Liquidity
Providers, such amount to be held in trust by the Trustee for the benefit
of the Noteholders of outstanding Timber Notes and the Liquidity Providers
entitled thereto.
4.3 SEC Reports. The Issuer shall file with the Trustee, and
provide each Rating Agency and Noteholders, within 15 days after it files
them with the SEC, copies of its annual report and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the SEC may by rules and regulations prescribe) which the
Issuer is required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act. Notwithstanding that the Issuer may not be subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Issuer shall provide the Trustee, each Rating Agency and Noteholders with
information which is substantially equivalent to that which would be
included in such annual reports and information which is substantially
equivalent to such information, documents and other reports which are
specified in Sections 13 and 15(d) of the Exchange Act. The Issuer also
shall comply with the provisions of TIA Section 314(a).
4.4 Maintenance of Office or Agency; Existence; Payment of Taxes
and Other Claims, Etc.
(a) Maintenance of Office or Agency. The Issuer hereby
irrevocably appoints the Trustee to be the agent of the Issuer and hereby
irrevocably designates the Corporate Trust Office to be the office of the
Issuer where notices and demands to or upon the Issuer in respect of the
Timber Notes and this Indenture may be served. The Trustee shall promptly
notify the Issuer of the Trustee's receipt of any notices or demands with
respect to the Timber Notes or this Indenture.
(b) Existence. The Issuer shall do or cause to be done all
things necessary to preserve and keep in full force and effect its
existence, rights and franchises as a limited liability company (except as
permitted by Section 4.13) under the laws of the State of Delaware and to
preserve and keep in full force and effect all other rights and franchises
material to the conduct of its business or to its ability to perform its
obligations under the Timber Notes and shall obtain and preserve its
qualification to do business as a limited liability company (except as
permitted by Section 4.13) in each jurisdiction in which such qualification
is necessary to protect the validity and enforceability of, or the ability
of the Issuer to perform its obligations under, this Indenture and the
other Operative Documents and all certificates, agreements, documents and
other writings then in effect referred to herein or therein or contemplated
hereby or thereby.
(c) Compliance With Laws and Regulations. The Issuer shall
comply with the requirements of all applicable laws and regulations, the
non-compliance with which would have a Material Adverse Effect.
(d) Payment of Taxes and Other Claims. The Issuer shall pay or
discharge, or cause to be paid or discharged, before the same shall become
delinquent, all taxes (including, without limitation, Yield Taxes),
assessments and governmental charges levied or imposed upon it or upon its
income, profits or property, and all lawful claims for labor, materials and
supplies that, if unpaid, would by law become a Lien upon its property;
provided that the Issuer shall not be required to pay or discharge or cause
to be paid or discharged any such tax, assessment, charge or claim so long
as (i) the amount, applicability or validity thereof is being diligently
contested in good faith by appropriate judicial or administrative
proceedings and against which adequate reserves are being maintained or
(ii) such proceedings or any bond delivered in connection therewith shall
effectively suspend or stay the collection of such tax, assessment, charge
or claim and against which adequate reserves are being maintained.
(e) Employees. The Issuer shall at all times employ such
officers and employees and have in effect such other arrangements as may be
necessary to ensure the continuity of the Issuer's operations.
(f) Independent Accountants. The Issuer's independent certified
public accountants at all times shall be a firm of independent certified
public accountants of recognized national reputation reasonably
satisfactory to the Trustee for purposes of preparing and delivering the
reports or certificates of such accountants required by this Indenture.
Such accountants may be the independent certified public accountants for
Pacific Lumber if they otherwise satisfy the criteria in this Section
4.4(f). Upon any resignation by, or change of, the Issuer's independent
certified public accountants, the Issuer shall promptly appoint a successor
thereto that shall also be a firm of independent certified public
accountants of recognized national reputation. If the Issuer shall fail to
appoint a successor to a firm of independent certified public accountants
that has ceased to act as the Issuer's independent certified public
accountants within 130 days after such cessation, the Trustee shall
promptly appoint a successor firm of independent certified public
accountants of recognized national reputation. The reasonable fees of such
firm of independent certified public accountants and any successor thereto
shall be payable by the Issuer.
4.5 Separate Existence and Formalities. The Issuer hereby
covenants and agrees that:
(1) the Issuer's funds and other assets will not be
commingled with those of Pacific Lumber;
(2) all actions taken by the Issuer will be taken pursuant
to authority granted by the Board of Managers of the Issuer, to the
extent required by law or the Issuer's Operating Agreement;
(3) the Issuer will maintain records and books of account
separate from those of Pacific Lumber in accordance with generally
accepted accounting principles;
(4) the Issuer will conduct its business at an office or
offices that are identifiably segregated from the offices of Pacific
Lumber and will have telephone numbers, a mailing address, stationery
and other business forms separate from Pacific Lumber;
(5) the Issuer will conduct its business solely in its own
name (except to the extent required for federal, state or local tax
purposes) and will not knowingly or negligently mislead any other
Person as to the identity or authority of the Issuer;
(6) all oral and written communications of the Issuer,
including, without limitation, letters, invoices, purchase orders,
contracts, statements and applications, will (except to the extent
required for federal, state or local tax purposes) be made solely in
the name of the Issuer;
(7) the Issuer will provide for all of its operating
expenses and liabilities from its own separate funds;
(8) the Issuer will maintain correct minutes of the
meetings and other proceedings of its members and the Board of
Managers and otherwise comply with the formalities required by law;
(9) the Issuer will not hold itself out or knowingly permit
itself to be held out as having agreed to pay or as being liable for
any indebtedness of Pacific Lumber; and
(10) the Issuer shall at all times maintain at least two
Independent Managers; provided, however, that the failure to maintain
such Independent Managers shall not constitute a "Default" hereunder
until the expiration of the applicable time period specified in
Section 7.1(8).
4.6 Reports, Notices and Certificates. The Issuer will furnish
to the Trustee and mail to each Rating Agency:
(a) not later than April 30 of each year, commencing April 30,
1999, written statements of the Issuer's independent certified public
accountants substantially in the forms of Exhibits B-1 and B-2 hereto;
(b) not later than April 30 of each year, commencing April 30,
1999, an Officer's Certificate to the effect that, to such person's
knowledge, (i) the Issuer has complied with all of the conditions and
covenants under the Indenture (determined without regard to any period of
grace or requirement of notice under this Indenture) during the preceding
year and during the current year to the date of such Certificate and (ii)
no Event of Default existed at any time during such preceding year or
during the current year to the date of such Certificate, in each of clause
(i) and (ii), except for those, if any, described in such Certificate in
reasonable detail;
(c) Monthly Trustee Certificates in accordance with Section
5.3(b) and Note Payment Trustee Certificates in accordance with Section
5.7(e); and
(d) if a Default or Event of Default continues for 5 Business
Days after a Responsible Officer of the Issuer becomes aware of the
existence of such Default or Event of Default, an Officer's Certificate
describing such Default or Event of Default in reasonable detail and
specifying what action the Issuer has taken or proposes to take with
respect to such Default or Event of Default.
The Issuer will mail to each Holder of Timber Notes:
(x) not later than each Monthly Deposit Date, the Monthly
Noteholder Certificate; and
(y) not later than each Note Payment Date, the Note Payment
Noteholder Certificate.
The Issuer will, to the extent provided and specified in any
supplemental indenture in connection with the issuance of any Additional
Timber Notes, mail to each Holder of any Additional Timber Notes:
(x) not later than each Monthly Deposit Date, specified
information in respect of such Monthly Deposit Date; and
(y) not later than each Note Payment Date, specified information
in respect of such Note Payment Date.
4.7 Access to Records. The Issuer shall, upon reasonable
notice, permit the Trustee, at reasonable times:
(a) to inspect and make or be provided with copies and extracts
from such books and records of the Issuer as may relate to the Timber Notes
and/or any of its rights or obligations under this Indenture or any other
Operative Document; and
(b) to visit and inspect any of the properties of the Issuer.
4.8 Limitation on Liens on Company Owned Timberlands or Company
Timber Rights. The Issuer shall not create, incur, assume, suffer or
permit to exist any Lien on the Company Owned Timberlands or Company Timber
Rights or any portion thereof or any interest therein other than (x) the
Lien of the Deed of Trust or (y) other Permitted Encumbrances.
4.9 Limitation on Indebtedness. The Issuer shall not issue,
assume, incur, create, guarantee or otherwise become liable for, directly
or indirectly, any Indebtedness other than (u) nonrecourse Indebtedness
outstanding on the Closing Date in a principal amount not exceeding
$510,000, provided that an amount equal to the principal amount of such
Indebtedness from time to time outstanding is held by the Trustee in a
separate cash collateral account so long as such Indebtedness is
outstanding, (v) Indebtedness represented by the Timber Notes, (w)
Indebtedness represented by any Additional Timber Notes, (x) Nonrecourse
Timber Acquisition Indebtedness in an aggregate principal amount not
exceeding $75 million outstanding at any one time, (y) Indebtedness under
the Line of Credit Agreement or any other liquidity arrangement in
connection with payment of interest (excluding interest on premiums) but
not in connection with the payment of principal or any premiums on the
Timber Notes or any Additional Timber Notes and (z) Indebtedness for
capital leases; provided, however, that (i) the aggregate amount of such
obligations under all such leases accruing during any consecutive 12 month
period does not exceed $100,000 multiplied by the Producer Price Index
Inflation Factor then applicable and (ii) the aggregate amount of such
obligations under all such leases accruing over the terms of such leases
does not exceed $500,000 multiplied by the Producer Price Index Inflation
Factor then applicable.
4.10 Investments, Loans and Advances. Except for Permitted
Investments or as otherwise contemplated by or provided in this Indenture,
the Deed of Trust or any other Operative Document, the Issuer shall not
make any loan or advance or extend any credit to (excluding (i) the
extension of trade credit in the ordinary course of business or (ii)
advances to employees or Managers, in the ordinary course of business, for
reasonable business expenses or salary, not to exceed $100,000 in the
aggregate at any one time), or own, purchase, repurchase or acquire (or
agree contingently to do so) any stock, obligations or securities of, or
any other ownership interest in, or all or substantially all of the assets
of, or make any capital contribution to or any other investment in, any
Affiliate or other Person.
4.11 Limitation on Restricted Payments. The Issuer shall not,
directly or indirectly, declare, make or pay any distribution or other
payment (whether in cash, property or obligations) in respect of any equity
interest in the Issuer, or, directly or indirectly, purchase, redeem,
retire or otherwise acquire for value any equity interest in the Issuer (a
"Restricted Payment"), except for any such Restricted Payment made solely
with funds or other assets that are free of the Lien of the Deed of Trust;
provided, however, that if an Event of Default described in Section 7.1(12)
(without regard to the grace period set forth therein) shall have occurred
and be continuing, the Issuer shall not make any Restricted Payment.
4.12 Certain Consents. The Issuer shall not give consent to any
amendment to the New Master Purchase Agreement, the New Services Agreement,
any Conveyance Document, or the Escrow Agreement referred to in the
definitions of Pacific Lumber Timber Rights Property and Company Timber
Rights Property unless (i) such amendment has been approved by a resolution
of the Board of Managers, including all Independent Managers and (ii)
either (A) such amendment is to cure any ambiguity, omission, defect or
inconsistency, or to add to the covenants of the other party thereto for
the benefit of the Issuer, the Noteholders or the holders of Additional
Timber Notes, or to surrender any right or power conferred therein on the
other party thereto, or in respect of any action to be taken by the Issuer
pursuant to Section 10 of the New Reciprocal Rights Agreement; provided,
that no such amendment may adversely affect in any material respect the
interests of the Holders of the Timber Notes or of any Additional Timber
Notes or (B) such amendment has received Rating Agency Confirmation or (C)
such amendment has received Rating Agency Evaluation and been approved by
the Supermajority Holders (after prior notice of such Rating Agency
Evaluation) or (D) such amendment is in connection with the issuance of
Additional Timber Notes, subject to the limitations set forth in Section
2.14. The Issuer will exercise its rights to require Pacific Lumber to
utilize the Net Short Log Xxxxxxxx Scale methodology of scaling, or to
utilize third party scalers, under Sections 6.2 and 6.3, respectively, of
the New Master Purchase Agreement, upon receipt of notice from the Trustee,
or from the Holders of 25% in aggregate outstanding principal amount of the
Timber Notes and any Additional Timber Notes (to the extent specified in
such notice).
4.13 Restrictions on Consolidation, Etc. Except as set forth
below, the Issuer shall not consolidate with or merge with or into any
other Person; or lease any of its assets to any other Person (other than
leases constituting Permitted Encumbrances); or make any amendment to
Section 2.5, 3.2 or 3.3 of the Operating Agreement. The Issuer shall not
sell or convey all or substantially all of its assets to any other Person
unless the Issuer, as a condition precedent to any such sale or conveyance,
shall pay in full or defease pursuant to Article 8 all principal of,
Premium, if any, interest on and other amounts payable with respect to the
Timber Notes and any Additional Timber Notes or under this Indenture or
the Line of Credit Agreement.
Notwithstanding the foregoing, the Issuer may consolidate with or
merge into any newly formed wholly-owned subsidiary of Pacific Lumber (or
any successor to Pacific Lumber) that has no material assets or liabilities
immediately prior to such consolidation or merger if (a) the Person formed
by such consolidation or into which the Issuer is merged is a corporation,
limited liability company or other entity organized and existing under the
laws of the United States of America, any State thereof or the District of
Columbia and shall expressly assume, by a supplemental indenture in form
and substance satisfactory to the Trustee, the due and punctual payment of
the principal of (and premiums, if any) and interest on all the Timber
Notes and any Additional Timber Notes then outstanding and the performance
of every covenant of this Indenture and the other Operative Documents on
the part of the Issuer to be performed or observed; (b) immediately after
giving effect to such transaction, no Event of Default, and no event which,
after notice or lapse of time or both, would become an Event of Default,
shall have occurred and be continuing; (c) such consolidation or merger is
approved by a Board Resolution, including the affirmative vote of both
Independent Managers; (d) such consolidation or merger has obtained Rating
Agency Confirmation; and (e) the Issuer has delivered to the Trustee an
Officer's Certificate (with the Rating Agency Confirmation attached
thereto) and an Opinion of Counsel, each stating that such consolidation or
merger and such supplemental indenture comply with this Indenture and the
Line of Credit Agreement.
4.14 No Other Business. Except for sales of Company Owned
Timberlands, Company Timber Rights or Company Timber or transfers of
Company Owned Timberlands or Company Timber Rights in exchange for
Substitute Timber Property in accordance with the procedures set forth in
Article 6 of this Indenture, the Issuer will not engage in any business
that is not related directly to (i) the operation, management, sale or
maintenance of the Company Owned Timberlands, the Company Timber Rights and
the Company Timber as provided by the Operative Documents, (ii) the
execution, delivery and performance of the Operative Documents, the Line of
Credit Agreement and the New Additional Services Agreement, (iii) issuing
and selling Timber Notes and any Additional Timber Notes pursuant to this
Indenture, (iv) issuing any Nonrecourse Timber Acquisition Indebtedness
and acquiring property secured by such Nonrecourse Timber Acquisition
Indebtedness, (v) acquiring Additional Timber Property or (vi) actions
reasonably incidental to the foregoing which do not, individually or in the
aggregate, have a Material Adverse Effect.
4.15 Transactions with Affiliates. Except for sales of Company
Owned Timberlands, Company Timber Rights or Company Timber or transfers of
Company Owned Timberlands or Company Timber Rights in exchange for
Substitute Timber Property in accordance with the procedures set forth in
Article 6 of this Indenture, the Issuer will not enter into any
transaction, arrangement or understanding, formal or informal, written or
oral (collectively, a "Transaction") with any Affiliate of the Issuer
unless (a) such Transaction has received Rating Agency Confirmation if the
amount involved in such Transaction and in all prior Transactions not
excepted by the following proviso in any fiscal year shall exceed
$2,000,000 and (b) either (x) such Transaction is on terms that are at
least as favorable to the Issuer as would be available to the Issuer in a
comparable Transaction with a Person that is not an Affiliate of the Issuer
or (y) in the event no comparable Transaction between the Issuer and an
unaffiliated third party is available, such Transaction is on terms that
are fair from a financial point of view to the Issuer; provided, that this
Section 4.15 shall not prohibit or otherwise restrict (i) compensation (in
the form of reasonable Manager's fees and reimbursement or advancement of
reasonable out-of-pocket expenses) paid to any Independent Manager of the
Issuer for services rendered in such person's capacity as a Manager, (ii)
indemnification of officers, Managers, and employees, and the obtaining of
liability insurance for the Issuer's Managers, officers and employees,
(iii) compensation and other benefits paid or made available to officers
and employees of the Issuer (who are not also officers or employees of
Pacific Lumber) for services actually rendered, comparable to those
generally paid or made available by entities engaged in the same or similar
businesses (including reimbursement or advancement of reasonable
out-of-pocket expenses), (iv) participation by employees of the Issuer in
employee benefit plans of Pacific Lumber or other Affiliates of the Issuer,
(v) lease of office space by the Issuer from Pacific Lumber in an annual
amount not to exceed $60,000 per year, (vi) coverage for the Issuer under
blanket insurance policies of Affiliates of the Issuer, (vii) the leasing
of vehicles or other equipment by the Issuer from Pacific Lumber in an
annual amount not to exceed $250,000 per year multiplied by the Producer
Price Index Inflation Factor then applicable, (viii) leases of portions of
Company Owned Timberlands to Pacific Lumber, provided that (A) such leases
are Permitted Encumbrances pursuant to clause (g) of the definition of such
term, (B) Pacific Lumber subleases, in the ordinary course of business, the
portions of Company Owned Timberlands that it leases from the Issuer and
(C) the rent paid by Pacific Lumber under such leases shall not be less
than 80% of the rent received by Pacific Lumber under such subleases, (ix)
participation by the Issuer with one or more of its Affiliates in the
Takings Litigation, provided that any recovery in such litigation shall be
allocated between the Issuer and its Affiliates on a pro rata basis so that
the Issuer will receive as its share of such recovery a percentage of such
recovery equal to the ratio of (A) the number of acres of the Company
Timber Property which is the subject of such litigation to (B) the total
number of acres of timberlands of the Issuer and its Affiliates that is the
subject of such litigation, or (x) any other Transaction with an Affiliate
of the Issuer to the extent such Transaction with such Affiliate is
contemplated by, and conducted in all material respects in accordance with
the terms of, the Operative Documents; and provided, further, that in the
case of clauses (i), (ii), (iii) and (v), such amounts shall be paid solely
from amounts on deposit in the Expense Reserve, from Excess Funds or from
other available funds of the Issuer that are free and clear of the Lien of
the Deed of Trust.
The Issuer shall provide each Rating Agency with a notice, on or
about June 30 and December 31 of each year, of all Transactions with any
Affiliate of the Issuer (other than sales of Company Timber or Transactions
excepted by the first proviso in the preceding paragraph) entered into
during the preceding six-month period which do not require Rating Agency
Confirmation under clause (a) of the preceding paragraph.
A Transaction permitted by Section 6.1, 6.3 or 6.4 between the
Issuer and a Person, and a Transaction between an Affiliate of the Issuer
and such Person (or an Affiliate of such Person), shall not be deemed a
Transaction between the Issuer and an Affiliate of the Issuer for the
purposes of this Section 4.15.
4.16 Insurance. The Issuer shall maintain or cause to be
maintained with respect to the Mortgaged Property such insurance as is
required by Section 7.1(i) of the Deed of Trust.
4.17 Company Timber Sales. All sales of Company Timber which are
made by the Issuer to Pacific Lumber shall be made pursuant to the New
Master Purchase Agreement and related log purchase agreements. All sales
of Company Timber which are made by the Issuer to any other Person (other
than Lump Sum Sales pursuant to Section 6.1 and 6.5) shall be made pursuant
to written Purchase Agreements satisfying the criteria specified in Section
7.1(h)(1) of the Deed of Trust.
4.18 Opinion as to Mortgaged Property. Promptly after the
execution and delivery of this Indenture, and on or before June 30 of each
calendar year, commencing June 30, 1999, the Issuer shall furnish to the
Trustee and the Rating Agencies an Opinion of Counsel stating that, in the
opinion of such counsel, either (a) such action has been taken with respect
to the recording, filing, rerecording and refiling of the Deed of Trust
(including, without limitation, the recordation of the real property
assignments referred to therein), any supplements and any other requisite
documents and with respect to the execution and filing of any UCC financing
statements and continuation statements as is necessary to maintain the
validity and perfection of the Lien of the Deed of Trust and reciting the
details of such action or (b) as of the date of such opinion, no such
action is necessary to maintain the validity and perfection of the Lien of
the Deed of Trust. Such Opinion of Counsel shall also describe the
recording, filing, rerecording and refiling of the Deed of Trust, any
supplements and any other requisite documents and the execution and filing
of any UCC financing statements and continuation statements that will, in
the opinion of such counsel, be required to maintain the validity and
perfection of the Lien of the Deed of Trust with respect to the Mortgaged
Property in existence as of the date of such opinion until September 1 in
the following calendar year.
4.19 Performance of Obligations.
(a) Except as expressly contemplated herein or in another
Operative Document, the Issuer will not take any action, and will use all
reasonable efforts not to permit any action to be taken by any other
Person, that would release any Person from any of such Person's material
covenants or obligations to the Issuer under any Operative Document or that
would result in the amendment, modification, hypothecation, subordination,
termination or discharge of, or impair the validity, enforceability or
effectiveness of, any such Operative Document.
(b) The Issuer shall punctually perform and observe in all
material respects all of its obligations and agreements contained in the
New Services Agreement and the New Master Purchase Agreement and the other
Operative Documents.
(c) The Issuer will make all deposits into the Collection
Account that the Issuer is required to make under the Operative Documents.
4.20 New Services Agreement; Operating Default; Termination of
New Services Agreement.
(a) If an Operating Default shall have occurred and be
continuing, the Trustee may, and, upon receipt of written instructions from
the Majority Holders directing the Trustee to take such action, shall, give
notice to Pacific Lumber or any other entity which is then the Services
Provider of its intention to terminate the New Services Agreement in
accordance with the terms thereof; provided that any such termination of
the New Services Agreement will not become effective, and the Services
Provider will not be relieved of its obligations under the New Services
Agreement and will continue (so long as the Services Provider continues to
perform in all material respects the services as contemplated by the New
Services Agreement with the same standard of care and diligence as were
observed before such Operating Default) to receive compensation for the
services performed by the Services Provider thereunder (as provided in
Section 7.2 of the New Services Agreement), unless and until a replacement
Services Provider shall have entered into a New Services Agreement.
(b) Upon any termination of the New Services Agreement as
contemplated by Section 4.20(a), the Issuer shall promptly solicit bids
from not fewer than three Persons to serve as a replacement Services
Provider or Services Providers.
4.21 New Master Purchase Agreement; Purchase Agreement Default;
Termination of New Master Purchase Agreement.
(a) If a Purchase Agreement Default shall have occurred and be
continuing, the Trustee may, and, upon receipt of written instructions from
the Majority Holders directing the Trustee to take such action, shall, give
notice to Pacific Lumber of its intention to terminate the New Master
Purchase Agreement in accordance with the terms thereof.
(b) Upon any termination of the New Master Purchase Agreement as
contemplated by Section 4.21(a), the Issuer shall promptly solicit new
purchasers on such terms as it deems appropriate, consistent with Section
4.17 (as provided in Section 10.2 of the New Master Purchase Agreement).
4.22 Distributions from Accounts. The Issuer shall not, directly
or indirectly, instruct the Trustee to make payments or distributions from
the Accounts except in accordance with this Indenture and the Deed of
Trust.
4.23 Status of the Deed of Trust. At all times (a) the Deed of
Trust shall be a valid and binding obligation of the Issuer; and (b) the
Lien of the Deed of Trust shall be a valid and perfected mortgage lien on
or a valid and perfected security interest in the Mortgaged Property,
subject to no Liens other than Permitted Encumbrances. The Issuer shall
cause to be delivered to the Collateral Agent a Title Insurance Policy (and
such endorsements or additional policies as may from time to time be
required pursuant to the terms and provisions of Sections 6.1, 6.3 and 6.4
of this Indenture or in connection with the issuance of Additional Timber
Notes) insuring the Collateral Agent in the principal amount of the Timber
Notes and the Commitments under the Line of Credit Agreement that the Deed
of Trust is a valid Lien against the Company Owned Timberlands and Company
Timber Rights, subject only to Permitted Encumbrances.
4.24 No Other Agreements. The Issuer shall not enter into any
agreements other than (i) the Operative Documents, the New Additional
Services Agreement, the Operating Agreement or the Line of Credit Agreement
or as contemplated by the Operative Documents, the New Additional Services
Agreement, the Operating Agreement or the Line of Credit Agreement, (ii)
agreements for or in connection with the sale of Company Timber, Company
Owned Timberlands or Company Timber Rights as permitted by this Indenture
and the Deed of Trust, (iii) trade accounts payable in the ordinary course
of business, (iv) agreements for expenditures expressly contemplated by the
Operative Documents or the New Additional Services Agreement, the
Operating Agreement or the Line of Credit Agreement, (v) agreements
required by this Indenture or the Deed of Trust, (vi) if Pacific Lumber is
no longer the Services Provider under the New Services Agreement, such
agreements as may be necessary or appropriate to obtain the Services, (vii)
agreements in the ordinary course of business related to actions permitted
by Section 4.14 and not otherwise prohibited by this Indenture, (viii)
agreements in respect of the issuance of Additional Timber Notes or in
respect of the issuance of Nonrecourse Timber Acquisition Indebtedness,
(ix) agreements in respect of the acquisition of Additional Timber
Properties or property that secures Nonrecourse Timber Acquisition
Indebtedness and (x) such other agreements as are not, individually or in
the aggregate, material to the business, financial condition or results of
operations of the Issuer.
4.25 Relocation of Chief Executive Office, Etc. The Issuer shall
not (a) relocate its chief executive office or principal place of business
from the address indicated in the preamble to this Indenture or (b)
maintain any of its books and records with respect to the Mortgaged
Property at any location other than such office or 0000 Xxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxx 00000 unless (i) the Trustee shall have been provided
with notice 30 days prior to such relocation and (ii) the Issuer shall have
delivered an Opinion of Counsel to the Trustee that any filings necessary
to continue the perfection of the Lien of the Deed of Trust have been
accomplished. Except in connection with a merger or consolidation
permitted under Section 4.13, the Issuer shall not change its name, or the
name under which it does business, from "Scotia Pacific Company LLC."
4.26 Timber Harvesting Plans, Etc. The Issuer shall (i) prepare
and file, and use its best efforts to obtain approval of, Timber Harvesting
Plans with respect to all Company Timber to be sold pursuant to the
Purchase Agreements, (ii) not enter into any Purchase Agreement (other than
the New Master Purchase Agreement) for the sale of stumpage unless the
Company Timber to be cut pursuant thereto is subject to a valid and
subsisting Timber Harvesting Plan or the Issuer reasonably believes that
the purchaser thereunder (or the Issuer) has the capacity to obtain a
Timber Harvesting Plan with respect thereto, (iii) at all times retain
sufficient persons with requisite professional qualifications to prepare
and file Timber Harvesting Plans, (iv) comply in all material respects with
all applicable federal, state or local regulations or statutes relating to
the Timber Harvesting Plans and the harvesting, cutting or severing of
Timber, including laws relating to wildlife habitat and endangered species,
(v) use its best efforts (consistent with prudent business practices) to
maintain a number of pending applications for Timber Harvesting Plans
which, if approved, would, together with Timber Harvesting Plans already
approved, cover sales of Company Timber adequate to pay, on any date, an
amount equal to the sum of (a) the excess, if any, of (i) the sum of (A)
all amounts specified as Minimum Principal Amortization for all Classes of
Timber Notes in the Structuring Schedule (Column L) (as such amount may be
modified as provided in Section 2.14) from the date of this Indenture
through a date which is 12 months subsequent to such date and (B) any
amount as provided in respect of this Section 4.26 in any supplement to
this Indenture executed in connection with the issuance of any Additional
Timber Notes over (ii) the aggregate principal amount of the Timber Notes
previously paid plus (b) Regular Interest to be accrued on the Timber Notes
and interest (not including any interest on premiums) to be accrued on any
Additional Timber Notes for such 12 month period and (vi) prepare and file
any 10 year plan, master plan, or any other development or strategic plan
required to be prepared in respect of the Company Timber Property by any
Governmental Authority.
4.27 [Intentionally Omitted]
4.28 Sale of Company Timber or Logs. The Issuer shall use its
best efforts (consistent with prudent business practices) to sell Company
Timber or logs in an amount sufficient to pay, as and when due, an amount
equal to (a) the excess, if any, of (i) the sum (A) of all amounts
specified as Minimum Principal Amortization in the Structuring Schedule
(column L) (as such amount may be modified as provided in Section 2.14)
from the date of the Indenture through the next Note Payment Date and (B)
any amount as provided in respect of this Section 4.28 in any supplement to
this Indenture executed in connection with the issuance of any Additional
Timber Notes over (ii) the aggregate principal amount of the Timber Notes
previously paid plus (b) Regular Interest and Default Interest to be
accrued on the Timber Notes and interest (not including any interest on
premiums) to be accrued on any Additional Timber Notes to such Note Payment
Date.
4.29 GIS. The Issuer shall maintain the GIS (including updates
thereto) in accordance with the past practices of the Issuer and Pacific
Lumber.
4.30 [Intentionally Omitted]
4.31 Liquidity Reserve. If at any time the Issuer reasonably
determines that amounts will be required to be borrowed under the Line of
Credit Agreement or withdrawn from the Liquidity Account pursuant to
Section 5.7(a)(i) (or drawn upon or withdrawn from any similar facility or
account that supports interest payable on any Additional Timber Notes) on
the next succeeding Note Payment Date, and funds to be so borrowed or on
deposit in the Liquidity Account (or available from any similar facility or
account that supports interest on any Additional Timber Notes) are for any
reason unavailable, during the continuance of such unavailability, the
Issuer shall use its best efforts (consistent with prudent business
practices) to obtain funds in the amount of such shortfall from third
parties, by offering logs for sale to third parties or otherwise.
4.32 Deed of Trust Covenants. The Issuer shall perform each of
the covenants and agreements made by the Issuer in the Deed of Trust.
ARTICLE 5
ACCOUNTS
5.1 Establishment of Accounts.
(a) There are hereby established with the Securities
Intermediary segregated trust accounts to be maintained at the Corporate
Trust Office of the Securities Intermediary (collectively, the "Accounts"),
as follows: the Collection Account, the Liquidity Account, the Expense
Reserve, the Prefunding Account, the Indebtedness Reserve Account and the
Payment Account. The funds in each of the Accounts shall be held subject
to a Lien in favor of the Collateral Agent for the benefit of the
Noteholders and the Liquidity Providers.
(b) Amounts on deposit in the Accounts shall be under the
exclusive dominion and control of the Collateral Agent and shall be subject
to withdrawal only as expressly provided herein.
5.2 Initial Deposits.
(a) On the Closing Date, the Issuer shall deposit in the
Prefunding Account an amount equal to $25,000,000 from the net proceeds
from the sale of the Timber Notes.
(b) On the Closing Date, the Issuer shall deposit in the Expense
Reserve an amount equal to $1,100,000 from the net proceeds from the sale
of the Timber Notes.
(c) On the Closing Date, the Issuer shall deposit in the
Indebtedness Reserve Account an amount equal to $510,000 from the net
proceeds of the sale of the Timber Notes.
5.3 Collection Account.
(a) Except for De Minimis Receipts, all payments received by the
Issuer in connection with the harvesting, severing, cutting or sale of
Company Timber and all other cash Proceeds received by the Issuer of or
from the Mortgaged Property (including, without limitation, insurance
proceeds, condemnation awards, proceeds from sales of Company Timber,
including Pay-as-You-Harvest Sales, Lump Sum Sales and Unallocated
Payments, whether pursuant to the New Master Purchase Agreement or
otherwise, proceeds from the sales of Company Owned Timberlands or Company
Timber Rights, and proceeds in respect of any Agreement Not to Cut, but
excluding proceeds of any Title Insurance Policy) shall be deposited in the
Collection Account, together with all other amounts required to be
deposited in the Collection Account under this Indenture or the Deed of
Trust. The Issuer shall forward all De Minimis Receipts to the Collection
Account at least monthly. Funds from time to time in the Collection
Account, including income on Eligible Investments with respect to amounts
held in the Collection Account, will be withdrawn from the Collection
Account on each Monthly Deposit Date as provided in Section 5.3(c).
(b) Not later than each Monthly Certificate Delivery Date, the
Issuer shall prepare and submit or cause to be prepared and submitted to
the Collateral Agent and the Trustee (with a copy mailed to each Rating
Agency), a Certificate in substantially the form of Exhibit C hereto (a
"Monthly Trustee Certificate"), containing information (except as otherwise
provided herein) as of the Monthly Calculation Date next preceding such
Monthly Certificate Delivery Date (which certificate shall give effect, on
a pro forma basis, to deposits to be made to, and interest to be earned on,
the Accounts to 11:00 A.M. New York City time on the next succeeding
Monthly Deposit Date) and signed by a Responsible Officer of the Issuer,
setting forth (among other things):
(i) the balance in the Collection Account, including
interest earned on investments from the prior Monthly Deposit
Date, and the balance in the Expense Reserve, indicating
separately for each item (A) the actual amount as of the opening
of business on such Monthly Certificate Delivery Date and (B) an
estimated pro forma amount as of 11:00 A.M. New York City time on
the next succeeding Monthly Deposit Date; and
(ii) the amount (if any), stated separately as to each Item
(and as to each applicable provision of Sections 5.3(d) and
5.3(e)), that in accordance with this Indenture is to be
deposited in or withdrawn from the Collection Account, the
Expense Reserve, the Prefunding Account, the Liquidity Account
and the Payment Account, or borrowed under the Line of Credit
Agreement or paid to the Liquidity Providers, as applicable, on
such Monthly Deposit Date pursuant to each of Items (i) through
(x), inclusive, of Section 5.3(c). Withdrawals from the
Collection Account on a Monthly Deposit Date pursuant to Items
(i) through (x), inclusive, of Section 5.3(c) (and the applicable
provisions of Sections 5.3(d) and 5.3(e)) are called the
"Collection Account Disbursement" for such Monthly Deposit Date,
and the amounts to be deposited or withdrawn, as part of the
Collection Account Disbursement for such Monthly Deposit Date,
are called "Collection Account Disbursement Funds" for such
Monthly Deposit Date.
In preparing the Monthly Trustee Certificate to be delivered on a Monthly
Certificate Delivery Date, the Issuer shall, with respect to the
information referred to in Section 5.3(b)(i), be entitled to rely in good
faith on information provided by the Trustee or the Collateral Agent and on
reasonable estimates of interest to be earned on the Accounts.
(c) On each Monthly Deposit Date, from amounts on deposit as of
11:00 A.M. New York City time on such Monthly Deposit Date (after giving
effect to deposits to the Collection Account on such Monthly Deposit Date),
and in accordance with the Monthly Trustee Certificate delivered in respect
of such Monthly Deposit Date, on which Monthly Trustee Certificate the
Trustee and the Collateral Agent may rely without inquiry, the Collateral
Agent shall make deposits in and withdrawals from the Accounts as set forth
below (said deposits and withdrawals to be made in the order and priority
set forth below):
(i) any amount necessary to cause the balance in the
Expense Reserve to equal the greater of (I) the sum of (a) all accrued
and unpaid Yield Taxes attributable to Company Timber which was cut,
harvested, severed or sold during the month to which such Monthly
Deposit Date relates and all prior Monthly Periods and (b) an amount
equal to all expenses of a nature permitted to be paid from the
Expense Reserve (including capital expenditures, personnel costs, the
Services Fee and other amounts payable under the New Services
Agreement) known or estimated by the Issuer to be payable prior to the
next Monthly Deposit Date and (II) $1.1 million shall, to the extent
of the balance in the Collection Account, be withdrawn from the
Collection Account and deposited in the Expense Reserve;
(ii) all unpaid Trustee's Expenses, Collateral Agent
Expenses and Liquidity Providers' Expenses incurred during or prior to
the Monthly Period to which such Monthly Deposit Date relates shall,
to the extent of the balance in the Collection Account not theretofore
withdrawn, be withdrawn from the Collection Account and, at the
direction of the Issuer, be paid to the Trustee, the Collateral Agent,
or the Liquidity Providers, as the case may be, by the Collateral
Agent or, if the Issuer shall have previously paid such expenses, such
amounts shall be withdrawn by the Collateral Agent from the Collection
Account and disbursed at the direction of the Issuer to reimburse
itself for such expenses;
(iii) if there has not been a Termination Advance under a
Line of Credit or there has been a Termination Advance under a Line of
Credit Agreement that has been replaced in accordance with the terms
of Section 11.4, an amount equal to all accrued and unpaid interest
(other than any Supplemental Liquidity Provider Interest) on, plus the
outstanding principal amount of, any outstanding Advances (other than
Advances made on, or within three Business Days preceding, such
Monthly Deposit Date) under the Line of Credit Agreement shall, to the
extent of the balance in the Collection Account not theretofore
withdrawn, be withdrawn by the Collateral Agent from the Collection
Account and disbursed to the Liquidity Providers in payment, first, of
such accrued and unpaid interest and, second, of such outstanding
principal amount;
(iv) the balance of funds in the Liquidity Account (if any) in
excess of the Required Liquidity Amount as of such Monthly Deposit
Date shall be withdrawn by the Collateral Agent from the Liquidity
Account and deposited in the Collection Account and shall be included
together with other funds to be withdrawn from the Collection Account
on such Monthly Deposit Date;
(v) an amount equal to (a) the product of (i) the Targeted
Monthly Deposit Amount for such Monthly Deposit Date and (ii) the
Reinvestment Factor for such Monthly Deposit Date less (b), if such
Monthly Deposit Date is neither a Note Payment Date nor the first
Monthly Deposit Date following a Note Payment Date, the Premium
Provision Refundable Amount for such Monthly Deposit Date shall, to
the extent of the balance in the Collection Account not theretofore
withdrawn, be withdrawn by the Collateral Agent from the Collection
Account and deposited in the Payment Account;
(vi) if there has been a Termination Advance under a Line of
Credit Agreement that has not been replaced in accordance with the
terms of Section 11.4, an amount equal to the excess of (a) the sum of
(i) all accrued and unpaid interest on all outstanding Advances (other
than any Supplemental Liquidity Provider Interest) under the Line of
Credit Agreement as of such Monthly Deposit Date and (ii) the product
obtained by multiplying the Line of Credit Amortization Amount, if
any, for the next Note Payment Date, by a fraction, the numerator of
which is the number of months from the immediately preceding Note
Payment Date and the denominator of which is six, over (b) the amount,
if any, of all amounts deposited pursuant to this clause (vi) in the
Payment Account after the immediately preceding Note Payment Date (or,
if the first Note Payment Date has not yet occurred, after the Closing
Date) shall, to the extent of the balance in the Collection Account
not theretofore withdrawn, be withdrawn by the Collateral Agent from
the Collection Account and deposited in the Payment Account;
(vii) if there has been a Termination Advance under a Line of
Credit Agreement that has not been replaced in accordance with the
terms of Section 11.4, any amount necessary to cause the balance in
the Liquidity Account to equal the Required Liquidity Amount as of
such Monthly Deposit Date shall, to the extent of the balance in the
Collection Account not theretofore withdrawn, be withdrawn by the
Collateral Agent from the Collection Account and deposited in the
Liquidity Account;
(viii) an amount equal to the Premium Provision for such Monthly
Deposit Date shall, to the extent of the balance in the Collection
Account not theretofore withdrawn, be withdrawn by the Collateral
Agent from the Collection Account and deposited in the Payment
Account;
(ix) if (a) the aggregate expenses of a nature permitted to be
paid from the Expense Reserve known or estimated by the Issuer to be
payable through any date within the following six months exceeds (b)
the sum of (I) the amount in the Expense Reserve and (II) the amounts
that the Issuer estimates will become available to the Issuer through
such date for the payment of the expenses referred to in the preceding
clause (a), an amount equal to the amount of such excess shall, to the
extent of the balance in the Collection Account not theretofore
withdrawn, be withdrawn from the Collection Account and deposited in
the Expense Reserve; and
(x) all unreserved funds in the Collection Account as of such
Monthly Deposit Date, after giving effect to all deposits and
withdrawals pursuant to the preceding Items (i) through (ix),
inclusive, on such Monthly Deposit Date (collectively, "Excess
Funds"), shall be paid, first, to the payment of any unpaid Additional
Liquidity Provider Fees incurred during or prior to the Monthly Period
to which such Monthly Deposit Date relates and to the payment of any
accrued and unpaid Supplemental Liquidity Provider Interest as of such
Monthly Date and, second, to or as directed by the Issuer in the
Monthly Trustee Certificate delivered with respect to such Monthly
Deposit Date, free and clear of the Lien of the Deed of Trust, except
as otherwise provided in Section 5.3(d) or Section 5.3(e).
(d) Notwithstanding the foregoing:
(i) if a Cash Retention Event shall have occurred and be
continuing on such Monthly Deposit Date, 75% of the Excess Funds (up
to the amount necessary to pay in full any Timber Notes remaining
outstanding) shall be deposited in the Payment Account on such Monthly
Deposit Date and the remainder shall be applied as set forth in
Section 5.3(c)(x);
(ii) if an Event of Default described in clauses (1), (2), (3),
(4), (5), (6), (7) (but, in the case of clause (7), only (A) with
respect to Sections 4.5, 4.8, 4.9, 4.11, 4.13, 4.23 and 4.25 of this
Indenture and Sections 7.1(c), (d) and (e) and 7.2(a) and (b) of the
Deed of Trust and (B) if the default giving rise to such Event of
Default has, or, with the passage of time, would have, a Material
Adverse Effect) and (11) of Section 7.1 has occurred and is continuing
on such Monthly Deposit Date, all Excess Funds shall be deposited in
the Payment Account on such Monthly Deposit Date;
(iii) if (A) the Trustee or the Noteholders shall have caused the
acceleration of the Timber Notes as provided in Section 7.2(b) or
7.2(c) of this Indenture and such acceleration shall not have been
rescinded pursuant to Section 7.2(d) or (B) an Event of Default under
Sections 7.1(6), (7), (8), (9), (10) or (12) has occurred and is
continuing, and the Trustee, within the previous 60 days, has
commenced a consent solicitation for an election to accelerate the
Timber Notes or any Additional Timber Notes by reason of such Event of
Default, all Excess Funds shall be deposited in the Payment Account on
such Monthly Deposit Date (either of the events described in the
preceding clause (ii) or this clause (iii), a "Trapping Event"); and
(iv) if the Collateral Agent holds any Section 6.1 Notes as of
such Monthly Deposit Date, (x) if the amount of Excess Funds (computed
as if such Section 6.1 Notes were cash), reduced by any amount
required to be deposited in the Payment Account pursuant to Section
5.3(d)(i) or to be paid pursuant to clause "first" of Section
5.3(c)(x), equals or exceeds the amount of such Section 6.1 Notes, so
long as no Trapping Event shall have occurred and be continuing, the
Section 6.1 Notes shall be released to or as directed by the Issuer,
free and clear of the Lien of the Deed of Trust, (y) if the amount of
Excess Funds (computed as if the Section 6.1 Notes were cash), reduced
by any amount required to be deposited in the Payment Account pursuant
to Section 5.3(d)(i) or to be paid pursuant to clause "first" of
Section 5.3(c)(x), is less than the amount of such Section 6.1 Notes,
so long as no Trapping Event has occurred and is continuing, a portion
of Section 6.1 Notes, in an amount up to the amount of Excess Funds
(computed on such basis), reduced by any amount required to be
deposited in the Payment Account pursuant to Section 5.3(d)(i) or to
be paid pursuant to clause "first" of Section 5.3(c)(x), shall be
released to or as directed by the Issuer, free and clear of the Lien
of the Deed of Trust, and the balance of such Section 6.1 Notes shall
be sold by the Issuer to Pacific Lumber for a cash purchase price
equal to the aggregate principal balance thereof plus accrued interest
thereon and (z) if any Trapping Event has occurred and is continuing,
the Issuer shall sell to Pacific Lumber all Section 6.1 Notes then
held by the Collateral Agent, for a cash purchase price equal to the
aggregate principal amount of such Section 6.1 Notes plus accrued
interest thereon. Section 6.1 Notes shall not be included in any
calculation pursuant to Section 5.7 and, except for the calculation
made pursuant to this Section 5.3(d)(iv), shall not be included in any
calculation of Excess Funds. All proceeds received by the Collateral
Agent from any sale of some or all of the Section 6.1 Notes to Pacific
Lumber pursuant to this Section 5.3(d)(iv) shall be deposited into the
Collection Account on such Monthly Deposit Date, for application as
provided in Section 5.3.
For purposes of this Section 5.3(d) and of Sections 5.3(e) and 5.7,
the Trustee and the Collateral Agent may rely, without further inquiry, on
statements contained in the Monthly Trustee Certificate in respect of any
Monthly Deposit Date as to whether a Cash Retention Event, a Trapping Event
or an Acceleration Event has occurred and is continuing on such Monthly
Deposit Date or a Line of Credit Acceleration has occurred.
(e) Notwithstanding the foregoing provisions of this Section 5.3, in
the event that a Line of Credit Acceleration has occurred or an
Acceleration Event shall have occurred and be continuing, all interest,
principal and other amounts (other than Additional Liquidity Provider Fees
and Supplemental Liquidity Provider Interest) then owing by the Issuer
under the Line of Credit Agreement shall be paid on each Monthly Deposit
Date, immediately after the transfers and payments pursuant to Sections
5.3(c)(i) and 5.3(c)(ii), and no amounts shall be deposited in the Payment
Account on such Monthly Deposit Date until such interest, principal and
other amounts are paid in full. Payments to the Liquidity Providers
pursuant to this Section 5.3(e) shall be applied, first, to Liquidity
Providers' Expenses, second, to interest (other than any Supplemental
Liquidity Provider Interest) and, third, to principal.
(f) The Issuer shall clearly indicate on each page of the Monthly
Trustee Certificate that such material is to be maintained as confidential.
The Trustee and the Collateral Agent shall treat any Monthly Trustee
Certificate designated as confidential material as confidential, and any
Monthly Trustee Certificate so designated shall not be available to
Noteholders. Notwithstanding the foregoing, nothing in this Section 5.3(f)
shall prohibit the Trustee and the Collateral Agent from disclosing such
Monthly Trustee Certificate to bank regulatory authorities (or otherwise as
required by law), auditors, attorneys or other agents of the Trustee within
the scope of their engagement.
(g) All payments of Liquidity Providers' Expenses and all other
payments to the Liquidity Providers or the Line of Credit Agent under this
Indenture or any other Operative Document shall be disbursed to the Line of
Credit Agent. The Line of Credit Agent shall be solely responsible for
disbursing all such payments that it receives to the Persons entitled to
such payments. If, on or prior to the date that is eight Business Days
prior to any Monthly Deposit Date, the Line of Credit Agent delivers
written notice to the Trustee and the Collateral Agent (with a copy to the
Issuer) stating that the amount set forth in the Monthly Trustee
Certificate delivered in respect of the preceding Monthly Deposit Date
understated the amount of Liquidity Providers' Expenses referred to in
Section 5.3(c)(ii), the amount of accrued and unpaid interest (other than
any Supplemental Liquidity Provider Interest) on, or the outstanding
principal amount of, Advances (other than Advances made on, or within three
Business Days preceding, such Monthly Deposit Date) under the Line of
Credit Agreement referred to in Section 5.3(c)(iii) or the amount of unpaid
Additional Liquidity Provider Fees or accrued and unpaid Supplemental
Liquidity Provider Interest referred to in clause "first" of Section
5.3(c)(x), the Collateral Agent may rely on such notice and shall include
the amount(s) of the understatement(s) set forth in such written notice in
the amounts to be disbursed, to the extent of cash available therefor,
pursuant to Section 5.3(c)(ii), 5.3(c)(iii) and/or clause "first" of
Section 5.3(c)(x), as applicable, on the next Monthly Deposit Date.
