-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, KBF62ctY8QlNhQBsGtDWaS/itDisuJNIg/TSbJjK6U/94F/Tpa0lrIj7lNpCKEQ4 rj2YQOLCygibaOvTXa5KOg== 0000891020-95-000119.txt : 19950427 0000891020-95-000119.hdr.sgml : 19950427 ACCESSION NUMBER: 0000891020-95-000119 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950426 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PLUM CREEK TIMBER CO L P CENTRAL INDEX KEY: 0000849213 STANDARD INDUSTRIAL CLASSIFICATION: SAWMILLS, PLANNING MILLS, GENERAL [2421] IRS NUMBER: 911443693 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-10239 FILM NUMBER: 95531599 BUSINESS ADDRESS: STREET 1: 999 THIRD AVE CITY: SEATTLE STATE: WA ZIP: 98104 BUSINESS PHONE: 2064673600 MAIL ADDRESS: STREET 1: 999 THIRD AVENUE CITY: SEATTLE STATE: WA ZIP: 98104-4096 10-K/A 1 FORM 10-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A AMENDMENT TO APPLICATION OR REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 PLUM CREEK TIMBER COMPANY, L.P. AMENDMENT NO. 1 The undersigned Registrant hereby amends the following items of its Annual Report for 1994 on Form 10-K as set forth in the pages attached hereto: Item 10 Directors and Executive Officers of the Registrant Item 11 Executive Compensation Item 12 Security Ownership of Certain Beneficial Owners and Management Item 13 Certain Relationships and Related Transactions Item 14 (a)(3) Exhibits Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its General Partner Date: April 25, 1995 By: DIANE M. IRVINE ------------------------------------------ Diane M. Irvine, Vice President and Chief Financial Officer See Exhibit Index on page 14 and 15. 2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-10239 PLUM CREEK TIMBER COMPANY, L.P. (Exact name of registrant as specified in its charter) 999 Third Avenue, Seattle, Washington 98104-4096 Telephone: (206) 467-3600 Organized in the State of Delaware I.R.S. Employer Identification No. 91-1443693 Securities registered pursuant to Section 12(b) of the Act: Depositary Units, Representing Limited Partner Interests The above securities are registered on the New York Stock Exchange. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to filing requirements for the past 90 days. Yes [ X ] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] DOCUMENTS INCORPORATED BY REFERENCE List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated: None. 3 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT DIRECTORS OF THE GENERAL PARTNER OF THE REGISTRANT The following eight persons are currently Directors of PC Advisory Corp. I ("Corp. I"), a Delaware corporation and the indirect general partner of Plum Creek Management Company, L.P. (the "General Partner"), a Delaware limited partnership, which is the general partner of the Registrant. The eight were elected by unanimous written consent of the stockholders of Corp. I to hold office until the Annual Meeting of Stockholders in 1996 and until their successors are duly elected and qualified. There are no family relationships among them. Ian B. Davidson (Age 63) -- Mr. Davidson was elected a Director of Corp. I in December 1992 and is a member of both the Audit Committee and the Compensation Committee and is Chairman of the Conflicts Committee of the Board of Directors. Since 1970, Mr. Davidson has been Chairman and Chief Executive Officer of D. A. Davidson & Co. and DADCO. Mr. Davidson also serves as a Director of Energy West and the DADCO Companies. George M. Dennison (Age 59) -- Dr. Dennison was elected a Director of Corp. I effective February 1994 and is a member of the Audit Committee, the Compensation Committee and the Conflicts Committee of the Board of Directors. Since 1990, Dr. Dennison has been President and Professor of History at The University of Montana. From 1987 to 1990, Dr. Dennison was Provost and Vice President for Academic Affairs and Professor of History at Western Michigan University. Charles P. Grenier (Age 45) -- Mr. Grenier was elected a Director of Corp. I effective April 11, 1995. Mr. Grenier has been Executive Vice President of the General Partner since January 1, 1994. Mr. Grenier was Vice President, Rocky Mountain Region of the General Partner from December 1992 to December 