5.4 Expense Reserve; Payment of Expenses.
(a) The Issuer may cause the Collateral Agent to withdraw from
the Expense Reserve (to the extent of amounts then on deposit in said
Expense Reserve), at any time or from time to time (so long as the Timber
Notes shall not have been accelerated pursuant to Section 7.2(a) of this
Indenture), amounts which the Issuer certifies to the Collateral Agent are
required to pay (i) capital costs or expenses, including the Services Fee
and other amounts payable pursuant to the New Services Agreement, with
respect to the Mortgaged Property, (ii) Taxes, (iii) Personnel Costs and
(iv) other reasonable and necessary expenses related to the business
operations of the Issuer or as contemplated by the Operative Documents;
provided, however, that no withdrawals from the Expense Reserve may be
effected pursuant to this Section 5.4 at any time when (x) the Timber Notes
have been accelerated pursuant to Section 7.2(b) of this Indenture, (y)
such acceleration has not been rescinded pursuant to Section 7.2(c) of this
Indenture, and (z) there shall be in effect a written notice delivered by
the Trustee to the Issuer, or by the Majority Holders to the Issuer and the
Trustee, stating that withdrawals from the Expense Reserve pursuant to this
Section 5.4 are prohibited. The Collateral Agent may rely on the Issuer's
certification without inquiry.
(b) The Issuer shall be permitted to issue checks, drafts, or
other instruments to third party payees against, and to request wire
transfers to a payroll account from, the funds on deposit in the Expense
Reserve for purposes permitted by paragraph (a) without the need for
additional certifications; provided that the presentment for payment to the
Trustee of any such check, draft or instrument, and any request for such a
wire transfer, shall be deemed a representation and warranty by the Issuer
that such expenditure is for such purpose (upon which the Collateral Agent
may rely without inquiry).
5.5 Deemed Production. Upon receipt by the Issuer of (i) any
proceeds in respect of a Lump Sum Sale pursuant to Section 6.1, (ii) any
proceeds in respect of any sale of Company Owned Timberlands or Company
Timber Rights pursuant to Section 6.1, (iii) any payments in respect of any
condemnation or taking for public use under the power of eminent domain of
any of the Mortgaged Property (including any recovery in the Takings
Litigation), (iv) any insurance proceeds in respect of any damage to or
loss or diminution in value of or income from any of the Mortgaged
Property, (v) any proceeds of any Agreement Not to Cut or (vi) any Up Front
Payment in respect of a Pay-As-You-Harvest-Sale (an "Unallocated Payment"),
the Issuer shall recognize Deemed Production in the Monthly Period in which
such amount is received (or, if received prior to the Monthly Deposit Date
or prior to 11:00 a.m. New York City time on the Monthly Deposit Date, in
the next preceding Monthly Period). In the case of the preceding clauses
(i) to (iv) (other than a recovery in the Takings Litigation), Deemed
Production shall be in respect of the number of Mbfe (as set forth in an
Officer's Certificate delivered to the Trustee) of Company Timber (or
Company Timber located on the Company Owned Timberlands or on the Company
Timber Rights Property that is subject to the Company Timber Rights, as
applicable) sold, condemned, taken, damaged or destroyed. In the case of
clause (v), Deemed Production shall be in respect of the number of Mbfe (as
set forth in an Officer's Certificate delivered to the Trustee) of Company
Timber to which such Agreement Not to Cut relates. In the case of a
recovery in the Takings Litigation, Deemed Production shall be in respect
of the number of Mbfe (as set forth in an Officer's Certificate delivered
to the Trustee) of Company Timber equal to the amount of such recovery
divided by the then applicable SBE price per Mbf of old growth redwood,
size quality code 2, for tractor logging. In the case of the preceding
clause (vi), Deemed Production shall be in respect of the number of Mbfe
(as set forth in an Officer's Certificate delivered to the Trustee) of
Company Timber to which such Pay-As-You Harvest Sale relates, multiplied by
the percentage that such Up Front Payment represents of the entire
contract. Each Officer's Certificate delivered pursuant to this Section
5.5 (other than in the case of a recovery in the Takings Litigation) shall
be based upon the information in the GIS (in the case of clauses (iv), (v)
and (vi), to the extent practicable) and such Certificate shall so state.
Upon the occurrence of any transaction which results in the
Issuer's election to recognize Deemed Production pursuant to Section
6.4(iii)(B), the Issuer shall recognize Deemed Production in the Monthly
Period in which such transaction occurs (or, if such transaction occurs on
or prior to the Monthly Deposit Date, in the next preceding Monthly
Period). Such Deemed Production shall be computed as set forth in Section
6.4(iii)(B).
5.6 Investment of Accounts, Etc. Amounts on deposit in the
Collection Account and the Expense Reserve shall be invested by the
Collateral Agent in such Eligible Investments specified in writing (or by
oral instructions confirmed promptly thereafter in writing) by the Issuer
that are consistent with the need to make withdrawals therefrom; provided,
however, that the Expense Reserve may be maintained as a non-interest
bearing account if the Collateral Agent shall reasonably determine that
maintaining the Expense Reserve as an interest bearing account is
administratively burdensome. Amounts deposited in the Payment Account
pursuant to clauses (v), (vi) or (viii) of Section 5.3(c) or otherwise
shall be invested by the Collateral Agent in such Eligible Investments
specified in writing (or by oral instructions confirmed promptly thereafter
in writing) by the Issuer that are consistent with the need to make
withdrawals therefrom pursuant to Section 5.7. Amounts, if any, on deposit
in the Liquidity Account shall be invested by the Collateral Agent in such
Eligible Investments specified in writing (or by oral instructions
confirmed promptly thereafter in writing) by the Issuer that are consistent
with the need to make withdrawals therefrom pursuant to clause (iv) of
Section 5.3(c) and Section 5.7. Amounts on deposit in the Prefunding
Account or the Indebtedness Reserve Account shall be invested by the
Collateral Agent in such Eligible Investments specified in writing (or by
oral instructions confirmed promptly in writing) by the Issuer that are
consistent with the Issuer's judgment as to the need to make withdrawals
therefrom pursuant to Section 5.10 or 5.11, as the case may be. Amounts
earned on funds in the Payment Account shall be deposited in the Payment
Account, amounts earned on funds in the Expense Reserve shall be deposited
in the Expense Reserve, amounts earned on funds in the Collection Account
shall be deposited in the Collection Account, amounts earned on funds in
the Liquidity Account shall be deposited in the Liquidity Account, amounts
earned on funds in the Prefunding Account shall be deposited in the
Prefunding Account and amounts earned on funds in the Indebtedness Reserve
Account shall be deposited in the Indebtedness Reserve Account.
5.7 Withdrawals and Deposits on Note Payment Dates.
(a) Prior to 1:00 p.m., New York City time, on each Note Payment
Date (after giving effect to any deposits on such date from the Liquidity
Account to the Collection Account and from the Collection Account to the
Liquidity Account), the Collateral Agent shall deposit the amounts
indicated below in the Payment Account in the order listed below:
(i) unless a Line of Credit Acceleration has occurred or an
Acceleration Event has occurred and is continuing on such Note
Payment Date, from a borrowing under the Line of Credit Agreement or
from the Liquidity Account, any amounts available under the Line of
Credit Agreement or on deposit in the Liquidity Account, up to an
amount equal to the excess, if any, of (A) the amount required to pay
accrued and unpaid interest (excluding interest on premiums) on the
Timber Notes and, if so provided in connection with the issuance of
any Additional Timber Notes, such Additional Timber Notes on such Note
Payment Date over (B) the amount available in the Payment Account to
be paid to the Holders of Timber Notes and such Additional Timber
Notes pursuant to Section 5.7(b)(i) below (after giving effect to any
transfer on such date pursuant to clauses (v), (vi) or (viii) of
Section 5.3(c) or Section 5.3(d)); and
(ii) from any funds available to the Issuer, any amounts that the
Issuer, at its option, elects to deposit therein to pay or prepay
interest or principal on the Timber Notes or any Premium or interest
on Premium then due and payable or becoming due and payable on such
Note Payment Date.
(b) On each Note Payment Date (after giving effect to the
deposits to the Payment Account on such date pursuant to Section 5.7(a)),
the Collateral Agent shall withdraw from the Payment Account all amounts
then on deposit in the Payment Account and apply such funds in the
following order of priority:
(i) from amounts on deposit in the Payment Account (exclusive of
amounts borrowed under the Line of Credit Agreement or withdrawn from
the Liquidity Account pursuant to Section 5.7(a)(i) above for the
payment of interest on such Note Payment Date), to the Holders of the
Timber Notes and any Additional Timber Notes, an amount equal to all
interest accrued and unpaid on the Timber Notes and any Additional
Timber Notes as of such date, computed on the basis of a 360-day year
of twelve 30-day months (including interest on past due principal and
interest, but not including interest on premium) and, if there has
been a Termination Advance under a Line of Credit Agreement that has
not been replaced in accordance with the terms of Section 11.4, to the
Liquidity Providers, an amount equal to all accrued and unpaid
interest (other than any Supplemental Liquidity Provider Interest) on
all outstanding Advances under the Line of Credit Agreement, as of
such date, provided, that, if the amount on deposit in the Payment
Account (exclusive of amounts borrowed under the Line of Credit
Agreement or withdrawn from the Liquidity Account pursuant to Section
5.7(a)(i) for the payment of interest on such Note Payment Date) is
insufficient to make such payment in full on all Classes of Timber
Notes and any Additional Timber Notes and to the Liquidity Providers,
such payments shall be made on each Class of Timber Notes and any
Additional Timber Notes and to the Liquidity Providers pro rata in
proportion to the interest (other than any Supplemental Liquidity
Provider Interest) due on each such Class and to the Liquidity
Providers;
(ii) to the Holders of the Timber Notes and, if so provided in
connection with the issuance of any Additional Timber Notes, such
Additional Timber Notes, the amount borrowed under the Line of Credit
Agreement or withdrawn from the Liquidity Account for the payment of
interest on such Note Payment Date in payment of accrued and unpaid
interest as of such date (including interest on past due principal and
interest, but not including interest on premium) on the Timber Notes
and such Additional Timber Notes, to the extent that the payments to
such Holders pursuant to the immediately preceding clause (i) are
insufficient to make payment in full of such accrued and unpaid
interest, provided that, if the amount on deposit in the Payment
Account is insufficient to make such payments in full on all Classes
of Timber Notes and Additional Timber Notes, such payments shall be
made on each Class of Timber Notes and Additional Timber Notes pro
rata in proportion to the amounts payable to each such Class pursuant
to this clause (ii);
(iii) if there has been a Termination Advance under a Line of
Credit Agreement that has not been replaced in accordance with the
terms of Section 11.4, to the Liquidity Account, to the extent, if
any, necessary to cause the amount on deposit in the Liquidity Account
to equal the Required Liquidity Amount;
(iv) to the Holders of each Class of Timber Notes, an amount
equal to any Minimum Principal Amortization Amount due on such Class
of Timber Notes as of such date, provided that, if the amount on
deposit in the Payment Account is insufficient to make such payments
in full on all Classes of Timber Notes, such payments shall be made,
first, on the Class A-1 Timber Notes, second, on the Class A-2 Timber
Notes, and, third, on the Class A-3 Timber Notes;
(v) if there has been a Termination Advance under a Line of
Credit Agreement that has not been replaced in accordance with the
terms of Section 11.4, to the Liquidity Providers, an amount equal to
the Line of Credit Amortization Amount, if any, due as of such Note
Payment Date;
(vi) to the Holders of Timber Notes, an amount equal to any
Depletion Amortization Amount due as of such Note Payment Date;
(vii) to the Holders of each Class of Timber Notes, an amount
equal to any interest on Premium then due and owing on such Class of
Timber Notes, provided that, if the amount on deposit in the Payment
Account is insufficient to make such payment in full on all Classes of
Timber Notes, such payment shall be made on each Class of Timber Notes
pro rata in proportion to the interest on Premium due on each such
Class;
(viii) to the Holders of each Class of Timber Notes, an amount
equal to any Premium then due and owing on such Class of Timber Notes,
provided that, if the amount on deposit in the Payment Account is
insufficient to make such payments in full on all Classes of Timber
Notes, such payments shall be made pro rata in proportion to the
Premium then due on each such Class;
(ix) (A) if a Trapping Event or a Cash Retention Event shall have
occurred and be continuing, or (B) to the extent directed by the
Issuer, or (C) to the extent of amounts otherwise deposited to the
Payment Account pursuant to Section 5.8 or Section 5.10, to the
Holders of the Timber Notes, to prepay principal of, and any
Prepayment Premium on, the Timber Notes; and
(x) unless a Trapping Event or a Cash Retention Event shall have
occurred and be continuing, to the Issuer, free and clear of the Lien
of the Deed of Trust.
(c) Principal payments payable pursuant to clauses (vi) and (ix)
of Section 5.7(b) shall be paid, first, to the holders of the Class A-1
Timber Notes until the Class A-1 Timber Notes have been paid in full,
second, to the holders of the Class A-2 Timber Notes until the Class A-2
Timber Notes have been paid in full and, third, to the holders of the Class
A-3 Timber Notes.
(d) If, on any Note Payment Date, there are insufficient funds
in the Payment Account to pay to the Holders of any Class of Timber Notes
all amounts pursuant to clauses (i), (ii), (iv), (vi), (vii), (viii) or
(ix) of Section 5.7(b), any partial payment on such Class with respect to
any such clause shall be made to the Holders of such Class pro rata in
proportion to the unpaid principal amount of the outstanding Timber Notes
of such Class (or, in the case of Non-Registration Premiums, pro rata in
proportion to the unpaid principal amount of the outstanding Timber Notes
of such Class with respect to which a Registration Default is continuing)
held by such Holders on such date. Notwithstanding the foregoing
provisions of this Section 5.7, in the event that a Line of Credit
Acceleration has occurred or an Acceleration Event shall have occurred and
be continuing, all interest, principal and other amounts (other than
Additional Liquidity Provider Fees and Supplemental Liquidity Provider
Interest) then owing by the Issuer under the Line of Credit Agreement shall
be paid in full from the Payment Account on each Note Payment Date before
any other amounts are paid from the Payment Account on such Note Payment
Date. Payments pursuant to the preceding sentence shall be applied, first,
to Liquidity Providers' Expenses, second, to interest (other than any
Supplemental Liquidity Provider Interest) and, third, to principal.
(e) Not less than two Business Days prior to each Note Payment
Date, the Issuer shall prepare and submit to the Trustee and the Collateral
Agent a certificate substantially in the form of Exhibit E hereto (a "Note
Payment Trustee Certificate"). Each Note Payment Trustee Certificate
shall set forth the following amounts and other information, each
determined as of the Note Payment Date to which such Certificate relates:
(i) the amount of all accrued and unpaid interest (excluding
interest on Premiums) on the Timber Notes on such Note Payment Date;
(ii) the amount, if any, of interest payable to the Liquidity
Providers from the Payment Account on such Note Payment Date;
(iii) the estimated balance, if any, in the Liquidity Account on
a pro forma basis as of such Note Payment Date (after giving effect to
any deposits on such date from the Liquidity Account to the Collection
Account and from the Collection Account to the Liquidity Account, but
prior to giving effect to any deposits on such date from the Liquidity
Account to the Payment Account);
(iv) the estimated amount, if any, available under the Line of
Credit Agreement on such Note Payment Date;
(v) the respective amounts, if any, to be deposited on such Note
Payment Date in the Payment Account pursuant to Sections 5.3(c),
5.3(d) and 5.7(a), in each case identifying the Account or other
source from which each deposit is to be made and the amount of each
deposit from each such Account or other source, together with the
aggregate amount expected to be on deposit in the Payment Account on
such Note Payment Date from such Accounts and other sources; and
(vi) the respective amounts required to be distributed from the
Payment Account pursuant to clauses (i) through (x) of Section 5.7(b).
Each Note Payment Trustee Certificate shall contain calculations
in reasonable detail of the amounts required to be set forth therein and
shall be signed by a Responsible Officer of the Issuer who shall certify as
true and correct all information therein set forth. The Trustee may rely
on such Note Payment Trustee Certificate without inquiry.
(f) The Issuer shall clearly indicate on each page of the Note
Payment Trustee Certificate that such material is to be maintained as
confidential. The Trustee and the Collateral Agent shall treat any Note
Payment Trustee Certificate designated as confidential material as
confidential, and any Note Payment Trustee Certificate so designated shall
not be available to Noteholders. Notwithstanding the foregoing, nothing in
this Section 5.3(f) shall prohibit the Trustee and the Collateral Agent
from disclosing such Note Payment Trustee Certificate to bank regulatory
authorities (or otherwise as required by law) or to auditors, attorneys or
other agents of the Trustee within the scope of their engagement.
5.8 Title Insurance Policy Proceeds. All proceeds of any Title
Insurance Policy received by the Trustee or the Collateral Agent shall be
held in Trust by the Collateral Agent subject to the Lien of the Deed of
Trust for the benefit of the Secured Parties and shall be invested in
Eligible Investments specified in writing (or by oral instructions
confirmed promptly thereafter in writing) by the Issuer until distributed
as provided herein. All such funds shall be held in a segregated trust
account to be established at the Corporate Trust Office of the Securities
Intermediary. Amounts on deposit in such account shall be under the
exclusive dominion and control of the Collateral Agent and shall be subject
to withdrawal only as provided in the following sentence. On the Note
Payment Date next succeeding the receipt of any such proceeds, after
deducting any expenses of the Trustee and the Collateral Agent therefrom,
the Collateral Agent shall deposit such proceeds into the Payment Account
and apply all such proceeds as provided in Section 5.7.
5.9 Release of Liquidity Account. On any Note Payment Date on
which the amounts on deposit in the Liquidity Account and the Payment
Account (after giving effect to transfers pursuant to Section 5.3(c)) equal
or exceed all outstanding principal of, premium, if any, and interest on
the Timber Notes and any Additional Timber Notes (including all Prepayment
Premiums which would be payable on the Timber Notes and any Additional
Timber Notes assuming the Timber Notes and any Additional Timber Notes were
paid in full on such date) plus all outstanding principal and interest then
owing to the Liquidity Providers, the Issuer may instruct the Collateral
Agent to release from the Liquidity Account and transfer to the Payment
Account for distribution pursuant to Section 5.7(b) any amounts on deposit
in the Liquidity Account; provided that such release results in all
outstanding principal of, Premium, if any, and interest on the Timber Notes
and any Additional Timber Notes plus all outstanding principal and interest
then owing to the Liquidity Providers being paid on such Note Payment Date.
5.10 Releases from Prefunding Account. The Issuer shall have the
right, at any time and from time to time, to obtain the release of funds
from the Prefunding Account upon the addition of an Additional Timber
Property or Properties (other than the Elk River Timberlands) to the
Mortgaged Property and compliance with the requirements and conditions of
this Section 5.10, and the Collateral Agent shall release the same to the
Issuer upon receipt by the Collateral Agent of a notice (the "Prefunding
Release Notice") requesting such release, stating the amount of funds to be
released and describing the Additional Timber Property or Properties to be
added to the Mortgaged Property. The Prefunding Release Notice (upon which
the Collateral Agent may rely without inquiry) shall be accompanied by the
following items (unless such item is by its terms required to be provided
simultaneously with such release):
(a) If the amount to be released exceeds $2,500,000, a Board
Resolution requesting such release and authorizing an application to the
Collateral Agent therefor.
(b) An Officer's Certificate, dated not more than 30 days prior
to the date of the application for such release stating substantially as
follows:
(i) that, in the opinion of the signer, after giving effect
to the release and the addition of the Additional Timber Property
or Properties to the Mortgaged Property, the security afforded by
the Indenture and the Deed of Trust will not be impaired by such
release and addition in contravention of the provisions of the
Indenture or the Deed of Trust;
(ii) that no Event of Default has occurred and is
continuing;
(iii) the purchase price of the Additional Timber Property
or Properties to be subjected to the Lien of the Deed of Trust;
(iv) that the amount of funds to be released from the
Prefunding Account does not exceed the lesser of (A) the purchase
price of the Additional Timber Property or Properties to be
subjected to the Lien of the Deed of Trust or (B) the then
remaining amount in the Prefunding Account;
(v) that all conditions precedent and other requirements
provided for in the Indenture and the Deed of Trust relating to
the release have been complied with (or, with respect to
conditions that cannot be satisfied until the time of such
release that such conditions will be satisfied at the time of
such release, and specifying the same); and
(vi) that, in the opinion of the signer, the acquisition of
the Additional Timber Property or Properties does not materially
adversely affect the ability of the Issuer to pay interest and
Minimum Principal Amortization on the Timber Notes.
(c) Simultaneously with such release, all actions necessary to
grant to the Collateral Agent a first priority perfected Lien on the
Additional Timber Property or Properties (subject only to Permitted
Encumbrances) shall have been taken.
(d) Simultaneously with such release, an Opinion of Counsel,
substantially to the effect that all conditions precedent and other
requirements in the Indenture and the Deed of Trust relating to the release
of such funds from the Prefunding Account have been complied with.
(e) Simultaneously with such release, evidence that a title
insurance company shall have committed to insure, by endorsement to the
existing mortgagee's title insurance policy relating the Company Owned
Timberland and the Company Timber Rights or by issuance of a new
mortgagee's title insurance policy in an amount equal to the lesser of (i)
the fair value of the Additional Timber Property or Properties or (ii) the
then outstanding principal balance of the Timber Notes and any Additional
Timber Notes plus the amount of the then existing Commitments under the
Line of Credit Agreement, that the Lien of the Deed of Trust is a first
priority perfected lien upon the Additional Timber Property or Properties,
subject only to Permitted Encumbrances, and that the Additional Timber
Property or Properties are in compliance with the California Subdivision
Map Act
The Issuer may, in any Trustee Note Payment Certificate in
respect of any Note Payment Date, direct that all or any portion of the
funds in the Prefunding Account on such Note Payment Date be transferred to
the Payment Account on such Note Payment Date and used on such Note Payment
Date to prepay principal of the Timber Notes as contemplated by Section
5.7(b)(ix) but not for any other purpose.
To the extent that the amount on deposit in the Prefunding
Account on any Monthly Deposit Date exceeds $25,000,000 less the sum of the
amounts, if any, theretofore released to the Issuer or transferred to the
Payment Account from the Prefunding Account pursuant to the foregoing
provisions of this Section 5.10, the Issuer may , in the Monthly Trustee
Certificate in respect of such Monthly Deposit Date, direct that an amount
up to the amount of such excess be transferred from the Prefunding Account
to the Collection Account on such Monthly Deposit Date and be included in
the Collection Account Disbursement Funds for such Monthly Deposit Date.
Any releases of funds from the Prefunding Account made in
compliance with this Section 5.10 shall be deemed not to impair the Lien of
the Deed of Trust.
5.11 Releases from Indebtedness Reserve Account. The Issuer may
cause the Collateral Agent to withdraw from the Indebtedness Reserve
Account (to the extent of amounts then on deposit in the Indebtedness
Reserve Account), at any time or from time to time (so long as the Timber
Notes shall not have been accelerated pursuant to Section 7.2(a)), amounts
to be used to pay (or to reimburse the Issuer for amounts paid for)
interest and principal on the Indebtedness referred to in clause (u) of
Section 4.9 (the "Indebtedness Reserve Debt") if, after giving effect
thereto and to any principal then being paid on the Indebtedness Reserve
Debt, the amount in the Indebtedness Reserve Account would not be less than
the outstanding principal amount of the Indebtedness Reserve Debt.
Notwithstanding the foregoing, no releases from the Indebtedness Reserve
Account may be effected pursuant to this Section 5.11 at any time when (x)
the Timber Notes have been accelerated pursuant to Section 7.2(b), (y) such
acceleration has not been rescinded pursuant to Section 7.2(c) and (z)
there shall be in effect a written notice delivered by the Trustee to the
Issuer, or by the Holders of a majority of outstanding principal amount of
the Timber Notes and any Additional Timber Notes to the Issuer and the
Trustee, stating that releases from the Indebtedness Reserve Account are
prohibited.
ARTICLE 6
SALE OF COMPANY OWNED TIMBERLANDS
OR COMPANY TIMBER RIGHTS;
CERTAIN TIMBER SALES; SUBSTITUTIONS
6.1 Release of Company Owned Timberlands or Company Timber
Rights. The Issuer shall have the right, at any time and from time to
time, to (i) sell or otherwise dispose of any of the Company Owned
Timberlands or Company Timber Rights or (ii) enter into any Lump Sum Sale,
only upon compliance with the requirements and conditions of this Section
6.1, and the Trustee shall instruct the Collateral Agent to (A) in the case
of clause (i), release the relevant Company Owned Timberlands or Company
Timber Rights from the Lien of the Deed of Trust or (B) in the case of
clause (ii), release the relevant Company Timber from the Lien of the Deed
of Trust or grant the proposed purchaser harvesting rights to the relevant
Company Timber prior to the Lien of the Deed of Trust, upon receipt by the
Trustee and the Collateral Agent of a Release Notice (as hereinafter
defined) requesting such release and describing the property to be so
released, which Release Notice (upon which the Trustee and the Collateral
Agent may rely without inquiry) shall be accompanied by the following items
(unless such item is by its terms required to be provided simultaneously
with such release):
(a) If the fair value of the Company Owned Timberlands, Company
Timber Rights or Company Timber, as the case may be, to be released exceeds
$2,500,000, a Board Resolution requesting such release and authorizing an
application to the Trustee and Collateral Agent therefor.
(b) An Officer's Certificate, dated not more than 30 days prior
to the date of the application for such release, stating substantially as
follows:
(i) that, in the opinion of the signer, the security
afforded by the Deed of Trust will not be impaired by such
release in contravention of the provisions of this Indenture or
the Deed of Trust;
(ii) that the Issuer will dispose of the Company Owned
Timberlands, Company Timber Rights or Company Timber, as the case
may be, so to be released, for a consideration representing, in
the opinion of the signer, its fair value, and that either (A) in
the case of a Lump Sum Sale, that such consideration consists
solely of cash, or (B) in the case of a sale of Company Owned
Timberlands or Company Timber Rights other than as described in
clause (C), that such consideration consists solely of cash or
(C) in the case of a sale of Company Owned Timberlands or Company
Timber Rights, if such consideration does not consist solely of
cash, that (x) the non-cash portion of such consideration
consists of one or more promissory note(s) or other instruments
representing the deferred portion of such sales price which do
not, in the aggregate, exceed the Maximum Non-Cash Consideration
Amount and (y) attached to such Release Notice is a schedule
which sets forth the basis for computation of the Maximum
Non-Cash Consideration Amount which schedule, to the best
knowledge of such signer, represents a true, complete and
accurate computation of such amount and (z) the non-cash portion
of such consideration shall be subjected to the Lien of the Deed
of Trust concurrently with any such release;
(iii) that (A) no Event of Default has occurred and is
continuing and (B) in the case of a sale of Company Owned
Timberlands or Company Timber Rights, if such consideration does
not consist solely of cash, that no event or condition exists
which, with the giving of notice or passage of time, or both,
would constitute a Trapping Event as of the next succeeding
Monthly Deposit Date;
(iv) the fair value, in the opinion of the signer, of the
Company Owned Timberlands, Company Timber Rights or Company
Timber, as the case may be, to be released at the date of such
application for release and, in the case of a sale of Company
Owned Timberlands or Company Timber Rights, if the consideration
does not consist solely of cash, the fair value of the non-cash
portion of such consideration;
(v) if such release relates to Company Owned Timberlands,
that the remaining Company Owned Timberlands have sufficient
access to other portions of the Company Owned Timberlands, public
or private roads and other transportation structures for the
continued use of such remaining Company Owned Timberlands in
substantially the manner carried on by the Issuer prior to such
release;
(vi) if the fair value of the property to be released is in
excess of the greater of (A) 5% of the then-remaining aggregate
principal balance of all outstanding Timber Notes and any
outstanding Additional Timber Notes or (B) $45 million multiplied
by the Lumber PPI Inflation Factor applicable on the date of such
Officer's Certificate, (I) that Rating Agency Confirmation has
been obtained or (II) that (x) such sale is made at a price no
less than the Collateral Release Price and (y) the amount on
deposit in the Payment Account on the next succeeding Note
Payment Date (or, if the date of such release is a Note Payment
Date, on such Note Payment Date) will, in the opinion of the
signer (based on such assumptions as the signer considers to be
reasonable in the circumstances), be sufficient to pay all
Premiums expected to be payable on such Note Payment Date; and
(vii) that all conditions precedent and other requirements
provided for in the Indenture and the Deed of Trust relating to
the release of the Company Owned Timberlands, Company Timber
Rights or Company Timber, as the case may be, in question have
been complied with (or, with respect to conditions that cannot be
satisfied until the time of such release, that such conditions
will be satisfied at the time of such release, and specifying the
same).
(c) If (i) the fair value of the Company Owned Timberlands,
Company Timber Rights or Company Timber, as the case may be, to be released
exceeds $25,000 and 1% of the aggregate principal balance of the Timber
Notes and any Additional Timber Notes or (ii) the fair value of the Company
Owned Timberlands, Company Timber Rights or Company Timber, as the case may
be, to be released, together with the fair value of all Company Owned
Timberlands, Company Timber Rights and Company Timber theretofore released
in such calendar year, exceeds 10% of the aggregate principal balance of
the Timber Notes and any Additional Timber Notes, a certificate of an
Independent Appraiser, stating:
(1) the fair value, in the opinion of the signer, of the Company
Owned Timberlands, Company Timber Rights or Company Timber, as the
case may be, to be released at the date of such application for
release and, in the case of the sale of Company Owned Timberlands or
Company Timber Rights, if such consideration does not consist solely
of cash, the fair value of the non-cash portion of such consideration;
and
(2) that, in the opinion of the signer, the security afforded by
the Deed of Trust will not be impaired by such release in
contravention of the terms of the Deed of Trust or the Indenture.
(d) Simultaneously with such release, all cash proceeds from the
Company Owned Timberlands, Company Timber Rights or Company Timber, as the
case may be, shall have been deposited into the Collection Account and, in
the case of the sale of Company Owned Timberlands or Company Timber Rights,
if such consideration does not consist solely of cash, (i) the non-cash
portion of such consideration shall consist of one or more promissory
note(s) or other instruments representing the deferred portion of such
sales price which do not, in the aggregate, exceed the Maximum Non-Cash
Consideration Amount and (ii) all action necessary to grant to the Trustee
a first priority perfected security interest in the non-cash portion of
such consideration shall have been taken.
(e) Simultaneously with such release, an Opinion of Counsel,
substantially to the effect that all conditions precedent and other
requirements herein and under the Deed of Trust relating to the release of
such Company Owned Timberlands, Company Timber Rights or Company Timber, as
the case may be, have been complied with.
(f) If such release relates to Company Owned Timberlands or
Company Timber Rights, and the Company Owned Timberlands or Company Timber
Rights to be released are less than all of the Company Owned Timberlands
and Company Timber Rights, simultaneously with such release evidence that a
title insurance company shall have committed to issue an endorsement to the
Title Insurance Policy relating to the remaining Company Owned Timberlands
and Company Timber Rights confirming that after such release such
mortgagee's Title Insurance Policy insures against any loss that may be
sustained by the Trustee or the Collateral Agent by reason of any loss of
priority of the Lien of the Deed of Trust on the remaining Company Owned
Timberlands and Company Timber Rights occasioned by the release of the
Company Owned Timberlands or Company Timber Rights being released.
(g) If required by Section 6.1(b)(vi), a copy of the Rating
Agency Confirmation.
In connection with any such release, the Issuer shall execute,
deliver and record or file and obtain such instruments as the Collateral
Agent and the Trustee may reasonably require.
The Issuer shall exercise its rights under this Section by
delivery to the Collateral Agent and the Trustee of a notice (each, a
"Release Notice"), which shall refer to this Section, describe with
particularity the items of property proposed to be covered by the release
and be accompanied by a form of the instruments proposed to give effect to
the release in form for execution by the Collateral Agent and/or the Deed
of Trust Trustee (the "Release Documents"). Upon compliance with this
Section 6.1, the Issuer shall direct the Collateral Agent and/or the Deed
of Trust Trustee to execute, acknowledge (if applicable) and deliver to the
Issuer a counterpart of the Release Documents within two Business Days
after receipt by the Collateral Agent and the Trustee of a Release Notice
and the satisfaction of the requirements of this Section.
Any promissory notes or instruments representing the deferred
portion of the sales price of Company Owned Timberlands or Company Timber
Rights sold pursuant to this Section 6.1 (the "Section 6.1 Notes") shall be
registered in the name of, or be payable to the order of, or be assigned to
or endorsed to the order of the Collateral Agent, as collateral agent for
the benefit of the Secured Parties, and shall be held by the Collateral
Agent subject to the Lien of the Deed of Trust, until the next succeeding
Monthly Deposit Date. On such Monthly Deposit Date, the Section 6.1 Notes
shall be disposed of by the Collateral Agent in the manner provided in
Section 5.3(d)(iv). All payments of principal of, interest on, or other
amounts payable with respect to any Section 6.1 Notes received by the
Collateral Agent shall be deposited into the Collection Account to be
included in Collection Account Disbursement Funds to be withdrawn from the
Collection Account as part of the Collection Account Disbursement on the
next succeeding Monthly Deposit Date, and all proceeds of the sale of the
Section 6.1 Notes shall be applied as provided in Section 5.3(d)(iv). The
Collateral Agent is authorized to take such actions as are necessary and
appropriate to transfer the Section 6.1 Notes as provided in Section
5.3(d)(iv).
Any releases of Company Owned Timberlands, Company Timber Rights
or Company Timber, as the case may be, made in compliance with the
provisions of this Section 6.1 shall be deemed not to impair the Lien of
the Deed of Trust.
If any of the non-cash portion of any consideration received for
the release of Company Owned Timberlands or Company Timber Rights consists
of real property, then such release shall be governed by Section 6.4 and
not this Section 6.1.
6.2 Sale of Company Timber. Nothing in Section 6.1 or in the
Deed of Trust shall be deemed to prohibit the Issuer from selling Company
Timber pursuant to Pay-as-You-Harvest Sales in the manner and to the extent
contemplated by this Indenture and the Deed of Trust (including, without
limitation, pursuant to the New Master Purchase Agreement), which sales may
be conducted without any release or consent by the Collateral Agent or
Trustee.
6.3 Sale of Pacific Lumber Timber Rights Property. Nothing in
this Indenture or the Deed of Trust shall be deemed to prohibit the Issuer
from selling or otherwise disposing of any Pacific Lumber Timber Rights
Property, and the Trustee shall instruct the Collateral Agent to release
the relevant Pacific Lumber Timber Rights Property from the Lien of the
Deed of Trust upon receipt by the Trustee and the Collateral Agent of a
Pacific Lumber Timber Rights Property Release Notice (as hereinafter
defined) requesting such release and describing the property to be so
released, which Pacific Lumber Timber Rights Property Release Notice (upon
which the Trustee and the Collateral Agent may rely without inquiry) shall
be accompanied by the following items (unless such item is by its terms
required to be provided simultaneously with such release):
(i) An Officer's Certificate, dated not more than 30 days
prior to the date of the application for such release, stating
substantially as follows:
(1) that the remaining Company Owned Timberlands have sufficient
access to other portions of the Company Owned Timberlands, public or
private roads and other transportation structures for the continued
use of such remaining Company Owned Timberlands in substantially the
manner carried on by the Issuer prior to such release;
(2) that the Company Owned Timberlands to be released consist
solely of Pacific Lumber Timber Rights Property (or, if such Company
Owned Timberlands consist partially of Pacific Lumber Timber Rights
Property, that the conditions set forth in Section 6.1 or 6.4 with
respect to the portion of such Company Owned Timberlands which is not
Pacific Lumber Timber Rights Property have been satisfied) (or, with
respect to conditions that cannot be satisfied until the time of such
release, that such conditions will be satisfied at the time of such
release, and specifying the same); and
(3) that all conditions precedent and other requirements
provided for in the Indenture and the Deed of Trust relating to the
release of such Pacific Lumber Timber Rights Property have been
complied with (or, with respect to conditions that cannot be satisfied
until the time of such release, that such conditions will be satisfied
at the time of such release, and specifying the same).
(ii) Simultaneously with such release, evidence that a title
insurance company shall have committed to issue an endorsement to
the Title Insurance Policy relating to the remaining Company
Owned Timberlands and Company Timber Rights confirming that after
such release such Title Insurance Policy insures against any loss
that may be sustained by the Trustee or the Collateral Agent by
reason of any loss of priority of the Lien of the Deed of Trust
on any of the remaining Company Owned Timberlands and Company
Timber Rights occasioned by the release of the Company Owned
Timberlands being released.
The Issuer shall exercise its rights under this Section by
delivery to the Collateral Agent and the Trustee of a notice (each a
"Pacific Lumber Timber Rights Property Release Notice"), which shall refer
to this Section, describe with particularity the items of property proposed
to be covered by the release and be accompanied by a form of the
instruments proposed to give effect to the release in form for execution by
the Collateral Agent and/or the Deed of Trust Trustee (the "Pacific Lumber
Timber Rights Property Release Documents"). Upon compliance with this
Section 6.3, the Issuer shall direct the Collateral Agent and/or the Deed
of Trust Trustee to execute, acknowledge (if applicable) and deliver to the
Issuer a counterpart of the Pacific Lumber Timber Rights Property Release
Documents within two Business Days after receipt by the Collateral Agent
and the Trustee of a Pacific Lumber Timber Rights Property Release Notice
and the satisfaction of the requirements of this Section.
Any releases of Pacific Lumber Timber Rights Property made in
compliance with the provisions of this Section 6.3 shall be deemed not to
impair the Lien of the Deed of Trust.
The proceeds of a sale or other disposition of Pacific Lumber
Timber Rights Property conducted in accordance with the provisions of this
Section 6.3 shall be payable to the Issuer or as the Issuer may direct,
free and clear of the Lien of the Deed of Trust.
6.4 Release of Company Owned Timberlands or Company Timber
Rights Upon Substitution of Property. The Issuer shall have the right, at
any time and from time to time, to obtain the release of Company Owned
Timberlands (or timber rights thereon) or Company Timber Rights from the
Lien of the Deed of Trust upon the addition of Substitute Timber Property
and compliance with the requirements and conditions of this Section 6.4,
and the Trustee shall instruct the Collateral Agent to release the same
from the Lien of the Deed of Trust upon receipt by the Trustee and the
Collateral Agent of a Release and Substitution Notice (as hereinafter
defined) requesting such release and describing the property to be released
and the Substitute Timber Property, which Release and Substitution Notice
(upon which the Trustee and the Collateral Agent may rely without inquiry)
shall be accompanied by the following items (unless such item is by its
terms required to be provided simultaneously with such release):
(a) If the fair value of the Company Owned Timberlands (or
timber rights thereon) or Company Timber Rights, as the case may be, to be
released exceeds $2,500,000, a Board Resolution requesting such release and
substitution and authorizing an application to the Trustee and the
Collateral Agent therefor.
(b) An Officer's Certificate, dated not more than 30 days prior
to the date of the application for such release and substitution, stating
substantially as follows:
(i) that, in the opinion of the signer, after giving effect
to the release and substitution, the security afforded by the
Deed of Trust will not be impaired by such release and
substitution in contravention of the provisions of this Indenture
or the Deed of Trust;
(ii) that no Event of Default has occurred and is
continuing;
(iii) the fair value, in the opinion of the signer, of the
Company Owned Timberlands (or timber rights thereon) or Company
Timber Rights to be released at the date of such application for
release;
(iv) the fair value, in the opinion of the signer, of the
Substitute Timber Property to be subjected to the Lien of the
Deed of Trust;
(v) that the consideration to be received by the Issuer
consists solely of Substitute Timber Property, or a combination
of cash and Substitute Timber Property;
(vi) that the remaining Company Owned Timberlands (after
giving effect to the addition of the Substitute Timber Property)
have sufficient access to other Company Owned Timberlands, public
or private roads and other transportation structures for the
continued use of such remaining Company Owned Timberlands in
substantially the manner carried on by the Issuer prior to such
release;
(vii) if the fair value of the Company Owned Timberlands (or
timber rights thereon) or Company Timber Rights to be released is
in excess of the greater of (A) 5% of the then-remaining
aggregate principal balance of all outstanding Timber Notes and
any outstanding Additional Timber Notes or (B) $45 million
multiplied by the Lumber PPI Inflation Factor applicable on the
date of such Officer's Certificate, that Rating Agency
Confirmation has been obtained;
(viii) that the signer knows of no reason why a Timber
Harvesting Plan with respect to the Substitute Timber Property
should not be available on terms not materially more onerous than
would have been the case with respect to the released property;
(ix) that all conditions precedent and other requirements
provided for in this Indenture and the Deed of Trust relating to
the release of the Company Owned Timberlands (or timber rights
thereon) or Company Timber Rights and substitution of the
Substitute Timber Property in question have been complied with
(or, with respect to conditions that cannot be satisfied until
the time of such release and substitution, that such conditions
will be satisfied at the time of such release and substitution,
and specifying the same); and
(x) in the event that any of the Substitute Timber Property
consists of timber rights, that such timber rights consist of the
ownership of, and (subject to compliance with applicable law) the
right, in perpetuity or until at least December 31, 2048, to
harvest, all trees and timber (including standing timber) then
located or thereafter growing in the soil of the timberlands
which are subject to such timber rights.
(c) If (i) the fair value of the Company Owned Timberlands (or
timber rights thereon) or Company Timber Rights to be released exceeds
$25,000 and 1% of the aggregate principal balance of the Timber Notes and
any Additional Timber Notes or (ii) the fair value of the Company Owned
Timberlands (or timber rights thereon) or Company Timber Rights to be
released, together with the fair value of all Company Owned Timberlands (or
timber rights thereon), Company Timber Rights and Company Timber
theretofore released in such calendar year, exceeds 10% of the aggregate
principal balance of the Timber Notes and any Additional Timber Notes, a
certificate of an Independent Appraiser, stating:
(1) the fair value, in the opinion of the signer, of (x) the
Company Owned Timberlands (or timber rights thereon) or Company Timber
Rights to be released and (y) the Substitute Timber Property to be
substituted, in each case at the date of such application for release;
and
(2) that, in the opinion of the signer, the security afforded by
the Deed of Trust will not be impaired by such release and
substitution in contravention of the terms of the Deed of Trust or
this Indenture.
(d) The then fair value of the Substitute Timber Property,
together with any cash consideration received, shall be at least equal to
the then fair value of the Company Owned Timberlands (or timber rights
thereon) or Company Timber Rights to be released as evidenced by the
certificates delivered pursuant to clauses (b) and/or (c) above.
(e) Simultaneously with any release and substitution, all
actions necessary to grant to the Collateral Agent a first priority
perfected Lien on the Substitute Timber Property (subject only to Permitted
Encumbrances) shall have been taken, and if any cash consideration is
received, all such cash shall have been deposited into the Collection
Account.
(f) Simultaneously with such release an Opinion of Counsel,
substantially to the effect that all conditions precedent and other
requirements herein and under the Deed of Trust relating to the release of,
and substitution for, such Company Owned Timberlands (or timber rights
thereon) or Company Timber Rights have been complied with.
(g) Simultaneously with such release, evidence that a title
company shall have committed to issue an endorsement to the Title Insurance
Policy relating to the remaining Company Owned Timberlands and Company
Timber Rights confirming that after such release such Title Insurance
Policy insures against any loss that may be sustained by the Trustee or the
Collateral Agent by reason of any loss of priority of the Lien of the Deed
of Trust on the remaining Company Owned Timberlands or Company Timber
Rights occasioned by the release of the Company Owned Timberlands or
Company Timber Rights being released and further insuring, by endorsement
to the existing Title Insurance Policy or by issuance of a new Title
Insurance Policy in an amount equal to the lesser of (i) the fair value of
the Substitute Timber Property or (ii) the then outstanding principal
balance of the Timber Notes and any Additional Timber Notes, plus the
amount of the then existing Commitments under the Line of Credit Agreement,
that the Lien of the Deed of Trust is a first priority perfected Lien upon
the Substitute Timber Property, subject only to Permitted Encumbrances, and
that the Substitute Timber Property is in compliance with the California
Subdivision Map Act.
(h) If required by Section 6.4(b)(vii), a copy of the Rating
Agency Confirmation.
In connection with any such release, the Issuer shall execute,
deliver and record or file and obtain such instruments as the Collateral
Agent and the Trustee may reasonably require including, without limitation,
an amendment to the Deed of Trust subjecting the Substitute Timber Property
to the Lien thereof.
The Issuer shall exercise its rights under this Section 6.4 by
delivery to the Collateral Agent and the Trustee of a notice (each, a
"Release and Substitution Notice"), which shall refer to this Section,
describe with particularity the items of property proposed to be covered by
the release and proposed to be substituted for such released property and
be accompanied by a form of the instruments proposed to give effect to the
release and substitution in form for execution by the Collateral Agent
and/or the Deed of Trust Trustee (the "Release and Substitution
Documents"). Upon compliance with this Section 6.4, the Issuer shall
direct the Collateral Agent and/or the Deed of Trust Trustee to execute,
acknowledge (if applicable) and deliver to the Issuer a counterpart of the
Release and Substitution Documents within two Business Days after receipt
by the Collateral Agent and the Trustee of a Release and Substitution
Notice and the satisfaction of the requirements of this Section. For
purposes of this Section 6.4, timber rights on Company Owned Timberlands
means the ownership of, and (subject to compliance with applicable law) the
right in perpetuity (or for a period of time) to harvest, all or a portion
of the trees and timber, including standing timber and crops, then located
or thereafter growing in the soil of the Company Owned Timberlands which
are subject to such timber rights.
Any releases and substitutions of Company Owned Timberlands (or
timber rights thereon) or Company Timber Rights made in compliance with the
provisions of this Section 6.4 shall be deemed not to impair the Lien of
the Deed of Trust.
In addition to the foregoing requirements, no release and
substitution of Company Owned Timberlands (or timber rights thereon) or
Company Timber Rights shall be permitted pursuant to this Section 6.4
unless:
(i) the aggregate fair value of all Company Owned
Timberlands (or timber rights thereon) and Company Timber Rights
released or to be released in accordance with this Section 6.4 at
any time during the term of the Timber Notes would not exceed
$90,000,000 multiplied by the Lumber PPI Inflation Factor then
applicable (unless the Issuer shall have obtained Rating Agency
Confirmation);
(ii) the types of timber contained in the Substitute Timber
Property are of the same types as contained on the Company Owned
Timberlands (or timber rights thereon) or Company Timber Rights
to be released or are otherwise included on the Structuring
Schedule; and
(iii) either (A) the number of Mbfe of timber on the
Substitute Timber Property being acquired (as indicated in an
Officer's Certificate) is at least equal to the number of Mbfe of
Company Timber on the Company Owned Timberlands (or in respect of
the timber rights thereon), or subject to the Company Timber
Rights, being released (as indicated in an Officer's Certificate)
(or, if Company Owned Timberlands (or timber rights thereon) or
Company Timber Rights are being released in exchange for
Substitute Timber Property and cash, the number of Mbfe of timber
on the Substitute Timber Property being acquired (as indicated in
an Officer's Certificate) is at least equal to the number of Mbfe
of Company Timber on the Company Owned Timberlands (or in respect
of the timber rights thereon), or subject to the Company Timber
Rights, being released (as indicated in an Officer's Certificate)
multiplied by a fraction, the numerator of which is the fair
value of the Substitute Timber Property to be acquired and the
denominator of which is the sum of the fair value of the
Substitute Timber Property to be acquired and the cash to be
received) or (B) the Issuer elects (in an Officer's Certificate)
to recognize Deemed Production in respect of a number of Mbfe of
Company Timber equal to the excess, if any, of the number of Mbfe
of Company Timber on the Company Owned Timberlands (or in respect
of the timber rights thereon), or subject to the Company Timber
Rights, being released (or, if Company Owned Timberlands (or the
timber rights thereon) or Company Timber Rights are being
released in exchange for Substitute Timber Property and cash,
equal to the excess, if any, of the number of Mbfe of Company
Timber on the Company Owned Timberlands (or in respect of the
timber rights thereon), or subject to the Company Timber Rights,
being released multiplied by a fraction, the numerator of which
is the fair value of the Substitute Timber Property to be
acquired and the denominator of which is the sum of the fair
value of the Substitute Timber Property to be acquired and the
cash to be received) over the number of Mbfe of timber on the
Substitute Timber Property being acquired or (C) the value of the
Company Owned Timberlands (or timber rights thereon) or Company
Timber Rights being released is less than $100,000 multiplied by
the Lumber PPI Inflation Factor then applicable. The Officer's
Certificate delivered pursuant to the preceding clauses (A) and
(B) may be based upon good faith estimates of a Responsible
Officer of the Issuer of the Mbfe of Company Timber on the
Substitute Timber Property to be acquired.
For the purposes of Sections 6.1(c) and 6.4(c), the fair value of
Company Owned Timberlands (or timber rights thereon), Company Timber Rights
and Company Timber released in any calendar year shall include (i) all Lump
Sum Sales pursuant to Section 6.1, (ii) all sales of Company Owned
Timberlands and Company Timber Rights pursuant to Section 6.1 and (iii) all
releases and substitutions pursuant to Section 6.4, but shall exclude (A)
all sales or other dispositions of Pacific Lumber Timber Rights Property
pursuant to Section 6.3 and (B) all sales of Company Timber pursuant to
Section 6.2.
6.5 Trust Indenture Act Requirements. The release of (i) any of the
Company Owned Timberlands (or timber rights thereon) or Company Timber
Rights or (ii) Company Timber pursuant to a Lump Sum Sale, from the Lien of
the Deed of Trust will not be deemed to impair the Lien of the Deed of
Trust in contravention of the provisions hereof and thereof if and to the
extent such Company Owned Timberlands (or timber rights thereon), Company
Timber Rights or Company Timber, as the case may be, is released pursuant
to the terms of this Indenture and the Deed of Trust. The Trustee and each
of the Noteholders and the Liquidity Providers acknowledge that a release
of Company Owned Timberlands (or timber rights thereon), Company Timber
Rights or Company Timber, as the case may be, in accordance with the terms
of the Deed of Trust and this Indenture will not be deemed for any purpose
to be an impairment of the Lien of the Deed of Trust in contravention of
the terms of this Indenture and the Deed of Trust. To the extent
applicable, without limitation, the Issuer and each obligor on the Timber
Notes and any Additional Timber Notes shall cause TIA Section 314(d)
relating to the release of property from the Lien of the Deed of Trust to
be complied with. Any certificate or opinion required by TIA Section
314(d) may be made by a Responsible Officer of the Issuer, except in cases
in which TIA Section 314(d) requires that such certificate or opinion be
made by an Independent person.
ARTICLE 7
DEFAULTS AND REMEDIES
7.1 Events of Default. "Event of Default" with respect to the
Timber Notes, wherever used herein, means any one of the following events:
(1) default in the payment of principal of any Timber Note
on the Final Maturity Date;
(2) failure of the Issuer to cause the amount on deposit in
the Payment Account on any Note Payment Date, to the extent such
amount is available for such application pursuant to Section 5.7, to
be applied to pay any amount of Minimum Principal Amortization Amount
(as such amount may be modified pursuant to Section 2.14(b)) or
Depletion Amortization Amount (as such amount may be modified pursuant
to Section 2.14(b)) that has become due or payable on any Class of
Timber Notes, and the continuation of such default for a period of
five days);
(3) default in the payment of any Regular Interest or
Default Interest on any Timber Note or in the payment of any interest
on any Additional Timber Note (except interest on any premiums) when
the same becomes due and payable and the continuation of such default
for a period of five days;
(4) failure of the Issuer to cause the amount on deposit in
the Payment Account on any Note Payment Date, to the extent such
amount is available for such application pursuant to Section 5.7, to
be applied to pay any amount of premium that has become due or payable
on any Timber Note or Additional Timber Note and the continuation of
such default for a period of five days;
(5) failure of the Issuer to cause the amount on deposit in
the Payment Account on any Note Payment Date, to the extent such
amount is available for such application pursuant to Section 5.7, to
be applied to pay any amount of interest that has become due or
payable on any amount of Premium on any Timber Note (or on any premium
on any Additional Timber Note), and the continuation of such default
for a period of five days;
(6) the sale, transfer, conveyance, pledge or hypothecation
of any membership interest in the Issuer or any interest therein by
Pacific Lumber (other than any transfer incidental to a merger or sale
or other disposition of substantially all of the assets of Pacific
Lumber (or substantially all of the assets of Pacific Lumber excluding
its interest in Salmon Creek) permitted by Section 4.2 of the New
Services Agreement or a transfer incidental to a merger, consolidation
or transfer of assets of the Issuer permitted by Section 4.13 of this
Indenture).
(7) default in the performance or observance of any
covenant or agreement of the Issuer set forth in Sections 4.4(b), (c),
(d) and (e), 4.5, 4.8, 4.9, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.17,
4.20, 4.21, 4.22, 4.23, 4.24, 4.25 and 4.26 of this Indenture or
Sections 7.1(c, (d), (e), (g) and (h), and 7.2(a), (b) and (c) of the
Deed of Trust (and, in each such case, to the extent such default is
remediable, such default shall continue for a period of 15 days
following written notice from the Trustee, or from the Holders of 25%
in aggregate principal amount of the outstanding Timber Notes and any
Additional Timber Notes);
(8) the failure of the Board of Managers to contain at
least two individuals who are Independent Managers, and the
continuation of such failure for a period of 30 consecutive days (or,
if such failure results from the death or resignation of an
Independent Manager, and provided that the Issuer is diligently
attempting to obtain replacement Independent Managers, the
continuation of such failure for a period of 90 days);
(9) default in the observance or performance of any
covenant or agreement of the Issuer made in this Indenture or the Deed
of Trust (other than a covenant or agreement, a default in the
observance or performance of which is elsewhere in this Section 7.1
specifically dealt with); or the Services Provider shall default in
the observance or performance of any covenant or agreement made by it
in the New Services Agreement; or Pacific Lumber shall default in the
observance of any covenant or agreement made by it in the New Master
Purchase Agreement or in any Conveyance Document (and, in each such
case, to the extent such default is remediable, such default shall
continue for a period of 30 days following written notice from the
Trustee, or from the Holders of 25% in aggregate principal amount of
the outstanding Timber Notes and any Additional Timber Notes);
(10) any representation or warranty of the Issuer made in
this Indenture, the Deed of Trust or any other Operative Document, or
any representation or warranty made by Pacific Lumber in any Operative
Document, or, in each such case, in any certificate or other writing
delivered pursuant hereto or thereto, shall prove to have been
incorrect in any material respect as of the time when the same was
made (and, in each such case, to the extent such default is
remediable, such default shall continue for a period of 30 days
following written notice from the Trustee, or from the Holders of 25%
in aggregate principal amount of the outstanding Timber Notes and any
Additional Timber Notes);
(11) the Issuer shall become Bankrupt or Insolvent; or
(12) a final judgment or judgments for the payment of money
in excess of $500,000 in the aggregate shall be rendered against the
Issuer by one or more courts, administrative tribunals or other bodies
having jurisdiction over the Issuer and the same shall not be
discharged (or provision shall not be made for such discharge), or a
stay of execution thereof shall not be procured, within 30 days from
the date of entry thereof and the Issuer shall not, within said period
of 30 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal.
7.2 Acceleration of Maturity; Rescission and Annulment.
(a) If an Event of Default under Section 7.1(11) shall occur, an
amount equal to all amounts payable with respect to the Timber Notes and
any Additional Timber Notes shall, without any demand, presentment or
notice (all of which are expressly waived by the Issuer), become
immediately due and payable.
(b) If any Event of Default under Sections 7.1(1), (2), (3), (4)
or (5) shall occur and be continuing, the Trustee may, or, if the Holders
of 25% in aggregate outstanding principal amount of the Timber Notes and
any Additional Timber Notes so elect, shall, declare all amounts payable
with respect to the Timber Notes and any Additional Timber Notes to be
immediately due and payable, and upon any such declaration of acceleration
such amount shall become immediately due and payable.
(c) If an Event of Default under Sections 7.1(6), (7), (8), (9),
(10) or (12) shall occur and be continuing, if the Majority Holders so
elect, the Trustee shall declare all amounts payable with respect to the
Timber Notes and any Additional Timber Notes to be immediately due and
payable, and upon any such declaration of acceleration such amount shall
become immediately due and payable.
(d) At any time after such declaration of acceleration of
maturity has been made (other than a declaration approved by the
Noteholders of 100% in aggregate principal amount of outstanding Timber
Notes and any Additional Timber Notes) and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article 7 provided, the Majority Holders, by written notice to the
Issuer and the Trustee, may rescind and annul such declaration of
acceleration and its consequences if:
(1) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay:
(x) all payments of principal of and interest and
premium, if any, on the Timber Notes and any Additional Timber
Notes and all other amounts that would then be due and payable
hereunder or upon the Timber Notes and any Additional Timber
Notes otherwise than by virtue of such declaration of
acceleration; and
(y) all sums paid or advanced by the Trustee and the
Collateral Agent hereunder or under the Deed of Trust on behalf
of the Issuer and the reasonable compensation, expenses,
disbursements and advances of the Trustee and the Collateral
Agent and their agents and counsel; and
(2) all Events of Default, other than the nonpayment of the
principal of the Timber Notes and any Additional Timber Notes that has
become due and payable solely by such declaration of acceleration,
have been cured or waived.
(e) No such rescission and annulment under this Indenture shall
affect any subsequent default or impair any right consequent thereon.
7.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
(a) The Issuer covenants that if the Timber Notes have been
declared due and payable pursuant to paragraph (b) or (c) of Section 7.2
and such declaration has not been rescinded and annulled pursuant to
Section 7.2(d), the Issuer will, upon demand of the Trustee, pay to the
Liquidity Providers the whole amount then due and payable to the Liquidity
Providers and pay to the Trustee, for the benefit of the Noteholders, the
whole amount then due and payable on all outstanding Timber Notes and any
Additional Timber Notes and in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection,
including, without limitation, the reasonable compensation, expenses,
disbursements and advances of the Trustee and the Collateral Agent and
their agents and counsel.
(b) If the Issuer fails forthwith to pay such amounts upon such
demand, the Trustee, in its own name and as trustee of an express trust,
may exercise all such rights as are provided under this Indenture and the
Deed of Trust, may institute a Proceeding in any court of competent
jurisdiction for the collection of the sums so due and unpaid, and may
prosecute such Proceeding to judgment or final decree, and may enforce the
same against the Issuer or other obligor upon such Timber Notes and
Additional Timber Notes and collect in the manner provided by law out of
the property of the Issuer or other obligor upon such Timber Notes and
Additional Timber Notes, wherever situated, the monies adjudged or decreed
to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee
may, as more particularly provided in Section 7.4, proceed to protect and
enforce its rights and the rights of the Noteholders and the holders of any
Additional Timber Notes, by such appropriate Proceedings as the Trustee
shall deem most effective to protect and enforce any such rights, whether
for the specific enforcement of any covenant or agreement in this Indenture
or the Deed of Trust or in aid of the exercise of any power granted herein
or to enforce any other proper remedy or legal or equitable right vested in
the Trustee by this Indenture or the Deed of Trust or by law.
(d) In any Proceeding brought by the Trustee, the Trustee shall
be held to represent the Noteholders and it shall not be necessary for any
such Noteholder to be a party to any such Proceeding.
7.4 Trustee May File Proofs of Claim.
(a) Without limiting the rights of any Noteholder to do the
same, the Trustee, in case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other similar Proceeding relating to the Issuer or any other
obligor upon the Timber Notes or any Additional Timber Notes or to the
Mortgaged Property or any Person having or claiming any ownership interest
in the Mortgaged Property, or to the creditors or property of the Issuer or
such other obligor or Person (irrespective of whether the principal of any
Timber Notes or any Additional Timber Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of
whether the Trustee shall have made any demand pursuant to the provisions
of this Section 7.4), shall be entitled and empowered, by intervention in
such Proceeding or otherwise:
(1) to file and prove a claim or claims for the aggregate amount
of principal, interest and premiums, if any, owing and unpaid in
respect of the Timber Notes and any Additional Timber Notes and to
file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including, without
limitation, any claim for reasonable compensation, expenses,
disbursements and advances of the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, except as
a result of negligence or bad faith) and of the Noteholders allowed in
such Proceeding; and
(2) to collect and receive any monies or other property payable
or deliverable on any such claims and to distribute the same, and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official in any such judicial proceeding is hereby authorized
by each Noteholder to make such payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments
directly to the Noteholders, to pay the Trustee and the Collateral
Agent any amount due to either of them for the reasonable
compensation, expenses, disbursements and advances of the Trustee and
the Collateral Agent, their agents and counsel, and any other amounts
due the Trustee and the Collateral Agent under Section 9.7.
(b) Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or vote for or accept or adopt on behalf
of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Timber Notes or any Additional Timber Notes or
the rights of any Noteholder thereof or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceeding or to vote
for the election of a trustee in bankruptcy or similar person.
7.5 Trustee May Enforce Claims Without Possession of Notes. All
rights of action and of asserting claims under this Indenture or under any
of the Timber Notes or any of the Additional Timber Notes may be enforced
by the Trustee without the possession of any of the Timber Notes or any of
the Additional Timber Notes or the production thereof in any Proceeding,
and any such Proceeding instituted by the Trustee shall be brought in its
own name as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable expenses,
disbursements and compensation of the Trustee, each predecessor Trustee and
their respective agents and attorneys, be for the ratable benefit of the
Noteholders and shall be applied in accordance with Section 7.7.
7.6 Remedies. If an Event of Default shall have occurred and be
continuing, the Trustee may institute a Proceeding in its own name and as
trustee of an express trust for the collection of all amounts then payable
on the Timber Notes and on any Additional Timber Notes or under the Line of
Credit Agreement or under this Indenture or the Deed of Trust with respect
thereto, and exercise all remedies under this Indenture or the Deed of
Trust, whether by declaration or otherwise, enforce any judgment obtained
and collect from the Issuer and any other obligor upon such Timber Notes or
Additional Timber Notes monies adjudged due.
7.7 Application of Money Collected. On any date when the Timber
Notes have been declared due and payable during the continuance of an Event
of Default and such declaration and its consequences have not been
rescinded and annulled (a "Post-Acceleration Date"), any monies collected
by the Trustee pursuant to this Article Seven or otherwise with respect to
the Timber Notes and on any Additional Timber Notes shall be deposited into
the Payment Account and shall be applied, first, to amounts described in
Section 9.7 (exclusive of indemnification payments) and to Liquidity
Providers' Expenses (exclusive of indemnification payments), second, to the
payment of all interest (other than Supplemental Liquidity Provider
Interest) and principal owing to the Liquidity Providers, third, to the
payment of interest (other than interest on premiums) due on each Class of
Timber Notes and any Additional Timber Notes pro rata in proportion to the
interest (other than interest on premiums) due on each such Class, fourth,
to the payment of principal on each Class of Timber Notes and any
Additional Timber Notes pro rata in proportion to the principal due on each
such Class, fifth, to the payment of any interest on premiums on each Class
of Timber Notes and any Additional Timber Notes pro rata in proportion to
the interest on premiums due on each such Class, sixth, to the payment of
any premiums on each Class of Timber Notes and any Additional Timber Notes
pro rata in proportion to the premiums due on each such Class, seventh, to
the payment of any Additional Liquidity Provider Fees and any Supplemental
Liquidity Provider Interest owing under the Line of Credit Agreement,
eighth, to the payment of indemnification payments under Section 9.7 and
indemnification payments owing by the Issuer under the Line of Credit
Agreement and, ninth, to the Issuer, free and clear of the Lien of the
Deed of Trust.
7.8 Limitation of Suits. No Holder of any Timber Note or
Additional Timber Note shall have any right to institute any Proceeding
with respect to this Indenture, the Timber Notes, any Additional Timber
Notes or the Deed of Trust, or for the appointment of a receiver or
trustee, or for any other remedy hereunder, or under the Timber Notes or
the Deed of Trust, unless:
(a) such Noteholder has previously given written notice to the
Trustee of a continuing Event of Default;
(b) the holders of not less than 25% in aggregate outstanding
principal amount of Timber Notes, any Additional Timber Notes and Advances
shall have made a written request to the Trustee to institute a proceeding
in respect of such Event of Default in its own name hereunder or under the
Deed of Trust;
(c) such holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
complying with such request;
(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such Proceeding; and
(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Majority Holders (as
such term is defined in Section 7.13(c)).
A Noteholder may not use this Indenture to prejudice the rights
of another Noteholder or to obtain a preference or priority over such other
Noteholder.
7.9 Unconditional Rights of Noteholders To Receive Principal and
Interest. Notwithstanding any other provisions in this Indenture or the
Deed of Trust, the Holder of any Timber Note or Additional Timber Note
shall have the right, which is absolute and unconditional, to receive
payment of the principal of, and interest and premium, if any, on, such
Timber Note or Additional Timber Note on or after the respective due dates
thereof expressed in such Timber Note or Additional Timber Note or in this
Indenture and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such
Noteholder; provided, however, that no Holder shall have the right to
institute any such suit, if and to the extent that the institution or
prosecution thereof or the entry of judgment therein would, under
applicable law, result in the surrender, impairment, waiver or loss of the
Lien of the Deed of Trust. Without limiting the foregoing, in no event
shall any Noteholder exercise any right of set-off, banker's lien, or the
like, against any deposit account or property of the Company held or
maintained by such Noteholder or amount owing by such Noteholder to the
Company, without prior consent of the Majority Holders, which rights of
set-off, banker's lien and the like are waived by the Noteholder's
acceptance of its Note and the benefit of this Indenture.
7.10 Restoration of Rights and Remedies. If the Trustee, the
Collateral Agent or any Noteholder has instituted any Proceeding to enforce
any right or remedy under this Indenture or the Deed of Trust and such
Proceeding has been discontinued or abandoned for any reason or has been
determined adversely to the Trustee, the Collateral Agent or such
Noteholder, then and in every such case the Issuer, the Trustee, the
Collateral Agent and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder and under the Deed of Trust, and thereafter all rights
and remedies of the Trustee, the Collateral Agent and the Noteholders shall
continue as though no such Proceeding had been instituted.
7.11 Rights and Remedies Cumulative. No right or remedy
conferred upon or reserved to the Trustee, the Collateral Agent or the
Noteholders in this Indenture or the Deed of Trust is intended to be
exclusive of any other right or remedy, and every right and remedy shall,
to the extent permitted by law, be cumulative and in addition to every
other right and remedy given hereunder or thereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of
any right or remedy hereunder or thereunder, or otherwise, shall not
prevent the concurrent assertion or employment of any other appropriate
right or remedy.
7.12 Delay or Omission Not a Waiver. No delay or omission of the
Trustee, the Collateral Agent or any Noteholder to exercise any right or
remedy accruing upon any Event of Default shall impair any such right or
remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article 7, by
the Deed of Trust or by law to the Trustee, the Collateral Agent or the
Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee, the Collateral Agent or, subject to
Section 7.8, the Noteholders, as the case may be.
7.13 Control by Majority Holders. Except as otherwise specified
in this Indenture, the Majority Holders shall have the right to direct the
time, method, and place of conducting any Proceeding for any remedy
available to the Trustee under this Indenture or otherwise with respect to
the Timber Notes or exercising any trust or power conferred on the Trustee
or the Collateral Agent, including the giving of any notice or direction
under the Deed of Trust, provided that:
(a) such direction shall not be in conflict with any rule of law
or with this Indenture; and
(b) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction.
(c) the Liquidity Providers shall have the right to vote pro
rata with the Holders of the Timber Notes and any Additional Timber Notes,
based on the outstanding principal amount of Timber Notes, Additional
Timber Notes and Advances, in directing the Trustee or Collateral Agent
with respect to whether and how to exercise rights against the Mortgaged
Property under the Deed of Trust and, for such purpose (and for purposes of
Section 7.8(e)), the "Majority Holders" shall be deemed to consist of a
majority by outstanding principal amount of Holders of Timber Notes and
Additional Timber Notes and the Liquidity Providers.
7.14 Course of Dealing Not a Waiver. No course of dealing
between the Trustee, the Collateral Agent and/or any Noteholder, on the one
hand, and the Issuer or any person claiming through or under the Issuer, on
the other hand, or any delay on the part of the Trustee, the Collateral
Agent and/or any Noteholder in exercising any right available to them shall
operate as a waiver of any rights of the Trustee, the Collateral Agent or
the Noteholder.
7.15 Waiver of Stay or Extension Laws. The Issuer covenants (to
the fullest extent that it may lawfully do so) that it will not at any time
insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, that may affect the covenants or the
performance of this Indenture or the Deed of Trust; and the Issuer (to the
fullest extent that it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power granted herein to the
Trustee or in the Deed of Trust to the Collateral Agent, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
7.16 Action on Notes. The Trustee's right to seek and recover
judgment on the Timber Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture or the Deed of Trust. No rights or remedies of
the Trustee, the Collateral Agent or the Noteholders shall be impaired by
the recovery of any judgment by the Trustee or the Collateral Agent against
the Issuer or by the levy of any execution under such judgment upon any
portion of the Mortgaged Property or upon any of the assets of the Issuer.
7.17 Waiver of Past Defaults. Subject to Sections 7.9 and 10.2,
the Majority Holders by notice to the Trustee may waive an existing Default
and its consequences except (1) a Default or Event of Default in the
payment of the principal of or interest or Premium on a Timber Note as
specified in clauses (1) - (5) of Section 7.1 or (2) a Default in respect
of a provision that under Section 10.2 cannot be amended without the
consent of each Noteholder affected. When a Default or Event of Default is
waived, it is deemed cured and ceases, but no such waiver shall extend to
any subsequent or other Default or Event of Default or impair any right
consequent thereon.
7.18 Certain Limitations on Exercise of Remedies under Deed of
Trust. In connection with any trustee sale or judicial sale by the Deed of
Trust Trustee under the Deed of Trust, the Collateral Agent shall not
accept any cash bid in an amount less than the aggregate amount payable on
the Timber Notes and any Additional Timber Notes plus the aggregate amount,
if any, of principal and interest then owed to the Liquidity Providers,
unless the holders of 66 2/3% in aggregate outstanding principal amount of
Advances under the Line of Credit Agreement, Timber Notes and any
Additional Timber Notes shall have approved the taking of such action
(which approval may be given generally and need not be given in respect of
any specific sale or bid). In the event that relevant law provides that a
trustee sale or judicial sale may be made in respect of less than all of
the Company Owned Timberlands and Company Timber Rights, and the Collateral
Agent shall determine to permit a trustee sale or judicial sale for less
than all of the Company Owned Timberlands and Company Timber Rights, in
connection with any such trustee sale or judicial sale by the Deed of Trust
Trustee, the Collateral Agent shall not accept any cash bid in an amount
less than the pro rata portion of the aggregate amount payable on the
Timber Notes and any Additional Timber Notes plus the aggregate amount, if
any, of principal and interest then owed to the Liquidity Providers, unless
the holders of 66 2/3% in aggregate outstanding principal amount of
Advances under the Line of Credit Agreement, Timber Notes and any
Additional Timber Notes shall have approved the taking of such action
(which approval may be given generally and need not be given in respect of
any specific sale or bid).
ARTICLE 8
DEFEASANCE AND COVENANT DEFEASANCE
8.1 Issuer's Option to Effect Defeasance or Covenant Defeasance.
The Issuer may, at its option by Board Resolution, at any time, with
respect to the Timber Notes and any Additional Timber Notes, elect to have
either Section 8.2 or Section 8.3 be applied to all of the outstanding
Timber Notes and any Additional Timber Notes (the "Defeased Notes"), upon
compliance with the conditions set forth below in this Article 8.
8.2 Defeasance and Discharge. Upon the Issuer's exercise under
Section 8.1 of the option applicable to this Section 8.2, the Issuer shall
be deemed to have been discharged from its obligations with respect to the
Defeased Notes on the date the conditions set forth below are satisfied
(hereinafter, "defeasance"). For this purpose, such defeasance means that
the Issuer shall be deemed to have paid and discharged the entire
indebtedness represented by the Defeased Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.5 and the
other Sections of this Indenture referred to in (a) and (b) below, and to
have satisfied all its other obligations under such Defeased Notes, this
Indenture and the Deed of Trust insofar as such Defeased Notes are
concerned (and the Trustee, at the expense of the Issuer, and, upon written
request, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or
discharged hereunder: (a) the rights of Holders of Defeased Notes to
receive solely from the trust fund described in Section 8.5 and as more
fully set forth in such Section, payments in respect of the principal of,
premium, if any, and interest on such Defeased Notes when such payments are
due, (b) the Issuer's obligations with respect to such Defeased Notes under
Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, and 4.2, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder, including,
without limitation, the Trustee's rights under Section 9.7, and (d) this
Article 8. Subject to compliance with this Article 8, the Issuer may
exercise its option under this Section 8.2 notwithstanding the prior
exercise of its option under Section 8.3 with respect to the Timber Notes
and any Additional Timber Notes.
8.3 Covenant Defeasance. Upon the Issuer's exercise under
Section 8.1 of the option applicable to this Section 8.3, the Issuer shall
be released from its obligations under any covenant or provision contained
in Sections 4.3 through 4.32, subsections (6), (7), (8), (9), (10) and (12)
of Section 7.1 shall not constitute a Default or an Event of Default, with
respect to the Defeased Notes on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"), and the
Defeased Notes shall thereafter be deemed to be not "outstanding" for the
purposes of any direction, waiver, consent or declaration or other act of
the Noteholders (and the consequences of any thereof) in connection with
such covenants and Events of Default, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such
covenant defeasance means that, with respect to the Defeased Notes, the
Issuer may omit to comply with and shall have no liability in respect of
any term, condition or limitation set forth in any such Section or Article,
whether directly or indirectly, by reason of any reference elsewhere herein
to any such Section or Article or by reason of any reference in any such
Section or Article to any other provision herein or in any other document
and such omission to comply shall not constitute a Default or an Event of
Default under subsections (6), (7), (8), (9), (10) and (12) of Section 7.1,
but, except as specified above, the remainder of this Indenture and such
Defeased Notes shall be unaffected thereby.
8.4 Conditions to Defeasance or Covenant Defeasance. The
following shall be the conditions to application of either Section 8.2 or
Section 8.3 to the Defeased Notes :
(1) The Issuer shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying the
requirements of Section 9.10 who shall agree to comply with the
provisions of this Article 8 applicable to it ("qualifying trustee"))
as trust funds in trust for the purpose of making the following
payments, specifically pledged as security for, and dedicated solely
to, the benefit of the Holders of the Timber Notes and any Additional
Timber Notes, (a) money in an amount, or (b) U.S. Government
Obligations (as defined below) which through the scheduled payment of
principal and interest in respect thereof in accordance with their
terms will provide, not later than the due date of any payment, money
in an amount, or (c) a combination thereof, sufficient (in the opinion
of a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to
the Trustee), without consideration of reinvestment of interest of
such U.S. Government Obligations, to pay and discharge, and which
shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, the principal of, premium, if any, and interest on the
Defeased Notes of each Class to maturity (based upon the original
Scheduled Amortization of the Timber Notes (and any similar schedule
with respect to any Additional Timber Notes) for such Class with
adjustments to such original Scheduled Amortization schedule (and any
similar schedule with respect to any Additional Timber Notes) for such
Class, which adjustments shall (A) increase the amount of principal
payable in accordance with the original Scheduled Amortization
schedule (and any similar schedule with respect to any Additional
Timber Notes) for such Class on the next succeeding Note Payment Date
by the amount of any Payment Deficiency on the date of defeasance or
covenant defeasance and (B) decrease, in order of maturity, the amount
of principal payable in accordance with the original Scheduled
Amortization schedule (and any similar schedule with respect to any
Additional Timber Notes) for such Class on the next succeeding Note
Payment Date(s) by the excess, if any, of (i) aggregate principal
amount that was paid on or prior to the date of defeasance on the
Defeased Notes, over (ii) the sum of all amounts specified in Schedule
B to the Indenture as Scheduled Amortization (and any similar schedule
with respect to any Additional Timber Notes) for such Class opposite
the respective dates occurring on or before the date of defeasance;
provided that the Trustee shall have been irrevocably instructed to
apply such money or the proceeds of such U.S. Government Obligations
to said payments with respect to the Notes. For this purpose, "U.S.
Government Obligations" means (i) direct obligations of the United
States of America for the timely payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United
States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States
of America, which, in either case, are not callable or redeemable at
the option of the issuer thereof, and shall also include a depository
receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act), as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any
such U.S. Government Obligation held by such custodian for the account
of the holder of such depository receipt, provided that (except as
required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such
depository receipt.
(2) No Default or Event of Default under subsection 7.1(11)
shall have occurred and be continuing on the date of such deposit or
at any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period).
(3) No event or condition shall exist that would prevent the
issuer from making payments of the principal of, premium, if any, and
interest on the Timber Notes and any Additional Timber Notes on the
date of such deposit or at any time during the period ending on the
91st day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period).
(4) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, any of the
Operative Documents, or any other material agreement or instrument to
which the Issuer is a party or by which it is bound.
(5) The Issuer shall have delivered to the Trustee an Opinion of
Counsel (who shall be Independent) or a ruling from the Internal
Revenue Service to the effect that the Holders of the outstanding
Timber Notes and any Additional Timber Notes will not recognize
income, gain or loss for United States federal income tax purposes as
a result of such defeasance or covenant defeasance, as the case may
be, and will be subject to United States federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such defeasance or covenant defeasance, as the case
may be, had not occurred.
(6) The Issuer shall have delivered to the Trustee an Opinion of
Counsel (who shall be Independent) to the effect that, (x) the trust
funds established pursuant to this Article will not be subject to any
rights of other creditors of the Issuer, and (y) after the 91st day
following the deposit, the trust funds established pursuant to this
Article will not be subject to the effect of any applicable United
States bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally. (For the limited purpose of
the Opinion of Counsel referred to in this clause (6), such Opinion
may contain an assumption that the conclusions contained in a
customary solvency letter by a nationally recognized appraisal firm,
dated as of the date of the deposit and taking into account such
deposit, are accurate as of such date, provided that such solvency
letter is also addressed and delivered to the Trustee.)
(7) The Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent (other than conditions requiring the passage of
time) provided for relating to either the defeasance under Section 8.2
or the covenant defeasance under Section 8.3 (as the case may be) have
been complied with as contemplated by this Section 8.4.
Opinions required to be delivered under this Section may have
qualifications customary for opinions of the type required.
Expenses of defeasance or covenant defeasance shall be payable
solely from funds not held pursuant to this Article 8.
8.5 Deposited Money and U.S. Government Obligations to be Held
in Trust; Other Miscellaneous Provisions. All money and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee--collectively for purposes of this Section 8.5,
the "Trustee") pursuant to Section 8.4 in respect of the Defeased Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Defeased Notes and this Indenture, to the payment,
either directly or through any Paying Agent, as the Trustee may determine,
to the Holders of such Defeased Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, but such
money need not be segregated from other funds except to the extent required
by law.
The Issuer shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 8.4 or the principal and interest
received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the Holders of the Defeased Notes.
Until principal, interest and all amounts payable in respect of the
Defeased Notes have been paid in full or defeased pursuant to this Article
8, all amounts payable by the Issuer in respect of its indemnification
obligations pursuant to this paragraph shall be payable solely from funds
not held pursuant to this Article 8.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall promptly deliver or pay to the Issuer from time to time upon
Issuer Request any money or U.S. Government Obligations held by it as
provided in Section 8.4 which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an equivalent defeasance
or covenant defeasance.
8.6 Reinstatement. If the Trustee or Paying Agent is unable to
apply any money or U.S. Government Obligations in accordance with Section
8.2 or 8.3, as the case may be, by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Issuer's obligations under this
Indenture, the Timber Notes and any Additional Timber Notes and the Deed of
Trust shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.2 or 8.3, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with Section 8.2 or 8.3, as the case
may be; provided, however, that if the Issuer makes any payment to the
Trustee or Paying Agent of principal of, premium, if any, or interest on
any Timber Note or Additional Timber Note following the reinstatement of
its obligations, the Trustee or Paying Agent shall promptly pay any such
amount to the Holders of the Timber Notes and any Additional Timber Notes
and the Issuer shall be subrogated to the rights of the Holders of such
Timber Notes and any Additional Timber Notes to receive such payment from
the money held by the Trustee or Paying Agent.
ARTICLE 9
THE TRUSTEE AND THE COLLATERAL AGENT
9.1 Duties of Trustee and Collateral Agent.
(a) The Trustee and the Collateral Agent, prior to the
occurrence of an Event of Default and after the curing or waiving of all
Events of Default which may have occurred, undertake to perform such duties
and only such duties as are specifically set forth in this Indenture and
the Deed of Trust. If an Event of Default has occurred and is continuing,
the Trustee and the Collateral Agent shall exercise the rights and powers
vested in it by this Indenture and the Deed of Trust and use the same
degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee and the Collateral Agent need perform only
those duties that are specifically set forth in this Indenture and the
Deed of Trust and no covenants or obligations shall be implied in this
Indenture or the Deed of Trust against the Trustee or the Collateral
Agent; and
(2) in the absence of bad faith on its part, the Trustee
and the Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee or the Collateral
Agent and conforming to the requirements of this Indenture and the
Deed of Trust; provided, however, that the Trustee and the Collateral
Agent shall examine the certificates and opinions to determine whether
or not they conform to the requirements of this Indenture and the Deed
of Trust.
(c) The Trustee and the Collateral Agent may not be relieved
from liability for their own negligent action, their own negligent failure
to act or their own willful misconduct, except that:
(1) this paragraph does not limit the effect of paragraph
(b) of this Section 9.1;
(2) neither the Trustee nor the Collateral Agent shall be
liable for any error of judgment made in good faith by a Responsible
Officer, unless it is proved that the Trustee or the Collateral Agent
was negligent in ascertaining the pertinent facts; and
(3) neither the Trustee nor the Collateral Agent shall be
liable with respect to any action it takes or omits to take in good
faith in accordance with a direction received by it pursuant to
Section 7.13.
(d) Every provision of this Indenture and the Deed of Trust that
in any way relates to the Trustee or the Collateral Agent is subject to
paragraphs (a), (b) and (c) of this Section 9.1.
(e) Money held in trust by the Trustee need not be segregated
from other funds except (i) to the extent provided by Article 5 of this
Indenture and (ii) to the extent required by law.
(f) No provision of this Indenture or the Deed of Trust shall
require the Trustee or the Collateral Agent to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its
duties hereunder or thereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds to believe that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
9.2 Rights of Trustee and Collateral Agent.
Subject to Section 9.1:
(a) The Trustee and the Collateral Agent may rely on any
document believed by it to be genuine and to have been signed or presented
by the proper person. Neither the Trustee nor the Collateral Agent need
investigate any fact or matter stated in the document.
(b) Before the Trustee or the Collateral Agent acts or refrains
from acting, it may require an Officer's Certificate or an Opinion of
Counsel.
(c) The Trustee and the Collateral Agent may act through agents
and shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) Neither the Trustee nor the Collateral Agent shall be liable
for any action it takes or omits to take in good faith which it believes to
be authorized or within its rights or powers conferred on it by this
Indenture or the Deed of Trust; provided, however, that the Trustee's or
the Collateral Agent's conduct does not constitute wilful misconduct,
negligence or bad faith.
(e) The Trustee and the Collateral Agent may consult with
counsel, and the advice or Opinion of Counsel with respect to matters of
law relating to this Indenture, the Timber Notes and the Deed of Trust
shall be full and complete authorization and protection from liability in
respect to any action taken, omitted or suffered by it hereunder or
thereunder in good faith and in accordance with the advice or Opinion of
Counsel.
9.3 Individual Rights of Trustee and Collateral Agent. The
Trustee or the Collateral Agent, in its individual or any other capacity,
may become the owner or pledgee of Timber Notes and may otherwise deal with
the Issuer or its Affiliates with the same rights it would have if it were
not Trustee or Collateral Agent. Any Paying Agent or Registrar may do the
same with like rights. Notwithstanding the foregoing, the Trustee and the
Collateral Agent must comply with Sections 9.10 and 9.12.
9.4 Trustee's and Collateral Agent's Disclaimer. Neither the
Trustee nor the Collateral Agent shall be responsible for, and neither the
Trustee nor the Collateral Agent makes any representation as to the
validity or adequacy of this Indenture, the Notes, or the Deed of Trust,
and neither the Trustee nor the Collateral Agent shall be accountable for
the Issuer's use of the proceeds from the Timber Notes, and neither the
Trustee nor the Collateral Agent shall be responsible for any statement in
this Indenture, the Notes, or the Deed of Trust other than its certificate
of authentication.
9.5 Notice of Defaults. If a Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each
Noteholder (in the manner and to the extent provided in TIA Section
313(c)), to the Line of Credit Agent and to each Rating Agency notices of
the Default within 60 days after it occurs. Except in the case of a
Default in payment of principal of or interest on any Timber Note, the
Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice
is in the interest of Noteholders.
9.6 Reports by Trustee to Noteholders. As promptly as
practicable after each May 15, beginning with the May 15 following the date
of this Indenture, and in any event prior to July 15 in each year, the
Trustee shall mail to each Noteholder a brief report dated as of May 15 of
such year that complies with TIA Section 313(a). The Trustee also shall
comply with TIA Section 313(b)(1) and (2).
A copy of such report at the time of its mailing to Noteholders
shall be filed with the SEC and each stock exchange, if any, on which the
Timber Notes are listed. The Issuer agrees to notify the Trustee whenever
the Timber Notes become listed on any stock exchange and of any delisting
thereof.
9.7 Compensation and Indemnity. The Issuer shall pay to the
Trustee and the Collateral Agent from time to time reasonable compensation
for its services. The Trustee's and the Collateral Agent's compensation
shall not be limited by any law on compensation relating to the trustee of
an express trust. The Issuer shall reimburse the Trustee and the
Collateral Agent upon request for all reasonable out-of-pocket expenses
incurred by it, except any such expense as may arise from the Trustee's or
Collateral Agent's negligence, bad faith or wilful misconduct. Such
expenses shall include the reasonable compensation and expenses of the
Trustee's and the Collateral Agent's agents and counsel. The Issuer shall
indemnify the Trustee and the Collateral Agent against any loss, liability
or expense (including reasonable attorneys' fees) incurred by it without
negligence or bad faith on its part in connection with the administration
of this trust and the performance of its duties hereunder. The Trustee and
the Collateral Agent shall notify the Issuer promptly of any claim for
which it may seek indemnity. The Issuer shall have the right to defend the
claim and the Trustee and the Collateral Agent shall cooperate in the
defense. The failure of the Trustee or the Collateral Agent to so notify
the Issuer shall not relieve the Issuer of its obligations hereunder. The
Issuer need not pay for any settlement made without its written consent.
The Issuer need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee or the Collateral Agent through willful
misconduct, negligence or bad faith. Until principal, interest and all
other amounts payable in respect of the Timber Notes have been paid in
full, all amounts payable by the Issuer in respect of its indemnification
obligations pursuant to this paragraph shall be payable solely from Excess
Funds.
The Issuer's payment obligations pursuant to this Section shall
survive the discharge of this Indenture and release of the Deed of Trust.
When the Trustee or Collateral Agent incurs expenses after the occurrence
of an Event of Default specified in Section 7.1(12) with respect to the
Issuer, the expenses are intended to constitute expenses of administration
under the Bankruptcy Law.
9.8 Replacement of Trustee and Collateral Agent. A resignation
or removal of the Trustee or the Collateral Agent and the appointment of a
successor Trustee and Collateral Agent shall become effective only upon the
successor Trustee's and Collateral Agent's acceptance of appointment as
provided in this Section 9.8. The Trustee and the Collateral Agent may
resign at any time by so notifying the Issuer and the Holders in writing.
The Majority Holders may remove the Trustee and the Collateral Agent by so
notifying the Trustee and the Collateral Agent in writing and may appoint a
successor Trustee and Collateral Agent with the Issuer's consent. The
Issuer shall remove the Trustee and the Collateral Agent if:
(1) the Trustee or Collateral Agent fails to comply with
Section 9.10;
(2) the Trustee or Collateral Agent is adjudged as bankrupt
or insolvent or an order for relief is entered with respect to the
Trustee or Collateral Agent under any Bankruptcy Law;
(3) a custodian, receiver or other public officer takes
charge of the Trustee or Collateral Agent or its property; or
(4) the Trustee or Collateral Agent otherwise becomes
incapable of acting.
If the Trustee or Collateral Agent resigns or is removed or if a
vacancy exists in the office of Trustee or Collateral Agent for any reason,
the Issuer shall promptly appoint a successor Trustee and Collateral Agent.
A successor Trustee and Collateral Agent shall deliver a written
acceptance of its appointment to the retiring Trustee and Collateral Agent
and to the Issuer. Thereupon the resignation or removal of the retiring
Trustee and Collateral Agent shall become effective, and the successor
Trustee and Collateral Agent shall have all the rights, powers and duties
of the Trustee and Collateral Agent under this Indenture and the Deed of
Trust. The successor Trustee and Collateral Agent shall mail a notice of
its succession to Noteholders. The retiring Trustee and Collateral Agent
shall promptly transfer all property held by it as Trustee or Collateral
Agent to the successor Trustee.
If a successor Trustee and Collateral Agent does not take office
within 60 days after the retiring Trustee and Collateral Agent resigns or
is removed, the retiring Trustee and Collateral Agent, the Issuer or the
Majority Holders may petition any court of competent jurisdiction for the
appointment of a successor Trustee and Collateral Agent.
If the Trustee and Collateral Agent fails to comply with Section
9.10, any Noteholder may petition any court of competent jurisdiction for
the removal of the Trustee and Collateral Agent and the appointment of a
successor Trustee and Collateral Agent.
9.9 Successor Trustee or Collateral Agent by Merger. If the
Trustee or Collateral Agent consolidates with, merges or converts into, or
transfers all or substantially all its corporate trust business or assets
(including the trust created by this Indenture) to, another corporation or
banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Trustee and Collateral
Agent; provided that in the case of a transfer of all or substantially all
of its corporate trust business to another corporation, the transferee
corporation expressly assumes all the Trustee's and Collateral Agent's
liabilities under the Indenture and the Deed of Trust.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts
created by this Indenture and the Deed of Trust, any of the Timber Notes
shall have been authenticated but not delivered, any such successor to the
Trustee may adopt the certificate of authentication of any predecessor
trustee, and deliver such Timber Notes so authenticated; and in case at
that time any of the Timber Notes shall not have been authenticated, any
successor to the Trustee may authenticate such Timber Notes either in the
name of any predecessor hereunder or in the name of the successor to the
Trustee; and in all such cases such certificates shall have the full force
which it is anywhere in the Timber Notes or in this Indenture provided that
the certificate of the Trustee shall have; provided, however, that the
right to adopt the certificate of authentication of any predecessor trustee
or authenticate Timber Notes in the name of any predecessor trustee shall
only apply to its successors by merger, conversion or consolidation.
9.10 Eligibility; Disqualification. The Trustee and the
Collateral Agent shall at all times satisfy the requirements of TIA Section
310(a)(1) and (2). In addition, without limiting the foregoing, the
Trustee and the Collateral Agent shall at all times be authorized to
conduct a corporate trust business, in good standing, and be either (a) a
bank or trust company having, or (b) a wholly-owned subsidiary of a bank or
trust company having, a combined capital and surplus of at least
$250,000,000 as set forth in its most recent published annual report of
condition. The Trustee and the Collateral Agent shall comply with TIA
Section 310(b), including the optional provision permitted by the second
sentence of TIA Section 310(b)(9).
9.11 Preferential Collection of Claims Against Issuer. The
Trustee and the Collateral Agent shall comply with TIA Section 311(a),
excluding any creditor relationship listed in TIA Section 311(b). A
Trustee and Collateral Agent who has resigned or been removed shall be
subject to TIA Section 311(a) to the extent indicated therein.
9.12 Trustee and Collateral Agent. The Trustee and the
Collateral Agent shall at all times be one and the same Person.
9.13 Escrow Agreement. The Trustee is authorized to enter into a
confidentiality agreement satisfactory to the Trustee pursuant to Section 6
of the Escrow Agreement among the Issuer, Pacific Lumber, Salmon Creek and
U.S. Bank of California.
ARTICLE 10
AMENDMENTS
10.1 Without Consent of Noteholders. The Issuer and the Trustee
may amend, supplement or otherwise modify this Indenture or the Timber
Notes or any Additional Timber Notes without notice to or consent of any
Noteholder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to provide for uncertificated notes in addition to or
in place of certificated notes; provided, however, that the
uncertificated notes are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the
uncertificated notes are described in Section 163(f)(2)(B) of the
Code;
(3) to make any change that does not adversely affect the
rights of any Noteholder;
(4) to add to the covenants of the Issuer for the benefit
of the Noteholders or to surrender any right or power herein conferred
upon the Issuer;
(5) to comply with the TIA;
(6) to comply with the provisions of Section 4.13; or
(7) subject to the limitations set forth in Section
2.14(b), in connection with the issuance of any Additional Timber
Notes.
After an amendment, supplement or modification under this Section
becomes effective, the Issuer shall mail to Noteholders a notice briefly
describing such amendment, supplement or other modification. The failure
to give such notice to all Noteholders, or any defect therein, shall not
impair or affect the validity of an amendment, supplement or other
modification under this Section 10.1.
10.2 With Consent of Noteholders.
(a) The Issuer and the Trustee may amend, supplement or otherwise
modify this Indenture or the Timber Notes or any Additional Timber Notes
without notice to any Noteholder but (i) with the written consent of the
Majority Holders and Rating Agency Confirmation or (ii) with the written
consent of the Supermajority Holders (after prior notice of the Rating
Agency Evaluation) and Rating Agency Evaluation. Subject to Sections 7.9
and 7.17, the Majority Holders may waive compliance by the Issuer with any
provision of this Indenture, the Deed of Trust or the Timber Notes or any
Additional Timber Notes without notice to any Noteholder.
(b) Notwithstanding anything to the contrary contained in
Sections 10.1 and 10.2(a), without the consent of each Noteholder affected,
an amendment, supplement, other modification or waiver may not:
(1) reduce the aggregate outstanding principal amount of
Timber Notes (or of Timber Notes and any Additional Timber Notes, as
applicable) whose Noteholders must consent to an amendment,
supplement, other modification or waiver;
(2) reduce the rate of or extend the time for payment of
interest on any Timber Note;
(3) reduce the principal of or extend the fixed maturity of
any Timber Note or Additional Timber Note; or
(4) reduce the premium payable (including any change in the
formulas utilized to compute such amount) upon the redemption or
prepayment of any Timber Note or Additional Timber Note;
(5) make any Timber Note or Additional Timber Note payable
in money other than that stated in the Timber Note or Additional
Timber Note;
(6) impair the right to institute suit for the enforcement
of any payment on or with respect to any Timber Note or Additional
Timber Note; or
(7) make any change in this Section 10.2.
(c) It shall not be necessary for the consent of the Noteholders
under this Section 10.2 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent approves the
substance thereof.
(d) After an amendment, supplement, waiver or other modification
under this Section becomes effective, the Issuer shall mail to Noteholders
a notice briefly describing such amendment. The failure to give such
notice to all Noteholders, or any defect therein, shall not impair or
affect the validity of an amendment, supplement, waiver or other
modification under this Section. Any amendment, supplement, waiver or
other modification shall be binding upon all subsequent transferees of
Notes.