1993 and was Vice President, Rocky Mountain Region of the former general partner of the Registrant, Plum Creek Management Company, from June 1989 to December 1992. Rick R. Holley (Age 43) -- Mr. Holley was elected a Director of Corp. I effective January 1, 1994. Mr. Holley has been President and Chief Executive Officer of the General Partner since January 1, 1994. Mr. Holley was Vice President and Chief Financial Officer of the General Partner from December 1992 to December 1993 and was Vice President and Chief Financial Officer of the former general partner of the Registrant, Plum Creek Management Company, from April 1989 to December 1992. David D. Leland (Age 59) -- Mr. Leland became a Director and Chairman of the Board of Directors of Corp. I in December 1992 and is a member of the Compensation Committee of the 2 4 Board of Directors. Mr. Leland was President and Chief Executive Officer of the General Partner from December 1992 to December 1993. Mr. Leland was a Director and President and Chief Executive Officer of the former general partner of the Registrant, Plum Creek Management Company, from April 1989 to December 1992. William E. Oberndorf (Age 41) -- Mr. Oberndorf was elected a Director of Corp. I in November 1992 and is Chairman of the Compensation Committee of the Board of Directors. Mr. Oberndorf is Vice President and Treasurer of Corp. I. Since 1991, Mr. Oberndorf's principal occupation has been as a Managing Director of SPO Partners & Co., an affiliate of the Registrant. From 1982 to 1991, Mr. Oberndorf was a general partner of San Francisco Partners II, L.P. Mr. Oberndorf serves as a Director for Bell & Howell Holdings Company and Wometco Cable Corp. William J. Patterson (Age 33) -- Mr. Patterson became a Director of Corp. I in November 1992 and is Chairman of the Audit Committee and a member of the Compensation Committee of the Board of Directors. Mr. Patterson is a Vice President of Corp. I. Since 1991, Mr. Patterson's principal occupation has been as a Managing Director of SPO Partners & Co., an affiliate of the Registrant. From 1989 to 1991, Mr. Patterson was an associate with San Francisco Partners II, L.P. John H. Scully (Age 50) -- Mr. Scully was elected a Director of Corp. I in November 1992 and is a member of the Compensation Committee of the Board of Directors. Mr. Scully is President of Corp. I. Since 1991, Mr. Scully's principal occupation has been as a Managing Director of SPO Partners & Co., an affiliate of the Registrant. From 1969 to 1991, Mr. Scully was a general partner of San Francisco Partners II, L.P. Mr. Scully serves as a Director for Bell & Howell Holdings Company and Wometco Cable Corp. EXECUTIVE OFFICERS OF THE GENERAL PARTNER OF THE REGISTRANT The names, ages, offices and periods of service as executive officers of the General Partner are listed below. There are no family relationships among them.
OFFICER NAME AGE OFFICE SINCE(d) - ---- --- ------ -------- Rick R. Holley (a) 43 President and Chief Executive Officer 1989 Charles P. Grenier (a) 45 Executive Vice President 1989 William R. Brown (b) 43 Vice President, Resource Management 1995 Diane M. Irvine (c) 36 Vice President and Chief Financial Officer 1994 James A. Kraft (a) 40 Vice President, Law 1989
(a) Served during the past five years in a managerial or executive capacity with the General Partner's predecessor, Plum Creek Management Company, and the General Partner. (b) Mr. Brown became Vice President, Resource Management of the General Partner on 3 5 February 22, 1995. Mr. Brown was the Director, Planning for the General Partner's predecessor, Plum Creek Management Company, and the General Partner from August 1990 to February 1995. From June 1987 to June 1990, Mr. Brown was the Director, Planning for Glacier Park Company. (c) Served since February 7, 1994 as Vice President and Chief Financial Officer of the General Partner. Ms. Irvine was a Partner with Coopers & Lybrand from October 1993 to February 1994 and was a manager with Coopers & Lybrand from July 1987 to September 1993. (d) Includes periods of time as an executive officer with the General Partner and with the former general partner of Registrant, Plum Creek Management Company. Executive