10.3 Compliance with Trust Indenture Act. Every amendment,
supplement or other modification to this Indenture, the Timber Notes or any
Additional Timber Notes shall comply with the TIA as then in effect.
10.4 Effect of Consents and Waivers; No Revocation of Consents.
A consent to an amendment, supplement or other modification or a waiver by
a Noteholder under or in connection with this Indenture or the Deed of
Trust shall bind the Noteholder and every subsequent holder of that Timber
Note or Additional Timber Note or portion of the Timber Note or Additional
Timber Note that evidences the same debt as the consenting Noteholder's
Timber Note or Additional Timber Note, even if notation of the consent or
waiver is not made on the Timber Note or Additional Timber Note. Once such
consent shall be given by a Noteholder, such consent may not be revoked by
such Noteholder or any subsequent holder. After an amendment, supplement
or other modification or waiver becomes effective, it shall bind every
Noteholder, unless it makes a change described in any of clauses (1)
through (7) of Section 10.2(b). In that case, the amendment, supplement,
waiver or other modification shall bind each Noteholder who has consented
to it and every subsequent Holder of a Timber Note or Additional Timber
Note or a portion of a Timber Note or Additional Timber Note that evidences
the same debt as the consenting Noteholder's Timber Note or Additional
Timber Note.
The Issuer shall (or, if Definitive Timber Notes have been
issued, may, but shall not be obligated to) fix a record date for the
purpose of determining the Noteholders entitled to give their consent or
take any other action described above. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those persons who were
Noteholders at such record date (or their duly designated proxies), and
only those persons, shall be entitled to give such consent or to take any
such action, whether or not such persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 130
days after such record date.
10.5 Notation on or Exchange of Notes. If an amendment changes
the terms of a Timber Note or Additional Timber Note, the Trustee may
require the Noteholder to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Timber Note or Additional Timber Note
regarding the changed terms and return it to the Holder. Alternatively, if
the Issuer or the Trustee so determines, the Issuer in exchange for the
Timber Note or Additional Timber Note shall issue and the Trustee shall
authenticate a new Timber Note or Additional Timber Note that reflects the
changed terms. Failure to make the appropriate notation or to issue a new
Timber Note or Additional Timber Note shall not affect the validity of such
amendment, supplement or other modification.
10.6 Trustee to Sign Amendments, Etc. The Trustee shall sign any
amendment, supplement or other modification authorized pursuant to this
Article 10 if the amendment, supplement or other modification does not
adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may, but need not sign it. In signing
such amendment, supplement or other modification the Trustee shall be
entitled to receive, and (subject to Section 9.1) shall be fully protected
in relying upon, an Officers' Certificate and an Opinion of Counsel stating
that such amendment, supplement, waiver or other modification is authorized
or permitted by this Indenture.
ARTICLE 11
LINE OF CREDIT
11.1 Line of Credit Agreement . In order to provide liquidity
for the payment of interest on the Timber Notes, the Issuer has entered
into a Line of Credit Agreement, with the Commitments thereunder equal to
the Required Liquidity Amount.
11.2 Advances Under Line of Credit Agreement.
(a) Interest Advances. In the event that any Note Payment
Trustee Certificate delivered to the Trustee indicates that, on the Note
Payment Date to which such Note Payment Trustee Certificate relates, there
will be insufficient funds in the Payment Account on such Note Payment Date
(the amount of such insufficiency being referred to as a "Funding
Deficiency") to pay the interest on the Timber Notes required to be paid
pursuant to clause (i) of Section 5.7(b) on such Note Payment Date, the
Issuer shall, on or prior to the date of delivery of such Note Payment
Trustee Certificate, if there is then an amount available under the Line
of Credit Agreement, deliver a notice of borrowing under the Line of Credit
Agreement (and deliver a copy thereof to the Trustee) for an Advance (any
Advance pursuant to a notice of borrowing given pursuant to this Section
11.2(a), an "Interest Advance") to be made under the Line of Credit
Agreement prior to 1:00 p.m. New York City time on such Note Payment Date
in an amount (the "Deficiency Amount") equal to the lesser of (i) the
amount then available under the Line of Credit Agreement and (ii) the
amount indicated on such Note Payment Trustee Certificate which, when added
to the other funds expected to be in the Payment Account on such Note
Payment Date, will be sufficient to permit the payment in full, from funds
available therefor under Section 5.7(b) of the Indenture, of all accrued
and unpaid interest (excluding interest on Premiums) on the Timber Notes.
If the Note Payment Trustee Certificate indicates that a Funding Deficiency
exists, such Note Payment Trustee Certificate is not accompanied by a copy
of a notice of borrowing under the Line of Credit Agreement in the
Deficiency Amount and there is then an amount available under the Line of
Credit Agreement, the Trustee shall promptly deliver a notice of borrowing
under the Line of Credit Agreement (and deliver a copy thereof to the
Issuer) for an Interest Advance in the Deficiency Amount (or any portion
thereof not reflected in a notice of borrowing delivered by the Issuer as
aforesaid) to be made under the Line of Credit Agreement prior to 1:00 p.m.
New York City time on such Note Payment Date.
In the event that, as of 1:00 p.m. New York City time on any Note
Payment Date there exists a Funding Deficiency in the Payment Account, the
Trustee shall (I) pay the interest on the Timber Notes on the Payment Date
to the extent of the funds available therefor in the Payment Account and
(II) if there is then an amount available under the Line of Credit
Agreement, deliver a notice of borrowing under the Line of Credit Agreement
(and deliver a copy thereof to the Issuer) for an Interest Advance to be
made under the Line of Credit Agreement on the next Business Day or as soon
as practicable thereafter in an amount equal to the lesser of (i) the
amount then available under the Line of Credit Agreement and (ii) the
amount which, when added to the other funds in the Payment Account on such
Note Payment Date, will be sufficient to permit the payment in full, from
funds available therefor under Section 5.7(b) of the Indenture, of all
accrued and unpaid interest (excluding interest on Premiums) on the Timber
Notes to the Note Payment Date. If the Interest Advance referred to in
clause (II) above has been deposited into the Payment Account at or before
1:00 p.m. New York City time on any Business Day, then, at or before 2:00
p.m. New York City time on such Business Day, or if such Interest Advance
has been deposited into the Payment Account after 1:00 p.m. New York City
time on any Business Day, at or before 2:00 p.m. New York City time on the
following Business Day, the Trustee shall utilize such Interest Advance to
make a supplemental interest payment pursuant to clause (ii) of Section
5.7(b) in the amount thereof to the Holders of the Timber Notes.
The proceeds of each Interest Advance shall be deposited in the
Payment Account as provided in Section 5.7(a)(i).
(b) Non-Renewal Advances. If the Line of Credit Agreement has a
Scheduled Termination Date prior to the date that is 15 days after the
Final Maturity Date, then, no earlier than the 120th day and no later than
the 90th day prior to such Scheduled Termination Date, the Issuer shall
request that the Liquidity Providers extend the Scheduled Termination Date
for a period not less than 364 days after the Scheduled Termination Date
(unless a Line of Credit Acceleration has theretofore occurred or a
Termination Advance has theretofore been made under the Line of Credit
Agreement). If the Trustee has not received a copy of such request from
the Issuer by the date that is 90 days prior to such Scheduled Termination
Date, the Trustee shall, on the first Business Day thereafter, request that
the Liquidity Providers extend the Scheduled Termination Date for a period
of 364 days after the Scheduled Termination Date (unless a Line of Credit
Acceleration has theretofore occurred or a Termination Advance has
theretofore been made under the Line of Credit Agreement).
The Issuer shall give the Trustee prompt notice (an "Extension
Notice") of any extension of the then effective Scheduled Termination Date,
which shall be accompanied by a written statement of the Line of Credit
Agent to such effect and shall specify the date to which the Scheduled
Termination Date has been extended. If the Trustee has not received an
Extension Notice on or before the 11th day prior to the then effective
Scheduled Termination Date, the Trustee shall, on the following Business
Day, deliver a notice of borrowing under the Line of Credit Agreement (and
deliver a copy thereof to the Issuer) for an Advance (a "Non-Renewal
Advance") in an amount equal to the entire amount then available under the
Line of Credit Agreement (unless the Issuer shall have earlier delivered
such a notice of borrowing and delivered a copy thereof to the Trustee or
unless a Line of Credit Acceleration has theretofore occurred or a
Termination Advance has theretofore been made under the Line of Credit
Agreement). The proceeds of any Non-Renewal Advance shall be deposited in
the Liquidity Account.
(c) Downgrade Advances. If any Liquidity Provider shall cease
to have the Required Liquidity Provider Rating (a "Downgraded Liquidity
Provider"), the Issuer shall deliver written notice thereof to the Trustee
promptly after it obtains notice or knowledge of such fact. If, by the
date that is 30 days after the giving of such notice, the Trustee has not
received written notice from the Liquidity Providers or the Line of Credit
Agent that the Commitment of the Downgraded Liquidity Provider under the
Line of Credit Agreement has been assumed by one or more Liquidity
Providers having the Required Liquidity Provider Rating, the Trustee shall,
on the following Business Day, deliver a notice of borrowing under the Line
of Credit Agreement (and deliver a copy thereof to the Issuer) for an
Advance (a "Downgrade Advance") in an amount equal to the entire amount
then available under the Line of Credit Agreement (unless the Issuer shall
have earlier delivered such a notice of borrowing and delivered a copy
thereof to the Trustee or unless a Line of Credit Acceleration has
theretofore occurred or a Termination Advance has theretofore been made
under the Line of Credit Agreement). The proceeds of any Downgrade Advance
shall be deposited in the Liquidity Account.
(d) Interest Rate Option. If the applicable form of a notice of
borrowing delivered by the Trustee under this Section 11.2 permits the
selection of an interest rate option in respect of an Advance, the Trustee
shall select such available interest rate option as has been specified to
the Trustee in advance in writing by the Issuer or, in the absence of such
specification, such available interest rate option as the Trustee shall, in
its sole discretion, determine to select.
11.3 Amendments to Line of Credit Agreement. The Issuer shall
not consent to any amendment to the Line of Credit Agreement, unless (i)
such amendment has been approved by a resolution of the Board of Managers,
including all Independent Managers and (ii) either (A) such amendment is to
(1) cure any ambiguity, omission, defect or inconsistency, (2) add to the
covenants of the other parties thereto for the benefit of the Issuer, the
Holders of the Timber Notes or the Trustee, (3) surrender any right of the
other parties thereto, (4) modify the obligations of the other parties
thereto among such other parties, (5) provide for the assignment to, and
assumption by, Liquidity Providers having the Required Liquidity Provider
Rating of the rights and obligations of one or more Liquidity Providers,
(6) extend the Scheduled Termination Date of the Line of Credit Agreement
and/or (7) modify the fees or the interest rates payable by the Issuer
under the Line of Credit Agreement; provided that no such amendment may
adversely affect in any material respect the interests of the Holders of
the Timber Notes (it being understood that no amendment referred to in the
preceding clauses (5), (6) and (7) shall be deemed to have such adverse
effect) or (B) such amendment has received Rating Agency Confirmation.
11.4 Replacement of Line of Credit Agreement.
(a) At any time, the Issuer may, at its option, arrange for a
replacement Line of Credit Agreement to replace the then existing Line of
Credit Agreement. No such replacement Line of Credit Agreement shall
become effective and no such replacement Line of Credit Agreement shall be
deemed a "Line of Credit Agreement" unless and until each of the following
conditions shall have been satisfied:
(i) such replacement Line of Credit Agreement has received
Rating Agency Confirmation;
(ii) the terms of such replacement Line of Credit Agreement
shall not be inconsistent with this Article 11 or
Sections 5.3 and 5.7;
(iii)all monetary obligations then owing under the Line of
Credit Agreement being replaced have been paid (which
payment shall be made first from any available funds in
the Liquidity Account as described in Section 11.4(b))
and the Commitments thereunder have been terminated;
(iv) the amount available under the replacement Line of
Credit Agreement is not less than the Required
Liquidity Amount; and
(v) an Officer's Certificate shall have been delivered to
the Trustee stating that each of the foregoing
conditions has been satisfied.
Upon satisfaction of the conditions set forth in this Section
11.4(a), (i) the replaced Line of Credit Agreement shall cease to be a
"Line of Credit Agreement", and the Liquidity Providers pursuant to the
replaced Line of Credit Agreement shall cease to be "Liquidity Providers",
under this Indenture, the Deed of Trust and the other Operative Documents
and (ii) such replacement Line of Credit Agreement shall be deemed to be
the "Line of Credit Agreement", and the Liquidity Providers under such
replacement Line of Credit shall be deemed to be the "Liquidity Providers",
under this Indenture, the Deed of Trust and the other Operative Documents.
(b) Upon satisfaction of the conditions set forth in Section
11.4(a), the Trustee shall release all funds then in the Liquidity Account
for use in payment of the monetary obligations owing under the Line of
Credit Agreement being replaced and any remaining funds in the Liquidity
Account shall be paid to or as directed by the Issuer, free and clear of
the Lien of the Deed of Trust.
ARTICLE 12
MISCELLANEOUS
12.1 Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required
provision shall control.
12.2 Notices. Any notice or communication shall be in writing
and delivered in person, transmitted by facsimile (confirmed in writing by
mail simultaneously dispatched) or mailed by first-class mail addressed as
follows:
If to the Issuer:
Scotia Pacific Company LLC
X.X. Xxx 000
000 Xxxx Xxxxxx
Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxx 00000
Telecopy No.: (000) 000-0000
Attention: Vice President, Finance and
Administration
With copies to:
Scotia Pacific Company LLC
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy No.: (000) 000-0000
Attention: General Counsel
and
if to the Trustee:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Corporate Trust Administration
(Scotia Pacific Company LLC
Timber Collaterized Notes)
Telecopy No.: (000) 000-0000
and
if to the Liquidity Providers or the Line of Credit Agent:
Bank of America National Trust
and Savings Association, as Agent
Bank of America National Trust
and Savings Association
Paper & Forest Products #9973
000 Xxxxxxxxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: X. X. Xxxxx, Managing Director
Telecopy No.: (000) 000-0000
with a copy to
Bank of America National Trust and Savings Association
Agency Administrative Services #5596
0000 Xxxxxxx Xxxx.
Xxxxxxx, XX 00000-0000
Attention: Scotia Pacific AO
Telecopy No.: (000) 000-0000
The Issuer, the Trustee or the Line of Credit Agent by notice to
the others may designate additional or different addresses for subsequent
notices or communications.
Any notice or communication mailed to a Noteholder shall be
mailed to the Noteholder at the Noteholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Notwithstanding anything to the contrary in this Section 12.2, notices to
the Issuer or the Trustee shall only be deemed given when received by the
Issuer or the Trustee, as the case may be.
12.3 Communication by Holders with Other Noteholders.
Noteholders may communicate pursuant to TIA Section 312(b) with other
Noteholders with respect to their rights under this Indenture or the Timber
Notes and the Trustee will comply with TIA Section 312(b). The Issuer, the
Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
12.4 Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Issuer to the Trustee to take any action
under this Indenture, the Issuer shall furnish to the Trustee upon the
Trustee's request:
(i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in
this Indenture relating to the proposed action have been complied
with (or will have been complied with upon the execution and
delivery of designated instruments); and
(ii) an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent have been complied
with (or will have been complied with upon the execution and
delivery of designated instruments).
except that in the case of any application or request as to which the
furnishing of such Officers' Certificate or Opinion of Counsel is
specifically required by any provisions of this Indenture relating to such
particular application or request, no additional certificate or opinion
need be furnished.
12.5 Statements Required in Certificate or Opinion.
(a) Each certificate or opinion with respect to compliance with
a covenant or condition provided for in this Indenture shall include:
(1) a statement that the person making such certificate or
rendering such opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he or
she has made such examination or investigation as is necessary to enable
him or her to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of
such person, such covenant or condition has been complied with.
(b) Unless otherwise expressly provided herein, any application,
request, order, certified resolution, certificate, notice, statement or
other instrument of the Issuer or of any other Person required or permitted
to be filed with the Trustee or to be made or given under this Indenture
shall be dated and shall state the provision or provisions of this
Indenture pursuant to which it is filed, made or given and shall be signed
by a Responsible Officer of the Person taking such action.
(c) Any counsel giving an Opinion of Counsel that an instrument
conforms to the requirements of this Indenture, or with respect to any
similar matter, may state that such counsel is not passing upon the truth,
accuracy or good faith of the facts or opinions stated in any application,
request, order, certified resolution, Officer's Certificate, appraiser's
certificate, notice, statement or other instrument required to be delivered
to the Trustee signed by any Person other than such counsel.
(d) Any Officer's Certificate of the Issuer or certificate of an
appraiser, forester or other expert may be based, insofar as the matters
therein are of a legal nature, upon an Opinion of Counsel, unless such
officer, appraiser or forester knows that such Opinion of Counsel is, or
any of the facts upon which such Opinion of Counsel is based is, erroneous.
(e) Any Opinion of Counsel may be based, insofar as it relates
to factual matters or information in possession of the Issuer or the
Services Provider, upon an Officer's Certificate or representations of a
Responsible Officer of the Issuer or the Services Provider, unless such
counsel knows that such Officer's Certificate or representations are
erroneous.
(f) Any Opinion of Counsel may be based, insofar as it relates
to appraisal matters, upon an appraiser's certificate, unless such counsel
knows that the appraiser's certificate is erroneous.
(g) Any Opinion of Counsel may be based on the written opinion
of other counsel reasonably satisfactory to the Trustee, in which event
such Opinion of Counsel shall be accompanied by a copy of such other
counsel's opinion addressed to the Trustee.
12.6 When Timber Notes Disregarded. In determining whether the
Holders of the required principal amount of Timber Notes have concurred in
any request, demand, authorization, direction, notice, consent or waiver
under or in connection with this Indenture or the Deed of Trust, Timber
Notes owned by the Issuer or by any person described in the last clause of
the definition of "outstanding" shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the
Trustee shall be protected in relying on any such request, demand,
authorization, direction, notice, consent or waiver, only Timber Notes
which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Timber Notes outstanding at the time shall
be considered in any such determination.
12.7 Rules by Trustee, Paying Agent and Registrar. The Trustee
may make reasonable rules for action by or a meeting of Noteholders. The
Registrar and the Paying Agent may make reasonable rules for their
functions.
12.8 Business Days. If a payment date is not a Business Day,
payment shall be made on the next succeeding Business Day, and no interest
or Deficiency Premiums shall accrue for the intervening period. If a
regular record date is not a Business Day, the record date shall not be
affected.
12.9 GOVERNING LAW. THE LAWS OF THE STATE OF NEW YORK SHALL
GOVERN THIS INDENTURE, THE TIMBER NOTES AND ANY ADDITIONAL TIMBER NOTES,
WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
12.10 No Recourse Against Others. A manager, director, officer,
employee, member or stockholder, as such, of the Issuer or the Trustee
shall not have any liability for any obligations of the Issuer or the
Trustee under the Timber Notes or any Additional Timber Notes or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Timber Note or Additional
Timber Note, each Noteholder shall waive and release all such liability.
The waiver and release shall be part of the consideration for the issue of
the Timber Notes or any Additional Timber Notes.
12.11 Successors. All agreements of the Issuer in this Indenture
and the Timber Notes shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
12.12 Severability. In case any provision of this Indenture or
in the Timber Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions thereof
shall not in any way be affected or impaired thereby.
12.13 Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all
of them together represent the same agreement. One signed copy is enough
to prove this Indenture. This Indenture may be executed in two or more
counterparts, each of which shall be an original, but all of them together
constitute the same agreement.
12.14 Table of Contents; Headings. The table of contents, cross
reference sheet and headings of the Articles and Sections of this Indenture
and the Timber Notes have been inserted for convenience of reference only,
are not intended to be considered a part hereof and shall not modify,
restrict or otherwise affect the meaning or interpretation of any of the
terms or provisions hereof.
12.15 Benefits of Indenture. Nothing in this Indenture or the
Notes, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, the Noteholders, and the Liquidity
Providers, any benefit or any legal or equitable right, remedy or claim
under this Indenture.
12.16 Limitations on Bankruptcy Petition Against Issuer. The
Trustee and each of the Noteholders hereby covenant and agree that, prior
to the date which is one year and one day after the payment in full of all
outstanding Timber Notes and Additional Timber Notes, it will not institute
against, or join any other Persons in instituting against, the Issuer any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other similar proceeding under any Bankruptcy Law, unless the
consent of the Holders of 51% in aggregate outstanding principal amount of
the Timber Notes and any Additional Timber Notes to the taking of such
action is obtained.
12.17 Entire Agreement. This Indenture constitutes the entire
agreement of the parties with respect to the subject matter hereof.
12.18 Concerning Paying Agents, Registrars, Securities
Intermediaries and Collateral Agents. Whether or not any applicable
provision of this Indenture or any other Operative Document expressly so
provides, and notwithstanding any other provision of this Indenture or any
other Operative Document to the contrary, any document, investment
direction or other written or oral statement of any other Person on which
the Trustee is entitled to rely may also be relied upon by any Paying
Agent, Registrar, Securities Intermediary or Collateral Agent.
ARTICLE 13
DISCHARGE
13.1 Discharge. This Indenture shall cease to be of further
effect at such time as (i) all outstanding Timber Notes and any Additional
Timber Notes have become due and payable, will become due and payable
within six months (based upon the actual principal amount of the Timber
Notes and any Additional Timber Notes previously paid and future payments
of principal based upon Minimum Principal Amortization (column L of the
Structuring Schedule)), or have been called for redemption on a redemption
date that is within six months under arrangements satisfactory to the
Trustee for giving the notice of redemption and the Issuer shall have
irrevocably (i.e., without condition or right of withdrawal) deposited with
the Trustee funds sufficient to pay all outstanding Timber Notes and any
Additional Notes, including unpaid principal thereof, accrued and unpaid
Regular Interest, accrued and unpaid Default Interest, if any, premiums, if
any, and interest on premiums, if any, thereon, and the Issuer shall have
paid in full all other sums payable hereunder and under the Deed of Trust
by the Issuer and (ii) an Officer's Certificate and an Opinion of Counsel
to the effect of the preceding clause (i) shall have been delivered to the
Trustee; provided that the Issuer's obligations under Sections 2.3, 2.5,
2.6, 2.7, 2.8, 2.9, 9.7 and 9.8 shall survive until the Timber Notes and
any Additional Notes have been paid in full, and thereafter the Issuer's
obligations under Section 9.7 shall continue to survive. Upon satisfaction
of the conditions in the preceding clauses (i) and (ii), the Trustee shall
acknowledge in writing the discharge of the Issuer's obligations under the
Timber Notes and this Indenture except for those surviving obligations
specified herein.
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
SCOTIA PACIFIC COMPANY LLC
By: /S/ XXXX X. XXXXX
Name: Xxxx X. Xxxxx
Title: Vice President-Financial Administration
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /S/ XXXX X. XXXXXXXX
Name: Xxxx X. Xxxxxxxx
Title: Vice President
SCHEDULE A
DEFINITIONS
An "Acceleration Event" will be deemed to exist at any time when
the Timber Notes have been accelerated and such acceleration has not been
rescinded.
"Accounts" has the meaning given to such term in Section 5.1(a) of
the Indenture.
"Actual Production" through any date means the number of Mbfe of
Company Timber actually harvested and sold from July 20, 1998 through such
date, except any such Company Timber that has been included in Deemed
Production for such period.
"Additional Liquidity Provider Fees" means any commitment fee,
agent's fee or similar fee payable to the Liquidity Providers or to any
agent for the Liquidity Providers under the Line of Credit Agreement to the
extent, but only to the extent, that the amount or rate of such fee is in
excess of the amount that would be payable therefor under the terms of the
Bank of America Credit Agreement as in effect on the Closing Date, it being
understood that no amount of any such fee that is or becomes payable
pursuant to the terms of the Bank of America Credit Agreement as in effect
on the Closing Date, whether or not such amount is actually payable on the
Closing Date, shall constitute Additional Liquidity Provider Fees.
"Additional Services" has the meaning given to such term in
Schedule 1 to the New Additional Services Agreement.
"Additional Timber Notes" means notes issued pursuant to a
Supplemental Indenture pursuant to Section 2.14 of the Indenture.
"Additional Timber Properties" means (a) any timber rights or
timberlands located in the State of California which are purchased by the
Company subsequent to the Closing Date and subjected to the Lien of the
Deed of Trust in connection with the release of funds from the Prefunding
Account pursuant to Section 5.10 of the Indenture and (b) the Elk River
Timberlands if and when the Elk River Timberlands become subject to the
Lien of the Deed of Trust.
"Adjusted Debt Obligations" means, on any Note Payment Date, an
amount equal to the excess, if any, of (a) the aggregate unpaid principal
amount of the outstanding Timber Notes on such date, determined before
giving effect to the payment of any amount paid in respect of the Timber
Notes on such date, over (b) the Aggregate Minimum Principal Amortization
Amount on such date.
"Advance" means any Interest Advance and any Termination Advance,
which may be a borrowing, draw or other cash receipt obtained by the Issuer
or the Trustee or behalf of the Issuer from the Liquidity Providers under
the Line of Credit Agreement. The term "borrow" when used with respect to
any Advance means to obtain such Advance under the Line of Credit Agreement
and the term "borrowing" has a like meaning.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition of "Affiliate," "control," when used with respect to any
specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise, and the terms "controlling"
and "controlled" have meanings correlative to the foregoing.
"Aggregate Minimum Principal Amortization Amount" as of any Note
Payment Date means the aggregate, for all Classes of Timber Notes, of the
respective Minimum Principal Amortization Amounts for such date.
"Agreement Not to Cut" means any agreement by the Issuer to limit
or refrain from cutting, harvesting, severing or selling any Company Timber
in exchange for a monetary payment to the Issuer.
"Alternate Property" means timberlands (a) containing at least the
number of Mbfe of timber as the Headwaters Acquisition Property, (b) having
a fair value at least equal to the Headwaters Acquisition Property, (c)
having expected operating costs not materially greater than the Headwaters
Acquisition Property, and (d) having sufficient access or access rights to
enable harvesting operations to be conducted thereon, all of which matters
shall be reflected in an Officer's Certificate.
"Assigned Proceeds" has the meaning given to such term in Section
2.1 of the Deed of Trust.
"Assigned Proceeds Obligor" means any Person (a) owing any Assigned
Proceeds, (b) having in their possession any Assigned Proceeds or (c)
obligated to pay, perform or deliver any Assigned Proceeds.
"Authenticating Agent" has the meaning given to such term in
Section 2.2 of the Indenture.
"Bank of America Credit Agreement" means the Credit Agreement,
dated July 20, 1998, among the Issuer, Bank of America National Trust and
Savings Association, as Agent, and the other financial institutions parties
thereto, as such credit agreement may from time to time be extended,
amended, modified, supplemented or amended and restated in accordance with
the provisions of Section 11.3 of the Indenture.
"Bankruptcy Law" means any Federal or State bankruptcy, insolvency,
reorganization or similar law for the relief of debtors from time to time
in effect.
"Bankrupt or Insolvent" or "Bankruptcy or Insolvency" shall have
occurred or exist with respect to any Person if:
(a) such Person shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee or
liquidator of itself or of all or a substantial part of its property under
any Bankruptcy Law, (ii) make a general assignment for the benefit of its
creditors, (iii) commence a voluntary case under the Federal Bankruptcy
Code, (iv) file a petition seeking to take advantage of any other
Bankruptcy Law, or (v) acquiesce in writing to any petition filed against
it in an involuntary case under the Federal Bankruptcy Code;
(b) a proceeding or case shall be commenced, without the
application or consent of such Person, in any court of competent
jurisdiction, seeking under any Bankruptcy Law (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of such Person, or of all or any
substantial part of its assets or (iii) similar relief in respect of such
Person under any Bankruptcy Law, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of
the foregoing (other than an order referred to in clause (c) below) shall
be entered and continue unstayed and in effect, for a period of 60 or more
consecutive days; or
(c) an order for relief against such Person shall be entered in
an involuntary case under the Federal Bankruptcy Code.
"Xxxx of Sale" has the meaning given to such term in the definition
of "Conveyance Documents."
"Board of Managers" means:
(a) the Board of Managers of the Issuer; or
(b) any Manager or committee of such Board of Managers duly
authorized under applicable law to act on behalf of such Board of Managers.
"Board Resolution" means a resolution duly adopted by the Board of
Managers of the Issuer.
"Book-Entry Note" means any beneficial interest in the Timber
Notes, ownership and transfers of which shall be made through book entries
by a Clearing Agency as described in Section 2.6 of the Indenture;
provided, that after the occurrence of a condition whereupon book-entry
registration and transfer are no longer permitted and Definitive Notes are
issued to all Note Owners, such Timber Notes shall no longer be "Book-Entry
Notes."
"Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions in the Borough of Manhattan, the City of
New York, New York, in San Francisco, California or in the Commonwealth of
Massachusetts, are authorized or required by law or executive order to
close.
A "Cash Retention Event" shall be deemed to exist on any date,
subsequent to January 20, 2014, on which any Timber Notes are outstanding.
"Cedel" means Cedel Bank, societe anonyme.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as the same may be in effect from time to
time, any successor statute, and the rules and regulations thereunder.
"Certificate" means a certificate conforming to the requirements of
Section 12.5 of the Indenture and Section 10.9 of the Deed of Trust.
"Class" means any of (i) the Class A-1 Timber Notes, (ii) the Class
A-2 Timber Notes, (iii) the Class A-3 Timber Notes or (iv) any class of
Additional Timber Notes.
"Class A-1 Timber Notes" means the Class of Timber Notes issued
pursuant to the Indenture and designated as the Scotia Pacific Company LLC
6.55% Class A-1 Timber Collateralized Notes.
"Class A-2 Timber Notes" means the Class of Timber Notes issued
pursuant to the Indenture and designated as the Scotia Pacific Company LLC
7.11% Class A-2 Timber Collateralized Notes.
"Class A-3 Timber Notes" means the Class of Timber Notes issued
pursuant to the Indenture and designated as the Scotia Pacific Company LLC
7.71% Class A-3 Timber Collateralized Notes.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act, and meeting
the requirements of the definition of the term "clearing corporation" in
Article Eight of the Uniform Commercial Code of the State of New York,
which is the Holder of any Book-Entry Note.
"Clearing Agency Agreement" shall mean the letter of
representations dated on or prior to the Closing Date, among the Issuer,
the Trustee and the initial Clearing Agency relating to the Book-Entry
Notes, as the same may be amended, modified or supplemented.
"Clearing Agency Participant" shall mean a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency records in a book-entry system ownership, transfers and
pledges of securities deposited with such Clearing Agency.
"Clearing System Certificate" A certificate in substantially the
form of Exhibit L to the Indenture or such other form of certificate as
shall be satisfactory to the Registrar, Euroclear and Cedel.
"Closing Date" shall mean the date on which the Timber Notes are
issued pursuant to the Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means State Street Bank and Trust Company, in
its capacity as collateral agent for the Holders of the Timber Notes and
the Liquidity Providers pursuant to the Deed of Trust and the Indenture,
together with its successors in such capacity.
"Collateral Agent Expenses" means any expenses or damages of or
compensation owing to the Collateral Agent (including, without limitation,
the reasonable fees and disbursements of counsel to the Collateral Agent)
incurred with respect to the enforcement or administration of the Deed of
Trust or owing to the Collateral Agent as part of the Secured Obligations.
"Collateral Mortgaged Property" means and includes all Mortgaged
Property (including both those now and hereafter existing), to which
Article 9 of the Uniform Commercial Code may now or hereafter apply,
including, but not limited to, personal property (tangible and intangible),
fixtures, goods, documents, instruments, general intangibles, chattel
paper, accounts, deposit accounts, products and proceeds, and further
including, without limitation, Harvested Timber, Company Timber to be cut
pursuant to a Purchase Agreement, the Assigned Proceeds, the Data
Processing Equipment, Data Processing Information, the Subject Contracts
and the Accounts.
"Collateral Release Price" means, as of any date, in respect of any
Company Owned Timberlands or Company Timber Rights to be released from the
Lien of the Deed of Trust on such date pursuant to Section 6.1 of the
Indenture, an amount equal to the product of (a) the number of Mbfe of
Company Timber located on the Company Owned Timberlands to be released (or
on the Company Timber Rights Property that is subject to the Company Timber
Rights to be released, as applicable) and (b) an amount equal to $724,
escalated at rate of 3-1/2% per annum (compounded annually, commencing
January 1, 1999) to such date.
"Collateral Value Factor", for any Monthly Calculation Date, shall
be the factor indicated as of such date in the Structuring Schedule under
the caption "Collateral Value Factor" (column H).
"Collection Account" means account number GE4767 established
pursuant to Section 5.1(a) of the Indenture with the Securities
Intermediary in the name of "State Street Bank and Trust Company, as
Collateral Agent for the Scotia Pacific Company LLC Class X-0, X-0 xxx X-0
Noteholders and the Liquidity Providers--Collection Account," and all
successor accounts thereto.
"Collection Account Disbursement" has the meaning given to such
term in Section 5.3(b) of the Indenture.
"Collection Account Disbursement Funds" has the meaning given to
such term in Section 5.3(b) of the Indenture.
"Collection Account Rate" means, for any date, a rate per annum
equal to the rate per annum (determined as of a date not more than three
Business Days prior to such date) for the offering to leading banks in the
London interbank market of Dollar deposits having a term of 30 days and in
an amount comparable to the amount to which such rate is applied.
"Commitment" means, at any time, the maximum principal or face
amount of the Advances, whether or not outstanding, that a Liquidity
Provider is required to make under the Line of Credit Agreement at such
time, as such amount may be varied or adjusted from time to time.
"Commitments" means, at any time, the aggregate amount of the Commitments
of all Liquidity Providers at such time.
"Company Timber" means (i) all trees and timber, including, without
limitation, standing timber and crops, now located on or hereafter planted
or growing in the soil of any Company Timber Property (other than the
Pacific Lumber Timber Rights Property), or any part or parcel thereof, and
all additions, substitutions and replacements thereof (including timber to
be cut pursuant to a Purchase Agreement) and (ii) any and all Harvested
Timber.
"Company Timber Property" means the Company Owned Timberlands and
the Company Timber Rights Property.
"Company Timber Rights" means (i) the timber rights of the Issuer
in respect of the Company Timber Rights Property referred to in clause (i)
of the definition of such term, including, without limitation, the
ownership of, and (subject to compliance with applicable law) the right in
perpetuity (or, in the case of Company Timber Rights in respect of not more
than 200 acres of timberlands, the right expiring not earlier than November
1, 2027) to harvest, all trees and timber, including, without limitation,
standing timber and crops, now located on or hereafter planted or growing
in the soil of such Company Timber Rights Property or any part or parcel
thereof and (ii) any timber rights which are (A) purchased by the Issuer
subsequent to the Closing Date with funds from the Prefunding Account, (B)
in perpetuity or expire no earlier than December 31, 2048 and (C) described
in an amendment to the Deed of Trust.
"Company Timber Rights Property" means (i) those portions of the
timberlands owned by Pacific Lumber, Salmon Creek or an unrelated third
party on the date hereof which are subject to the Company Timber Rights and
are described with particularity in the Pacific Lumber Timber Deeds and, as
to a portion of such lands, in certain maps referenced in the Pacific
Lumber Timber Deeds and held by an escrow agent pursuant to an Escrow
Agreement by and among the Issuer, Pacific Lumber, Salmon Creek and such
escrow agent, dated as of the Closing Date, and (ii) any timberlands that
are subject to timber rights referred to in clause (ii) of the definition
of Company Timber Rights.
"Company Owned Timberlands" means:
(a) the parcels of land described in (i) Exhibit A to the Deed of
Trust and (ii) any amendment to the Deed of Trust with respect to the
addition of Substitute Timber Property or Additional Timber Properties,
together with the entire right, title and interest of the Issuer in and to
such parcels of land, subject to Permitted Encumbrances, together with (a)
all right, title and interest of the Issuer in and to all buildings,
structures and other improvements now standing, or at any time hereafter
constructed or placed, upon such land, including, without limitation, all
right in and to all equipment and fixtures of every kind and nature on such
land or in any such buildings, structures or other improvements (such
buildings, structures, other improvements, equipment and fixtures being
herein collectively called the "Improvements"), (b) all right, title and
interest of the Issuer in and to all and singular the tenements,
hereditaments, easements, rights of way, rights, privileges and
appurtenances in and to such land belonging or in any way appertaining
thereto, including without limitation, all right, title and interest of the
Issuer in, to and under any streets, ways, alleys, vaults, gores or strips
of land adjoining such land and (c) all claims or demands of the Issuer, in
law or in equity, in possession or expectancy of, in and to such land
together with all rents, income, revenues, issues and profits from and in
respect of the property described above in this paragraph (a) and the
present and continuing right to make claim for, collect, receive and
receipt for the same as hereinafter provided. It is the intention of the
Issuer that, so far as may be permitted by law, all of the foregoing,
whether now owned or hereafter acquired by the Issuer, affixed, attached or
annexed to such land shall be and remain or become and constitute a part of
the Mortgaged Property and the security covered by and subject to the Lien
of the Deed of Trust;
(b) all right, title and interest of the Issuer in and to (i) all
extensions, improvements, betterments, renewals, substitutes and
replacements of and on the property described in the foregoing clause (a)
and (ii) all additions and appurtenances thereto not presently leased to or
owned by the Issuer and hereafter leased to, acquired by or released to the
Issuer or, constructed, assembled or placed upon the Company Owned
Timberlands immediately upon such leasing, acquisition, release,
construction, assembling or placement, and without any further grant or
other act by the Issuer (including, without limitation, all lands added by
lot line adjustment to any existing legal parcel constituting part of the
Company Owned Timberlands); and
(c) all the estate, right, title and interest of the Issuer, in and
to all contract rights, actions and rights in action, relating to the
property described in clause (a), including, without limitation, all rights
to insurance proceeds and unearned premiums arising from or relating to
damage to such property.
Notwithstanding the foregoing, Company Owned Timberlands shall not
include any Pacific Lumber Timber.
"Contingent Obligation" means, as to any Person, any obligation of
such Person guaranteeing any Indebtedness, leases, dividends or other
obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligations of such Person, whether or not contingent, (i)
to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (ii) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of
assuring the owner of any such primary obligation of the ability of the
primary obligor to make payment of such primary obligation or (iv)
otherwise to assure or hold harmless the holder of such primary obligation
against loss in respect thereof; provided, however, that the term
Contingent Obligation shall not include endorsements of instruments for
deposit or collection in the ordinary course of business or obligations in
connection with surety or appeal bonds.
"Conveyance Documents" means (i) the Grant Deed dated March 18,
1993 from Pacific Lumber, as grantor, to Scotia Pacific Holding Company, a
Delaware corporation ("Scotia Pacific"), as grantee, conveying certain of
the Company Owned Timberlands to Scotia Pacific and reserving in Pacific
Lumber certain timber rights (the "First Pacific Lumber Grant Deed"), (ii)
the Grant Deed dated on or prior to the Closing Date from Pacific Lumber,
as grantor, to the Issuer, as grantee, conveying certain Company Owned
Timberlands to the Issuer (the "Second Pacific Lumber Grant Deed"), (iii)
the Quitclaim Deed dated on or prior to the Closing Date from Pacific
Lumber to the Issuer conveying to the Issuer all of Pacific Lumber's
interest in certain of the timber rights previously reserved by Pacific
Lumber in the First Pacific Lumber Grant Deed (the "Pacific Lumber
Quitclaim Deed"), (iv) three Grant Deeds, each dated on or prior to the
Closing Date, from Pacific Lumber, as grantor, to the Issuer, as grantee,
conveying the Company Timber Rights to the Issuer (the "Pacific Lumber
Timber Deeds"), (v) the Xxxx of Sale and General Assignment dated as of
March 23, 1993 transferring from Pacific Lumber certain of the Data
Processing Information and other personal property to Scotia Pacific (the
"Xxxx of Sale"), (vi) the Xxxx of Sale and General Assignment dated as of
the Closing Date transferring from Pacific Lumber certain Data Processing
Information and other personal property with respect to certain Company
Owned Timberlands and the Company Timber Rights to the Issuer (the "New
Xxxx of Sale"), (vii) the New Environmental Indemnification Agreement,
(viii) the New Reciprocal Rights Agreement and (ix) the Transfer Agreement
dated as of the Closing Date (the "New Transfer Agreement") among the
Issuer, Pacific Lumber and Salmon Creek.
"Corporate Trust Office" means the office of the Trustee, the
Collateral Agent or the Registrar, as applicable, at which the trust
created by this Indenture shall be principally administered.
"Counsel" means legal counsel reasonably satisfactory to the
Trustee. Such legal counsel may be an employee, officer, manager or
director of the Issuer, Pacific Lumber or an Affiliate of either of them,
unless otherwise indicated.
"covenant defeasance" shall have the meaning set forth in Section
8.3 of the Indenture.
"Data Processing Equipment" means all hardware, software, or other
data processing systems or equipment, whether now owned or hereafter
acquired by the Issuer, and wherever located.
"Data Processing Information" means all information, programs,
know-how, methods or methodology relating to the management of the Company
Timber Property, the harvesting, severing or cutting of Company Timber, and
the preparation of applications for Timber Harvesting Plans, including,
without limitation, all such information, programs, know-how, methods or
methodology relating to the GIS.
"De Minimis Receipts" means payments received by the Issuer in an
aggregate amount not greater than $50,000 at any one time that would
otherwise be required to be deposited in the Collection Account and which
the Issuer has deposited into another bank account.
"Debt Obligations", as of any date (in each case determined before
giving effect to any payment made on such date), means the sum of (a) the
outstanding principal balance of the Timber Notes as of such date plus (b)
interest accrued and unpaid on the Timber Notes to such date, including any
interest on unpaid interest (computed on the basis of a 360-day year of
twelve 30-day months), plus (c) any Premium accrued and unpaid on the
Timber Notes and any interest accrued and unpaid thereon.
"Deed of Trust" means the Deed of Trust, Security Agreement,
Financing Statement, Fixture Filing and Assignment dated the Closing Date
by the Issuer, as trustor, in favor of the Deed of Trust Trustee for the
benefit of the Collateral Agent, as beneficiary and agent for the Secured
Parties, as the same may be amended, supplemented and otherwise modified
and in effect from time to time.
"Deed of Trust Trustee" means Fidelity National Title Insurance
Company, and its successors in the trust created by the Deed of Trust.
"Deemed Collateral Value", for any Monthly Calculation Date, shall
be an amount equal to the product (in Dollars) of the Collateral Value
Factor for such date and the Deemed Remaining Harvest Quantity for such
date.
"Deemed Production" through any date, means the number of Mbfe of
Company Timber deemed harvested and sold from July 20, 1998 through such
date pursuant to Section 5.5 of the Indenture.
"Deemed Remaining Harvest Quantity" means, for any Monthly
Calculation Date, an amount equal to the excess of (i) of the Structured
Harvest Quantity over (ii) the sum of all Actual Production and all Deemed
Production (each expressed in Mbfe) through such date.
"Default" means any occurrence or condition that, with notice or
the lapse of time, or both, would become an Event of Default.
"Default Interest" means the interest accruing at the Default Rate
on any amount of Regular Interest on any Class of Timber Notes that was not
paid when such amount became due and payable.
"Default Rate" means the applicable Note Rate plus 2.00% per annum.
"defeasance" shall have the meaning set forth in Section 8.2 of the
Indenture.
"Defeased Notes" shall have the meaning set forth in Section 8.1 of
the Indenture.
"Deficiency Premium Amount", with respect to any Payment Deficiency
on any Class of Timber Notes with respect to which a Deficiency Premium
Amount is payable on a Note Payment Date, means an amount of interest
(computed on the basis of a 360-day year of twelve 30-day months) on such
Payment Deficiency, for the period from and including the Note Payment Date
immediately preceding such Note Payment Date to but excluding such Note
Payment Date, at a rate per annum equal to 1.50%.
"Definitive Notes" has the meaning given to such term in Section
2.1.
"Depletion Amortization Amount" means, on any Note Payment Date,
an amount, if any, equal to the lesser of (a) the excess, if any, of (i)
the balance in the Payment Account on such date over (ii) the sum of the
Minimum Obligations on such date or (b) the Excess Debt Obligations Amount
on such date.
"Depository" means, with respect to the Global Certificates, DTC or
such other Person or Persons as shall be designated as Depository by the
Registrar pursuant to Section 2.6(a) of the Indenture.
"Discounted Servicing Obligation", at any Monthly Deposit Date or
Note Payment Date, means the amount specified as the Discounted Servicing
Obligation (column J) opposite the Monthly Period preceding such date on
the Structuring Schedule.
"Disposal Site" means any site, facility or location to which any
Hazardous Materials from or attributable to the Company Owned Timberlands
have been transported for treatment, disposal, storage or deposit.
"Dollars" and "$" means lawful money of the United States of
America.
"Downgrade Advance" has the meaning set forth in Section 11.2(c) of
the Indenture.
"DTC" means The Depository Trust Company, a New York corporation.
"DTC Custodian" has the meaning given to such term in Section 2.1.
"Eligible Investments" means any one or more of the following,
which, in each case, matures (or is redeemable by the holder thereof
without the incurrence of a loss) not later than the date the funds
invested therein are required to be used: (a) direct obligations of, and
obligations fully guaranteed or insured by, the United States of America or
any agency or instrumentality of the United States of America, the
obligations of which are backed by the full faith and credit of the United
States of America; (b) demand deposits (including but not limited to
controlled disbursement accounts or other similar accounts) and time
deposits with, and certificates of deposit and bankers' acceptances issued
by, any bank or trust company organized under the laws of the United States
of America or any State thereof whose unsecured, unguaranteed long-term
senior debt obligations are rated "AA" by S&P and "Aa2" by Moody's or
higher, or whose unsecured, unguaranteed commercial paper obligations are
rated "A-1" by S&P and "P-1" by Moody's or higher, including the Trustee,
so long as the Trustee otherwise satisfies such requirements (or, in the
case of the Expense Reserve, whether or not the Trustee satisfies such
requirements); (c) repurchase agreements entered into with entities whose
unsecured, unguaranteed long-term debt obligations are rated "AA" by S&P
and "Aa2" by Moody's or higher, or whose unsecured, unguaranteed commercial
paper obligations are rated "A-1" by S&P and "P-1" by Moody's or higher,
pursuant to a written agreement with respect to any obligation described in
clause (a) above; (d) commercial paper (including both noninterest-bearing
discount obligations and interest-bearing obligations payable on demand or
on a specified date not later than 150 days from the date of acquisition
thereof) and having a rating of "A-1" by S&P and "P-1" by Moody's or
higher; (e) direct obligations or shares of any money market fund or other
similar investment company all of whose investments consist of obligations
described in the foregoing clauses of this definition and that is rated
"AAm" by S&P and "Aa" by Moody's or higher; (f) taxable auction rate
securities commonly known as "money market notes" that at the time of
purchase have been rated and the ratings for which (i) for direct issues,
must not be less than "P-1" if rated by Moody's and not less than "A-1" if
rated by S&P, or (ii) for collateralized issues which follow the asset
coverage tests set forth in the Investment Company Act of 1940, as amended,
must have long-term ratings of at least "AAA" if rated by S&P and "Aaa" if
rated by Moody's; or (g) with Rating Agency Confirmation, any investments
hereafter developed which are substantially comparable to those described
above.
"Elk River Timberlands" means, in the event that any Headwaters
Acquisition Property is acquired by an Affiliate of the Issuer upon
consummation of the Headwaters Agreement (as such term is defined in the
Offering Memorandum), (a) such Headwaters Acquisition Property or (b) the
Alternate Property, either (a) or (b) of which will be transferred to the
Issuer within 180 days after consummation of the Headwaters Agreement and
made subject to the Lien of the Deed of Trust promptly after the
acquisition thereof by the Issuer.
"Environmental Laws" means all federal, state or local statutes,
laws, ordinances, regulations, rules, rulings, orders, restrictions,
requirements, writs, injunctions, decrees or other official acts relating
to the environment or hazardous or similar substances (including, without
limitation, CERCLA and similar state laws), whether now or hereafter
enacted or imposed by any Governmental Authority.
"Euroclear" means Xxxxxx Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.
"Event of Default" has the meaning given to such term in Section
7.1 of the Indenture.
"Excess Debt Obligations Amount" means, on any Note Payment Date,
an amount equal to the excess, if any, of (a) the sum of (i) the Adjusted
Debt Obligations on such date plus (ii) the Discounted Servicing Obligation
at such date over (b) the Total Collateral Value at such date.
"Excess Funds" has the meaning given to such term in Section
5.3(c)(x) of the Indenture.
"Excess Payment" has the meaning given to such term in Section
2.12(a) of the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time.
"Exchange Offer Registration Statement" shall mean a registration
statement of the Issuer on an appropriate form under the Securities Act
with respect to the Registered Exchange Offer, all amendments and
supplements to such registration statement, including post-effective
amendments thereto, in each case including the prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"Exchange Timber Notes" shall mean debt securities of the Issuer
identical in all material respects to the Timber Notes (except that the
Non-Registration Premium provisions and the transfer restrictions shall be
modified or eliminated, as appropriate, and interest thereon shall accrue
from and including the last date to which interest was paid on the Timber
Notes or, if no such interest has been paid, from the Closing Date) to be
issued under the Indenture to Holders in exchange for Registrable
Securities pursuant to the Registered Exchange Offer.
"Expense Reserve" means account number GE4766 established pursuant
to Section 5.1(a) of the Indenture with the Securities Intermediary in the
name of "State Street Bank and Trust Company, as Collateral Agent for the
Scotia Pacific Company LLC Class X-0, X-0 xxx X-0 Noteholders and the
Liquidity Providers--Expense Reserve," and all successor accounts thereto.
"Final Maturity Date" means July 20, 2028.
"Financial Asset" means "financial asset" as defined in Section 8-
102(a)(9) of the Uniform Commercial Code.
"First Pacific Lumber Grant Deed" has the meaning given to such
term in the definition of "Conveyance Documents."
"General Laws" means all applicable statutes, laws, ordinances,
regulations, rules, rulings, orders, restrictions, requirements, writs,
injunctions, decrees or other official acts of any Governmental Authority,
now and hereafter existing at any time or times, other than Environmental
Laws and Tax Laws.
"GIS" means the geographical information system of the Issuer,
including any Data Processing Equipment and/or Data Processing Information
which is a part of such system, and any updates, upgrades or modifications
thereto developed by Pacific Lumber or the Issuer.
"Global Notes" has the meaning ascribed to such term in Section
2.1.
"Governmental Authority" means (a) the United States of America,
(b) any State, commonwealth, county, parish, municipality, territory,
possession or other governmental subdivision within the United States of
America or under the jurisdiction of the United States of America and (c)
any Tribunal.
"Grant Deeds" means the First Pacific Lumber Grant Deed and the
Second Pacific Lumber Grant Deed.
"Harvested Timber" means all trees, timber and crops which have
been severed, cut or harvested from the Company Timber Property (other than
the Pacific Lumber Timber Rights Property), or any parcel thereof, and with
respect to which title has not yet passed to a third party purchaser in
compliance with the terms of the Indenture.
"Hazardous Materials" means (a) any "hazardous waste," "hazardous
substance," "hazardous material," "hazardous constituent," "toxic
chemical," "toxic substance," "acutely toxic substance," "pollutant" or
"contaminant," or any other formulation intended to define, list or
classify substances by reason of hazardous, dangerous, toxic or other
deleterious properties, such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or "EP toxicity," as defined in any
Environmental Law (including, without limitation, asbestos, polychlorinated
biphenyls, oil, petroleum, petroleum-related or petroleum-derived products,
natural gas, natural gas liquids, liquified natural gas or synthetic
natural gas), or any similar substances, (b) any substance the presence of
which on any property included in the Company Owned Timberlands is
prohibited by any Environmental Law, (c) any underground storage tanks, (d)
any flammable substances or explosives or any radioactive materials and (e)
any other substances subject to any rules or regulations (including,
without limitation, any notice requirements or special handling
requirements) of any Governmental Authority under any Environmental Law.
"Hazardous Materials Contamination" means the contamination
(whether now existing or hereafter occurring) of any improvements,
facilities, soil, groundwater, air or other elements on or of any property
included in the Company Owned Timberlands or the contamination of any
improvements, facilities, soil, groundwater, air or other elements on or of
any other lands as a result of Hazardous Materials at any time (before or
after date of the Deed of Trust) emanating from any Company Owned
Timberlands.
"Holder" means the Person in whose name a Timber Note or an
Additional Timber Note is registered on the Register or on any similar
register for any Additional Timber Notes, as the case may be.
"Headwaters Acquisition Property" means, of the approximately 7,700
acres of timberlands expected to be acquired by an Affiliate of the Issuer
upon the consummation of the Headwaters Agreement, that portion of such
timberlands, if any, actually so acquired by an Affiliate of the Issuer
upon consummation of the Headwaters Agreement.
"Indebtedness" means, as to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, (ii) the face amount of all letters
of credit issued for the account of such Person and all drafts drawn
thereunder, (iii) the aggregate amount payable under all capital leases
under which such person is the lessee, (iv) all Contingent Obligations of
such Person, (v) all net obligations of such Person under any interest rate
protection agreements, (vi) all obligations of such Person under
"take-or-pay" or other similar agreements and (vii) all liabilities of the
types described in clauses (i), (ii), (iii), (iv), (v) and (vi) secured by
any Lien on any property owned by such Person, whether or not such
liabilities have been assumed by such Person; provided, however, that
Indebtedness shall not include (a) trade payables due within 90 days,
accrued expenses and other current liabilities arising in the ordinary
course of business in commercially reasonable amounts not inconsistent with
industry standards, (b) compensation, pension obligations and other
obligations arising from employee benefits and employee arrangements in
commercially reasonable amounts not inconsistent with industry standards,
(c) indebtedness consisting of letters of credit or otherwise required by
law in respect of workers' compensation obligations or similar social
insurance and (d) indebtedness the occurrence of which is expressly
contemplated by the terms of the Indenture or other Operative Documents.
"Indebtedness Reserve Account" means account number GE4806
established pursuant to Section 5.1(a) of the Indenture with the Securities
Intermediary in the name of "State Street Bank and Trust Company, as
Collateral Agent for the Scotia Pacific Company LLC Class X-0, X-0 xxx X-0
Noteholders and the Liquidity Providers--Indebtedness Reserve Account," and
all successor accounts thereto..
"Indebtedness Reserve Debt" has the meaning given to such term in
Section 5.11 of the Indenture.
"Indenture" shall mean the Indenture between the Issuer and the
Trustee, pursuant to which the Timber Notes have been issued, as the same
may be amended, modified or supplemented.
"Independent" when used with respect to any specified Person, means
that such Person:
(a) is in fact independent of the Issuer and any other obligor
upon the Timber Notes;
(b) is not an employee, officer, manager, director or an
Affiliate of the Issuer or such other obligor; and
(c) does not own, and that no Affiliate of such Person owns,
directly or indirectly, any beneficial or other interest in the Issuer
or such other obligor or in any Affiliate of the Issuer or such other
obligor.
"Independent Appraiser" means any person who in the course of his
business appraises properties of a type similar to the Company Owned
Timberlands or Company Timber Rights and who is Independent.
"Independent Manager" means a Person who, on any date on which a
determination thereof is to be made:
(a) is a voting member of the Board of Managers;
(b) is not an Affiliate of the Issuer (otherwise than to the
extent such Person may be deemed an Affiliate of the Issuer by virtue of
such position as a manager or as a director of the Issuer or of any
entity merged with or consolidated into the Issuer) or Pacific Lumber,
or an employee, officer or director of Pacific Lumber, or an employee or
officer of the Issuer;
(c) has not received, directly or indirectly, at any time during
the two years immediately preceding such date, material compensation or
payment from the Issuer or Pacific Lumber or from any Affiliate of the
Issuer or Pacific Lumber (except for director's or manager's fees and
expense reimbursement for serving as such);
(d) does not own, directly or indirectly, any beneficial or other
interest in the Issuer or Pacific Lumber; and
(e) shall have a fiduciary duty to the Noteholders.
"Insolvency Event of Default" means the Event of Default specified
in Section 7.1(11) of the Indenture.
"Institutional Accredited Investor" means a Person which is an
institution and is an "accredited investor" as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act, but is not a QIB.
"Interest Advance" has the meaning set forth in Section 11.2(a) of
the Indenture.
"Issuer" has the meaning given to such term in the recitals to the
Indenture.
"Issuer Taxes" means (without duplication) all taxes, assessments,
fees, levies, imposts, duties, deductions, withholdings or other charges,
together with any interest and penalties payable in connection therewith,
from time to time or at any time imposed or assessed by any statute, law,
ordinance, regulation, rule, ruling, order, writ, injunction, decree or
other official act of any Governmental Authority (a) against the Issuer by
reason of the Issuer's ownership, harvesting, sale or other disposition or
use of all or any part of the Mortgaged Property, (b) upon or with respect
to, measured by or charged against, required to be deducted or withheld
from or otherwise attributable to all or any part of the Mortgaged Property
(or the use, sale or other disposition thereof) or (c) upon or against the
Issuer, the Collateral Agent, the Services Provider, the Trustee or any
Beneficiary (as defined in the Deed of Trust) by reason of the Deed of
Trust or the Liens created thereby, including, without limitation, yield,
franchise, sales, transfer, gross receipts, profits, income (other than
income taxes imposed on amounts paid or accrued on the Notes), property, ad
valorem, production and severance taxes.
"Legended Definitive Note" means a Definitive Note bearing the
Securities Legend.
"Lien" means any deed of trust, security interest, assignment,
pledge, hypothecation, charge or other encumbrance.
"Lien of the Deed of Trust" means the lien, assignment and security
interest created or granted, or renewed, extended and continued in force
and effect, by the Deed of Trust (including the after-acquired property
provisions of the Deed of Trust), or created by any subsequent conveyance
under the Deed of Trust or supplement to the Deed of Trust in favor of the
Collateral Agent (whether made by the Issuer or any other Person), or
otherwise created, effectively constituting any property a part of the
security and Mortgaged Property held by the Collateral Agent for the
benefit of the Secured Parties.
"Line of Credit Acceleration" means the election of the Liquidity
Providers, during the continuance of a Triggering Event, to permanently
cancel their obligations to make Advances under the Line of Credit
Agreement (other than by reason of a Termination Advance having been made
or the occurrence of the Scheduled Termination Date) or, if a Termination
Advance has been made, to require that such Advance be payable on each
Monthly Deposit Date and Note Payment Date in accordance with Sections 5.3
and 5.7 of the Indenture, in each case as provided in the Line of Credit
Agreement, or such other meaning as provided in the Line of Credit
Agreement then in effect.
"Line of Credit Agent" means the financial institution or other
agent under the Line of Credit Agreement, designated thereunder from time
to time, through whom the Liquidity Providers make Advances to the Issuer
or to the Trustee on behalf of the Issuer and who is authorized to receive
payments of interest and principal payable to the Liquidity Providers from
the Issuer, in accordance with the terms of the Line of Credit Agreement.
"Line of Credit Agreement" means a credit facility, including a
line of credit, revolving loan agreement, letter of credit facility or any
similar financing facility, of the Issuer in effect from time to time with
one or more Liquidity Providers each of whom, as of the date such credit
facility is first entered into, or, if later with respect to any Liquidity
Provider, as of the date it first becomes party thereto, has the Required
Liquidity Provider Rating, pursuant to which the Issuer or the Trustee on
behalf of the Issuer may obtain Interest Advances or a Termination Advance
from the Liquidity Providers thereunder, as such credit facility may from
time to time be extended, amended, modified, supplemented or amended and
restated in accordance with the provisions of Section 11.3 of the
Indenture; provided, however, that such credit facility is either (I) the
Bank of America Credit Agreement or (II) a replacement for a then existing
Line of Credit Agreement entered into in compliance with Section 11.4 of
the Indenture. As of the Closing Date, the Line of Credit Agreement is the
Bank of America Credit Agreement.
"Line of Credit Amortization Amount" means, as of any Note Payment
Date, the amount, if any, of principal, which, under the terms of the Line
of Credit Agreement is payable on such Note Payment Date in respect of a
Termination Advance.
"Liquidity Account" means account number GE4808 established
pursuant to Section 5.1(a) of the Indenture with the Securities
Intermediary in the name of "State Street Bank and Trust Company, as
Collateral Agent for the Scotia Pacific Company LLC Class X-0, X-0 xxx X-0
Noteholders and the Liquidity Providers -- Liquidity Account," and all
successor accounts thereto.
"Liquidity Provider" means any financial institution that is at the
relevant time a party to the Line of Credit Agreement and has a Commitment
thereunder or has Advances outstanding thereunder.
"Liquidity Providers' Expenses" means, as of any date, all amounts
then due from the Issuer under the Line of Credit Agreement, other than
interest (including any Supplemental Liquidity Provider Interest) and
principal and other than any Additional Liquidity Provider Fees; provided,
however, that indemnification obligations under the Line of Credit
Agreement shall not be deemed to be Liquidity Providers' Expenses (but
shall be deemed to be obligations for interest and principal on Advances)
to the extent that such indemnification obligations include, or represent
compensation for or damages constituting, the principal of and interest on
Advances.
"Lumber PPI Index" means, with respect to any date, the most recent
Producer Price Index (Lumber and Wood Products Commodity Groups) (Standard
Industrial Classification No. 2400) as published by the United States
Department of Labor, Bureau of Labor Statistics or any substitute index
hereafter adopted by the Department of Labor.
"Lumber PPI Inflation Factor" means, with respect to any date, a
fraction, the numerator of which is the then most recent Lumber PPI Index
and the denominator of which is the Lumber PPI Index in effect with respect
to January 1, 1998.
"Lump Sum Sale" means, with respect to any sale of Company Timber,
any agreement or arrangement pursuant to which the Issuer receives full
cash payment in advance for the purchase price for a specified quantity of
Company Timber (or Company Timber covered by one or more Timber Harvesting
Plans or contained on one or more parcels of land), and is required to
provide, subsequent to the date of such payment, the quantity of timber
provided therein (or covered by such Timber Harvesting Plans or contained
on such parcels).
"Majority Holders," at any date, means, subject to the provisions
of Section 7.13 of the Indenture, the Holders of a majority in aggregate
outstanding principal amount of Timber Notes and any Additional Timber
Notes of all Classes at such date.
"Manager" means a manager of the Issuer.
"Material Adverse Effect" means any material adverse effect on (a)
the Mortgaged Property or the operation, use or value thereof, (b) the
ability of the Issuer to perform and observe in all material respects its
covenants and obligations under the Deed of Trust, the Indenture or any of
the other Operative Documents, (c) the condition (financial or otherwise),
results of operations, business or business prospects of the Issuer or (d)
the rights or remedies of the Trustee or any Noteholder under the Indenture
or of the Deed of Trust Trustee or the Collateral Agent under the Deed of
Trust.
"Maximum Non-Cash Consideration Amount" shall mean, as of the date
of release of any Company Owned Timberlands or Company Timber Rights (the
"Release Date"), an amount equal to the amount of Excess Funds which would
be available for payment to or as directed by the Issuer pursuant to
Section 5.3(c)(x) of the Indenture on the next succeeding Monthly Deposit
Date, based upon the following assumptions: (i) all Section 6.1 Notes
proposed to be received in connection with the sale of Company Owned
Timberlands or Company Timber Rights were to be received in the form of
cash, (ii) no proceeds from any Company Owned Timberlands or Company Timber
Rights (pursuant to sales under the New Master Purchase Agreement or
otherwise) were received during the period from the Release Date through
and including the next succeeding Monthly Deposit Date (except for the
proceeds of sales pursuant to the New Master Purchase Agreement made prior
to the Release Date in the Monthly Period to which such next succeeding
Monthly Deposit Date relates), (iii) except for Deemed Production
attributable to such sale of Company Owned Timberlands or Company Timber
Rights, there was no Actual Production or Deemed Production during the
period, if any, from and including the Release Date through the end of the
Monthly Period to which such next succeeding Monthly Deposit Date relates,
(iv) the balances in the Collection Account, the Liquidity Account, if
any, plus any amount available under the Line of Credit Agreement and the
Expense Reserve shall equal the respective balances as of such Release Date
(giving effect to transactions on such date and to payments under the New
Master Purchase Agreement to be made on such next succeeding Monthly
Deposit Date in respect of sales made prior to the Release Date) and (v)
all transfers to and from the Collection Account as described in Sections
5.3(c)(i) through (ix), except to the extent provided in clauses (ii),
(iii) and (iv) of this definition, shall be computed in the same manner as
such items would be computed on the next succeeding Monthly Deposit Date.
"Mbfe" means, with respect to (i) old growth redwood, one Mbfe for
each one thousand board feet, net Xxxxxxxx scale, of Company Timber, (ii)
old growth Xxxxxxx-fir, 0.723757 Mbfe for each one thousand board feet, net
Xxxxxxxx scale, of Company Timber, (iii) young growth redwood, 0.751381
Mbfe for each one thousand board feet, net Xxxxxxxx scale, of Company
Timber, (iv) young growth Xxxxxxx-fir, 0.488950 Mbfe for each one thousand
board feet, net Xxxxxxxx scale, of Company Timber and (v) each other
species or category of Company Timber other than hardwoods (i.e., trees
which are not conifers), 0.309392 Mbfe for each one thousand feet, net
Xxxxxxxx scale, of Company Timber.
"Minimum Principal Amortization" means, for any Class of Timber
Notes, the amount of principal payments on the Timber Notes of such Class
set forth for such Class under the column headed "Minimum Principal
Amortization" in Schedule B to the Indenture.
"Minimum Principal Amortization Amount" means, for any Class of
Timber Notes, as of any Note Payment Date, the excess, if any, of: (i) the
sum of all amounts specified with respect to such Class in Schedule B to
the Indenture as Minimum Principal Amortization opposite the respective
Note Payment Dates occurring on or prior to such Note Payment Date, over
(ii) the aggregate principal amount that was paid on the Timber Notes of
such Class prior to such Note Payment Date.
"Minimum Obligations" means, on any Note Payment Date, the sum of
(a) the Aggregate Minimum Principal Amortization Amount on such Note
Payment Date, (b) all accrued and unpaid interest (excluding interest on
premiums) due and payable to the Holders of the Timber Notes and any
Additional Timber Notes on such Note Payment Date, and (c) the aggregate
amount, if any, of principal and interest (other than any Supplemental
Liquidity Provider Interest) in respect of outstanding Advances under the
Line of Credit Agreement to be paid from the Payment Account on such Note
Payment Date.
"Monthly Calculation Date" means the last day of each calendar
month.
"Monthly Certificate Delivery Date", with respect to any Monthly
Calculation Date, means the day which is two Business Days prior to the
Monthly Deposit Date with respect to such Monthly Calculation Date.
"Monthly Deposit Date", with respect to any Monthly Calculation
Date, means (a) the 20th day of the calendar month following such Monthly
Calculation Date or (b) if such day is not a Business Day, the Business Day
immediately succeeding such day (provided, however, that all calculations
as of such Monthly Deposit Date shall be computed as of the date that would
have been a Monthly Deposit Date if such date were a Business Day).
"Monthly Period" means, with respect to any Monthly Calculation
Date, the calendar month ending on such Monthly Calculation Date.
"Monthly Noteholder Certificate" means a Certificate in
substantially in the form of Exhibit D to the Indenture.
"Monthly Trustee Certificate" means a Certificate as of a Monthly
Calculation Date prepared and delivered by the Issuer pursuant to Section
5.3(b) of the Indenture (which Certificate, except as otherwise provided
herein, shall relate to the sale of Company Timber during the Monthly
Period ending on such Monthly Calculation Date).
"Moody's" means Xxxxx'x Investors Service, Inc. or any successor to
such corporation's business of rating securities.
"Mortgaged Property" means all of the rights, titles, interests
and estates now owned or hereafter acquired by the Issuer in, to and under,
each of the following:
(a) the Company Owned Timberlands;
(b) the Company Timber Rights;
(c) all Company Timber;
(d) the Accounts, all funds, investments, securities and Financial
Assets from time to time held in or credited to any Account, all
Security Entitlements with respect to any Account and all interests,
profits, Proceeds, or other income derived from such funds, investments,
securities, Financial Assets and Security Entitlements and all the
Issuer's rights in any funds held in any Account;
(e) all the Subject Contracts, and all the Proceeds now or
hereafter receivable, owing, deliverable, performable or attributable to
or under the Subject Contracts;
(f) all Data Processing Equipment and all other machinery,
equipment and other tangible personal property and all fixtures and
improvements now or hereafter situated upon any part of the Company
Owned Timberlands;
(g) all Data Processing Information and all other information,
programs, know-how, methods or methodology relating to the management of
the Company Timber Property and the harvesting, severing or cutting of
Company Timber;
(h) all existing and future permits, licenses, rights-of-way,
easements, leases, franchises, certificates of public convenience and
necessity, and all similar rights and privileges, that relate to or are
appurtenant to any part of the Company Timber Property;
(i) all Proceeds of and other rights relating to insurance or
condemnation (including, without limitation, any judgments, insurance
proceeds, awards of damages and settlements) receivable or accruing by
reason of the loss of, damage to, diminution in the value of or income
or revenues from, or taking (by power of eminent domain or otherwise) of
all or any part of the properties or interests hereinabove or
hereinbelow described in this definition of the Mortgaged Property;
(j) all documents, instruments, drafts, acceptances, general
intangibles, chattel paper, deposit accounts, accounts, and all the
Proceeds therefrom or attributable thereto, whether now or hereafter
existing, arising out of or relating to the sale, use, exchange,
development, operation, cutting, harvesting, storage, gathering,
transportation, improvement, marketing, disposal, lease, handling or
other dealings with or of all or any portion of the properties or
interests hereinabove or hereinbelow described in this definition of
Mortgaged Property;
(k) without limiting the foregoing descriptions, all equipment and
inventory (as such terms are defined in the Uniform Commercial Code) and
all documents (as defined in the Uniform Commercial Code) now and at any
time or times hereafter obtained or acquired by the Issuer covering or
representing all or any portion of the properties or interests
hereinabove or hereinbelow described in this definition of Mortgaged
Property;
(l) all Timber Harvesting Plans and any other permits, documents
or other governmental approvals pertaining to the harvesting, cutting,
severing, transporting, storing, processing or handling of the Company
Timber; and all plans, engineering reports, land planning, maps,
surveys, and information and any other reports, plans, maps, surveys or
information to be used in connection with the Company Owned Timberlands
or Company Timber Rights.
(m) all property of any kind or description that (i) may from time
to time after the date of the Deed of Trust by delivery or by writing of
any kind be conveyed, mortgaged, pledged, assigned or transferred to the
Collateral Agent by the Issuer, or by any Person, with the consent of
the Issuer, or otherwise as expressly permitted by the terms of the Deed
of Trust and accepted by the Collateral Agent to be held as part of the
Mortgaged Property or (ii) is required by the terms of the Indenture or
the Deed of Trust to be subjected to the Lien of the Deed of Trust;
(n) each and every right, privilege, hereditament and/or
appurtenance in anywise incident or appertaining to any of the
properties or interests hereinabove or hereinbelow described in this
definition of the Mortgaged Property;
(o) the Proceeds from or attributable to the rights, titles,
interests and estates hereinabove referred to in this definition of the
Mortgaged Property (including, without limitation, all Assigned
Proceeds), all guarantees and suretyship agreements relating to any such
Proceeds, and the rights, titles and interests of the Issuer therein,
and all security for payment or performance thereof, now or hereafter
existing or arising;
(p) all other personal property used in connection with the
above-described Mortgaged Property; and
(q) all extensions, renewals, proceeds, accessions, improvements,
substitutions and replacements of and to any of the above-described
Mortgaged Property.
Notwithstanding the foregoing, Mortgaged Property shall not include (i) any
Pacific Lumber Timber, (ii) any motor vehicles subject to a certificate of
title law, (iii) any Timber Harvesting Plans, to the extent that the Issuer
is prohibited from granting a security interest therein, (iv) any permits,
documents or other governmental approvals other than Timber Harvesting
Plans which the Issuer is prohibited by applicable law from granting a
security interest in or (v) any accounts or inventory (as each such term is
defined in the Uniform Commercial Code) of Pacific Lumber or any proceeds
thereof.
"New Additional Services Agreement" means the New Additional
Services Agreement dated as of the Closing Date between the Issuer and
Pacific Lumber, as the same may be amended, modified or supplemented.
"New Xxxx of Sale" has the meaning assigned to such term in the
definition of "Conveyance Documents."
"New Environmental Indemnification Agreement" means the New
Environmental Indemnification Agreement dated as of the Closing Date
between the Issuer and Pacific Lumber, as the same may be amended, modified
or supplemented.
"New Master Purchase Agreement" means the New Master Purchase
Agreement dated as of the Closing Date between the Issuer and Pacific
Lumber, as the same may be amended, modified or supplemented.
"New Reciprocal Rights Agreement" means the New Reciprocal Rights
Agreement dated as of the Closing Date among the Issuer, Pacific Lumber and
Salmon Creek, as the same may be amended, modified or supplemented.
"New Services Agreement" means the New Services Agreement entered
into between the Issuer and Pacific Lumber dated as of the Closing Date, as
the same may be amended, modified or supplemented, and any similar
agreement hereafter entered into between the Issuer and any Person (other
than Pacific Lumber) as successor Services Provider, as the same may be
amended, modified or supplemented.
"New Transfer Agreement" has the meaning assigned to such term in
the definition of "Conveyance Documents."
"Nonrecourse Timber Acquisition Indebtedness" means purchase money
indebtedness incurred by the Issuer in the course of acquisition of any
timberlands or timber rights, provided that (i) in the event of nonpayment
of such purchase money indebtedness, the holder thereof shall only have
recourse for repayment to the property securing such indebtedness and (ii)
the agreements in respect of such purchase money indebtedness shall contain
a non-petition agreement substantially similar to that included in the New
Master Purchase Agreement.
"Non-Renewal Advance" has the meaning set forth in Section 11.2(b)
of the Indenture.
"Note Owner," with respect to a Book-Entry Note, means the person
who is the owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly or through a Clearing Agency Participant, in
accordance with the rules of such Clearing Agency).
"Note Payment Date" means January 20, 1999, and the 20th day of
each January and July thereafter through and including the Final Maturity
Date. Notwithstanding the foregoing provisions of this definition, if any
date or day that would constitute a Note Payment Date is not a Business
Day, the next succeeding such date or day shall constitute the Note Payment
Date (provided, however, that interest and Deficiency Premiums payable on
such Note Payment Date, and all other calculations as of such Note Payment
Date, shall be computed as of the date which would have been a Note Payment
Date if such date were a Business Day).
"Note Payment Noteholder Certificate" means a Certificate
substantially in the form of Exhibit F to the Indenture.
"Note Payment Trustee Certificate" means the Certificate required
to be prepared and submitted by the Issuer pursuant to Section 5.7(e) of
the Indenture.
"Note Purchase Agreement" means the Purchase Agreement dated as of
July 9, 1998 among the Issuer, Pacific Lumber and Salomon Brothers Inc., as
Representative of the Initial Purchasers, in respect of the initial
purchase of the Timber Notes.
"Note Rate" means, for each Class of Timber Notes, the interest
rate indicated on the face of each Timber Note of such Class.
"Noteholder" means a Holder.
"Offering Memorandum" means the Offering Memorandum dated July 9,
1998 relating to the offering of the Timber Notes, as such Offering
Memorandum may be amended or supplemented.
"Officer" has the meaning given to such term in the definition of
"Responsible Officer."
"Officer's Certificate" means a certificate that:
(a) is signed by a Responsible Officer of the Person or Persons
required to furnish or submit such certificate; and
(b) complies with the applicable requirements of Section 12.5 of
the Indenture or Section 10.9 of the Deed of Trust, as the case may be.
"Operating Agreement" means the Agreement of Limited Liability
Company of the Issuer, as amended from time to time.
"Operating Default" means:
(a) any failure by the Services Provider to provide any
certificate, report or notice to the Issuer or the Trustee, all in
accordance with the New Services Agreement, and the continuation of such
failure for five Business Days after notice thereof from the Issuer or the
Trustee;
(b) any failure by the Services Provider to observe or perform any
covenant or agreement of the Services Provider under the New Services
Agreement that has a Material Adverse Effect (and if such default is
remediable, the continuation of such default for a period of 30 days
after notice thereof from the Issuer or the Trustee);
(c) the execution by the Services Provider of any instrument
purporting to assign any of its duties or responsibilities under the New
Services Agreement except as expressly permitted by the New Services
Agreement;
(d) any representation or warranty made by Pacific Lumber as
initial Services Provider in the New Services Agreement (or by any
successor Services Provider in any other New Services Agreement) shall
prove to have been incorrect as of the time when the same was made and
the circumstance or condition in respect of which such representation or
warranty was incorrect has a Material Adverse Effect (and if such
default is remediable, the continuation of such default for a period of
30 days after notice thereof from the Issuer or the Trustee); or
(e) the Bankruptcy or Insolvency of the Services Provider.
"Operative Documents" means the Indenture, the Deed of Trust, the
Timber Notes from time to time outstanding, the New Services Agreement, the
New Master Purchase Agreement (and log purchase agreements entered into
pursuant thereto) and the Conveyance Documents.
"Opinion of Counsel" means a written opinion of Counsel which:
(a) complies with the applicable requirements of Section 12.5 of
the Indenture or Section 10.9 of the Deed of Trust, as applicable;
(b) is addressed to the Trustee or the Collateral Agent, as
applicable; and
(c) is in form and substance reasonably satisfactory to the
addressee.
"outstanding" when used with reference to any Timber Notes or any
Additional Timber Notes, means, as of any particular time, all Timber Notes
(or Additional Timber Notes, as applicable) theretofore authenticated and
delivered by the Trustee, other than Timber Notes (or Additional Timber
Notes, as applicable) in respect of which all outstanding or accrued
principal of, Regular Interest and Default Interest on, Premium on and
interest on Premium (or similar amounts with respect to the Additional
Timber Notes, as applicable) shall have been paid in full in accordance
with the Indenture; Timber Notes or Additional Timber Notes theretofore
canceled by the Trustee, or surrendered to the Trustee for cancellation,
pursuant to Section 2.9 of the Indenture; Timber Notes or Additional
Timber Notes in substitution for which other Timber Notes or Additional
Timber Notes shall theretofore have been authenticated and delivered
pursuant to the Indenture; and solely for purposes of determining whether
the holders of the requisite aggregate outstanding principal amount of
Timber Notes (or Timber Notes and Additional Timber Notes, as applicable)
have given any request, demand, authorization, direction, notice, consent
or waiver hereunder, Timber Notes (and Additional Timber Notes, as
applicable) registered in the name of (i) the Issuer or any other obligor
upon the Timber Notes (or Additional Timber Notes, as applicable), (ii) any
nominee or Affiliate of the Issuer or such other obligor, (iii) any
successor to the interest of the Issuer in all or substantially all of the
Mortgaged Property, (iv) any nominee or Affiliate of any such successor,
(v) Pacific Lumber or (vi) any nominee or Affiliate or nominee of any
Affiliate of Pacific Lumber.
"Pacific Lumber" means The Pacific Lumber Company and any successor
in interest thereto.
"Pacific Lumber Timber" means (i) all trees and timber, including,
without limitation, standing timber and crops, now located on or hereafter
planted or growing in the soil of any Pacific Lumber Timber Rights
Property, or any part or parcel thereof, and all additions, substitutions
and replacements thereof and (ii) any and all of the foregoing which have
been severed, cut or harvested from the Pacific Lumber Timber Rights
Property or any part of parcel thereof.
"Pacific Lumber Timber Deeds" has the meaning assigned to such term
in the definition of "Conveyance Documents."
"Pacific Lumber Timber Rights" means the timber rights of Pacific
Lumber in respect of the Pacific Lumber Timber Rights Property, including,
without limitation, the ownership of, and (subject to compliance with
applicable law) the right in perpetuity to harvest, all trees and timber,
including, without limitation, standing timber and crops, now located on or
hereafter planted or growing in the soil of any Pacific Lumber Timber
Rights Property or any part or parcel thereof.
"Pacific Lumber Timber Rights Property" means those portions of the
Company Owned Timberlands specifically identified as Pacific Lumber Timber
Rights Property on those certain maps held by an escrow agent pursuant to
an Escrow Agreement by and among the Issuer, Pacific Lumber, Salmon Creek
and such escrow agent, dated as of the Closing Date.
"Pacific Lumber Timber Rights Property Release Documents" has the
meaning assigned to such term in Section 6.3 of the Indenture.
"Pacific Lumber Timber Rights Property Release Notice" has the
meaning set forth in Section 6.3 of the Indenture.
"Pay-as-You-Harvest Sale" means, with respect to any sale of
Company Timber, any agreement or arrangement pursuant to which (A) the
Issuer shall receive partial payment in advance (the "Up-Front Payment")
for the purchase of a specified quantity of Company Timber (or Company
Timber covered by one or more Timber Harvesting Plans or contained on one
or more parcels of land), and the balance of which shall be paid as (or
after) such Company Timber is harvested and/or delivered or (B) the Issuer
shall receive payments for the purchase of a specified quantity of Company
Timber (or Company Timber covered by one or more Timber Harvesting Plans or
contained on one or more parcels of land) as (or after) such Company Timber
is harvested and/or delivered.
"Paying Agent" has the meaning given to such term in Section 2.3 of
the Indenture.
"Payment Account" means account number GE4765 established pursuant
to Section 5.1(a) of the Indenture with the Securities Intermediary in the
name of "State Street Bank and Trust Company, as Collateral Agent for the
Scotia Pacific Company LLC Class X-0, X-0 xxx X-0 Noteholders and the
Liquidity Providers--Payment Account," and all successor accounts thereto.
"Payment Default" means any Event of Default specified in paragraph
(1), (2), (3), (4) or (5) of Section 7.1 of the Indenture.
"Payment Deficiency" has the meaning given to such term in Section
2.12(b) of the Indenture.
"Permitted Encumbrances" means:
(a) the specific matters, if any, to which the Deed of Trust is
expressly made subject as set forth in a Schedule to a mortgagee title
insurance policy in favor of the Trustee or Collateral Agent in respect
of the Mortgaged Property;
(b) the New Reciprocal Rights Agreement;
(c) easements, restrictions, rights-of-way, servitudes,
restrictive covenants, permits, licenses, use agreements, boundary
agreements, surface leases, subsurface leases, or other similar
encumbrances on, over or in respect of the Company Timber or the Company
Timber Property contained in or arising from or in respect of any
document, instrument or agreement entered into by or with the consent of
the Issuer in connection with any Timber Harvesting Plans, Timber Laws
or Environmental Laws;
(d) discrepancies, conflicts in boundary lines, shortages in area,
encroachments or any other facts which a correct survey would disclose,
none of which, singly or in the aggregate, materially adversely affects
the operation or value of the Mortgaged Property or materially adversely
impairs the Issuer's or the Collateral Agent's right to receive and
retain the proceeds of cutting, harvesting or severing of Company Timber
attributable to the Company Owned Timberlands or the Company Timber
Rights;
(e) Liens for Issuer Taxes not yet delinquent or that are being
diligently contested by the Issuer in good faith by appropriate
proceedings and against which adequate reserves are being maintained in
accordance with generally accepted accounting principles by the Issuer,
provided that the enforcement or foreclosure of any such lien shall have
been stayed pending the resolution of such proceedings;
(f) operators' liens or mechanics' or materialmen's liens arising
in the ordinary course of business and incidental to the incurrence of
reasonable expenses permitted by the Indenture or Deed of Trust with
respect to the Mortgaged Property for amounts not yet due and payable or
that are being diligently contested by the Issuer in good faith by
appropriate proceedings and against which adequate reserves are being
maintained by the Issuer, provided that the enforcement or foreclosure
of any such lien shall have been stayed pending the resolution of such
proceedings and such lien is fully subordinate to and subject in right
of prior payment of the Secured Obligations;
(g) easements, restrictions, rights-of-way, servitudes,
restrictive covenants, permits, licenses, use agreements, boundary
agreements, surface leases, subsurface leases or other similar
encumbrances on, over or in respect of the Company Timber or Company
Owned Timberlands, none of which, singly or in the aggregate, materially
adversely affects the operation or value of the Mortgaged Property or
materially adversely impairs the Issuer's or the Collateral Agent's
right to receive and retain the Proceeds of cutting, harvesting or
severing Company Timber attributable to the Company Owned Timberlands or
the Company Timber Rights;
(h) such sales contracts and other similar agreements as are
customarily found in connection with operating properties comparable to
the Company Owned Timberlands or Company Timber Rights, none of which,
singly or in the aggregate, materially adversely affects the operation
or value of the Mortgaged Property or materially adversely impairs the
Issuer's or the Collateral Agent's right to receive and retain the
Proceeds of cutting, harvesting or severing Company Timber attributable
to the Company Owned Timberlands or the Company Timber Rights;
(i) any lease, contract or other agreement or encumbrance
(including, without limitation, the interest of any purchaser under a
Lump Sum Sale Agreement entered into in accordance with Section 6.1 of
the Indenture in and to the Company Timber so purchased) granted or
created by the Issuer after the date of the Deed of Trust that is
specifically permitted and authorized under the terms of the Indenture
and/or the Deed of Trust; and
(j) Liens securing the Indebtedness referred to in clause (u) of
Section 4.9 of the Indenture.
"Permitted Investments" means (i) Eligible Investments, (ii) any
Section 6.1 Notes, and (iii) investments of a nature described in the
definition of Eligible Investments, without regard to the required ratings
or maturities set forth therein.
"Person" means an individual, a corporation, a partnership, a
trust, an unincorporated organization, a limited liability company
(including, without limitation, the Issuer), or a government or political
subdivision thereof.
"Personnel Costs" means all costs and expenses incurred by the
Issuer after the Closing Date attributable to individuals employed by the
Issuer.
"Post-Acceleration Date" has the meaning given to such term in
Section 7.7 of the Indenture.
"PPI Index" means, with respect to any date, the most recent
Producer Price Index (all Commodities) as published by the United States
Department of Labor, Bureau of Labor Statistics or any substitute index
hereafter adopted by the Department of Labor.
"Prefunding Account" means account number GE4794 established
pursuant to Section 5.1(a) of the Indenture with the Securities
Intermediary in the name of "State Street Bank and Trust Company, as
Collateral Agent for the Scotia Pacific Company LLC Class X-0, X-0 xxx X-0
Noteholders and the Liquidity Providers--Prefunding Account," and all
successor accounts thereto.
"Premium" means any Prepayment Premium payable in respect of an
Excess Payment pursuant to Section 2.12(a) of the Indenture, any Deficiency
Premium Amount payable in respect of a Payment Deficiency pursuant to
Section 2.12(b) of the Indenture and any Non-Registration Premium payable
pursuant to Section 2.12(c) of the Indenture.
"Premium Provision" means, for any Monthly Deposit Date, an amount
equal to that described in either paragraph (a) or (b) below:
(a) if such Monthly Deposit Date is a Note Payment Date, the
Premium Provision will equal the amount, if any, of the Prepayment
Premium that will become payable on such Monthly Deposit Date by virtue
of the payments or prepayments of principal on the Timber Notes being
made on such Note Payment Date, less the amount, if any, of all amounts
of Premium Provision deposits made in the Payment Account since the
immediately preceding Note Payment Date and the interest earned on such
deposits to such Monthly Deposit Date; and
(b) if such Monthly Deposit Date is not a Note Payment Date, the
Premium Provision will equal an amount equal to the present value at
such Monthly Deposit Date (discounted from the immediately succeeding
Note Payment Date at the Collection Account Rate, compounded monthly) of
the excess, if any, of (i) the amount, if any, of the Prepayment Premium
that would become payable on the Timber Notes on such Monthly Deposit
Date if such Monthly Deposit Date were a Note Payment Date and the
Scheduled Amortization for each Class of Timber Notes with respect to
such Monthly Deposit Date were the amount obtained by multiplying the
Scheduled Amortization for such Class of Timber Notes with respect to
the immediately succeeding Note Payment Date by a fraction, the
numerator of which is the number of months from the immediately
preceding Note Payment Date to such Monthly Deposit Date and the
denominator of which is six over (ii) the amount, if any, of all amounts
of Premium Provision deposited in the Payment Account after the
immediately preceding Note Payment Date and the interest earned on such
deposits to such Monthly Deposit Date.
"Premium Provision Refundable Amount" means, for any Monthly
Deposit Date (except any Monthly Deposit Date immediately following a
Monthly Deposit Date that is a Note Payment Date), the amount, if any, by
which the Premium Provision for the immediately preceding Monthly Deposit
Date exceeded the Premium Provision for such Monthly Deposit Date. The
"Premium Provision Refundable Amount" for any Monthly Deposit Date
immediately following a Monthly Deposit Date that is a Note Payment Date
shall be zero.
"Prepayment Premium" means, with respect to principal of any Class
of Timber Notes paid earlier than provided under the Scheduled Amortization
for such Class of Timber Notes, the premium that will be due and payable as
a result of such prepayment, determined as provided in the Indenture.
"Prepayment Premium Amount," for any Class of Timber Notes with
respect to any Excess Payment on such Class on any date, means an amount
that is equal to the excess, if any, of:
(a) the sum of (i) the present value (as defined below and subject
to the assumption below) at such date of such Excess Payment plus (ii) the
sum of the present values (as so defined and subject to said assumption) at
such date of the amounts of interest, computed at the Note Rate for such
Class, that would thereafter have accrued with respect to such Excess
Payment over
(b) such Excess Payment.
For purposes of this definition, (1) the present values of such Excess
Payment and interest thereon shall be calculated assuming that such Excess
Payment had been paid on the Note Payment Date or Note Payment Dates on
which such Excess Payment would have otherwise been paid if a portion of
the principal amount of the applicable Class of Timber Notes that equals
(but does not exceed) the Scheduled Amortization Amount for such Class on
each such Note Payment Date were paid on such Note Payment Date, (2)
"present value" shall be computed in accordance with generally accepted
financial practice based on a 360-day year of twelve 30-day months and at a
discount rate, compounded semiannually on each Note Payment Date, equal to
the Reinvestment Yield and (3) "Reinvestment Yield" shall be determined
by reference to the most recent Federal Reserve Statistical Release H.
15(519) (or, if such Statistical Release is no longer published, any
publicly available source of similar market data) that became publicly
available at least two, but not more than six, Business Days prior to the
date on which the Excess Payment occurs or, in the case of an optional
redemption, prior to the redemption date and shall be the sum of (A) 0.50%
per annum plus (B) the most recent weekly average yield on actively traded
U.S. Treasury securities adjusted to a constant maturity equal to the then
remaining weighted average life (computed as described in the following
paragraph) of such Excess Payment. For purposes of clause (1) of the
preceding sentence, the Scheduled Amortization Amount for the applicable
Class of Timber Notes on any Note Payment Date or Note Payment Dates shall
be calculated assuming that, after the date on which the payment of the
Excess Payment occurs, no payments of principal (other than those assumed
to be made in clause (1) of the preceding sentence) will be made to the
holders of such Class of Timber Notes. If the weighted average life of the
Excess Payment (so computed) is not equal to the constant maturity of a
U.S. Treasury security for which a weekly average yield is given, the
Reinvestment Yield shall be obtained by linear interpolation (calculated to
the nearest one-twelfth of a year) from the weekly average yields of U.S.
Treasury securities for which such yields are given, except that if the
weighted average life of the Excess Payment (so computed) is less than one
year, the weekly average yield in actively traded U.S. Treasury securities
adjusted to a constant maturity of one year shall be used.
For the purpose of clause (3)(B) of the preceding paragraph,
"weighted average life" shall mean the number of years (calculated to the
nearest one-twelfth year) obtained by dividing (a) the sum of the products
obtained by multiplying, for each date on which an Excess Payment (or
portion thereof) would have been paid if such Excess Payment had been paid
in accordance with the Scheduled Amortization for the applicable Class of
Timber Notes set forth in Schedule B to the Indenture, (i) the number of
years (calculated to the nearest one-twelfth year) which will elapse
between the date on which such Excess Payment is made and the date on which
such Excess Payment (or portion thereof) would have been paid if such
Excess Payment had been paid in accordance with the Scheduled Amortization
Schedule for the applicable Class of Timber Notes by (ii) the Excess
Payment (or portion thereof) which would have been paid if such Excess
Payment had been paid in accordance with the Scheduled Amortization
Schedule for such Class by (b) the Excess Payment on which the Prepayment
Premium Amount is computed.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Proceeds" means all proceeds, products, offspring, rents or
profits of or derived from the Mortgaged Property. The term "Proceeds"
includes whatever is receivable or received when any of the Mortgaged
Property or Proceeds is sold, collected, exchanged or otherwise disposed
of, whether such disposition is voluntary or involuntary, and includes,
without limitation, all rights to payment, including return premiums, with
respect to any insurance relating thereto.
"Producer Price Index Inflation Factor" means, with respect to any
date, a fraction, the numerator of which is the then most recent PPI Index
and the denominator of which is the PPI Index in effect with respect to
January 1, 1998.
"Purchase Agreement" shall mean (i) the New Master Purchase
Agreement or (ii) any other agreement for the purchase of stumpage or logs
between the Issuer and any other Person, as the same may be extended,
renewed, modified, amended or supplemented.
"Purchase Agreement Default" means:
(a) any failure by Pacific Lumber to make any payment, transfer or
deposit to the Issuer or the Trustee in accordance with the New Master
Purchase Agreement, and the continuation of such failure for ten Business
Days after notice from the Issuer or the Trustee;
(b) any failure by Pacific Lumber to observe or perform any
covenant or agreement of Pacific Lumber under the New Master Purchase
Agreement that has a Material Adverse Effect (and if such default is
remediable, the continuation of such default for a period of 30 days after
notice from the Issuer or the Trustee);
(c) the execution by Pacific Lumber of any instrument purporting
to assign any of its duties or responsibilities under the New Master
Purchase Agreement except as expressly permitted by the New Master Purchase
Agreement;
(d) any representation or warranty of Pacific Lumber in the New
Master Purchase Agreement shall prove to have been incorrect as of the time
when the same was made and the circumstance or condition in respect of
which such representation or warranty was incorrect has a Material Adverse
Effect (and if such default is remediable, the continuation of such default
for a period of 30 days after notice from the Issuer or the Trustee);
(e) the Bankruptcy or Insolvency of Pacific Lumber; or
(f) the failure by the applicable Affiliate of the Issuer to
transfer the Elk River Timberlands, if any, to the Issuer within the time
period specified under the definition of "Elk River Timberlands," and the
continuation of such failure for ten Business Days after notice from the
Issuer or the Trustee.
"QIB" means "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"qualifying trustee" shall have the meaning set forth in Section
8.4 of the Indenture.
"Quitclaim Deed" has the meaning assigned to such term in the
definition of "Conveyance Documents."
"Rating Agencies" means, at any time, S&P and Xxxxx'x or any
successor to each such corporation's business of rating securities, which
is then providing a rating for any of the Timber Notes.
"Rating Agency Condition" means, with respect to the issuance of
any Additional Timber Notes, that at the time of the issuance of such
Additional Timber Notes and after giving effect to the issuance thereof,
the Timber Notes shall be rated by S&P and Xxxxx'x not lower than the
Required Note Ratings.
"Rating Agency Confirmation" means, with respect to any action
proposed to be taken by the Issuer, that each of the Rating Agencies which
is then providing a rating for the Timber Notes shall have unconditionally
(except for conditions which will be fulfilled prior to consummation of the
transaction requiring Rating Agency Confirmation) confirmed in writing that
the contemplated action will not result in a downgrade, withdrawal or
qualification of the then current rating given each Class of Timber Notes
then outstanding by such Rating Agency.