officers of the General Partner are appointed annually at the second quarterly meeting of the Board of Directors of Corp. I. COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT David D. Leland, a Director of Corp. I, failed to report in a timely manner on a Form 4 for 1994 the disposition by him on August 24 and August 25, 1994 of 2,000 and 8,000 Limited Partnership Units of the Registrant ("Units"), respectively. The Units were reported on a Form 4 by Mr. Leland on October 18, 1994. Ian B. Davidson, a Director of Corp. I, failed to report in a timely manner on a Form 4 for 1994 the acquisition by his wife on June 17, 1994 of 200 Units of the Registrant. The Units were reported on a Form 5 by Mr. Davidson on February 14, 1995. Other than the late reportings noted above, the Registrant is not aware of any reporting violations regarding Section 16(a). 4 6 ITEM 11. EXECUTIVE COMPENSATION The following table sets forth a summary of compensation for the three fiscal years ended December 31, 1994 for the President and Chief Executive Officer and the four other most highly compensated executive officers of the Registrant for services rendered in all capacities. Compensation amounts are on an accrual basis and include amounts deferred at the officer's election. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ------------ ANNUAL COMPENSATION AWARDS ----------------------------------------------------------- (c) (d) (c)(e)(f)(g) OTHER ANNUAL RESTRICTED ALL OTHER NAME & PRINCIPAL (b) COMPENSATION STOCK AWARDS COMPENSATION POSITION (a) YEAR SALARY ($) BONUS ($) ($) ($) ($) - ---------------- ---- ---------- --------- ------------ ------------ ------------ Rick R. Holley 1994 $375,000 $187,500 $187,500 $111,755 President and 1993 $149,733 $90,840 $ 10 $377,470 Chief Executive Officer 1992 $139,567 $84,840 $111 $331,784 Robert E. Manne 1994 $300,000 $150,000 $150,000 $64,871 Executive Vice 1993 $152,717 $92,430 $102 $366,531 President 1992 $145,000 $87,630 $192 $316,112 Charles P. Grenier 1994 $300,000 $150,000 $150,000 $64,871 Executive Vice 1993 $148,433 $90,060 $20 $366,131 President 1992 $139,083 $84,060 $249 $315,335 James A. Kraft 1994 $200,000 $100,000 $100,000 $49,711 Vice President, Law 1993 $123,633 $62,650 $37 $279,232 1992 $114,467 $57,650 $15 $283,332 Diane M. Irvine 1994 $135,288 $75,000 $10,728 $75,000 $37,500 Vice President and Chief Financial Officer
5 7 (a) Principal position as of December 31, 1994. (b) Bonuses include cash amounts awarded under the Management Incentive Plan ("MIP"). Under the terms of the MIP, one half of any bonus awarded is paid in cash and the remaining half of any bonus awarded is converted into restricted Shadow Units (defined below). The Shadow Unit portion of the awards are reflected under the Restricted Stock Awards column of the Summary Compensation Table. Payments made under the MIP are not reimbursable by the Registrant. (c) All Other Compensation and Other Annual Compensation includes $30,000 and $10,728, respectively, for reimbursement to Ms. Irvine of the purchase price of 1,000 Units and the related tax liability. (d) The amounts under the Restricted Stock Awards column of the Summary Compensation Table represent Shadow Units awarded under the MIP. Messrs. Holley, Manne, Grenier, Kraft and Ms. Irvine were awarded 8,287, 6,630, 6,630, 4,420 and 3,315 Shadow Units on January 30, 1995 for the 1994 Plan Year. The number of Shadow Units credited to each participant's account was determined by the amount of the Unit portion of bonuses awarded divided by the Average Price of a Unit for the date the cash portion was paid to the Participant. Once Shadow Units have been credited to a participant's account, additional Shadow Units will be credited to the participant's account with respect to subsequent cash distributions made by the Registrant. The number of additional Shadow Units to be so credited is equal to the per Unit distribution amount multiplied by the number of Shadow Units currently credited to the participant's account divided by the Average Price of the Units on the distribution date. Each Shadow Unit credited to a participant's account represents the participant's right to receive an actual Unit upon the occurrence of a realization event which is defined as the earliest of the expiration of the Performance Period (three years subsequent to the Plan Year for which the bonus is awarded), a change in control or the participant's termination of employment as a result of permanent disability or the participant's death. If the participant's employment is terminated involuntarily for cause prior to the occurrence of a realization event, the participant forfeits any Shadow Units credited to his or her account. (e) All Other Compensation includes director fees of $34,000 paid to Mr. Holley. (f) All Other Compensation includes participation in the Incentive Sharing Plan ("IS Plan"). The IS Plan provided for cash incentive payments by the General Partner to eligible key employees of the General Partner and the Registrant and its subsidiaries. The incentive payments were made from a pool consisting of an amount between 25% and 50% of the incentive cash distributions declared by the Registrant to the General Partner for any year prior to 1994. Payments made under the IS Plan are not reimbursable by the Registrant. Compensation related to distributions declared for 1993, paid in 1994, from the IS Plan to Messrs. Holley, 6 8 Manne, Grenier, and Kraft totalled $44,218, $44,218, $44,218 and $33,690, respectively. Participation in the IS Plan by the above participants terminated in 1994. (g) All Other Compensation includes matching thrift contributions in the Plum Creek Thrift and Profit Sharing Plan for Messrs. Holley, Manne, Grenier and Kraft totaling $6,750 each and includes matching thrift contributions in the Plum Creek Supplemental Benefits Plan for Messrs. Holley, Manne, Grenier, Kraft and Ms. Irvine totaling $26,787, $13,903, $13,903, $9,271 and $7,500, respectively. LONG-TERM INCENTIVE PLAN AWARDS IN 1994
PERFORMANCE PERIOD NAME NUMBER OF UARS UNTIL MATURATION ---- -------------- ---------------- Diane M. Irvine 125,000 December 31, 1998
Effective October 1, 1993, the Board of Directors of Corp. I approved a long-term incentive plan ("LTIP"). The LTIP is administered by a committee of the Board of Directors ("Committee"). Pursuant to the determination of the Committee, Unit Appreciation Rights ("UARs") were granted to Ms. Irvine effective February 7, 1994. The terms of the UARs granted to Ms. Irvine provide for five Unit Value targets with the first Unit Value target set at 115% of a base Unit value of $26.45 and each subsequent Unit Value target at 115% of the previous target. Consequently, the five Unit Value targets are $30.42, $34.98, $40.23, $46.26, and $53.20, respectively. A Unit Value target is attained when the Unit Value (defined as the sum of the current market price of a Unit and all cash distributions paid by the Registrant on or after January 1, 1994) equals or exceeds the Unit Value target for 75 calendar days during any 90 consecutive calendar day period. Upon attaining each Unit Value target prior to December 31, 1998, (the "Performance Period") a percentage of the UARs are triggered equal, respectively in turn, to 10%, 15%, 20%, 25%, and 30% of the UARs awarded to a participant. Upon attaining each Unit Value target prior to the end of the Performance Period, a participant's account will be credited with a number of Shadow Units determined by multiplying the number of UARs triggered by approximately 0.503. Once Shadow Units have been credited to a participant's account, additional Shadow Units will be credited to the participant's account with respect to subsequent cash distributions made by the Registrant. The number of additional Shadow Units to be so credited is equal to the per Unit distribution amount multiplied by the number of Shadow Units currently credited to the participant's account divided by the market price of the Units on the distribution date. 7 9 Each Shadow Unit credited to a participant's account represents the participant's right to receive an actual Unit upon the occurrence of a realization event which is defined as the earliest of the expiration of the Performance Period, a change in control or the participant's termination of employment either involuntarily without cause or voluntarily with good reason or as a result of permanent disability or the participant's death. If the participant's employment is terminated either involuntarily for cause or voluntarily without good reason prior to the occurrence of a realization event, the participant forfeits any Shadow Units credited to his or her account and any UARs granted to the participant under the LTIP. 8 10 PENSION PLAN Estimated annual benefit levels under the supplemental, non-qualified pension plan of the Registrant ("Pension Plan"), based on earnings and years of credited service at age 65, are as follows: PENSION PLAN TABLE