"Rating Agency Evaluation" shall mean, with respect to any action
proposed to be taken by the Issuer, that each of the Rating Agencies which
is then providing a rating for the Timber Notes shall have indicated in
writing the rating which will be given to the Timber Notes of each Class by
such Rating Agency as a consequence of such action, which may be a
downgrading of such rating.
"Record Date" for any Note Payment Date, means the close of
business on the fifth day of the month in which such Note Payment Date
occurs. If a Record Date is not a Business Day, the Record Date shall not
be affected.
"Register" shall have the meaning set forth in Section 2.3 of the
Indenture.
"Registered Exchange Offer" shall mean the proposed offer of the
Issuer to issue and deliver to the Holders of the Registrable Securities
that are not prohibited by any law or policy of the SEC from participating
in such offer, in exchange for the Registrable Securities of each Class, a
like aggregate principal amount of the Exchange Timber Notes of such Class.
"Registrable Securities" shall mean the Timber Notes; provided,
however, that any Timber Note shall cease to be a Registrable Security when
(i) such Timber Note has been exchanged for a freely tradeable Exchange
Timber Note upon consummation of the Registered Exchange Offer and is
thereafter freely tradeable by the holder thereof not an Affiliate of the
Issuer, (ii) a Registration Statement with respect to such Timber Note
shall have been declared effective under the Securities Act and such Timber
Note shall have been disposed of pursuant to such Registration Statement,
(iii) such Timber Note shall have been sold to the public in compliance
with Rule 144 (or any similar provision then in force) under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act, or
(iv) such Timber Note shall have ceased to be outstanding.
"Registrar" shall have the meaning set forth in Section 2.3 of the
Indenture.
"Registration Default" means, if (i) the Exchange Offer
Registration Statement or a Shelf Registration Statement, if applicable, is
not declared effective on or prior to 180 days after the Closing Date, (ii)
the Registered Exchange Offer is not consummated on or prior to 240 days
after the Closing Date or (iii) a Shelf Registration Statement is filed and
declared effective on or prior to 180 days after the Closing Date but shall
thereafter cease to be effective or usable (at any time that the Issuer is
obligated to maintain the effectiveness thereof) in connection with resales
of Timber Notes or Exchange Timber Notes in accordance with and during the
periods specified in the Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated the Closing Date, between the Issuer and Salomon Brothers
Inc, as representative for Salomon Brothers Inc, BancAmerica Xxxxxxxxx
Xxxxxxxx, Bear, Xxxxxxx & Co. Inc. and Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation, as initial purchasers.
"Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement.
"Regular Interest" means interest on the unpaid portions of the
principal amounts of the outstanding Timber Notes (computed on the basis of
a 360-day year of twelve 30-day months).
"Regulation S Transfer Certificate" means a certificate
substantially in the form of Exhibit H to the Indenture.
"Regulation S Exchange Certificate" means a certificate
substantially in the form of Exhibit I to the Indenture.
"Reinvestment Factor" means, for any Monthly Deposit Date in each
year, the following factors:
Monthly Deposit Dates Factor
-------------------------- --------------------------
January 20 and July 20 1.00000
February 20 and August 20 1.02872
March 20 and September 20 1.02291
April 20 and October 20 1.01713
May 20 and November 20 1.01139
June 20 and December 20 1.00568
"Reinvestment Yield" has the meaning given to such term in the
definition of "Prepayment Premium Amount".
"Release and Substitution Notice" has the meaning given to such
term in Section 6.4 of the Indenture.
"Release and Substitution Documents" has the meaning given to such
term in Section 6.4 of the Indenture.
"Release Date" has the meaning given to such term under the
definition of "Maximum Non-Cash Consideration Amount."
"Release Documents" has the meaning given to such term in Section
6.1 of the Indenture.
"Release Notice" has the meaning given to such term in Section 6.1
of the Indenture.
"Required Liquidity Amount", as of any date, is an amount equal to
the aggregate, for all Classes of Timber Notes outstanding, of (i) the Note
Rate for such Class multiplied by (ii) the principal amount of such Class
then outstanding. The Required Liquidity Amount may be modified in
connection with the issuance of Additional Timber Notes.
"Required Liquidity Provider Rating" means, with respect to a
Liquidity Provider, a rating on its short-term unsecured debt obligations
of not less than P-1 by Xxxxx'x and A-1 by S&P or, if S&P and Xxxxx'x have
not rated such Liquidity Provider's short-term unsecured debt obligations,
a rating on its long-term unsecured debt obligations of not less than Aa2
by Xxxxx'x and not less than AA by S&P or, in each case, if any such Rating
Agency adopts a new rating system, any successor rating thereto.
"Required Note Ratings" shall mean:
Rating for
------------------------
Rating Agency Class A-1 Class A-2 Class A-3
-------------- --------- --------- ---------
Xxxxx'x A1 A3 Baa2
S&P A A BBB
or, if any such Rating Agency adopts a new rating system, any successor
rating thereto.
"Responsible Officer" or "Officer"
(a) of any Person that is a corporation (other than the Trustee),
means the chairman of the board of directors, the president or any vice
president, the controller or any assistant controller, the treasurer or
any assistant treasurer, or the secretary or any assistant secretary of
such Person;
(b) of any Person that is a partnership (other than the Trustee),
means any such officer of a corporate general partner of such Person or
any individual general partner of such Person;
(c) of any Person that is a limited liability company (other than
the Trustee), means the chairman of the board of managers and any other
person performing functions comparable to the functions of the officers
enumerated in (a) of this definition); and
(d) of the Trustee or the Collateral Agent, means (i) any officer
in the Corporate Trust Office of the Trustee and (ii) any other officer
of the Trustee to whom a matter is referred because of such officer's
knowledge of and familiarity with such matter.
"Restricted Global Notes" has the meaning set forth in Section 2.1
of the Indenture.
"Restricted Payment" shall have the meaning set forth in Section
4.11 of the Indenture.
"Restricted Period" means the period from the Closing Date through
the 40th day after the Closing Date.
"Rule 144A Transfer Certificate" means a certificate substantially
in the form of Exhibit G to the Indenture.
"Rule 144A Exchange Certificate" means a certificate substantially
in the form of Exhibit J to the Indenture.
"Salmon Creek" means Salmon Creek Corporation, a Delaware
corporation, and any successor in interest thereto.
"Scotia Pacific" means Scotia Pacific Holding Company, a Delaware
corporation.
"Scheduled Amortization" means, for any Class of Timber Notes, the
amount of principal payments on the Timber Notes of such Class set forth
for such Class under the column headed "Scheduled Amortization" in Schedule
B to the Indenture.
"Scheduled Amortization Amount" means, for any Class of Timber
Notes, as of any date, the excess, if any, of:
(i) the sum of all amounts specified with respect to such
Class in Schedule B to the Indenture as Scheduled Amortization opposite
the respective dates occurring on or before such date, over
(ii) the aggregate principal amount that was paid on the
Timber Notes of such Class prior to such date.
"Scheduled Termination Date" means the date specified under the
Line of Credit Agreement, as of which, at 5:00 p.m. New York City time or
such other time as is stated in the Line of Credit Agreement, the Liquidity
Providers thereunder cease to be required to make Advances (other than by
reason of the occurrence of a Line of Credit Acceleration or a Termination
Advance having been made), as such date may be extended from time to time.
"SEC" means the Securities and Exchange Commission or any successor
agency responsible for the administration of the Securities Act.
"Second Pacific Lumber Grant Deed" has the meaning given to such
term in the definition of "Conveyance Documents."
"S&P" means Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, or any successor to such division's business of rating
securities.
"Section 6.1 Notes" shall have the meaning given to such term in
Section 6.1 of the Indenture.
"Secured Obligations" means all indebtedness, liabilities and other
obligations described or referred to in and provided to be secured by the
Deed of Trust as set forth in the granting clause of the Deed of Trust.
"Secured Parties" means any Persons who at any time or from time to
time are holders of any of the Secured Obligations or any portion thereof.
"Securities Act" means the Securities Act of 1933, as amended and
in effect from time to time.
"Securities Intermediary" means State Street Bank and Trust
Company, acting in its capacity as a "securities intermediary" (as defined
in Section 8-102(a)(14) of the Uniform Commercial Code, and any successor
entity thereto.
"Securities Legend" means the legend set forth in Section 2.6(b) of
the Indenture.
"Security Agreement" means the security agreement set forth in
Article III of the Deed of Trust, covering and describing the Collateral
Mortgaged Property and other rights and interests of the Issuer and
securing payment of the Secured Obligations.
"Security Entitlement" means "security entitlement" as defined in
Section 8-102(a)(17) of the Uniform Commercial Code.
"Services" has the meaning given to such term in the New Services
Agreement.
"Services Fee" means, for any month, the fee for such month payable
by the Issuer to the Services Provider pursuant to Section 5.1(a)(i) of the
New Services Agreement as partial compensation for the Services provided
during such month by the Services Provider pursuant to the New Services
Agreement.
"Services Provider" means Pacific Lumber, as the initial service
provider under the New Services Agreement, together with its successors in
such capacity under the New Services Agreement.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Issuer pursuant to the provisions of Section 3 of the
Registration Rights Agreement which covers some or all of the Registrable
Securities or Exchange Timber Notes, as applicable, on an appropriate form
under Rule 415 under the Securities Act, or any similar rule that may be
adopted by the SEC, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"State" means any one of the 50 states of the United States of
America (and any additional states that may be admitted after the Closing
Date) or the District of Columbia.
"Structured Harvest Quantity" shall mean 3,397,345 Mbfe.
"Structuring Schedule" means the schedule attached to and
incorporated in the Indenture as Schedule C.
"Structuring Prices" means the prices per Mbfe set forth under
Column C in the Structuring Schedule.
"Subject Contracts" means (a) all presently existing and future
contracts or leases relating in any manner to the purchase, sale, removal,
regeneration, cutting, harvesting, hauling or storing of any Company
Timber, including, without limitation, the New Master Purchase Agreement,
(b) the New Services Agreement, (c) the Conveyance Documents, and (d) any
other agreements entered into by the Issuer subsequent to the date of the
Deed of Trust, whether or not of the same general nature as set forth in
clauses (a) through (d).
"Substitute Timber Property" means any parcel or parcels of land or
any timber rights subjected to the Lien of Deed of Trust in accordance with
Section 6.4 of the Indenture.
"Supermajority Holders," at any date, means the Holders of 66 2/3%
in aggregate outstanding principal amount of Timber Notes and any
Additional Timber Notes at such date.
"Supplemental Liquidity Provider Interest" means any interest
payable under the Line of Credit Agreement to the extent, but only to the
extent, that such interest is payable at a rate per annum that is in excess
of the rate per annum for such interest payable under the terms of the Bank
of America Credit Agreement as in effect on the Closing Date, it being
understood that no amount of interest that is or becomes payable pursuant
to the terms of the Bank of America Credit Agreement as in effect on the
Closing Date (including by reason of any payments provided for in Article
III thereof), whether or not such amount is actually payable on the Closing
Date, shall constitute Supplemental Liquidity Provider Interest.
"Takings Litigation" means any existing or future action brought by
the Issuer alleging uncompensated taking, by any governmental authority, of
Company Owned Timberlands or Company Timber Rights for public use, and
seeking just compensation from or other relief against such governmental
authority.
"Targeted Monthly Deposit Amount" means, for any Monthly Deposit
Date, the excess of (a) the sum of (i) the Debt Obligations as of such
Monthly Deposit Date plus (ii) the Discounted Servicing Obligation as of
such Monthly Deposit Date over (b) the sum of (i) the Total Collateral
Value as of such Monthly Deposit Date plus (ii) all amounts then on deposit
in the Payment Account, including interest earned thereon as of such
Monthly Deposit Date (before giving effect to any deposits made in the
Payment Account, or to any transactions effected pursuant to Section 5.7 of
the Indenture, on such Monthly Deposit Date but after deducting the amount
of any deposits made pursuant to Sections 5.3(c)(vi) and 5.3(c)(viii) of
the Indenture after the immediately preceding Note Payment Date or, if the
first Note Payment Date has not yet occurred, after the Closing Date);
provided that in no event shall the Targeted Monthly Deposit Amount be less
than the excess (if any) of (x) the amount of accrued and unpaid interest
on the principal of the outstanding Timber Notes on such Monthly Deposit
Date over (y) the balance in the Payment Account on such Monthly Deposit
Date (before giving effect to any deposits made in the Payment Account, or
to any transactions effected pursuant to Section 5.7 of the Indenture, on
such Monthly Deposit Date but after deducting the amount of any deposits
made pursuant to Sections 5.3(c)(vi) and 5.3(c)(viii) of the Indenture
after the immediately preceding Note Payment Date or, if the first Note
Payment Date has not yet occurred, after the Closing Date).
"Tax Laws" means all applicable statutes, laws, ordinances,
regulations, rules, rulings, orders, restrictions, requirements, writs,
injunctions, decrees or other official acts relating to the reporting,
imposition, rendition, collection, enforcement or other aspects of Issuer
Taxes, of every kind or character now imposed or hereafter enacted by any
Governmental Authority.
"Taxes" means all Yield Taxes and all ad valorem, occupation,
property and other taxes and assessments imposed with respect to the
Company Owned Timberlands or Company Timber Rights subject to the Lien of
the Deed of Trust (excluding income taxes and franchise taxes).
"Termination Advance" means a Downgrade Advance or a Non-Renewal
Advance, together with any Interest Advances outstanding on the date such
Downgrade Advance or Non-Renewal Advance is made.
"TIA" means the Trust Indenture Act of 1939, as amended and in
effect from time to time.
"Timber Harvesting Plans" means all permits, whether now existing
or hereafter created, filed with any Governmental Authority with respect to
the harvesting, cutting or severance of Timber.
"Timber Laws" means all applicable statutes, laws, ordinances,
regulations, rules, rulings, orders, restrictions, requirements, writs,
injunctions, decrees or other official acts relating to the harvesting,
cutting, severance, handling or transporting of Company Timber, and the
maintenance, operation and management of the Company Timber Property,
whether now or hereafter enacted or imposed by any Governmental Authority,
including, without limitation, those relating to streams, waterways,
wildlife habitat and endangered species, exclusive of Environmental Laws.
"Timber Note" or "Note" means any of the Class A-1 Timber Notes,
the Class A-2 Timber Notes and the Class A-3 Timber Notes.
"Title Commitment" means the commitment for a Title Insurance
Policy.
"Title Defect" means any encumbrance, encroachment, irregularity,
defect, or deficiency in or objection to the Issuer's title to any portion
of the Company Owned Timberlands or Company Timber Rights subject to the
Lien of the Deed of Trust (other than Permitted Encumbrances) that, alone
or in combination with other defects, renders the Issuer's title to such
Company Owned Timberlands or Company Timber Rights other than good and
marketable title.
"Title Insurance Policy" means any ALTA mortgagee's policy of title
insurance in favor of the Trustee or the Collateral Agent in respect of the
Company Owned Timberlands and Company Timber Rights subject to the Lien of
the Deed of Trust.
"Total Collateral Value" means, on any date, an amount equal to
the lesser of (a) the Deemed Collateral Value for the Monthly Calculation
Date immediately preceding such date and (b) the Structuring Collateral
Value for the Monthly Calculation Date immediately preceding such date.
"Transaction" has the meaning assigned to such term in Section 4.15
of the Indenture.
"Transferee Letter" means a letter substantially in the form of
Exhibit K to the Indenture.
"Trapping Event" shall have the meaning given to such term in
Section 5.3(d)(iii) of the Indenture.
"Tribunal" means any court or any governmental department,
commission, board, bureau, agency or instrumentality of the United States
of America or of any State, commonwealth, territory, possession, county,
parish, municipality or other governmental subdivision within the United
States of America or under the jurisdiction of the United States of
America, whether now or hereafter constituted or existing.
"Triggering Event", at any time, has the meaning assigned to such
term in the Line of Credit Agreement at such time.
"Trustee" means the Person named as "Trustee" in the recitals to
the Indenture, in its capacity as trustee under the Indenture, together
with its successors in such capacity.
"Trustee's Expenses" means any fees, expenses, and damages of, or
compensation to, the Trustee (including, without limitation, the reasonable
fees and disbursements of counsel to the Trustee) incurred pursuant to the
Indenture or owing to the Trustee as part of the Secured Obligations.
"Trustor" means the Issuer, as trustor under the Deed of Trust.
"Unallocated Payment" has the meaning given to such term in Section
5.5 of the Indenture.
"Uniform Commercial Code" means the Uniform Commercial Code as now
or hereafter in effect in the State of California.
"Unlegended Definitive Note" means a Definitive Note which does not
bear the Securities Legend.
"Unrestricted Global Notes" has the meaning ascribed to such term
in Section 2.1 of the Indenture.
"Up-Front Payment" has the meaning set forth in the definition of
Pay-as-You-Harvest- Sale.
"U.S. Government Obligations" shall have the meaning set forth in
Section 8.4 of the Indenture.
"Yield Taxes" means all yield, severance, excise, sales and other
taxes imposed on the cutting, harvesting, severing or sale of Company
Timber from the Company Owned Timberlands or the Company Timber Rights
Property subject to the Lien of the Deed of Trust (excluding income taxes
and franchise taxes).
Schedule B
MINIMUM PRINCIPAL AMORTIZATION AND SCHEDULED AMORTIZATION SCHEDULES
CLASS A-1 TIMBER NOTES
------------------------------------------------------------------------------------
(in thousands) MINIMUM PRINCIPAL
AMORTIZATION SCHEDULED AMORTIZATION
----------------------------------------- -----------------------------------------
Note Principal Principal Principal Principal
Payment Date Year Payment Balance Payment Balance
---------------------------- -------- ------------------- ------------------- ------------------- -------------------
Initial 0.0 ---- $160,700 ---- $160,700
January 20, 1999 0.5 $415 160,285 $5,360 155,340
July 20, 1999 1.0 448 159,837 2,825 152,515
January 20, 2000 1.5 10,047 149,790 12,950 139,565
July 20, 2000 2.0 411 149,379 2,915 136,650
January 20, 2001 2.5 9,996 139,383 13,114 123,537
July 20, 2001 3.0 480 138,903 3,213 120,324
January 20, 2002 3.5 10,087 128,816 13,448 106,875
July 20, 2002 4.0 703 128,113 3,693 103,182
January 20, 2003 4.5 10,378 117,735 14,015 89,167
July 20, 2003 5.0 2,062 115,672 5,306 83,861
January 20, 2004 5.5 12,121 103,552 16,013 67,847
July 20, 2004 6.0 2,649 100,902 6,193 61,654
January 20, 2005 6.5 12,856 88,046 17,066 44,588
July 20, 2005 7.0 4,182 83,864 8,015 36,573
January 20, 2006 7.5 14,794 69,071 19,291 17,282
July 20, 2006 8.0 5,857 63,213 9,988 7,294
January 20, 2007 8.5 16,892 46,321 7,294 0
July 20, 2007 9.0 7,688 38,633 0 0
January 20, 2008 9.5 19,163 19,469 0 0
July 20, 2008 10.0 1,572 17,898 0 0
January 20, 2009 10.5 11,087 6,810 0 0
July 20, 2009 11.0 2,858 3,952 0 0
January 20, 2010 11.5 3,952 0 0 0
July 20, 2010 12.0 0 0 0 0
January 20, 2011 12.5 0 0 0 0
July 20, 2011 13.0 0 0 0 0
January 20, 2012 13.5 0 0 0 0
July 20, 2012 14.0 0 0 0 0
January 20, 2013 14.5 0 0 0 0
July 20, 2013 15.0 0 0 0 0
January 20, 2014 15.5 0 0 0 0
July 20, 2014 16.0 0 0 0 0
January 20, 2015 16.5 0 0 0 0
July 20, 2015 17.0 0 0 0 0
January 20, 2016 17.5 0 0 0 0
July 20, 2016 18.0 0 0 0 0
January 20, 2017 18.5 0 0 0 0
July 20, 2017 19.0 0 0 0 0
January 20, 2018 19.5 0 0 0 0
July 20, 2018 20.0 0 0 0 0
January 20, 2019 20.5 0 0 0 0
July 20, 2019 21.0 0 0 0 0
January 20, 2020 21.5 0 0 0 0
July 20, 2020 22.0 0 0 0 0
January 20, 2021 22.5 0 0 0 0
July 20, 2021 23.0 0 0 0 0
January 20, 2022 23.5 0 0 0 0
July 20, 2022 24.0 0 0 0 0
January 20, 2023 24.5 0 0 0 0
July 20, 2023 25.0 0 0 0 0
January 20, 2024 25.5 0 0 0 0
July 20, 2024 26.0 0 0 0 0
January 20, 2025 26.5 0 0 0 0
July 20, 2025 27.0 0 0 0 0
January 20, 2026 27.5 0 0 0 0
July 20, 2026 28.0 0 0 0 0
January 20, 2027 28.5 0 0 0 0
July 20, 2027 29.0 0 0 0 0
January 20, 2028 29.5 0 0 0 0
July 20, 2028 30.0 0 0 0 0
------------------- -------------------
Total $160,700 $160,700
=================== ===================
Weighted Average Life 6.8 Years 5.0 Years
=================== ===================
CLASS A-2 TIMBER NOTES
------------------------------------------------------------------------------------
(in thousands) MINIMUM PRINCIPAL
AMORTIZATION SCHEDULED AMORTIZATION
----------------------------------------- -----------------------------------------
Note Principal Principal Principal Principal
Payment Date Year Payment Balance Payment Balance
---------------------------- -------- ------------------- ------------------- ------------------- -------------------
Initial 0.0 ---- $243,200 ---- $243,200
January 20, 1999 0.5 $0 243,200 $0 243,200
July 20, 1999 1.0 0 243,200 0 243,200
January 20, 2000 1.5 0 243,200 0 243,200
July 20, 2000 2.0 0 243,200 0 243,200
January 20, 2001 2.5 0 243,200 0 243,200
July 20, 2001 3.0 0 243,200 0 243,200
January 20, 2002 3.5 0 243,200 0 243,200
July 20, 2002 4.0 0 243,200 0 243,200
January 20, 2003 4.5 0 243,200 0 243,200
July 20, 2003 5.0 0 243,200 0 243,200
January 20, 2004 5.5 0 243,200 0 243,200
July 20, 2004 6.0 0 243,200 0 243,200
January 20, 2005 6.5 0 243,200 0 243,200
July 20, 2005 7.0 0 243,200 0 243,200
January 20, 2006 7.5 0 243,200 0 243,200
July 20, 2006 8.0 0 243,200 0 243,200
January 20, 2007 8.5 0 243,200 14,383 228,817
July 20, 2007 9.0 0 243,200 12,120 216,696
January 20, 2008 9.5 0 243,200 24,231 192,466
July 20, 2008 10.0 0 243,200 5,975 186,490
January 20, 2009 10.5 0 243,200 16,051 170,439
July 20, 2009 11.0 0 243,200 7,622 162,817
January 20, 2010 11.5 8,826 234,374 18,099 144,717
July 20, 2010 12.0 4,287 230,087 9,430 135,287
January 20, 2011 12.5 14,626 215,460 20,317 114,971
July 20, 2011 13.0 5,880 209,580 11,416 103,555
January 20, 2012 13.5 16,633 192,947 22,701 80,854
July 20, 2012 14.0 7,626 185,321 13,569 67,285
January 20, 2013 14.5 18,811 166,510 25,258 42,028
July 20, 2013 15.0 9,537 156,973 15,893 26,134
January 20, 2014 15.5 21,173 135,800 26,134 0
July 20, 2014 16.0 11,625 124,175 0 0
January 20, 2015 16.5 23,733 100,442 0 0
July 20, 2015 17.0 13,905 86,536 0 0
January 20, 2016 17.5 26,505 60,032 0 0
July 20, 2016 18.0 16,392 43,639 0 0
January 20, 2017 18.5 29,505 14,134 0 0
July 20, 2017 19.0 14,134 0 0 0
January 20, 2018 19.5 0 0 0 0
July 20, 2018 20.0 0 0 0 0
January 20, 2019 20.5 0 0 0 0
July 20, 2019 21.0 0 0 0 0
January 20, 2020 21.5 0 0 0 0
July 20, 2020 22.0 0 0 0 0
January 20, 2021 22.5 0 0 0 0
July 20, 2021 23.0 0 0 0 0
January 20, 2022 23.5 0 0 0 0
July 20, 2022 24.0 0 0 0 0
January 20, 2023 24.5 0 0 0 0
July 20, 2023 25.0 0 0 0 0
January 20, 2024 25.5 0 0 0 0
July 20, 2024 26.0 0 0 0 0
January 20, 2025 26.5 0 0 0 0
July 20, 2025 27.0 0 0 0 0
January 20, 2026 27.5 0 0 0 0
July 20, 2026 28.0 0 0 0 0
January 20, 2027 28.5 0 0 0 0
July 20, 2027 29.0 0 0 0 0
January 20, 2028 29.5 0 0 0 0
July 20, 2028 30.0 0 0 0 0
------------------- -------------------
Total $243,200 $243,200
=================== ===================
Weighted Average Life 15.9 Years 12.4 Years
=================== ===================
CLASS A-3 TIMBER NOTES
------------------------------------------------------------------------------------
(in thousands) MINIMUM PRINCIPAL
AMORTIZATION SCHEDULED AMORTIZATION
----------------------------------------- -----------------------------------------
Note Principal Principal Principal Principal
Payment Date Year Payment Balance Payment Balance
---------------------------- -------- ------------------- ------------------- ------------------- -------------------
Initial 0.0 ---- $463,348 ---- $463,348
January 20, 1999 0.5 $0 463,348 $0 463,348
July 20, 1999 1.0 0 463,348 0 463,348
January 20, 2000 1.5 0 463,348 0 463,348
July 20, 2000 2.0 0 463,348 0 463,348
January 20, 2001 2.5 0 463,348 0 463,348
July 20, 2001 3.0 0 463,348 0 463,348
January 20, 2002 3.5 0 463,348 0 463,348
July 20, 2002 4.0 0 463,348 0 463,348
January 20, 2003 4.5 0 463,348 0 463,348
July 20, 2003 5.0 0 463,348 0 463,348
January 20, 2004 5.5 0 463,348 0 463,348
July 20, 2004 6.0 0 463,348 0 463,348
January 20, 2005 6.5 0 463,348 0 463,348
July 20, 2005 7.0 0 463,348 0 463,348
January 20, 2006 7.5 0 463,348 0 463,348
July 20, 2006 8.0 0 463,348 0 463,348
January 20, 2007 8.5 0 463,348 0 463,348
July 20, 2007 9.0 0 463,348 0 463,348
January 20, 2008 9.5 0 463,348 0 463,348
July 20, 2008 10.0 0 463,348 0 463,348
January 20, 2009 10.5 0 463,348 0 463,348
July 20, 2009 11.0 0 463,348 0 463,348
January 20, 2010 11.5 0 463,348 0 463,348
July 20, 2010 12.0 0 463,348 0 463,348
January 20, 2011 12.5 0 463,348 0 463,348
July 20, 2011 13.0 0 463,348 0 463,348
January 20, 2012 13.5 0 463,348 0 463,348
July 20, 2012 14.0 0 463,348 0 463,348
January 20, 2013 14.5 0 463,348 0 463,348
July 20, 2013 15.0 0 463,348 0 463,348
January 20, 2014 15.5 0 463,348 463,348 0
July 20, 2014 16.0 0 463,348 0 0
January 20, 2015 16.5 0 463,348 0 0
July 20, 2015 17.0 0 463,348 0 0
January 20, 2016 17.5 0 463,348 0 0
July 20, 2016 18.0 0 463,348 0 0
January 20, 2017 18.5 0 463,348 0 0
July 20, 2017 19.0 4,966 458,382 0 0
January 20, 2018 19.5 32,870 425,512 0 0
July 20, 2018 20.0 6,089 419,423 0 0
January 20, 2019 20.5 15,292 404,131 0 0
July 20, 2019 21.0 7,508 396,624 0 0
January 20, 2020 21.5 17,080 379,544 0 0
July 20, 2020 22.0 9,061 370,483 0 0
January 20, 2021 22.5 19,020 351,463 0 0
July 20, 2021 23.0 10,759 340,703 0 0
January 20, 2022 23.5 21,123 319,581 0 0
July 20, 2022 24.0 12,616 306,965 0 0
January 20, 2023 24.5 23,401 283,564 0 0
July 20, 2023 25.0 14,642 268,922 0 0
January 20, 2024 25.5 25,869 243,053 0 0
July 20, 2024 26.0 16,853 226,201 0 0
January 20, 2025 26.5 28,540 197,661 0 0
July 20, 2025 27.0 19,262 178,399 0 0
January 20, 2026 27.5 31,431 146,969 0 0
July 20, 2026 28.0 21,885 125,084 0 0
January 20, 2027 28.5 34,558 90,526 0 0
July 20, 2027 29.0 24,740 65,785 0 0
January 20, 2028 29.5 37,940 27,845 0 0
July 20, 2028 30.0 27,845 0 0 0
------------------- -------------------
Total $463,348 $463,348
=================== ===================
Weighted Average Life 25.5 Years 15.5 Years
=================== ===================
Schedule C
STRUCTURING SCHEDULE ASSUMPTIONS
(Dollars in thousands, except prices)
ANNUAL ESCALATORS
--------------------------------------
Operating Costs 5.00%
Capital Expenditures 5.00%
Prices 3.50%
OTHER
----------------------------------------------------------------------------------
Years
--------------------------------------------------
1.0 - 11.5 11.5 - 19.0 19.0 - 30.0
--------------- --------------- ---------------
Structuring Note Rate (1) 6.55% 7.11% 7.71%
Class A-1 Class A-2 Class A-3
--------------- --------------- ---------------
Note Balance $160,700 $243,200 $463,348
Production Haircut (2) 10%
Effective Price Haircut (3) 25%
SEASONALITY (% OF YEAR'S
HARVEST ALLOCATED TO EACH MONTH)
------------------------------------------------
January 1.37%
February 2.76%
March 4.88%
April 11.77%
May 10.92%
June 12.82%
July 12.59%
August 13.67%
September 11.84%
October 10.59%
November 4.62%
December 2.18%
----------------------- -----------------------
100.00%
ANNUAL HARVEST STRUCTURING
LEVELS AFTER PRICE LEVELS SCHEDULED
PRODUCTION AFTER PRICE ANNUAL ANNUAL ANNUAL
HAIRCUT HAIRCUT OPERATING YIELD CAPITAL
YEAR (MBFE) ($ PER MBFE) COSTS (4) TAXES (5) EXPENDITURES (6)
-------------------- -------------------- -------------------- -------------------- -------------------- --------------------
1998 (7) 69,375 $568 $2,827 $1,142 $2,965
1999 146,047 619 6,474 2,621 6,795
2000 146,047 618 6,796 2,618 7,135
2001 146,047 619 7,134 2,623 7,492
2002 146,047 623 7,489 2,639 7,866
2003 146,047 645 7,862 2,731 8,260
2004 146,047 653 8,254 2,766 8,673
2005 146,047 676 8,665 2,863 9,106
2006 146,047 700 9,097 2,964 9,562
2007 146,047 724 9,550 3,067 10,040
2008 118,918 750 9,502 2,585 9,708
2009 118,918 776 9,975 2,675 10,193
2010 118,918 803 10,473 2,769 10,703
2011 118,918 831 10,995 2,866 11,238
2012 118,918 860 11,543 2,966 11,800
2013 118,918 890 12,119 3,070 12,390
2014 118,918 921 12,723 3,177 13,010
2015 118,918 954 13,358 3,289 13,660
2016 118,918 987 14,024 3,404 14,343
2017 118,918 1,022 14,724 3,523 15,060
2018 78,923 1,057 13,773 2,420 13,135
2019 78,923 1,094 14,460 2,505 13,791
2020 78,923 1,133 15,182 2,592 14,481
2021 78,923 1,172 15,939 2,683 15,205
2022 78,923 1,213 16,735 2,777 15,965
2023 78,923 1,256 17,570 2,874 16,763
2024 78,923 1,300 18,447 2,975 17,602
2025 78,923 1,345 19,368 3,079 18,482
2026 78,923 1,392 20,335 3,187 19,406
2027 78,923 1,441 21,350 3,298 20,376
2028 (7) 35,140 1,491 11,208 1,520 10,697
-------------------- ------------------- ------------------- ------------------- ------------------- -------------------
3,397,345 $377,952 $86,269 $375,902
=================== =================== =================== ===================
---------------
(1) The transaction was sized using interest rates for each class with an
overall effective rate of 7.43%.
(2) Discount from Initial Harvest Schedule.
(3) Effective discount from June 1998 SBE Prices. Haircuts range from
approximately 17.4% to 26.6% to effect the equivalent of a 25%
overall haircut.
(4) Annual Operating Costs include Administrative Expenses, Property
Taxes and the Services Fee.
(5) Annual Yield Taxes are calculated by multiplying revenues by 2.9%.
(6) Annual Capital Expenditures relate primarily to reforestation of
timberlands and construction and rehabilitation of logging roads.
(7) Amounts for 1998 and 2028 represent approximately six months of
operations.
A B C D E F G
------------- ----------- ------------ --------- ----- --------------- -----------
Structuring
Deemed
Production Structuring Remaining
Month Structuring Mbfe Harvest
(Period Harvest Price Operating Yield Capital Quantity
Ending) (Mbfe) ($ per Mbfe) Costs(1) Taxes Expenditures(2) (Mbfe)(3)
------------- ----------- ------------ --------- ----- --------------- -----------
Initial (as of
Closing) 3,397,345
Jul-98 6,742 $568 $195 $111 $203 3,390,603
Aug-98 19,967 568 526 329 552 3,370,636
Sep-98 17,285 568 526 284 552 3,353,351
Oct-98 15,461 568 526 255 552 3,337,890
Nov-98 6,742 568 526 111 552 3,331,148
Dec-98 3,178 568 526 52 552 3,327,970
Jan-99 1,998 619 539 36 566 3,325,972
Feb-99 4,031 619 539 72 566 3,321,942
Mar-99 7,127 619 539 128 566 3,314,814
Apr-99 17,193 619 539 309 566 3,297,621
May-99 15,952 619 539 286 566 3,281,670
Jun-99 18,725 619 539 336 566 3,262,944
Jul-99 18,388 619 539 330 566 3,244,556
Aug-99 19,967 619 539 358 566 3,224,590
Sep-99 17,285 619 539 310 566 3,207,305
Oct-99 15,461 619 539 278 566 3,191,843
Nov-99 6,742 619 539 121 566 3,185,102
Dec-99 3,178 619 539 57 566 3,181,924
Jan-00 1,998 618 566 36 595 3,179,926
Feb-00 4,031 618 566 72 595 3,175,895
Mar-00 7,127 618 566 128 595 3,168,768
Apr-00 17,193 618 566 308 595 3,151,575
May-00 15,952 618 566 286 595 3,135,623
Jun-00 18,725 618 566 336 595 3,116,898
Jul-00 18,388 618 566 330 595 3,098,509
Aug-00 19,967 618 566 358 595 3,078,543
Sep-00 17,285 618 566 310 595 3,061,258
Oct-00 15,461 618 566 277 595 3,045,796
Nov-00 6,742 618 566 121 595 3,039,055
Dec-00 3,178 618 566 57 595 3,035,877
Jan-01 1,998 619 595 36 624 3,033,879
Feb-01 4,031 619 595 72 624 3,029,848
Mar-01 7,127 619 595 128 624 3,022,721
Apr-01 17,193 619 595 309 624 3,005,528
May-01 15,952 619 595 286 624 2,989,576
Jun-01 18,725 619 595 336 624 2,970,851
Jul-01 18,388 619 595 330 624 2,952,463
Aug-01 19,967 619 595 359 624 2,932,496
Sep-01 17,285 619 595 310 624 2,915,211
Oct-01 15,461 619 595 278 624 2,899,750
Nov-01 6,742 619 595 121 624 2,893,008
Dec-01 3,178 619 595 57 624 2,889,830
Jan-02 1,998 623 624 36 656 2,887,832
Feb-02 4,031 623 624 73 656 2,883,801
Mar-02 7,127 623 624 129 656 2,876,674
Apr-02 17,193 623 624 311 656 2,859,481
May-02 15,952 623 624 288 656 2,843,530
Jun-02 18,725 623 624 338 656 2,824,804
Jul-02 18,388 623 624 332 656 2,806,416
Aug-02 19,967 623 624 361 656 2,786,449
Sep-02 17,285 623 624 312 656 2,769,164
Oct-02 15,461 623 624 279 656 2,753,703
Nov-02 6,742 623 624 122 656 2,746,962
Dec-02 3,178 623 624 57 656 2,743,784
Jan-03 1,998 645 655 37 688 2,741,786
Feb-03 4,031 645 655 75 688 2,737,755
Mar-03 7,127 645 655 133 688 2,730,628
Apr-03 17,193 645 655 322 688 2,713,435
May-03 15,952 645 655 298 688 2,697,483
Jun-03 18,725 645 655 350 688 2,678,758
Jul-03 18,388 645 655 344 688 2,660,369
Aug-03 19,967 645 655 373 688 2,640,403
Sep-03 17,285 645 655 323 688 2,623,118
Oct-03 15,461 645 655 289 688 2,607,656
Nov-03 6,742 645 655 126 688 2,600,915
Dec-03 3,178 645 655 59 688 2,597,737
Jan-04 1,998 653 688 38 723 2,595,739
Feb-04 4,031 653 688 76 723 2,591,708
Mar-04 7,127 653 688 135 723 2,584,581
Apr-04 17,193 653 688 326 723 2,567,338
May-04 15,952 653 688 302 723 2,551,436
Jun-04 18,725 653 688 355 723 2,532,711
Jul-04 18,388 653 688 348 723 2,514,323
Aug-04 19,967 653 688 378 723 2,494,356
Sep-04 17,285 653 688 327 723 2,477,071
Oct-04 15,461 653 688 293 723 2,461,610
Nov-04 6,742 653 688 128 723 2,454,868
Dec-04 3,178 653 688 60 723 2,451,690
Jan-05 1,998 676 722 39 759 2,449,692
Feb-05 4,031 676 722 79 759 2,445,661
Mar-05 7,127 676 722 140 759 2,438,534
Apr-05 17,193 676 722 337 759 2,421,341
May-05 15,952 676 722 313 759 2,405,389
Jun-05 18,725 676 722 367 759 2,386,664
Jul-05 18,388 676 722 361 759 2,368,276
Aug-05 19,967 676 722 391 759 2,348,309
Sep-05 17,285 676 722 339 759 2,331,024
Oct-05 15,461 676 722 303 759 2,315,563
Nov-05 6,742 676 722 132 759 2,308,821
Dec-05 3,178 676 722 62 759 2,305,643
Jan-06 1,998 700 758 41 797 2,303,646
Feb-06 4,031 700 758 82 797 2,299,615
Mar-06 7,127 700 758 145 797 2,292,488
Apr-06 17,193 700 758 349 797 2,275,295
May-06 15,952 700 758 324 797 2,259,343
Jun-06 18,725 700 758 380 797 2,240,617
Jul-06 18,388 700 758 373 797 2,222,229
Aug-06 19,967 700 758 405 797 2,202,263
Sep-06 17,285 700 758 351 797 2,184,978
Oct-06 15,461 700 758 314 797 2,169,516
Nov-06 6,742 700 758 137 797 2,162,775
Dec-06 3,178 700 758 64 797 2,159,597
Jan-07 1,998 724 796 42 837 2,157,599
Feb-07 4,031 724 796 85 837 2,153,568
Mar-07 7,127 724 796 150 837 2,146,441
Apr-07 17,193 724 796 361 837 2,129,248
May-07 15,952 724 796 335 837 2,113,296
Jun-07 18,725 724 796 393 837 2,094,571
Jul-07 18,388 724 796 386 837 2,076,183
Aug-07 19,967 724 796 419 837 2,056,216
Sep-07 17,285 724 796 363 837 2,038,931
Oct-07 15,461 724 796 325 837 2,023,470
Nov-07 6,742 724 796 142 837 2,016,728
Dec-07 3,178 724 796 67 837 2,013,550
Jan-08 1,627 750 792 35 809 2,011,923
Feb-08 3,282 750 792 71 809 2,008,641
Mar-08 5,803 750 792 126 809 2,002,838
Apr-08 13,999 750 792 304 809 1,988,839
May-08 12,989 750 792 282 809 1,975,850
Jun-08 15,247 750 792 331 809 1,960,603
Jul-08 14,975 750 792 325 809 1,945,630
Aug-08 16,258 750 792 353 809 1,929,372
Sep-08 14,074 750 792 306 809 1,915,298
Oct-08 12,589 750 792 274 809 1,902,709
Nov-08 5,489 750 792 119 809 1,897,219
Dec-08 2,588 750 792 56 809 1,894,632
Jan-09 1,627 776 831 37 849 1,893,005
Feb-09 3,282 776 831 74 849 1,889,723
Mar-09 5,803 776 831 131 849 1,883,920
Apr-09 13,999 776 831 315 849 1,869,920
May-09 12,989 776 831 292 849 1,856,932
Jun-09 15,247 776 831 343 849 1,841,684
Jul-09 14,973 776 831 337 849 1,826,712
Aug-09 16,258 776 831 366 849 1,810,454
Sep-09 14,074 776 831 317 849 1,796,380
Oct-09 12,589 776 831 283 849 1,783,790
Nov-09 5,489 776 831 123 849 1,778,301
Dec-09 2,588 776 831 58 849 1,775,714
Jan-10 1,627 803 873 38 892 1,774,087
Feb-10 3,282 803 873 76 892 1,770,805
Mar-10 5,803 803 873 135 892 1,765,001
Apr-10 13,999 803 873 326 892 1,751,002
May-10 12,989 803 873 302 892 1,738,013
Jun-10 15,247 803 873 355 892 1,722,766
Jul-10 14,973 803 873 349 892 1,707,794
Aug-10 16,258 803 873 379 892 1,691,536
Sep-10 14,074 803 873 328 892 1,677,462
Oct-10 12,589 803 873 293 892 1,664,872
Nov-10 5,489 803 873 128 892 1,659,383
Dec-10 2,588 803 873 60 892 1,656,795
Jan-11 1,627 831 916 39 937 1,655,168
Feb-11 3,282 831 916 79 937 1,651,886
Mar-11 5,803 831 916 140 937 1,646,083
Apr-11 13,999 831 916 337 937 1,632,084
May-11 12,989 831 916 313 937 1,619,095
Jun-11 15,247 831 916 367 937 1,603,848
Jul-11 14,973 831 916 361 937 1,588,875
Aug-11 16,258 831 916 392 937 1,572,618
Sep-11 14,074 831 916 339 937 1,558,543
Oct-11 12,589 831 916 303 937 1,545,954
Nov-11 5,489 831 916 132 937 1,540,465
Dec-11 2,588 831 916 62 937 1,537,877
Jan-12 1,627 860 962 41 983 1,536,250
Feb-12 3,282 860 962 82 983 1,532,968
Mar-12 5,803 860 962 145 983 1,527,165
Apr-12 13,999 860 962 349 983 1,513,166
May-12 12,989 860 962 324 983 1,500,177
Jun-12 15,247 860 962 380 983 1,484,930
Jul-12 14,973 860 962 373 983 1,469,957
Aug-12 16,258 860 962 406 983 1,453,699
Sep-12 14,074 860 962 351 983 1,439,625
Oct-12 12,589 860 962 314 983 1,427,036
Nov-12 5,489 860 962 137 983 1,421,546
Dec-12 2,588 860 962 65 983 1,418,959
Jan-13 1,627 890 1,010 42 1,033 1,417,332
Feb-13 3,282 890 1,010 85 1,033 1,414,050
Mar-13 5,803 890 1,010 150 1,033 1,408,247
Apr-13 13,999 890 1,010 361 1,033 1,394,247
May-13 12,989 890 1,010 335 1,033 1,381,259
Jun-13 15,247 890 1,010 394 1,033 1,366,011
Jul-13 14,973 890 1,010 387 1,033 1,351,039
Aug-13 16,258 890 1,010 420 1,033 1,334,781
Sep-13 14,074 890 1,010 363 1,033 1,320,707
Oct-13 12,589 890 1,010 325 1,033 1,308,117
Nov-13 5,489 890 1,010 142 1,033 1,302,628
Dec-13 2,588 890 1,010 67 1,033 1,300,041
Jan-14 1,627 921 1,060 43 1,084 1,298,414
Feb-14 3,282 921 1,060 88 1,084 1,295,132
Mar-14 5,803 921 1,060 155 1,084 1,289,328
Apr-14 13,999 921 1,060 374 1,084 1,275,329
May-14 12,989 921 1,060 347 1,084 1,262,340
Jun-14 15,247 921 1,060 407 1,084 1,247,093
Jul-14 14,973 921 1,060 400 1,084 1,232,121
Aug-14 16,258 921 1,060 434 1,084 1,215,863
Sep-14 14,074 921 1,060 376 1,084 1,201,789
Oct-14 12,589 921 1,060 336 1,084 1,189,199
Nov-14 5,489 921 1,060 147 1,084 1,183,710
Dec-14 2,588 921 1,060 69 1,084 1,181,122
Jan-15 1,627 954 1,113 45 1,138 1,179,495
Feb-15 3,282 954 1,113 91 1,138 1,176,213
Mar-15 5,803 954 1,113 160 1,138 1,170,410
Apr-15 13,999 954 1,113 387 1,138 1,156,411
May-15 12,989 954 1,113 359 1,138 1,143,422
Jun-15 15,247 954 1,113 422 1,138 1,128,175
Jul-15 14,973 954 1,113 414 1,138 1,113,202
Aug-15 16,258 954 1,113 450 1,138 1,096,945
Sep-15 14,074 954 1,113 389 1,138 1,082,870
Oct-15 12,589 954 1,113 348 1,138 1,070,281
Nov-15 5,489 954 1,113 152 1,138 1,064,792
Dec-15 2,588 954 1,113 72 1,138 1,062,204
Jan-16 1,627 987 1,169 47 1,195 1,060,577
Feb-16 3,282 987 1,169 94 1,195 1,057,295
Mar-16 5,803 987 1,169 166 1,195 1,051,492
Apr-16 13,999 987 1,169 401 1,195 1,037,492
May-16 12,989 987 1,169 372 1,195 1,024,504
Jun-16 15,247 987 1,169 436 1,195 1,009,257
Jul-16 14,973 987 1,169 429 1,195 994,284
Aug-16 16,258 987 1,169 465 1,195 978,026
Sep-16 14,074 987 1,169 403 1,195 963,952
Oct-16 12,589 987 1,169 360 1,195 951,363
Nov-16 5,489 987 1,169 157 1,195 945,873
Dec-16 2,588 987 1,169 74 1,195 943,286
Jan-17 1,627 1,022 1,227 48 1,255 941,659
Feb-17 3,282 1,022 1,227 97 1,255 938,377
Mar-17 5,803 1,022 1,227 172 1,255 932,574
Apr-17 13,999 1,022 1,227 415 1,255 918,574
May-17 12,989 1,022 1,227 385 1,255 905,585
Jun-17 15,247 1,022 1,227 452 1,255 890,338
Jul-17 14,973 1,022 1,227 444 1,255 875,366
Aug-17 16,258 1,022 1,227 482 1,255 859,108
Sep-17 14,074 1,022 1,227 417 1,255 845,034
Oct-17 12,589 1,022 1,227 373 1,255 832,444
Nov-17 5,489 1,022 1,227 163 1,255 826,955
Dec-17 2,588 1,022 1,227 77 1,255 824,367
Jan-18 1,080 1,057 1,148 33 1,095 823,288
Feb-18 2,178 1,057 1,148 67 1,095 821,110
Mar-18 3,851 1,057 1,148 118 1,095 817,258
Apr-18 9,291 1,057 1,148 285 1,095 807,967
May-18 8,620 1,057 1,148 264 1,095 799,347
Jun-18 10,119 1,057 1,148 310 1,095 789,228
Jul-18 9,937 1,057 1,148 305 1,095 779,291
Aug-18 10,790 1,057 1,148 331 1,095 768,501
Sep-18 9,341 1,057 1,148 286 1,095 759,160
Oct-18 8,355 1,057 1,148 256 1,095 750,805
Nov-18 3,643 1,057 1,148 112 1,095 747,162
Dec-18 1,717 1,057 1,148 53 1,095 745,445
Jan-19 1,080 1,094 1,205 34 1,149 744,365
Feb-19 2,178 1,094 1,205 69 1,149 742,187
Mar-19 3,851 1,094 1,205 122 1,149 738,335
Apr-19 9,291 1,094 1,205 295 1,149 729,044
May-19 8,620 1,094 1,205 274 1,149 720,424
Jun-19 10,119 1,094 1,205 321 1,149 710,305
Jul-19 9,937 1,094 1,205 315 1,149 700,368
Aug-19 10,790 1,094 1,205 342 1,149 689,578
Sep-19 9,341 1,094 1,205 296 1,149 680,238
Oct-19 8,355 1,094 1,205 265 1,149 671,882
Nov-19 3,643 1,094 1,205 116 1,149 668,239
Dec-19 1,717 1,094 1,205 55 1,149 666,522
Jan-20 1,080 1,133 1,265 35 1,207 665,442
Feb-20 2,178 1,133 1,265 72 1,207 663,264
Mar-20 3,851 1,133 1,265 127 1,207 659,413
Apr-20 9,291 1,133 1,265 305 1,207 650,122
May-20 8,620 1,133 1,265 283 1,207 641,501
Jun-20 10,119 1,133 1,265 332 1,207 631,382
Jul-20 9,937 1,133 1,265 326 1,207 621,445
Aug-20 10,790 1,133 1,265 354 1,207 610,656
Sep-20 9,341 1,133 1,265 307 1,207 601,315
Oct-20 8,355 1,133 1,265 274 1,207 592,960
Nov-20 3,643 1,133 1,265 120 1,207 589,316
Dec-20 1,717 1,133 1,265 56 1,207 587,599
Jan-21 1,080 1,172 1,328 37 1,267 586,519
Feb-21 2,178 1,172 1,328 74 1,267 584,341
Mar-21 3,851 1,172 1,328 131 1,267 580,490
Apr-21 9,291 1,172 1,328 316 1,267 571,199
May-21 8,620 1,172 1,328 293 1,267 562,579
Jun-21 10,119 1,172 1,328 344 1,267 552,459
Jul-21 9,937 1,172 1,328 338 1,267 542,523
Aug-21 10,790 1,172 1,328 367 1,267 531,733
Sep-21 9,341 1,172 1,328 318 1,267 522,392
Oct-21 8,355 1,172 1,328 284 1,267 514,037
Nov-21 3,643 1,172 1,328 124 1,267 510,394
Dec-21 1,717 1,172 1,328 58 1,267 508,676
Jan-22 1,080 1,213 1,395 38 1,330 507,597
Feb-22 2,178 1,213 1,395 77 1,330 505,418
Mar-22 3,851 1,213 1,395 136 1,330 501,567
Apr-22 9,291 1,213 1,395 327 1,330 492,276
May-22 8,620 1,213 1,395 303 1,330 483,656
Jun-22 10,119 1,213 1,395 356 1,330 473,537
Jul-22 9,937 1,213 1,395 350 1,330 463,600
Aug-22 10,790 1,213 1,395 380 1,330 452,810
Sep-22 9,341 1,213 1,395 329 1,330 443,469
Oct-22 8,355 1,213 1,395 294 1,330 435,114
Nov-22 3,643 1,213 1,395 128 1,330 431,471
Dec-22 1,717 1,213 1,395 60 1,330 429,754
Jan-23 1,080 1,256 1,464 39 1,397 428,674
Feb-23 2,178 1,256 1,464 79 1,397 426,496
Mar-23 3,851 1,256 1,464 140 1,397 422,644
Apr-23 9,291 1,256 1,464 338 1,397 413,353
May-23 8,620 1,256 1,464 314 1,397 404,733
Jun-23 10,119 1,256 1,464 369 1,397 394,614
Jul-23 9,937 1,256 1,464 362 1,397 384,677
Aug-23 10,790 1,256 1,464 393 1,397 373,887
Sep-23 9,341 1,256 1,464 340 1,397 364,547
Oct-23 8,355 1,256 1,464 304 1,397 356,191
Nov-23 3,643 1,256 1,464 133 1,397 352,548
Dec-23 1,717 1,256 1,464 63 1,397 350,831
Jan-24 1,080 1,300 1,537 41 1,467 349,751
Feb-24 2,178 1,300 1,537 82 1,467 347,573
Mar-24 3,851 1,300 1,537 145 1,467 343,721
Apr-24 9,291 1,300 1,537 350 1,467 334,430
May-24 8,620 1,300 1,537 325 1,467 325,810
Jun-24 10,119 1,300 1,537 381 1,467 315,691
Jul-24 9,937 1,300 1,537 375 1,467 305,754
Aug-24 10,790 1,300 1,537 407 1,467 294,964
Sep-24 9,341 1,300 1,537 352 1,467 285,624
Oct-24 8,355 1,300 1,537 315 1,467 277,268
Nov-24 3,643 1,300 1,537 137 1,467 273,625
Dec-24 1,717 1,300 1,537 65 1,467 271,908
Jan-25 1,080 1,345 1,614 42 1,540 270,828
Feb-25 2,178 1,345 1,614 85 1,540 268,650
Mar-25 3,851 1,345 1,614 150 1,540 264,799
Apr-25 9,291 1,345 1,614 362 1,540 255,508
May-25 8,620 1,345 1,614 336 1,540 246,887
Jun-25 10,119 1,345 1,614 395 1,540 236,768
Jul-25 9,937 1,345 1,614 388 1,540 226,831
Aug-25 10,790 1,345 1,614 421 1,540 216,042
Sep-25 9,341 1,345 1,614 364 1,540 206,701
Oct-25 8,355 1,345 1,614 326 1,540 198,346
Nov-25 3,643 1,345 1,614 142 1,540 194,703
Dec-25 1,717 1,345 1,614 67 1,540 192,985
Jan-26 1,080 1,392 1,695 44 1,617 191,906
Feb-26 2,178 1,392 1,695 88 1,617 189,727
Mar-26 3,851 1,392 1,695 156 1,617 185,876
Apr-26 9,291 1,392 1,695 375 1,617 176,585
May-26 8,620 1,392 1,695 348 1,617 167,965
Jun-26 10,119 1,392 1,695 409 1,617 157,846
Jul-26 9,937 1,392 1,695 401 1,617 147,909
Aug-26 10,790 1,392 1,695 436 1,617 137,119
Sep-26 9,341 1,392 1,695 377 1,617 127,778
Oct-26 8,355 1,392 1,695 337 1,617 119,423
Nov-26 3,643 1,392 1,695 147 1,617 115,780
Dec-26 1,717 1,392 1,695 69 1,617 114,062
Jan-27 1,080 1,441 1,779 45 1,698 112,983
Feb-27 2,178 1,441 1,779 91 1,698 110,805
Mar-27 3,851 1,441 1,779 161 1,698 106,953
Apr-27 9,291 1,441 1,779 388 1,698 97,662
May-27 8,620 1,441 1,779 360 1,698 89,042
Jun-27 10,119 1,441 1,779 423 1,698 78,923
Jul-27 9,937 1,441 1,779 415 1,698 68,986
Aug-27 10,790 1,441 1,779 451 1,698 58,196
Sep-27 9,341 1,441 1,779 390 1,698 48,855
Oct-27 8,355 1,441 1,779 349 1,698 40,500
Nov-27 3,643 1,441 1,779 152 1,698 36,857
Dec-27 1,717 1,441 1,779 72 1,698 35,140
Jan-28 1,080 1,491 1,868 47 1,783 34,060
Feb-28 2,178 1,491 1,868 94 1,783 31,882
Mar-28 3,851 1,491 1,868 167 1,783 28,030
Apr-28 9,291 1,491 1,868 402 1,783 18,739
May-28 8,620 1,491 1,868 373 1,783 10,119
Jun-28 10,119 1,491 1,868 438 1,783 0
-----------
Total 3,397,345
A H I J K L
--------------- ----------- ----------- ----------- ----------- ---------------
Column I = Column J + Column K
------------------------------
Production Collateral Structuring Discounted Minimum
Month Value Collateral Servicing Structuring Principal
(Period Ending) Factor(4) Value Obligation Balance Amortization(5)
--------------- ----------- ----------- ----------- ----------- ---------------
Initial (as of 0.291331621 $989,754 $122,506 $867,248
Closing
Jul-98 0.292674900 992,344 123,061 869,293 $0
Aug-98 0.293161304 988,140 123,288 864,852 0
Sep-98 0.293828925 985,312 123,516 861,796 0
Oct-98 0.294621701 983,415 123,745 859,670 0
Nov-98 0.296067639 986,245 123,976 862,269 0
Dec-98 0.297791251 991,040 124,208 866,833 415
Jan-99 0.299589922 996,428 124,428 871,999 0
Feb-99 0.301224321 1,000,650 124,650 875,999 0
Mar-99 0.302598435 1,003,058 124,873 878,184 0
Apr-99 0.303091129 999,480 125,098 874,382 0
May-99 0.303678647 996,573 125,324 871,249 0
Jun-99 0.304000316 991,936 125,551 866,385 448
Jul-99 0.304434115 987,754 125,780 861,974 0
Aug-99 0.304710604 982,567 126,010 856,557 0
Sep-99 0.305202120 978,876 126,241 852,635 0
Oct-99 0.305841456 976,198 126,474 849,724 0
Nov-99 0.307265191 978,671 126,709 851,962 0
Dec-99 0.309021410 983,283 126,944 856,338 10,047
Jan-00 0.310905981 988,658 127,155 861,503 0
Feb-00 0.312626710 992,870 127,366 865,503 0
Mar-00 0.314087457 995,270 127,579 867,691 0
Apr-00 0.314665934 991,693 127,793 863,900 0
May-00 0.315339782 988,787 128,009 860,778 0
Jun-00 0.315747496 984,153 128,226 855,927 411
Jul-00 0.316271667 979,971 128,444 851,527 0
Aug-00 0.316638787 974,786 128,663 846,123 0
Sep-00 0.317221282 971,096 128,884 842,212 0
Oct-00 0.317952117 968,417 129,106 839,311 0
Nov-00 0.319468793 970,883 129,330 841,554 0
Dec-00 0.321319079 975,485 129,554 845,931 9,996
Jan-01 0.323298126 980,847 129,753 851,095 0
Feb-01 0.325112767 985,042 129,952 855,091 0
Mar-01 0.326666925 987,423 130,152 857,271 0
Apr-01 0.327335133 983,815 130,354 853,461 0
May-01 0.328099585 980,879 130,557 850,322 0
Jun-01 0.328596753 976,212 130,761 845,451 480
Jul-01 0.329215514 971,997 130,966 841,030 0
Aug-01 0.329677015 966,777 131,173 835,603 0
Sep-01 0.330354915 963,054 131,381 831,673 0
Oct-01 0.331182158 960,345 131,590 828,755 0
Nov-01 0.332799184 962,791 131,801 830,990 0
Dec-01 0.334752039 967,377 132,012 835,364 10,087
Jan-02 0.336834024 972,720 132,196 840,524 0
Feb-02 0.338750034 976,888 132,380 844,507 0
Mar-02 0.340403522 979,230 132,566 846,664 0
Apr-02 0.341162116 975,547 132,753 842,794 0
May-02 0.342018369 972,539 132,941 839,599 0
Jun-02 0.342604539 967,791 133,130 834,661 703
Jul-02 0.343318482 963,494 133,320 830,174 0
Aug-02 0.343873995 958,187 133,512 824,676 0
Sep-02 0.344648162 954,387 133,704 820,683 0
Oct-02 0.345573532 951,607 133,898 817,709 0
Nov-02 0.347297332 954,012 134,093 819,920 0
Dec-02 0.349361192 958,571 134,289 824,283 10,378
Jan-03 0.351544351 963,859 134,455 829,404 0
Feb-03 0.353548166 967,928 134,622 833,306 0
Mar-03 0.355268707 970,107 134,791 835,316 0
Apr-03 0.356023751 966,047 134,960 831,087 0
May-03 0.356883168 962,686 135,130 827,556 0
Jun-03 0.357449989 957,522 135,302 822,220 2,062
Jul-03 0.358154683 952,824 135,474 817,350 0
Aug-03 0.358687038 947,078 135,648 811,431 0
Sep-03 0.359454365 942,891 135,822 807,069 0
Oct-03 0.360384113 939,758 135,998 803,760 0
Nov-03 0.362176799 941,991 136,174 805,817 0
Dec-03 0.364337027 946,452 136,352 810,100 12,121
Jan-04 0.366636790 951,693 136,498 815,195 0
Feb-04 0.368752519 955,699 136,645 819,053 0
Mar-04 0.370578142 957,789 136,793 820,996 0
Apr-04 0.371413065 953,561 136,942 816,619 0
May-04 0.372355251 950,041 137,092 812,949 0
Jun-04 0.372996769 944,693 137,243 807,450 2,649
Jul-04 0.373784758 939,815 137,394 802,421 0
Aug-04 0.374395947 933,877 137,547 796,330 0
Sep-04 0.375248051 929,516 137,700 791,816 0
Oct-04 0.376266973 926,222 137,855 788,368 0
Nov-04 0.378172431 928,363 138,010 790,353 0
Dec-04 0.380456025 932,760 139,166 794,594 12,856
Jan-05 0.382872823 937,921 138,289 799,631 0
Feb-05 0.385089926 941,800 138,413 803,386 0
Mar-05 0.386992713 943,695 138,538 805,157 0
Apr-05 0.387822170 939,050 138,663 800,387 0
May-05 0.388766581 935,135 138,789 796,346 0
Jun-05 0.389383662 929,328 138,916 790,412 4,182
Jul-05 0.390159604 924,006 139,043 784,962 0
Aug-05 0.390742149 917,583 139,171 778,412 0
Sep-05 0.391584535 912,793 139,301 773,493 0
Oct-05 0.392606777 909,106 139,430 769,675 0
Nov-05 0.394591728 911,042 139,561 771,481 0
Dec-05 0.396987360 915,311 139,693 775,619 14,794
Jan-06 0.399527565 920,370 139,789 780,581 0
Feb-06 0.401850072 924,100 139,886 784,214 0
Mar-06 0.403830476 925,776 139,983 785,793 0
Apr-06 0.404642726 920,681 140,081 780,600 0
May-06 0.405578537 916,341 140,180 776,161 0
Jun-06 0.406156150 910,041 140,279 769,761 5,857
Jul-06 0.406906499 904,240 140,379 763,860 0
Aug-06 0.407444031 897,299 140,480 756,819 0
Sep-06 0.408262961 892,045 140,581 751,465 0
Oct-06 0.409276582 887,932 140,683 747,250 0
Nov-06 0.411340932 889,638 140,785 748,853 0
Dec-06 0.413853575 893,757 140,888 752,869 16,892
Jan-07 0.416523908 898,692 140,954 757,738 0
Feb-07 0.418955621 902,249 141,020 761,229 0
Mar-07 0.421012980 903,679 141,087 762,593 0
Apr-07 0.421792142 898,100 141,154 756,946 0
May-07 0.422704573 893,300 141,221 752,079 0
Jun-07 0.423222624 886,470 141,289 745,181 7,688
Jul-07 0.423929016 880,154 141,357 738,797 0
Aug-07 0.424399550 872,657 141,426 731,231 0
Sep-07 0.425176297 866,905 141,495 725,410 0
Oct-07 0.426164791 862,331 141,564 720,767 0
Nov-07 0.428306992 863,779 141,634 722,144 0
Dec-07 0.430941505 867,722 141,705 726,017 19,163
Jan-08 0.433768748 872,709 141,780 730,930 0
Feb-08 0.436382413 876,536 141,855 734,681 0
Mar-08 0.438664756 878,574 141,931 736,644 0
Apr-08 0.439810302 874,712 142,007 732,705 0
May-08 0.441081886 871,512 142,084 729,428 0
Jun-08 0.442010224 866,606 142,161 724,446 1,572
Jul-08 0.443112636 862,133 142,238 719,895 0
Aug-08 0.444015150 856,671 142,316 714,354 0
Sep-08 0.445196612 852,684 142,395 710,289 0
Oct-08 0.446572245 849,697 142,474 707,223 0
Nov-08 0.448967362 851,790 142,554 709,236 0
Dec-08 0.451798662 855,992 142,634 713,358 11,087
Jan-09 0.454787557 860,915 142,675 718,240 0
Feb-09 0.457545807 864,635 142,716 721,919 0
Mar-09 0.459946995 866,503 142,758 723,746 0
Apr-09 0.461122531 862,262 142,799 719,463 0
May-09 0.462432848 858,706 142,841 715,865 0
Jun-09 0.463371469 853,384 142,884 710,500 2,858
Jul-09 0.464499629 848,507 142,926 705,581 0
Aug-09 0.465409340 842,602 142,969 699,633 0
Sep-09 0.466617146 838,222 143,012 695,210 0
Oct-09 0.468032392 834,872 143,055 691,816 0
Nov-09 0.470548407 836,777 143,099 693,678 0
Dec-09 0.473536426 840,865 143,143 697,722 12,778
Jan-10 0.476695955 845,700 143,146 702,554 0
Feb-10 0.479606654 849,290 143,148 706,141 0
Mar-10 0.482132005 850,964 143,151 707,813 0
Apr-10 0.483331290 846,314 143,154 703,160 0
May-10 0.484673857 842,370 143,157 699,213 0
Jun-10 0.485611073 836,594 143,159 693,435 4,287
Jul-10 0.486753744 831,275 143,162 688,113 0
Aug-10 0.487657651 824,890 143,165 681,725 0
Sep-10 0.488882640 820,082 143,168 676,914 0
Oct-10 0.490331081 816,339 143,171 673,168 0
Nov-10 0.492974065 818,033 143,174 674,859 0
Dec-10 0.496129491 821,995 143,177 679,808 14,626
Jan-11 0.499471208 826,709 143,136 683,573 0
Feb-11 0.502541835 830,142 143,095 687,047 0
Mar-11 0.505193626 831,591 143,054 688,537 0
Apr-11 0.506403528 826,493 143,013 683,480 0
May-11 0.507767302 822,124 142,971 679,152 0
Jun-11 0.508687643 815,858 142,929 672,928 5,880
Jul-11 0.509833018 810,061 142,887 667,174 0
Aug-11 0.510715781 803,161 142,845 660,316 0
Sep-11 0.511945785 797,890 142,802 655,088 0
Oct-11 0.513417451 793,720 142,759 650,961 0
Nov-11 0.516192241 795,176 142,716 652,460 0
Dec-11 0.519526327 798,968 142,673 656,295 16,633
Jan-12 0.523063815 803,557 142,583 660,974 0
Feb-12 0.526304288 806,808 142,493 664,314 0
Mar-12 0.529087000 808,003 142,403 665,600 0
Apr-12 0.530293132 802,421 142,312 660,109 0
May-12 0.531665060 797,592 142,220 655,371 0
Jun-12 0.532548725 790,797 142,128 648,669 7,626
Jul-12 0.533679832 784,486 142,036 642,451 0
Aug-12 0.534519877 777,031 141,942 635,089 0
Sep-12 0.535737279 771,261 141,849 629,412 0
Oct-12 0.537217295 766,628 141,754 624,874 0
Nov-12 0.540127995 767,817 141,659 626,158 0
Dec-12 0.543653080 771,421 141,564 629,858 18,811
Jan-13 0.547401665 775,850 141,420 634,430 0
Feb-13 0.550822586 779,891 141,275 637,616 0
Mar-13 0.553739820 779,802 141,129 638,674 0
Apr-13 0.554921442 773,698 140,982 632,716 0
May-13 0.556282408 768,370 140,834 627,535 0
Jun-13 0.557101438 761,007 140,686 620,321 9,537
Jul-13 0.558193732 754,141 140,536 613,605 0
Aug-13 0.558960362 746,090 140,386 605,704 0
Sep-13 0.560139504 739,780 140,235 599,545 0
Oct-13 0.561605695 734,646 140,082 594,564 0
Nov-13 0.564655051 735,536 139,929 595,606 0
Dec-13 0.568384716 738,923 139,775 599,148 21,173
Jan-14 0.572361896 743,163 139,570 603,593 0
Feb-14 0.575974537 745,963 139,363 606,599 0
Mar-14 0.579028310 746,558 139,155 607,402 0
Apr-14 0.580155240 739,889 138,946 600,943 0
May-14 0.581477063 734,022 138,736 595,286 0
Jun-14 0.582191363 726,047 138,524 587,523 11,625
Jul-14 0.583208886 718,584 138,311 580,273 0
Aug-14 0.583857668 709,891 138,097 571,794 0
Sep-14 0.584960675 702,999 137,881 565,118 0
Oct-14 0.586379688 697,322 137,664 559,658 0
Nov-14 0.589568017 697,878 137,446 560,431 0
Dec-14 O.593517243 701,016 137,226 563,790 23,733
Jan-15 0.597743290 705,035 136,953 568,083 0
Feb-15 0.601559473 707,562 136,677 570,885 0
Mar-15 0.604749016 707,804 136,400 571,404 0
Apr-15 0.605776593 700,527 136,121 564,405 0
May-15 0.607017103 694,077 135,841 558,236 0
Jun-15 0.607567919 685,443 135,558 549,884 13,905
Jul-15 0.608456935 677,336 135,274 542,061 0
Aug-15 0.608922020 667,954 134,989 532,965 0
Sep-15 0.609891799 660,434 134,701 525,732 0
Oct-15 0.611212547 654,169 134,412 519,757 0
Nov-15 0.614535813 654,353 134,121 520,231 0
Dec-15 0.618721105 657,208 133,828 523,380 26,505
Jan-16 0.623219920 660,973 133,478 527,495 0
Feb-16 0.627251672 663,190 133,126 530,064 0
Mar-16 0.630571265 663,041 132,772 530,269 0
Apr-16 0.631431776 655,106 132,415 522,690 0
May-16 0.632526374 648,026 132,057 515,969 0
Jun-16 0.632825088 638,683 131,696 506,987 16,392
Jul-16 0.633503001 629,882 131,333 498,549 0
Aug-16 0.633683696 619,759 130,967 488,792 0
Sep-16 0.634431579 611,562 130,600 480,962 0
Oct-16 0.635573585 604,661 130,230 474,431 0
Nov-16 0.639019778 604,432 129,858 474,574 0
Dec-16 0.643459123 606,966 129,484 477,482 29,505
Jan-17 0.648259469 610,439 129,049 481,390 0
Feb-17 0.652520179 612,310 128,612 483,698 0
Mar-17 0.655958348 611,729 128,171 483,558 0
Apr-17 0.656548921 603,089 127,728 475,360 0
May-17 0.657394308 595,327 127,283 468,044 0
Jun-17 0.657297089 585,217 126,835 458,382 19,100
Jul-17 0.657621458 575,659 126,384 449,276 0
Aug-17 0.657341164 564,727 125,930 438,797 0
Sep-17 0.657700957 555,780 125,473 430,306 0
Oct-17 0.658503770 548,168 125,014 423,154 0
Nov-17 0.662012877 547,455 124,552 422,903 0
Dec-17 0.666692084 549,599 124,087 425,512 32,870
Jan-18 0.671762307 553,054 123,698 429,355 0
Feb-18 0.676404547 555,402 123,307 432,095 0
Mar-18 0.680417192 556,076 122,914 433,162 0
Apr-18 0.682235703 551,224 122,518 428,706 0
May-18 0.684289686 546,985 122,120 424,864 0
Jun-18 0.685661273 541,143 121,720 419,423 6,089
Jul-18 0.687384691 535,673 121,317 414,356 0
Aug-18 0.688701641 529,268 120,911 408,356 0
Sep-18 0.690547961 524,237 120,504 403,733 0
Oct-18 0.692766768 520,133 120,093 400,040 0
Nov-18 0.697008336 520,778 119,680 401,098 0
Dec-18 0.702126340 523,396 119,265 404,131 15,292
Jan-19 0.707584447 526,701 118,790 407,911 0
Feb-19 0.712569351 528,860 118,312 410,548 0
Mar-19 0.716859709 529,283 117,831 411,452 0
Apr-19 0.718727879 523,984 117,347 406,638 0
May-19 0.720852216 519,319 116,860 402,460 0
Jun-19 0.722216178 512,994 116,370 396,624 7,508
Jul-19 0.723976630 507,050 115,877 391,173 0
Aug-19 0.725280735 500,138 115,381 384,757 0
Sep-19 0.727165522 494,645 114,882 379,763 0
Oct-19 0.729460015 490,111 114,380 375,731 0
Nov-19 0.734004985 490,491 113,875 376,616 0
Dec-19 0.739526877 492,911 113,367 379,544 17,080
Jan-20 0.745429612 496,040 112,796 383,244 0
Feb-20 0.750804467 497,982 112,221 385,760 0
Mar-20 0.755406499 498,125 111,643 386,482 0
Apr-20 0.757310530 492,344 111,061 381,283 0
May-20 0.759494846 487,217 110,476 376,741 0
Jun-20 0.760822550 480,370 109,887 370,483 9,061
Jul-20 0.762601518 473,915 109,294 364,621 0
Aug-20 0.763861410 466,456 108,698 357,758 0
Sep-20 0.765763516 460,465 108,098 352,367 0
Oct-20 0.768119884 455,464 107,495 347,969 0
Nov-20 0.773009125 455,547 106,888 348,659 0
Dec-20 0.779000360 457,740 106,277 351,463 19,020
Jan-21 0.785423406 460,666 105,599 355,067 0
Feb-21 0.791250842 462,360 104,918 357,443 0
Mar-21 0.796208824 462,191 104,232 357,959 0
Apr-21 0.798126673 455,889 103,542 352,347 0
May-21 0.800353369 450,262 102,847 347,414 0
Jun-21 0.801601112 442,852 102,149 340,703 10,759
Jul-21 0.803368808 435,846 101,446 334,400 0
Aug-21 0.804535759 427,798 100,739 327,059 0
Sep-21 0.806420321 421,268 100,027 321,240 0
Oct-21 0.808814140 415,760 99,311 316,449 0
Nov-21 0.814102613 415,513 98,591 316,922 0
Dec-21 0.820654158 417,447 97,867 319,581 21,123
Jan-22 O.827703518 420,140 97,072 323,068 0
Feb-22 0.834070727 421,555 96,271 325,283 0
Mar-22 0.839445487 421,038 95,467 325,572 0
Apr-22 0.841341648 414,172 94,657 319,516 0
May-22 0.843581133 408,003 93,842 314,161 0
Jun-22 0.844679990 399,987 93,022 306,965 12,616
Jul-22 0.846387358 392,385 92,197 300,188 0
Aug-22 0.847382661 383,703 91,367 292,336 0
Sep-22 0.849190717 376,590 90,533 286,057 0
Oct-22 0.851578096 370,534 89,693 280,841 0
Nov-22 0.857344379 369,919 88,847 281,072 0
Dec-22 0.864590848 371,561 87,997 283,564 23,401
Jan-23 0.872424644 373,986 87,072 286,913 0
Feb-23 0.879461137 375,086 86,142 288,945 0
Mar-23 0.885342188 374,185 85,205 288,980 0
Apr-23 0.887157894 366,710 84,263 282,446 0
May-23 0.889359432 359,953 83,315 276,638 0
Jun-23 0.890195186 351,283 82,362 268,922 14,642
Jul-23 0.891757660 343,039 81,402 261,636 0
Aug-23 0.892446417 333,674 80,437 253,237 0
Sep-23 0.894072481 325,931 79,466 246,465 0
Oct-23 0.896370786 318,279 78,489 240,790 0
Nov-23 0.902736756 318,258 77,506 240,752 0
Dec-23 0.910894728 319,570 76,517 243,053 25,869
Jan-24 0.919769515 321,690 75,449 246,242 0
Feb-24 0.927685028 322,438 74,374 248,064 0
Mar-24 0.934216956 321,110 73,293 247,817 0
Apr-24 0.935850014 312,977 72,205 240,772 0
May-24 0.937922365 305,585 71,111 234,474 0
Jun-24 0.938291080 296,210 70,010 226,201 16,853
Jul-24 0.939551335 287,272 68,902 218,370 0
Aug-24 0.939680365 277,172 67,787 209,385 0
Sep-24 0.940917110 268,748 66,666 202,082 0
Oct-24 0.942955486 261,452 65,538 195,914 0
Nov-24 0.950132725 259,980 64,403 195,578 0
Dec-24 0.959594034 260,921 63,261 197,661 28,540
Jan-25 0.969978363 262,698 62,035 200,663 0
Feb-25 0.979156638 263,051 60,802 202,249 0
Mar-25 0.986605944 261,252 59,561 201,691 0
Apr-25 0.987863943 252,407 58,313 194,094 0
May-25 0.989628425 244,327 57,057 187,270 0
Jun-25 0.989120963 234,193 55,793 178,399 19,262
Jul-25 0.989746805 224,506 54,522 169,984 0
Aug-25 0.988765830 213,615 53,243 160,371 0
Sep-25 0.989134875 204,455 51,956 152,499 0
Oct-25 0.990493822 196,460 50,662 145,799 0
Nov-25 0.998916382 194,492 49,359 145,132 0
Dec-25 1.010529182 195,017 48,049 146,969 31,431
Jan-26 1.023449847 196,406 46,650 149,756 0
Feb-26 1.034738502 196,318 45,242 151,076 0
Mar-26 1.043708428 194,000 43,826 150,174 0
Apr-26 1.044180660 184,387 42,401 141,985 0
May-26 1.045232502 175,562 40,968 134,595 0
Jun-26 1.042847605 164,609 39,525 125,084 21,885
Jul-26 1.041957325 154,115 38,074 116,040 0
Aug-26 1.038303984 142,371 36,614 105,757 0
Sep-26 1.036304872 132,417 35,146 97,271 0
Oct-26 1.035528273 123,666 33,668 89,998 0
Nov-26 1.046374270 121,149 32,181 88,968 0
Dec-26 1.062671817 121,211 30,685 90,526 34,558
Jan-27 1.081262717 122,164 29,096 93,068 0
Feb-27 1.097305506 121,586 27,497 94,090 0
Mar-27 1.109799568 118,697 25,888 92,809 0
Apr-27 1.108440736 108,253 24,269 83,984 0
May-27 1.107601374 98,623 22,640 75,983 0
Jun-27 1.099643863 86,787 21,002 65,785 24,740
Jul-27 1.093288273 75,421 19,353 56,069 0
Aug-27 1.078427339 62,760 17,694 45,066 0
Sep-27 1.063307268 51,948 16,026 35,923 0
Oct-27 1.046368977 42,378 14,347 28,031 0
Nov-27 1.065134348 39,258 12,657 26,600 0
Dec-27 1.104259468 38,803 10,958 27,845 37,940
Jan-28 1.152941973 39,269 9,159 30,110 0
Feb-28 1.196530844 38,148 7,350 30,798 0
Mar-28 1.235393737 34,628 5,529 29,100 0
Apr-28 1.242740520 23,288 3,697 19,591 0
May-28 1.263680410 12,787 1,854 10,933 0
Jun-28 0.000000000 0 0 0 27,845
---------------
$867,248
ALL DOLLARS IN THOUSANDS, EXCEPT FOR COLUMN C AND COLUMN H
(1) Operating Costs include administrative expenses, property taxes, the
Services Fee, and certain amounts reimbursable under the New Services
Agreement.
(2) A portion of Capital Expenditures is reimbursable under the New
Services Agreement.
(3) The Structured Harvest Quantity is 3,397,345 Mbfe. In all subsequent
periods the column represents the Deemed Remaining Harvest Quantity,
which is equal to the previous period of Column G less current period
Column B.
(4) Amount in Column I divided by amount in Column G, expressed in units
of dollars (in thousands) per Mbfe.
(5) Payments to Holders on Timber Notes are due on the 20th day of the
subsequent month.
EXHIBIT A-1-1
(FORM OF FACE OF NOTE)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS, AS SET FORTH
HEREIN, WITHOUT SURRENDER OF THIS NOTE. ACCORDINGLY, THE UNPAID PRINCIPAL
AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE INITIAL PRINCIPAL
AMOUNT SET FORTH BELOW (DUE TO PRINCIPAL PAYMENTS BEFORE OR AFTER THE DATE
OF THIS NOTE). ANYONE ACQUIRING BENEFICIAL OWNERSHIP OF THIS NOTE MAY
ASCERTAIN THE CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE.
No. A-1-__ $________
CUSIP No. X00000XX0
SCOTIA PACIFIC COMPANY LLC
6.55% Class A-1 Timber Collateralized Notes, due 2028
Scotia Pacific Company LLC, a Delaware limited liability company,
promises to pay to ________, or registered assigns, the principal sum of
_______ Dollars (or such other amount (not in excess of One Hundred Sixty
Three Million Seven Hundred Thousand ($163,700,000) Dollars) as shall equal
the unpaid principal amount of this Note) on July 20, 2028 (the "Final
Maturity Date") and, on each Note Payment Date, such amounts as provided in
the Indenture.
Note Payment Dates: January 20th and July 20th
Record Dates: January 5th and July 5th
Note Rate: 6.55%
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which further provisions are incorporated and
shall for all purposes have the same effect as if set forth at this place.
Capitalized terms used and not defined in this Note which are defined in
the Indenture referred to herein have the meanings assigned to them in the
Indenture.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated: ______,____
SCOTIA PACIFIC COMPANY LLC
By________________________________
President or Vice President
By________________________________
Secretary or Assistance Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
STATE STREET BANK AND TRUST COMPANY
as Trustee,
certifies that this is one
of the Class A-1 Timber Notes referred
to in the Indenture.
by________________________________
Authorized Signatory
6.55% Class A-1 Timber Collateralized Notes, due 2028
1. Interest; Principal; Premium
SCOTIA PACIFIC COMPANY LLC, a Delaware limited liability company
(such limited liability company, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuer"),
promises to pay to the registered Holder hereof, or to its registered
assigns, the initial principal amount indicated on the face hereof (or such
lesser amount as shall equal the unpaid principal amount of this Note) on
the Final Maturity Date indicated on the face hereof and, on each Note
Payment Date that precedes the Final Maturity Date, (i) the principal
amount required to be paid on such date by Sections 2.11 and 5.7 of the
Indenture, (ii) interest (computed on the basis of a 360-day year of twelve
30-day months) on the unpaid principal balance hereof, from and including
the most recent Note Payment Date on which interest has been duly paid to
but excluding such Note Payment Date at the rate per annum indicated on the
face hereof, (iii) without duplication of any amount payable pursuant to
clause (ii), interest (computed on the basis of a 360-day year of twelve
30-day months) on any principal of this Note, and, to the extent lawful,
interest payable under the foregoing clause (ii), that is not paid on the
date such principal or interest becomes due and payable, for the period
from and including the date such principal or interest becomes due and
payable to but excluding the date such principal or interest is paid in
full, at the Default Rate, (iv) any Premium required to be paid on such
date by Sections 2.12 and 5.7 of the Indenture, and (v) any interest
(computed on the basis of a 360-day year of twelve 30-day months) required
to be paid on such date by Sections 2.12 and 5.7 of the Indenture on any
Premium payable on this Note. If the date scheduled to be a Note Payment
Date is not a Business Day, the next succeeding day that is a Business Day
shall be the Note Payment Date, but all calculations of interest and other
items will be as of the 20th day of the applicable month. As provided in
Section 2.12(b) of the Indenture, for the purposes of Sections 2.11(e),
2.12(b), 2.12(c) and 2.12(d) of the Indenture, if any portion of the
principal amount of any Note remains unpaid after the final Maturity Date,
and, if the Notes shall not have been accelerated pursuant to Section 7.2
of the Indenture, the last day of each month that occurs after such Final
Maturity Date and prior to the date on which the entire unpaid principal
amount of such Note is paid shall be deemed to constitute a Note Payment
Date.
2. Method of Payment
The Issuer will pay the amounts payable on the Notes on each Note
Payment Date to the persons who are registered Holders of Notes at the
close of business on the fifth day of the month in which such Note Payment
Date occurs (the "Record Date"), even if Notes are canceled after the
Record Date and on or before such Note Payment Date. Holders need not
surrender Notes to a Paying Agent to collect principal or other amounts
payable in respect of the Notes, except that Notes must be surrendered to a
Paying Agent after due notice to collect the final installment of principal
thereon. The Issuer will pay all amounts payable on the Notes in money of
the United States that at the time of payment is legal tender for payment
of public and private debts. Payments on Definitive Notes will be made (i)
by a U.S. dollar check drawn on a bank in New York City or Boston,
Massachusetts mailed to the Holder at such Holder's registered address or
(ii) upon application by a Holder of at least U.S. $5,000,000 in principal
amount of Definitive Notes to a Paying Agent not later than five Business
Days prior to the related Record Date, by wire transfer in immediately
available funds to a U.S. dollar account maintained by such Holder with a
bank in New York City or Boston, Massachusetts. Payments to Holders of the
Global Notes will be made (i) by a U.S. dollar check drawn on a bank in New
York City or Boston, Massachusetts delivered to the registered owner of
such Global Notes, at its registered address or (ii) by wire transfer in
immediately available funds to a U.S. dollar account maintained by such
registered owner with a bank in New York City or Boston, Massachusetts.
However, the final distribution with respect to each Class of Timber Notes
will be made only against surrender of the Timber Notes of such Class at
the corporate trust office of a Paying Agent, in Boston, Massachusetts or
New York, New York.
3. Paying Agent and Registrar
The Trustee, together with its affiliate, State Street Bank and
Trust Company, N.A. will initially act as sole Paying Agents and the
Trustee, initially, will act as Registrar. The Issuer may appoint and
change any Registrar without notice. The Issuer may act as Registrar. The
Issuer may appoint one or more other paying agents.
4. Indenture; Deed of Trust
The Issuer has issued the Notes under an Indenture dated as of
July 20, 1998 (the "Indenture"), between the Issuer and State Street Bank
and Trust Company, a Massachusetts trust company, as Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
SectionSection 77aaa-77bbbb) as in effect on the date of the Indenture (the
"TIA"). The Notes are subject to all such terms, and Noteholders are
referred to the Indenture and the TIA for a statement of those terms.
The Notes and the obligations of the Issuer pursuant to the
Indenture and the Deed of Trust are secured by a Deed of Trust, Security
Agreement, Financing Statement, Fixture Filing and Assignment of Proceeds
dated on or prior to July 20, 1998 (the "Deed of Trust") by the Issuer, as
trustor, in favor of a trustee under the Deed of Trust, for the benefit of
State Street Bank and Trust Company, in its capacity as collateral agent
for the Holders of the Timber Notes and the Liquidity Providers pursuant to
the Deed of Trust. Noteholders are referred to the Deed of Trust for a
statement of the terms thereof. Subject to certain exceptions set forth in
the Deed of Trust, (i) the Deed of Trust may be amended with the written
consent of the Majority Secured Parties (as defined in the Deed of Trust)
and Rating Agency Confirmation or with the written consent of the
Supermajority Holders (after notice of the Rating Agency Evaluation) and
Rating Agency Evaluation and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Majority Secured
Parties. Subject to certain exceptions set forth in the Deed of Trust, the
Collateral Agent and the Issuer may amend the Deed of Trust to cure any
ambiguity, omission, defect or inconsistency, to add to the covenants of
the Issuer for the benefit of the Collateral Agent or the Secured Parties
or to surrender any right or power conferred upon the Issuer or to make any
change that does not adversely affect the rights of any Noteholder or any
Liquidity Provider. The Indenture and the Deed of Trust impose certain
restrictions upon, among other things, the ability of the Issuer to incur
Indebtedness, to enter into agreements other than the Operative Documents,
to create Liens on the Mortgaged Property, and to enter into transactions
with Affiliates.
5. Collateral
Pursuant to the Deed of Trust, the Issuer has pledged the
Mortgaged Property. Upon the satisfaction of certain conditions set forth
in the Indenture, the Issuer may issue Additional Timber Notes that will be
equally and ratably secured with the Notes by the Mortgaged Property. The
Notes do not constitute obligations of The Pacific Lumber Company ("Pacific
Lumber"), and the Notes are not guaranteed by Pacific Lumber or any other
Person.
6. Optional Redemption or Prepayment
The Issuer may redeem the Notes of any Class, in whole, but not
in part, at any time, provided that no Notes of a Class having an earlier
Scheduled Maturity Date (or, in the case of redemption of the Class A-3
Notes, no Notes) remain outstanding (after giving effect to all principal
payments (including payments of principal in the redemption) occurring on
the redemption date) following such redemption, at a redemption price equal
to (i) all unpaid principal amounts thereof as of the redemption date, (ii)
all accrued and unpaid Premium thereon as of the redemption date, (iii) all
accrued and unpaid Regular Interest, Default Interest and interest on
Premium thereon as of the redemption date and (iv) a redemption premium
computed as provided in the definition of Prepayment Premium Amount in
Schedule A to the Indenture, as if the excess of (a) the aggregate
outstanding principal amount of the Notes of such Class to be redeemed over
(b) the Scheduled Amortization Amount for such Class of Notes as of the
redemption date, constituted an "Excess Payment" as set forth in such
definition. The issuer may also make optional partial or total prepayments
of principal on any Note Payment Date as provided in the Indenture.
7. Notice of Redemption
Notice of redemption will be mailed at least 15 days (or 30 days
if legally required by DTC) but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at his or her registered
address. If money sufficient to pay the redemption price of all Notes
called for redemption is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied, on and after
the redemption date interest shall cease to accrue on the Notes called for
redemption.
8. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in denominations
of $100,000 original principal amount or any integral multiple of $1,000 in
excess thereof. A Holder may transfer or exchange Notes for Notes of the
same Class in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate certificates, opinions,
endorsements and transfer documents and to pay any taxes and fees required
by law or permitted by the Indenture. The Registrar need not transfer or
exchange (i) any Notes called for redemption or (ii) any Notes for a period
of 15 days before a Note Payment Date.
9. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner of
it for all purposes.
10. Unclaimed Money
If money for the payment of principal of, Premium, if any, or
interest on any Note remains unclaimed for two years, the Trustee or Paying
Agent shall pay the money back to the Issuer at its request unless an
abandoned property law designates another person. After any such payment,
Holders entitled to the money must look only to the Issuer and not to the
Trustee for payment.
11. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the
Majority Holders and Rating Agency Confirmation or with the written consent
of the Supermajority Holders (after notice of the Rating Agency Evaluation)
and Rating Agency Evaluation and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Majority Holders.
Subject to certain exceptions set forth in the Indenture, without the
consent of any Noteholder, the Issuer and the Trustee may amend the
Indenture or the Notes to cure any ambiguity, omission, defect or
inconsistency, to make any change that does not adversely affect the rights
of any Noteholder, to add to the covenants of the Issuer for the benefit of
the Holders or to surrender any right or power conferred upon the Issuer,
to comply with the TIA, to comply with the provisions of Section 4.13 of
the Indenture (in connection with certain consolidations or mergers), to
provide for uncertificated Notes in addition to or in place of certificated
Notes and, subject to certain limitations set forth in the Indenture, in
connection with the issuance of any Additional Timber Notes.
12. Defaults and Remedies
The occurrence of any of the events enumerated in Section 7.1 of
the Indenture shall constitute an Event of Default.
If an Event of Default under Section 7.1(11) of the Indenture
shall occur, the Indenture provides that an amount equal to all amounts
payable with respect to the Notes and any Additional Timber Notes shall,
without any demand, presentment or notice, become immediately due any
payable. If any Event of Default described in any of Section 7.1(1)
through (5) shall occur and be continuing, the Trustee may, or, if the
Holders of 25% in aggregate outstanding principal amount of the Notes and
any Additional Timber Notes so elect, shall, declare all amounts payable
with respect to the Notes and any Additional Timber Notes to be immediately
due and payable, and upon any such declaration of acceleration such amount
shall become immediately due and payable. If any Event of Default
described in causes (6) through (10) or in clause (12) of Section 7.1 of
the Indenture shall occur and be continuing, if the Majority Holders so
elect, the Trustee shall declare all amounts payable with respect to the
Notes and any Additional Timber Notes to be immediately due and payable,
and upon any such declaration of acceleration such amount shall become
immediately due and payable. If certain conditions set forth in Section
7.1(d) of the Indenture have been satisfied, the Majority Holders may
rescind and annul a declaration of acceleration.
Noteholders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Notes unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Notes and any Additional Timber Notes may direct the Trustee in its
exercise of any trust or power; provided, however, that the Liquidity
Providers have the right to vote pro rata (as provided in the Indenture)
with the Holders of the Notes and any Additional Timber Notes in directing
the Trustee or the Collateral Agent with respect to whether and how to
exercise rights against the Mortgaged Property under the Deed of Trust.
The Trustee may withhold from Noteholders notice of any continuing Default
known to the Trustee (except a Default in payment of principal or interest)
if it determines that withholding notice is in their interest.
Acceptance of this Note constitutes the waiver of certain rights
of setoff, banker's lien, or the like against property of, or any amounts
owing to, the Company as set forth in Section 7.9 of the Indenture.
13. Trustee Dealings with the Issuer
Subject to certain limitations imposed by the TIA if and when the
Indenture is qualified under the TIA, the Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with and collect obligations owed to it by the
Issuer or its Affiliates and may otherwise deal with the Issuer of its
Affiliates with the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A director, manager, officer, employee, member or stockholder, as
such, of the Issuer or the Trustee shall not have any liability for any
obligations of the Issuer or the Trustee under the Notes or the Indenture
or the Deed of Trust or for any claim based on, in respect of or by reason
of such obligations or their creation. By accepting a Note, each
Noteholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Notes.
15. Authentication
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent appointed by the Trustee and acceptable
to the Issuer) manually signs the certificate of authentication on the
other side of this Note.
16. Abbreviations
Customary abbreviations may be used in the name of a Noteholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by
the entirety), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuer has caused CUSIP
numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Noteholders. No
representation is made as to the accuracy of such numbers either as printed
on the Notes or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.
The Issuer will furnish to any Noteholder upon written request
and without charge a copy of the Indenture, the Deed of Trust, the New
Services Agreement and the New Master Purchase Agreement. Requests may be
made to:
Scotia Pacific Company LLC
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Secretary
18. Transfer Restrictions
TRANSFERS AND EXCHANGES OF THIS NOTE ARE SUBJECT TO RESTRICTIONS
AS PROVIDED IN THE INDENTURE UNTIL THE EXPIRATION OF THE RESTRICTED PERIOD
(AS DEFINED IN THE INDENTURE.)
ASSIGNMENT FORM
To assign this Note, fill in the form below and have your signature
guaranteed:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint___________________________________ attorney or
agent to transfer this Note on the books of the Issuer. The attorney or
agent may substitute another to act for him.
___________________________________________________________________________
Date:
Your
Signature:_________________________________________________________________
Sign exactly as your name appears on the other side of this Note.
Signature Guarantee:_______________________________________________________
(Signature must be guaranteed by a member firm of the
New York Stock Exchange, commercial bank or trust
company or another entity with membership in an
approved signature guarantee medallion program pursuant
to Securities and Exchange Commission Rule 17Ad-15.)