YEARS OF SERVICE ----------------------------------------------------------- REMUNERATION 15 20 25 30 ------------ -------- -------- -------- -------- $100,000 $22,470 $29,960 $37,450 $44,940 $300,000 $70,470 $93,960 $117,450 $140,940 $500,000 $118,470 $157,960 $197,450 $236,940 $700,000 $166,470 $221,960 $277,450 $332,940 $900,000 $214,470 $285,960 $357,450 $428,940 $1,100,000 $262,470 $349,960 $437,450 $524,940 $1,300,000 $310,470 $413,960 $517,450 $620,940 $1,500,000 $358,470 $477,960 $597,450 $716,940
Benefit accruals under the Pension Plan are based on the gross amount of earnings, including cash incentive bonuses and IS Plan payments, but excluding bonuses awarded in Units under the MIP and all commissions and other extra or added compensation or benefits of any kind or nature. Bonuses awarded in Units under the MIP for 1994 were $187,500, $150,000, $150,000, $100,000 and $75,000 for Messrs. Holley, Manne, Grenier, Kraft and Ms. Irvine, respectively. The Pension Plan formula for retirement at age 65 is 1.1% of the highest five-year average earnings, plus .5% of the highest five-year average earnings in excess of one-third of the FICA taxable wage base in effect during the year of termination, times the number of years of credited service up to a maximum of 30 years. An early retirement supplement equal to 1% of the highest five-year average earnings up to one- third of the FICA taxable wage base in effect in the year of termination, times the number of years of credited service up to a maximum of 30 years, is payable until age 62. Both the basic benefit and the supplement are reduced by 2% for each year the employee's actual retirement date precedes the date the employee would have attained age 65, or the date the employee could have retired after attaining age 60 with 30 years of credited service, if earlier. In addition, the basic benefit and the supplemental benefit will be reduced by any previously accrued and distributed benefits, increased for an assumed interest factor, under the Burlington Resources Inc. Pension Plan, under which participation was terminated on December 31, 1992 for the officers of the general partner of the Registrant. Years of service under the Pension Plan at age 65 for Messrs. Holley, Manne, Grenier, Kraft and Ms. Irvine would be 30, 24, 27, 30 and 30, respectively. Years of service under the Pension Plan as of December 31, 1994 for Messrs. Holley, Manne, Grenier, Kraft and Ms. Irvine were 12, 9, 8, 11 and 1, respectively. 9 11 DIRECTOR COMPENSATION Directors of Corp. I receive an annual retainer of $30,000 plus $1,000 for each Board of Directors meeting and committee meeting attended. The chairmen of the Audit Committee, the Compensation Committee, and the Conflicts Committee of the Board of Directors each receive an additional annual retainer of $5,000. Directors may defer all or part of their compensation. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION During 1994, Mr. Leland served on the Compensation Committee of the Board of Directors. Mr. Leland is the former President and Chief Executive Officer of the General Partner. 10 12 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT BENEFICIAL OWNERSHIP To the best knowledge of the Registrant, there were no beneficial owners of more than five percent of the Registrant's Units outstanding on March 31, 1995. SECURITY OWNERSHIP OF MANAGEMENT The following table shows the total number of Units held by the directors of Corp. I, the executive officers of the General Partner, and all directors of Corp. I and executive officers of the General Partner as a group, in each case, as of March 31, 1995.