IMPORTANT NOTICE: WHEN YOU SIGN YOUR NAME TO THIS ASSIGNMENT FROM WITHOUT
FILLING IN THE NAME OF YOUR "ASSIGNEE" OR "ATTORNEY OR AGENT", THIS NOTE
BECOMES FULLY NEGOTIABLE, SIMILAR TO A CHECK ENDORSED IN BLANK. THEREFORE,
TO SAFEGUARD A SIGNED NOTE, IT IS RECOMMENDED THAT YOU EITHER (i) FILL IN
THE NAME OF THE NEW OWNER IN THE "ASSIGNEE" BLANK, OR (ii) IF YOU ARE
SENDING THE SIGNED NOTE TO YOUR BANK OR BROKER, FILL IN THE NAME OF THE
BANK OR BROKER IN THE "ATTORNEY OR AGENT" BLANK. ALTERNATIVELY, INSTEAD OF
USING THIS ASSIGNMENT FORM, YOU MAY SIGN A SEPARATE "POWER OF ATTORNEY"
FORM AND THEN MAIL THE UNSIGNED NOTE AND THE SIGNED "POWER OF ATTORNEY" IN
SEPARATE ENVELOPES. FOR ADDED PROTECTION, USE CERTIFIED OR REGISTERED MAIL
FOR A NOTE.
EXHIBIT A-2-1
(FORM OF FACE OF NOTE)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS, AS SET FORTH
HEREIN, WITHOUT SURRENDER OF THIS NOTE. ACCORDINGLY, THE UNPAID PRINCIPAL
AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE INITIAL PRINCIPAL
AMOUNT SET FORTH BELOW (DUE TO PRINCIPAL PAYMENTS BEFORE OR AFTER THE DATE
OF THIS NOTE). ANYONE ACQUIRING BENEFICIAL OWNERSHIP OF THIS NOTE MAY
ASCERTAIN THE CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE.
No. A-2-__ $________
CUSIP No. X00000XX0
SCOTIA PACIFIC COMPANY LLC
7.11% Class A-2 Timber Collateralized Notes, due 2028
Scotia Pacific Company LLC, a Delaware limited liability company,
promises to pay to _________, or registered assigns, the principal sum of
_________ Dollars (or such other amount (not in excess of Two Hundred Forty
Three Million Two Hundred Thousand ($243,200,000) Dollars) as shall equal
the unpaid principal amount of this Note) on July 20, 2028 (the "Final
Maturity Date") and, on each Note Payment Date, such amounts as provided in
the Indenture.
Note Payment Dates: January 20th and July 20th
Record Dates: January 5th and July 5th
Note Rate: 7.11%
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which further provisions are incorporated and
shall for all purposes have the same effect as if set forth at this place.
Capitalized terms used and not defined in this Note which are defined in
the Indenture referred to herein have the meanings assigned to them in the
Indenture.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated: ________,_____
SCOTIA PACIFIC COMPANY LLC
By___________________________________________
President or Vice President
By___________________________________________
Secretary or Assistance Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
STATE STREET BANK AND TRUST COMPANY
as Trustee,
certifies that this is one
of the Class A-2 Timber Notes referred
to in the Indenture.
by__________________________________
Authorized Signatory
7.11% Class A-2 Timber Collateralized Notes, due 2028
1. Interest; Principal; Premium
SCOTIA PACIFIC COMPANY LLC, a Delaware limited liability company
(such limited liability company, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuer"),
promises to pay to the registered Holder hereof, or to its registered
assigns, the initial principal amount indicated on the face hereof (or such
lesser amount as shall equal the unpaid principal amount of this Note) on
the Final Maturity Date indicated on the face hereof and, on each Note
Payment Date that precedes the Final Maturity Date, (i) the principal
amount required to be paid on such date by Sections 2.11 and 5.7 of the
Indenture, (ii) interest (computed on the basis of a 360-day year of twelve
30-day months) on the unpaid principal balance hereof, from and including
the most recent Note Payment Date on which interest has been duly paid to
but excluding such Note Payment Date at the rate per annum indicated on the
face hereof, (iii) without duplication of any amount payable pursuant to
clause (ii), interest (computed on the basis of a 360-day year of twelve
30-day months) on any principal of this Note, and, to the extent lawful,
interest payable under the foregoing clause (ii), that is not paid on the
date such principal or interest becomes due and payable, for the period
from and including the date such principal or interest becomes due and
payable to but excluding the date such principal or interest is paid in
full, at the Default Rate, (iv) any Premium required to be paid on such
date by Sections 2.12 and 5.7 of the Indenture, and (v) any interest
(computed on the basis of a 360-day year of twelve 30-day months) required
to be paid on such date by Sections 2.12 and 5.7 of the Indenture on any
Premium payable on this Note. If the date scheduled to be a Note Payment
Date is not a Business Day, the next succeeding day that is a Business Day
shall be the Note Payment Date, but all calculations of interest and other
items will be as of the 20th day of the applicable month. As provided in
Section 2.12(b) of the Indenture, for the purposes of Sections 2.11(e),
2.12(b), 2.12(c) and 2.12(d) of the Indenture, if any portion of the
principal amount of any Note remains unpaid after the final Maturity Date,
and, if the Notes shall not have been accelerated pursuant to Section 7.2
of the Indenture, the last day of each month that occurs after such Final
Maturity Date and prior to the date on which the entire unpaid principal
amount of such Note is paid shall be deemed to constitute a Note Payment
Date.
2. Method of Payment
The Issuer will pay the amounts payable on the Notes on each Note
Payment Date to the persons who are registered Holders of Notes at the
close of business on the fifth day of the month in which such Note Payment
Date occurs (the "Record Date"), even if Notes are canceled after the
Record Date and on or before such Note Payment Date. Holders need not
surrender Notes to a Paying Agent to collect principal or other amounts
payable in respect of the Notes, except that Notes must be surrendered to a
Paying Agent after due notice to collect the final installment of principal
thereon. The Issuer will pay all amounts payable on the Notes in money of
the United States that at the time of payment is legal tender for payment
of public and private debts. Payments on Definitive Notes will be made (i)
by a U.S. dollar check drawn on a bank in New York City or Boston,
Massachusetts mailed to the Holder at such Holder's registered address or
(ii) upon application by a Holder of at least U.S. $5,000,000 in principal
amount of Definitive Notes to a Paying Agent not later than five Business
Days prior to the related Record Date, by wire transfer in immediately
available funds to a U.S. dollar account maintained by such Holder with a
bank in New York City or Boston, Massachusetts. Payments to Holders of the
Global Notes will be made (i) by a U.S. dollar check drawn on a bank in New
York City or Boston, Massachusetts delivered to the registered owner of
such Global Notes, at its registered address or (ii) by wire transfer in
immediately available funds to a U.S. dollar account maintained by such
registered owner with a bank in New York City or Boston, Massachusetts.
However, the final distribution with respect to each Class of Timber Notes
will be made only against surrender of the Timber Notes of such Class at
the corporate trust office of a Paying Agent, in Boston, Massachusetts or
New York, New York.
3. Paying Agent and Registrar
The Trustee, together with its affiliate, State Street Bank and
Trust Company, N.A. will initially act as sole Paying Agents and the
Trustee, initially, will act as Registrar. The Issuer may appoint and
change any Registrar without notice. The Issuer may act as Registrar. The
Issuer may appoint one or more other paying agents.
4. Indenture; Deed of Trust
The Issuer has issued the Notes under an Indenture dated as of
July 20, 1998 (the "Indenture"), between the Issuer and State Street Bank
and Trust Company, a Massachusetts trust company, as Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
SectionSection 77aaa-77bbbb) as in effect on the date of the Indenture (the
"TIA"). The Notes are subject to all such terms, and Noteholders are
referred to the Indenture and the TIA for a statement of those terms.
The Notes and the obligations of the Issuer pursuant to the
Indenture and the Deed of Trust are secured by a Deed of Trust, Security
Agreement, Financing Statement, Fixture Filing and Assignment of Proceeds
dated on or prior to July 20, 1998 (the "Deed of Trust") by the Issuer, as
trustor, in favor of a trustee under the Deed of Trust, for the benefit of
State Street Bank and Trust Company, in its capacity as collateral agent
for the Holders of the Timber Notes and the Liquidity Providers pursuant to
the Deed of Trust. Noteholders are referred to the Deed of Trust for a
statement of the terms thereof. Subject to certain exceptions set forth in
the Deed of Trust, (i) the Deed of Trust may be amended with the written
consent of the Majority Secured Parties (as defined in the Deed of Trust)
and Rating Agency Confirmation or with the written consent of the
Supermajority Holders (after notice of the Rating Agency Evaluation) and
Rating Agency Evaluation and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Majority Secured
Parties. Subject to certain exceptions set forth in the Deed of Trust, the
Collateral Agent and the Issuer may amend the Deed of Trust to cure any
ambiguity, omission, defect or inconsistency, to add to the covenants of
the Issuer for the benefit of the Collateral Agent or the Secured Parties
or to surrender any right or power conferred upon the Issuer or to make any
change that does not adversely affect the rights of any Noteholder or any
Liquidity Provider. The Indenture and the Deed of Trust impose certain
restrictions upon, among other things, the ability of the Issuer to incur
Indebtedness, to enter into agreements other than the Operative Documents,
to create Liens on the Mortgaged Property, and to enter into transactions
with Affiliates.
5. Collateral
Pursuant to the Deed of Trust, the Issuer has pledged the
Mortgaged Property. Upon the satisfaction of certain conditions set forth
in the Indenture, the Issuer may issue Additional Timber Notes that will be
equally and ratably secured with the Notes by the Mortgaged Property. The
Notes do not constitute obligations of The Pacific Lumber Company ("Pacific
Lumber"), and the Notes are not guaranteed by Pacific Lumber or any other
Person.
6. Optional Redemption or Prepayment
The Issuer may redeem the Notes of any Class, in whole, but not
in part, at any time, provided that no Notes of a Class having an earlier
Scheduled Maturity Date (or, in the case of redemption of the Class A-3
Notes, no Notes) remain outstanding (after giving effect to all principal
payments (including payments of principal in the redemption) occurring on
the redemption date) following such redemption, at a redemption price equal
to (i) all unpaid principal amounts thereof as of the redemption date, (ii)
all accrued and unpaid Premium thereon as of the redemption date, (iii) all
accrued and unpaid Regular Interest, Default Interest and interest on
Premium thereon as of the redemption date and (iv) a redemption premium
computed as provided in the definition of Prepayment Premium Amount in
Schedule A to the Indenture, as if the excess of (a) the aggregate
outstanding principal amount of the Notes of such Class to be redeemed over
(b) the Scheduled Amortization Amount for such Class of Notes as of the
redemption date, constituted an "Excess Payment" as set forth in such
definition. The issuer may also make optional partial or total prepayments
of principal on any Note Payment Date as provided in the Indenture.
7. Notice of Redemption
Notice of redemption will be mailed at least 15 days (or 30 days
if legally required by DTC) but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at his or her registered
address. If money sufficient to pay the redemption price of all Notes
called for redemption is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied, on and after
the redemption date interest shall cease to accrue on the Notes called for
redemption.
8. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in denominations
of $100,000 original principal amount or any integral multiple of $1,000 in
excess thereof. A Holder may transfer or exchange Notes for Notes of the
same Class in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate certificates, opinions,
endorsements and transfer documents and to pay any taxes and fees required
by law or permitted by the Indenture. The Registrar need not transfer or
exchange (i) any Notes called for redemption or (ii) any Notes for a period
of 15 days before a Note Payment Date.
9. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner of
it for all purposes.
10. Unclaimed Money
If money for the payment of principal of, Premium, if any, or
interest on any Note remains unclaimed for two years, the Trustee or Paying
Agent shall pay the money back to the Issuer at its request unless an
abandoned property law designates another person. After any such payment,
Holders entitled to the money must look only to the Issuer and not to the
Trustee for payment.
11. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the
Majority Holders and Rating Agency Confirmation or with the written consent
of the Supermajority Holders (after notice of the Rating Agency Evaluation)
and Rating Agency Evaluation and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Majority Holders.
Subject to certain exceptions set forth in the Indenture, without the
consent of any Noteholder, the Issuer and the Trustee may amend the
Indenture or the Notes to cure any ambiguity, omission, defect or
inconsistency, to make any change that does not adversely affect the rights
of any Noteholder, to add to the covenants of the Issuer for the benefit of
the Holders or to surrender any right or power conferred upon the Issuer,
to comply with the TIA, to comply with the provisions of Section 4.13 of
the Indenture (in connection with certain consolidations or mergers), to
provide for uncertificated Notes in addition to or in place of certificated
Notes and, subject to certain limitations set forth in the Indenture, in
connection with the issuance of any Additional Timber Notes.
12. Defaults and Remedies
The occurrence of any of the events enumerated in Section 7.1 of
the Indenture shall constitute an Event of Default.
If an Event of Default under Section 7.1(11) of the Indenture
shall occur, the Indenture provides that an amount equal to all amounts
payable with respect to the Notes and any Additional Timber Notes shall,
without any demand, presentment or notice, become immediately due any
payable. If any Event of Default described in any of Section 7.1(1)
through (5) shall occur and be continuing, the Trustee may, or, if the
Holders of 25% in aggregate outstanding principal amount of the Notes and
any Additional Timber Notes so elect, shall, declare all amounts payable
with respect to the Notes and any Additional Timber Notes to be immediately
due and payable, and upon any such declaration of acceleration such amount
shall become immediately due and payable. If any Event of Default
described in causes (6) through (10) or in clause (12) of Section 7.1 of
the Indenture shall occur and be continuing, if the Majority Holders so
elect, the Trustee shall declare all amounts payable with respect to the
Notes and any Additional Timber Notes to be immediately due and payable,
and upon any such declaration of acceleration such amount shall become
immediately due and payable. If certain conditions set forth in Section
7.1(d) of the Indenture have been satisfied, the Majority Holders may
rescind and annul a declaration of acceleration.
Noteholders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Notes unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Notes and any Additional Timber Notes may direct the Trustee in its
exercise of any trust or power; provided, however, that the Liquidity
Providers have the right to vote pro rata (as provided in the Indenture)
with the Holders of the Notes and any Additional Timber Notes in directing
the Trustee or the Collateral Agent with respect to whether and how to
exercise rights against the Mortgaged Property under the Deed of Trust.
The Trustee may withhold from Noteholders notice of any continuing Default
known to the Trustee (except a Default in payment of principal or interest)
if it determines that withholding notice is in their interest.
Acceptance of this Note constitutes the waiver of certain rights
of setoff, banker's lien, or the like against property of, or any amounts
owing to, the Company as set forth in Section 7.9 of the Indenture.
13. Trustee Dealings with the Issuer
Subject to certain limitations imposed by the TIA if and when the
Indenture is qualified under the TIA, the Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with and collect obligations owed to it by the
Issuer or its Affiliates and may otherwise deal with the Issuer of its
Affiliates with the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A director, manager, officer, employee, member or stockholder, as
such, of the Issuer or the Trustee shall not have any liability for any
obligations of the Issuer or the Trustee under the Notes or the Indenture
or the Deed of Trust or for any claim based on, in respect of or by reason
of such obligations or their creation. By accepting a Note, each
Noteholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Notes.
15. Authentication
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent appointed by the Trustee and acceptable
to the Issuer) manually signs the certificate of authentication on the
other side of this Note.
16. Abbreviations
Customary abbreviations may be used in the name of a Noteholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by
the entirety), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuer has caused CUSIP
numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Noteholders. No
representation is made as to the accuracy of such numbers either as printed
on the Notes or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.
The Issuer will furnish to any Noteholder upon written request
and without charge a copy of the Indenture, the Deed of Trust, the New
Services Agreement and the New Master Purchase Agreement. Requests may be
made to:
Scotia Pacific Company LLC
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Secretary
18. Transfer Restrictions
TRANSFERS AND EXCHANGES OF THIS NOTE ARE SUBJECT TO RESTRICTIONS
AS PROVIDED IN THE INDENTURE UNTIL THE EXPIRATION OF THE RESTRICTED PERIOD
(AS DEFINED IN THE INDENTURE.)
ASSIGNMENT FORM
To assign this Note, fill in the form below and have your signature
guaranteed:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ___________________________________ attorney or
agent to transfer this Note on the books of the Issuer. The attorney or
agent may substitute another to act for him.
Date:
Your Signature:____________________________________________________________
Sign exactly as your name appears on the other side of this Note.
Signature Guarantee:_______________________________________________________
(Signature must be guaranteed by a member firm of the
New York Stock Exchange, commercial bank or trust
company or another entity with membership in an
approved signature guarantee medallion program pursuant
to Securities and Exchange Commission Rule 17Ad-15.)
IMPORTANT NOTICE: WHEN YOU SIGN YOUR NAME TO THIS ASSIGNMENT FROM WITHOUT
FILLING IN THE NAME OF YOUR "ASSIGNEE" OR "ATTORNEY OR AGENT", THIS NOTE
BECOMES FULLY NEGOTIABLE, SIMILAR TO A CHECK ENDORSED IN BLANK. THEREFORE,
TO SAFEGUARD A SIGNED NOTE, IT IS RECOMMENDED THAT YOU EITHER (i) FILL IN
THE NAME OF THE NEW OWNER IN THE "ASSIGNEE" BLANK, OR (ii) IF YOU ARE
SENDING THE SIGNED NOTE TO YOUR BANK OR BROKER, FILL IN THE NAME OF THE
BANK OR BROKER IN THE "ATTORNEY OR AGENT" BLANK. ALTERNATIVELY, INSTEAD OF
USING THIS ASSIGNMENT FORM, YOU MAY SIGN A SEPARATE "POWER OF ATTORNEY"
FORM AND THEN MAIL THE UNSIGNED NOTE AND THE SIGNED "POWER OF ATTORNEY" IN
SEPARATE ENVELOPES. FOR ADDED PROTECTION, USE CERTIFIED OR REGISTERED MAIL
FOR A NOTE.
EXHIBIT A-3-1
(FORM OF FACE OF NOTE)
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS, AS SET FORTH
HEREIN, WITHOUT SURRENDER OF THIS NOTE. ACCORDINGLY, THE UNPAID PRINCIPAL
AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE INITIAL PRINCIPAL
AMOUNT SET FORTH BELOW (DUE TO PRINCIPAL PAYMENTS BEFORE OR AFTER THE DATE
OF THIS NOTE). ANYONE ACQUIRING BENEFICIAL OWNERSHIP OF THIS NOTE MAY
ASCERTAIN THE CURRENT PRINCIPAL AMOUNT BY INQUIRY OF THE TRUSTEE.
No. A-3-__ $_______
CUSIP No. X00000XX0
SCOTIA PACIFIC COMPANY LLC
7.71% Class A-3 Timber Collateralized Notes, due 2028
Scotia Pacific Company LLC, a Delaware limited liability company,
promises to pay to ________, or registered assigns, the principal sum of
___________ Dollars (or such other amount (not in excess of Four Hundred
Sixty Three Million Three Hundred Forty Eight Thousand ($463,348,000)
Dollars) as shall equal the unpaid principal amount of this Note) on July
20, 2028 (the "Final Maturity Date") and, on each Note Payment Date, such
amounts as provided in the Indenture.
Note Payment Dates: January 20th and July 20th
Record Dates: January 5th and July 5th
Note Rate: 7.71%
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which further provisions are incorporated and
shall for all purposes have the same effect as if set forth at this place.
Capitalized terms used and not defined in this Note which are defined in
the Indenture referred to herein have the meanings assigned to them in the
Indenture.
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized officers.
Dated: ________,_____
SCOTIA PACIFIC COMPANY LLC
By _________________________________
President or Vice President
By _________________________________
Secretary or Assistance Secretary
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
STATE STREET BANK AND TRUST COMPANY
as Trustee,
certifies that this is one
of the Class A-3 Timber Notes referred
to in the Indenture.
by _________________________________
Authorized Signatory
7.71% Class A-3 Timber Collateralized Notes, due 2028
1. Interest; Principal; Premium
SCOTIA PACIFIC COMPANY LLC, a Delaware limited liability company
(such limited liability company, and its successors and assigns under the
Indenture hereinafter referred to, being herein called the "Issuer"),
promises to pay to the registered Holder hereof, or to its registered
assigns, the initial principal amount indicated on the face hereof (or such
lesser amount as shall equal the unpaid principal amount of this Note) on
the Final Maturity Date indicated on the face hereof and, on each Note
Payment Date that precedes the Final Maturity Date, (i) the principal
amount required to be paid on such date by Sections 2.11 and 5.7 of the
Indenture, (ii) interest (computed on the basis of a 360-day year of twelve
30-day months) on the unpaid principal balance hereof, from and including
the most recent Note Payment Date on which interest has been duly paid to
but excluding such Note Payment Date at the rate per annum indicated on the
face hereof, (iii) without duplication of any amount payable pursuant to
clause (ii), interest (computed on the basis of a 360-day year of twelve
30-day months) on any principal of this Note, and, to the extent lawful,
interest payable under the foregoing clause (ii), that is not paid on the
date such principal or interest becomes due and payable, for the period
from and including the date such principal or interest becomes due and
payable to but excluding the date such principal or interest is paid in
full, at the Default Rate, (iv) any Premium required to be paid on such
date by Sections 2.12 and 5.7 of the Indenture, and (v) any interest
(computed on the basis of a 360-day year of twelve 30-day months) required
to be paid on such date by Sections 2.12 and 5.7 of the Indenture on any
Premium payable on this Note. If the date scheduled to be a Note Payment
Date is not a Business Day, the next succeeding day that is a Business Day
shall be the Note Payment Date, but all calculations of interest and other
items will be as of the 20th day of the applicable month. As provided in
Section 2.12(b) of the Indenture, for the purposes of Sections 2.11(e),
2.12(b), 2.12(c) and 2.12(d) of the Indenture, if any portion of the
principal amount of any Note remains unpaid after the final Maturity Date,
and, if the Notes shall not have been accelerated pursuant to Section 7.2
of the Indenture, the last day of each month that occurs after such Final
Maturity Date and prior to the date on which the entire unpaid principal
amount of such Note is paid shall be deemed to constitute a Note Payment
Date.
2. Method of Payment
The Issuer will pay the amounts payable on the Notes on each Note
Payment Date to the persons who are registered Holders of Notes at the
close of business on the fifth day of the month in which such Note Payment
Date occurs (the "Record Date"), even if Notes are canceled after the
Record Date and on or before such Note Payment Date. Holders need not
surrender Notes to a Paying Agent to collect principal or other amounts
payable in respect of the Notes, except that Notes must be surrendered to a
Paying Agent after due notice to collect the final installment of principal
thereon. The Issuer will pay all amounts payable on the Notes in money of
the United States that at the time of payment is legal tender for payment
of public and private debts. Payments on Definitive Notes will be made (i)
by a U.S. dollar check drawn on a bank in New York City or Boston,
Massachusetts mailed to the Holder at such Holder's registered address or
(ii) upon application by a Holder of at least U.S. $5,000,000 in principal
amount of Definitive Notes to a Paying Agent not later than five Business
Days prior to the related Record Date, by wire transfer in immediately
available funds to a U.S. dollar account maintained by such Holder with a
bank in New York City or Boston, Massachusetts. Payments to Holders of the
Global Notes will be made (i) by a U.S. dollar check drawn on a bank in New
York City or Boston, Massachusetts delivered to the registered owner of
such Global Notes, at its registered address or (ii) by wire transfer in
immediately available funds to a U.S. dollar account maintained by such
registered owner with a bank in New York City or Boston, Massachusetts.
However, the final distribution with respect to each Class of Timber Notes
will be made only against surrender of the Timber Notes of such Class at
the corporate trust office of a Paying Agent, in Boston, Massachusetts or
New York, New York.
3. Paying Agent and Registrar
The Trustee, together with its affiliate, State Street Bank and
Trust Company, N.A. will initially act as sole Paying Agents and the
Trustee, initially, will act as Registrar. The Issuer may appoint and
change any Registrar without notice. The Issuer may act as Registrar. The
Issuer may appoint one or more other paying agents.
4. Indenture; Deed of Trust
The Issuer has issued the Notes under an Indenture dated as of
July 20, 1998 (the "Indenture"), between the Issuer and State Street Bank
and Trust Company, a Massachusetts trust company, as Trustee. The terms of
the Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C.
SectionSection 77aaa-77bbbb) as in effect on the date of the Indenture (the
"TIA"). The Notes are subject to all such terms, and Noteholders are
referred to the Indenture and the TIA for a statement of those terms.
The Notes and the obligations of the Issuer pursuant to the
Indenture and the Deed of Trust are secured by a Deed of Trust, Security
Agreement, Financing Statement, Fixture Filing and Assignment of Proceeds
dated on or prior to July 20, 1998 (the "Deed of Trust") by the Issuer, as
trustor, in favor of a trustee under the Deed of Trust, for the benefit of
State Street Bank and Trust Company, in its capacity as collateral agent
for the Holders of the Timber Notes and the Liquidity Providers pursuant to
the Deed of Trust. Noteholders are referred to the Deed of Trust for a
statement of the terms thereof. Subject to certain exceptions set forth in
the Deed of Trust, (i) the Deed of Trust may be amended with the written
consent of the Majority Secured Parties (as defined in the Deed of Trust)
and Rating Agency Confirmation or with the written consent of the
Supermajority Holders (after notice of the Rating Agency Evaluation) and
Rating Agency Evaluation and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Majority Secured
Parties. Subject to certain exceptions set forth in the Deed of Trust, the
Collateral Agent and the Issuer may amend the Deed of Trust to cure any
ambiguity, omission, defect or inconsistency, to add to the covenants of
the Issuer for the benefit of the Collateral Agent or the Secured Parties
or to surrender any right or power conferred upon the Issuer or to make any
change that does not adversely affect the rights of any Noteholder or any
Liquidity Provider. The Indenture and the Deed of Trust impose certain
restrictions upon, among other things, the ability of the Issuer to incur
Indebtedness, to enter into agreements other than the Operative Documents,
to create Liens on the Mortgaged Property, and to enter into transactions
with Affiliates.
5. Collateral
Pursuant to the Deed of Trust, the Issuer has pledged the
Mortgaged Property. Upon the satisfaction of certain conditions set forth
in the Indenture, the Issuer may issue Additional Timber Notes that will be
equally and ratably secured with the Notes by the Mortgaged Property. The
Notes do not constitute obligations of The Pacific Lumber Company ("Pacific
Lumber"), and the Notes are not guaranteed by Pacific Lumber or any other
Person.
6. Optional Redemption or Prepayment
The Issuer may redeem the Notes of any Class, in whole, but not
in part, at any time, provided that no Notes of a Class having an earlier
Scheduled Maturity Date (or, in the case of redemption of the Class A-3
Notes, no Notes) remain outstanding (after giving effect to all principal
payments (including payments of principal in the redemption) occurring on
the redemption date) following such redemption, at a redemption price equal
to (i) all unpaid principal amounts thereof as of the redemption date, (ii)
all accrued and unpaid Premium thereon as of the redemption date, (iii) all
accrued and unpaid Regular Interest, Default Interest and interest on
Premium thereon as of the redemption date and (iv) a redemption premium
computed as provided in the definition of Prepayment Premium Amount in
Schedule A to the Indenture, as if the excess of (a) the aggregate
outstanding principal amount of the Notes of such Class to be redeemed over
(b) the Scheduled Amortization Amount for such Class of Notes as of the
redemption date, constituted an "Excess Payment" as set forth in such
definition. The issuer may also make optional partial or total prepayments
of principal on any Note Payment Date as provided in the Indenture.
7. Notice of Redemption
Notice of redemption will be mailed at least 15 days (or 30 days
if legally required by DTC) but not more than 60 days before the redemption
date to each Holder of Notes to be redeemed at his or her registered
address. If money sufficient to pay the redemption price of all Notes
called for redemption is deposited with the Paying Agent on or before the
redemption date and certain other conditions are satisfied, on and after
the redemption date interest shall cease to accrue on the Notes called for
redemption.
8. Denominations; Transfer; Exchange
The Notes are in registered form without coupons in denominations
of $100,000 original principal amount or any integral multiple of $1,000 in
excess thereof. A Holder may transfer or exchange Notes for Notes of the
same Class in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate certificates, opinions,
endorsements and transfer documents and to pay any taxes and fees required
by law or permitted by the Indenture. The Registrar need not transfer or
exchange (i) any Notes called for redemption or (ii) any Notes for a period
of 15 days before a Note Payment Date.
9. Persons Deemed Owners
The registered Holder of this Note may be treated as the owner of
it for all purposes.
10. Unclaimed Money
If money for the payment of principal of, Premium, if any, or
interest on any Note remains unclaimed for two years, the Trustee or Paying
Agent shall pay the money back to the Issuer at its request unless an
abandoned property law designates another person. After any such payment,
Holders entitled to the money must look only to the Issuer and not to the
Trustee for payment.
11. Amendment; Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Notes may be amended with the written consent of the
Majority Holders and Rating Agency Confirmation or with the written consent
of the Supermajority Holders (after notice of the Rating Agency Evaluation)
and Rating Agency Evaluation and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Majority Holders.
Subject to certain exceptions set forth in the Indenture, without the
consent of any Noteholder, the Issuer and the Trustee may amend the
Indenture or the Notes to cure any ambiguity, omission, defect or
inconsistency, to make any change that does not adversely affect the rights
of any Noteholder, to add to the covenants of the Issuer for the benefit of
the Holders or to surrender any right or power conferred upon the Issuer,
to comply with the TIA, to comply with the provisions of Section 4.13 of
the Indenture (in connection with certain consolidations or mergers), to
provide for uncertificated Notes in addition to or in place of certificated
Notes and, subject to certain limitations set forth in the Indenture, in
connection with the issuance of any Additional Timber Notes.
12. Defaults and Remedies
The occurrence of any of the events enumerated in Section 7.1 of
the Indenture shall constitute an Event of Default.
If an Event of Default under Section 7.1(11) of the Indenture
shall occur, the Indenture provides that an amount equal to all amounts
payable with respect to the Notes and any Additional Timber Notes shall,
without any demand, presentment or notice, become immediately due any
payable. If any Event of Default described in any of Section 7.1(1)
through (5) shall occur and be continuing, the Trustee may, or, if the
Holders of 25% in aggregate outstanding principal amount of the Notes and
any Additional Timber Notes so elect, shall, declare all amounts payable
with respect to the Notes and any Additional Timber Notes to be immediately
due and payable, and upon any such declaration of acceleration such amount
shall become immediately due and payable. If any Event of Default
described in causes (6) through (10) or in clause (12) of Section 7.1 of
the Indenture shall occur and be continuing, if the Majority Holders so
elect, the Trustee shall declare all amounts payable with respect to the
Notes and any Additional Timber Notes to be immediately due and payable,
and upon any such declaration of acceleration such amount shall become
immediately due and payable. If certain conditions set forth in Section
7.1(d) of the Indenture have been satisfied, the Majority Holders may
rescind and annul a declaration of acceleration.
Noteholders may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Notes unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Notes and any Additional Timber Notes may direct the Trustee in its
exercise of any trust or power; provided, however, that the Liquidity
Providers have the right to vote pro rata (as provided in the Indenture)
with the Holders of the Notes and any Additional Timber Notes in directing
the Trustee or the Collateral Agent with respect to whether and how to
exercise rights against the Mortgaged Property under the Deed of Trust.
The Trustee may withhold from Noteholders notice of any continuing Default
known to the Trustee (except a Default in payment of principal or interest)
if it determines that withholding notice is in their interest.
Acceptance of this Note constitutes the waiver of certain rights
of setoff, banker's lien, or the like against property of, or any amounts
owing to, the Company as set forth in Section 7.9 of the Indenture.
13. Trustee Dealings with the Issuer
Subject to certain limitations imposed by the TIA if and when the
Indenture is qualified under the TIA, the Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with and collect obligations owed to it by the
Issuer or its Affiliates and may otherwise deal with the Issuer of its
Affiliates with the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A director, manager, officer, employee, member or stockholder, as
such, of the Issuer or the Trustee shall not have any liability for any
obligations of the Issuer or the Trustee under the Notes or the Indenture
or the Deed of Trust or for any claim based on, in respect of or by reason
of such obligations or their creation. By accepting a Note, each
Noteholder waives and releases all such liability. The waiver and release
are part of the consideration for the issue of the Notes.
15. Authentication
This Note shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent appointed by the Trustee and acceptable
to the Issuer) manually signs the certificate of authentication on the
other side of this Note.
16. Abbreviations
Customary abbreviations may be used in the name of a Noteholder
or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by
the entirety), JT TEN (=joint tenants with right of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
17. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Issuer has caused CUSIP
numbers to be printed on the Notes and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Noteholders. No
representation is made as to the accuracy of such numbers either as printed
on the Notes or as contained in any notice of redemption and reliance may
be placed only on the other identification numbers placed thereon.
The Issuer will furnish to any Noteholder upon written request
and without charge a copy of the Indenture, the Deed of Trust, the New
Services Agreement and the New Master Purchase Agreement. Requests may be
made to:
Scotia Pacific Company LLC
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Secretary
18. Transfer Restrictions
TRANSFERS AND EXCHANGES OF THIS NOTE ARE SUBJECT TO RESTRICTIONS
AS PROVIDED IN THE INDENTURE UNTIL THE EXPIRATION OF THE RESTRICTED PERIOD
(AS DEFINED IN THE INDENTURE.)
ASSIGNMENT FORM
To assign this Note, fill in the form below and have your signature
guaranteed:
I or we assign and transfer this Note to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ___________________________________ attorney or
agent to transfer this Note on the books of the Issuer. The attorney or
agent may substitute another to act for him.
Date:
Your Signature:____________________________________________________________
Sign exactly as your name appears on the other side of this Note.
Signature Guarantee:_______________________________________________________
(Signature must be guaranteed by a member firm of the
New York Stock Exchange, commercial bank or trust
company or another entity with membership in an
approved signature guarantee medallion program pursuant
to Securities and Exchange Commission Rule 17Ad-15.)
IMPORTANT NOTICE: WHEN YOU SIGN YOUR NAME TO THIS ASSIGNMENT FROM WITHOUT
FILLING IN THE NAME OF YOUR "ASSIGNEE" OR "ATTORNEY OR AGENT", THIS NOTE
BECOMES FULLY NEGOTIABLE, SIMILAR TO A CHECK ENDORSED IN BLANK. THEREFORE,
TO SAFEGUARD A SIGNED NOTE, IT IS RECOMMENDED THAT YOU EITHER (i) FILL IN
THE NAME OF THE NEW OWNER IN THE "ASSIGNEE" BLANK, OR (ii) IF YOU ARE
SENDING THE SIGNED NOTE TO YOUR BANK OR BROKER, FILL IN THE NAME OF THE
BANK OR BROKER IN THE "ATTORNEY OR AGENT" BLANK. ALTERNATIVELY, INSTEAD OF
USING THIS ASSIGNMENT FORM, YOU MAY SIGN A SEPARATE "POWER OF ATTORNEY"
FORM AND THEN MAIL THE UNSIGNED NOTE AND THE SIGNED "POWER OF ATTORNEY" IN
SEPARATE ENVELOPES. FOR ADDED PROTECTION, USE CERTIFIED OR REGISTERED MAIL
FOR A NOTE.
EXHIBIT B-1
TO INDENTURE
FORM OF REPORT OF
INDEPENDENT ACCOUNTANTS
[Letterhead of Accountants]
____________, _______
State Street Bank and Trust Company
as Trustee under the Indenture
referred to below
Two International Place, 4th Floor
Boston, Massachusetts 02110
Scotia Pacific Company LLC
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
This letter is delivered pursuant to Section 4.6(a) of the
Indenture dated as of July 20, 1998 (as amended, supplemented and otherwise
modified and in effect on the date of this letter, the "Indenture") between
Scotia Pacific Company LLC, a Delaware limited liability company (the
"Issuer"), and State Street Bank and Trust Company, as trustee.
Capitalized terms used but not defined herein have the respective
meanings given to such terms in the Indenture.
We confirm that we are independent public accountants with respect
to the Issuer, within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934 and the applicable rules and regulations
thereunder. We have read such provisions of the Indenture, the Deed of
Trust and the New Services Agreement as we have deemed necessary for the
purposes of delivering this letter.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet of the Issuer as of December 31, ____
[insert last date of most recent fiscal year] and the related statements of
operations, cash flows and changes in member's capital for [relevant period
described] [insert last date of most recently audited balance sheet] and
have issued our report thereon dated __________, ____. We have not audited
any financial statements of the Issuer as of any date or for any period
subsequent to December 31, ___ [insert last day of most recent fiscal
year].
The sufficiency of the agreed-upon procedures we have been
requested to perform, as set forth in subsequent paragraphs of this report,
is the sole responsibility of the Issuer and the Trustee. Consequently, we
make no representation regarding the sufficiency of the procedures
described below either for the purposes for which this report has been
requested or for any other purpose. Further, we make no representations
regarding questions of legal interpretation, nor do we provide any
assurance as to any matters relating to the Issuer's solvency, adequacy of
capital or ability to pay its debts.
Pursuant to Section 4.6(a) of the Indenture, we have performed the
procedures enumerated below:
1. We read the Monthly Trustee Certificates (which are attached
hereto as Annex A) and the Note Payment Trustee Certificates
(which are attached hereto as Annex B) issued by the Issuer to
the Trustee in respect of the Monthly Periods from [insert
first day of the fiscal year referred to above except with
respect to its fiscal year 1998, insert July 20, 1998] through
[insert last day of fiscal year referred to above]. For each
such Certificate, we recalculated the amounts deposited in and
withdrawn from the Collection Account, the Expense Reserve,
the Liquidity Account, if any, and the Payment Account, which were
established pursuant to the Indenture and found them to
be mathematically correct. Our recalculations of such amounts
was based on the procedures provided by the Issuer and set
forth in Annex C hereto.
2. We compared our recalculations of the amounts described above
to the amounts set forth in Annex A and Annex B and found them
to be in agreement[, except as described below].
3. We compared the amounts indicated in the Monthly Trustee
Certificates with respect to Mbfe of Timber sold by the Issuer
during the Monthly Periods covered by each such Monthly
Trustee Certificate to the Issuer's books and records for such
Monthly Period (including records with respect to MBF, net
Xxxxxxxx Scale, of Company Timber sold), and found them to be
in agreement, [except as described below].
4. We did not perform any procedures with respect to portions of
the Monthly Trustee Certificates, which contain the Issuer's
estimates of amounts to be deposited or interest that will be
earned in succeeding months.
[list exceptions, if any]
Because the procedures described above do not constitute an audit
made in accordance with generally accepted auditing standards, we do not
express an opinion on any of the items referred to above. In addition, we
make no representations, and express no opinion as to, (a) questions of
legal interpretation of the Operative Documents, (b) the sufficiency of the
foregoing procedures for your purposes, (c) the sufficiency of the
requirements set forth in Section 4.6(a) of the Indenture, (d) the
methodology set forth in the Indenture or (e) the assumptions set forth in
the attached Annex C. Had we performed additional procedures, or had we
made an audit in accordance with generally accepted auditing standards,
other matters might have come to our attention that would have been
reported to you.
This letter is intended solely for the management of the Issuer and
the Trustee, and should not be used for any other purpose. We have no
responsibility to update this report to reflect any events or circumstances
occurring after the date of this letter. We also understand that the
Issuer will be providing a copy of this letter to various Rating Agencies
pursuant to Section 4.6(a) of the Indenture. Our work was specifically
performed to satisfy the requirements of the Indenture, and accordingly, we
make no representation regarding the sufficiency of the procedures
performed for the Rating Agencies' purposes. Distribution of this letter
to the Rating Agencies does not establish any privity between our Firm and
them.
Very truly yours,
Annex C to Exhibit
B-1 to Indenture
Agreed Upon Procedures
I. Monthly Trustee Certificate Procedures
1. Compared the opening balances in the Collection Account, the
Payment Account, the Liquidity Account, if any, and the Expense Reserve to
amounts shown on bank statements from the Trustee.
2. Compared the amount deposited in the Expense Reserve to (i)
accrued and unpaid Yield Taxes as reflected on the Issuer's books and
records and (ii) additional known expenses reflected on a schedule prepared
by the Issuer. Compared the Services Fee included in clause (ii) of this
Item 2 to the amount payable under the New Services Agreement, including
recomputation of the adjustment provided in Section 5.1(a) of the New
Services Agreement.
3. Compared the Trustee's, Collateral Agent's and Liquidity
Providers' Expenses to the amounts payable under the fee agreement between
the Trustee and the Issuer, the fee agreement between the Collateral Agent
and the Issuer and the Line of Credit Agreement, respectively.
4. Recomputed the Required Liquidity Amount. Compared the
opening balance in the Liquidity Account to amounts reflected on bank
statements from the Trustee. Recomputed the amount required to be
deposited to or released from the Liquidity Account and compared the amount
deposited or released to such recomputed amount. Recomputed the amount of
deposit with respect to the Line of Credit Agreement as provided in clause
(vi) of Section 5.3(c) of the Indenture and compared the amount deposited
to the Payment Account in respect of clause (vi) of Section 5.3(c) of the
Indenture to such recomputed amount. [This Item 4 is applicable only if
there is a Termination Advance under a Line of Credit Agreement which has
not been replaced.]
5. Recomputed the Targeted Monthly Deposit Amount and compared
the amount deposited to the Payment Account in respect of the Targeted
Monthly Deposit Amount to such recomputed amount.
6. Recomputed the Premium Provision and compared the amount
deposited to the Payment Account in respect of the Premium Provision to
such recomputed amount.
7. Recomputed the interest and principal payment to the Liquidity
Providers pursuant to clause (vi) of Section 5.3(c) and compared the amount
withdrawn from the Collection Account in respect thereof to such recomputed
amount.
8. Made inquiries of Responsible Officers of the Issuer as to
whether or not a Cash Retention Event or Trapping Event existed on (or a
Line of Credit Acceleration occurred prior to) such Monthly Deposit Date.
9. Recomputed the amount of Excess Funds. If the Monthly Trustee
Certificate reflected any Additional Liquidity Provider Fees or
Supplemental Liquidity Provider Interest owing, recomputed the amount
thereof and compared such recomputed amount to the amount withdrawn from
the Collection Account in respect thereof. If any Section 6.1 Notes were
in existence on such Monthly Deposit Date, recomputed the amount of Excess
Funds as if such Section 6.1 Notes were cash, and compared the amount of
such recomputed Excess Funds (based on such assumption) to the amount of
such Section 6.1 Notes. Compared the amount released to the Issuer (or, if
any Section 6.1 Notes were in existence, the sum of the amount released to
the Issuer and the face amount of and accrued interest on such Section 6.1
Notes distributed to the Issuer) to such recomputed amounts. Compared the
amount, if any, paid by Pacific Lumber to the Issuer in respect of any
Section 6.1 Notes to such recomputed amounts.
10. Reviewed the Monthly Production reports delivered by Pacific
Lumber pursuant to the New Master Purchase Agreement for the Monthly
Periods for which Monthly Trustee Certificates were reviewed. Compared the
net Xxxxxxxx scale production data in the Monthly Production Reports to a
schedule prepared by Pacific Lumber. Recomputed the Mbfe production data
in the Monthly Production Reports. Compared the Mbfe production data in
each Monthly Trustee Certificate to the Mbfe production data in the related
Monthly Production Report.
II. Note Payment Trustee Certificate Procedures.
1. Compared the opening balances in the Liquidity Account and the
Payment Account to amounts shown on bank statements of the Trustee.
2. Recomputed the amount required to be deposited to or released
from the Liquidity Account and deposited to the Payment Account in respect
thereof to such recomputed amount. [This Item 2 is applicable only if
there is a Termination Advance under a Line of Credit Agreement which has
not been replaced.]
3. Compared the amount indicated in the Note Payment Certificate
as an optional deposit to the Payment Account to amounts shown on bank
statements of the Trustee.
4. Recomputed the amounts of interest (including interest on past
due principal and interest but excluding interest on Premium) payable on
the Timber Notes and to the Liquidity Providers and compared the amount
withdrawn from the Payment Account in respect thereof to such recomputed
amount.
5. Recomputed the Minimum Principal Amortization Amount and
compared the amount withdrawn from the Payment Account in respect thereof
to such recomputed amount.
6. Recomputed the Line of Credit Amortization Amount, if any, and
compared the amount withdrawn from the Payment Account in respect thereof.
[This Item 6 is applicable only if there is a Termination Advance under a
Line of Credit Agreement which has not been replaced.]
7. Recomputed the Depletion Amortization Amount and compared the
amount withdrawn from the Payment Account in respect thereof to such
recomputed amount.
8. Recomputed the Required Liquidity Amount (after giving effect
to principal payments being made on such date). Recomputed the amount, if
any, required to be deposited to the Liquidity Account and compared the
amount deposited to the Liquidity Account from the Payment Account to such
recomputed amount. [This Item 8 is applicable only if there is a
Termination Advance under a Line of Credit Agreement which has not been
replaced.]
9. Recomputed the amount of interest on Premium payable on the
Timber Notes and compared the amount withdrawn from the Payment Account in
respect thereof to such recomputed amount.
10. Recomputed the Premium payable on the Timber Notes and
compared the amount withdrawn from the Payment Account to such recomputed
amount.
11. Made inquiries of Responsible Officer's of the Issuer as to
whether or not a Cash Retention Event or a Trapping Event existed on such
Note Payment Date.
12. Recomputed the amount distributable pursuant to clause (ix) or
(x) of Section 5.7(b). Compared the amounts distributed pursuant to such
clauses to such recomputed amount.
III. General Provisions
1. Terms used but not defined in this Annex C shall have the
meaning set forth in Schedule A to the Indenture.
2. This Annex C may be modified by the Issuer, the independent
accountants and the Trustee if (i) such modification has been approved by a
resolution of the Board of Managers of the Issuer, including all
Independent Managers and (ii) either (A) such modification is (1) to cure
any ambiguity, omission, defect or inconsistency in the agreed upon
procedures, or to add additional procedures or (2) is necessary to take
account of the issuance of Additional Timber Notes (provided, that no such
modification may adversely affect the interests of Noteholders) or (B) such
modification shall have received Rating Agency Approval and (iii) the
Issuer shall have delivered to the Trustee an Officer's Certificate as to
compliance with the preceding clauses (i) and (ii).
EXHIBIT B-2
TO INDENTURE
FORM OF REPORT OF
INDEPENDENT ACCOUNTANTS
[Letterhead of Accountants]
__________, ______
State Street Bank and Trust Company
as Trustee under the Indenture
referred to below
Two International Place, 4th Floor
Boston, Massachusetts 02110
Scotia Pacific Company LLC
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
This letter is delivered pursuant to Section 4.6(a) of the
Indenture dated as of July 20, 1998 (as amended, supplemented and otherwise
modified and in effect on the date of this letter, the "Indenture") between
Scotia Pacific Company LLC, a Delaware limited liability company (the
"Issuer"), and State Street Bank and Trust Company, as trustee (the
"Trustee").
We confirm that we are independent public accountants with respect
to the Issuer, within the meaning of the Securities Act of 1933 and the
Securities Act of 1934 and the applicable rules and regulations thereunder.
We have audited, in accordance with generally accepted auditing
standards, the balance sheet of the Issuer as of December 31, ____ [insert
last day of most recent fiscal year] and the related statements of
operations, cash flows and changes in members' capital for the year then
ended [describe period covered] [date of most recent audited balance sheet]
and have issued our report thereon dated __________, ____.
In connection with out audit, nothing came to our attention that
caused us to believe that the Issuer was not in compliance with any of the
terms, covenants, provisions or conditions of Section 7.1 of Article Seven
of the Indenture, insofar as they relate to accounting matters, [except as
described below]. However, our audit was not directed primarily toward
obtaining knowledge of such noncompliance.
[describe exceptions, if any]
This letter is intended solely for the management of the Issuer and
the Trustee and shall not be used for any other purposes. We have no
responsibility to update this report to reflect any events or circumstances
occurring after the date of this letter. We also understand that the
Issuer will be providing a copy of this letter to various Rating Agencies
pursuant to Section 4.6(a) of the Indenture. Our work was specifically
performed to satisfy the requirements of the Indenture, and accordingly, we
make no representation regarding the sufficiency of the procedures
performed for the Rating Agencies' purposes. Distribution of this letter
to the Rating Agencies does not establish any privity between our Firm and
them.
Very truly yours,