AMOUNT AND NATURE OF BENEFICIAL OWNERSHIP OF PERCENT OF NAME OF INDIVIDUAL OR IDENTITY OF GROUP DEPOSITARY UNITS CLASS --------------------------------------- ---------------- ----- Directors Ian B. Davidson 20,200 0.05% George M. Dennison 392 0.00% Rick R. Holley 151,340(d)(e) 0.37% David D. Leland 125,625 0.31% William E. Oberndorf 822,249(a) 2.02% William J. Patterson 0(b) 0.00% John H. Scully 851,493(c) 2.10% Executive Officers Charles P. Grenier (f) 88,695(d) 0.22% Diane M. Irvine 4,578(d) 0.01% James A. Kraft 38,927(d) 0.10% Robert E. Manne 34,115(d) 0.08% 12 Executive Officers & Directors as a Group 1,104,324 2.72% ========= =====
(a) Includes 224,983 Units owned by Main Street Partners, L.P., 84,817 Units owned by San Francisco Partners II, L.P. and 500,393 Units owned by an Employee Benefits Trust of the General Partner as to which Mr. Oberndorf has shared voting and dispositive power. Mr. 11 13 Oberndorf shares control of and has an indirect pecuniary interest in the General Partner's 2% interest in the Registrant. Mr. Oberndorf disclaims that the General Partner's 2% interest in the Partnership constitutes a security. (b) Mr. Patterson has an indirect pecuniary interest in the General Partner's 2% interest in the Registrant. Mr. Patterson disclaims that the General Partner's 2% interest in the Registrant constitutes a security. (c) Includes 224,983 Units owned by Main Street Partners, L.P., 84,817 Units owned by San Francisco Partners II, L.P. and 500,393 Units owned by an Employee Benefits Trust of the General Partner as to which Mr. Scully has shared voting and dispositive power. Mr. Scully shares control of and has an indirect pecuniary interest in the General Partner's 2% interest in the Registrant. Mr. Scully disclaims that the General Partner's 2% interest in the Registrant constitutes a security. (d) Includes non-vested Shadow Units credited to participant's accounts under the terms of the LTIP and Shadow Units credited to participant's accounts under the terms of the MIP. Upon vesting, the participants are entitled to receive one Unit for each Shadow Unit that vests. Non-vested Shadow Units under the terms of the LTIP credited to the participant's accounts for Messrs. Holley, Grenier and Kraft totaled 71,036, 50,740 and 30,444, respectively. Shadow Units under the terms of the MIP credited to the participant's accounts for Messrs. Holley, Manne, Grenier, Kraft and Ms. Irvine totaled 8,444, 6,755, 6,755, 4,503 and 3,378, respectively. Messrs. Holley, Manne, Grenier, Kraft and Ms. Irvine disclaim beneficial ownership of both the non-vested Shadow Units under the LTIP and the Shadow Units under the MIP. (e) Includes 43,200 Units deferred under the Unit Awards Plan. Mr. Holley disclaims beneficial ownership of the Units deferred. (f) Elected a Director of Corp. I effective April 11, 1995. 12 14 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Registrant is required under its Partnership agreement to reimburse the General Partner for compensation costs related to the management of the Registrant, including the purchase of Units associated with certain benefit plans. During 1994, the Registrant paid the General Partner for its purchase of 496,800 Units at a total cost of $12.8 million, of which $10.5 million was funded from current operations and $2.3 million from funds held by an employee benefit trust of the Registrant. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as a part of the Form 10-K: (1) Financial Statements and Supplementary Financial Information The following combined financial statements of the Company were included in Part II, Item 8 of the Form 10-K as filed on March 15, 1995: Combined Statement of Income........................ 26 Combined Balance Sheet.............................. 27 Combined Statement of Cash Flows.................... 28 Notes to Combined Financial Statements.............. 29 Report of Independent Accountants................... 42 Supplementary Financial Information................. 43 (2) Financial Statement Schedules Not applicable. (3) List of Exhibits Each exhibit set forth below in the Index to Exhibits is filed as a part of this report. Exhibits not incorporated by reference to a prior filing are designated by an asterisk ("*"); all exhibits not so designated are incorporated herein by reference to a prior filing as indicated. Exhibits designated by a positive sign ("+") indicates management contracts or compensatory plans or arrangements required to be filed as an exhibit to this report. 13 15 Index to Exhibits
Exhibit Designation Nature of Exhibit - ----------- ----------------- 3.A Amended and Restated Agreement of Limited Partnership of Plum Creek Timber Company, L.P. dated June 8, 1989, as amended to date (conformed composite version) (Form 10-K/A, Amendment No. 1, filed April 1994). 3.B Certificate of Limited Partnership of Plum Creek Timber Company, L.P., as filed with the Secretary of State of the state of Delaware on April 12, 1989 (Form S-1, Regis. No. 33-28094, filed May, 1989). 4.A Form of Deposit Agreement by and among Plum Creek Timber Company, L.P. and The First National Bank of Boston, dated as of May 1989, (Form S-1, Regis. No. 33-28094, filed May, 1989). 4.B Form of Transfer Application (Form S-1, Regis. No. 33-28094, filed May, 1989). 4.C.1* Senior Note Agreement, dated May 31, 1989, 11 1/8 percent Senior Notes due June 8, 2007, Plum Creek Timber Company, L.P. (Form 10-Q, No. 1-10239, filed August, 1989). Amendment No. 1, consent and waiver dated January 1, 1991 to Senior Note Agreement, dated May 31, 1989, 11 1/8 percent Senior Notes due June 8, 2007, Plum Creek Timber Company, L.P. (Form 8 Amendment No. 1, filed April 1991). Amendment No. 2, consent and waiver dated September 1, 1993 to the Senior Note Agreement (Form 10-K/A, Amendment No. 1, filed April 1994). Amendment No. 3, Senior Note Agreement Amendment dated May 20, 1994. See attached exhibit. 4.C.2* Mortgage Note Agreement, dated May 31, 1989, 11 1/8 percent First Mortgage Notes due June 8, 2007, Plum Creek Manufacturing, Inc. (Form 10-Q, No. 1-10239, filed August, 1989). Amendment No. 1, consent and waiver dated January 1, 1991 to Mortgage Note Agreement, dated May 31, 1989, 11 1/8 percent First Mortgage Notes due June 8, 2007, Plum Creek Manufacturing, Inc., now Plum Creek Manufacturing, L.P. (Form 8 Amendment No. 1, filed April 1991). Amendment No. 2, consent and waiver dated September 1, 1993 to the Mortgage Note Agreement (Form 10-K/A, Amendment No. 1, filed April 1994). Amendment No. 3, Mortgage Note Agreement Amendment dated May 20, 1994. See attached exhibit. 4.C.3* Senior Note Agreement, dated August 1, 1994, 8.73% Senior Notes due August 1, 2009, Plum Creek Timber Company, L.P. See attached exhibit. 10.A.1* $100 million Amended and Restated Credit Agreement by and between Plum Creek Timber Company, L.P., Bank of America National Trust and Savings Association as Agent, ABN AMRO Bank N.V. as Co-agent and the Other Financial Institutions Party Thereto, dated as of November 15, 1994. See attached exhibit. 10.A.2* $35 million Credit Agreement by and between Plum Creek Timber Company, L.P., Bank of America National Trust and Savings Association as Agent, ABN AMRO Bank N.V. as Co-agent and the Other Financial Institutions Party Thereto, dated as of November 15, 1994. See attached exhibit. 10.B.1*+ Plum Creek Supplemental Benefits Plan. See attached exhibit. 10.B.2+ Incentive Sharing Plan, Plum Creek Management Company. (Form 10-K, No. 1-10239, filed March, 1990). Amendment number 1, dated April 1991, Incentive Sharing Plan, Plum Creek Management Company. (Form 10-Q, No. 1-10239, filed May, 1991).
14 16 10.B.3+ Unit Awards Plan, PCTC, Inc. (Form 10-K, No. 1-10239, filed March, 1990). Amendment number 1, dated April 1991, to Unit Awards Plan, PCTC, Inc. (Form 10-Q, No. 1-10239, filed May, 1991). 10.B.4+ Incentive Compensation Plan, Plum Creek Management Company. (Form 8 Amendment No. 1, filed April, 1990). Amendment dated January 1, 1991 to Incentive Compensation Plan, Plum Creek Management Company. (Form 8 Amendment No. 1, filed April 1991). 10.B.5+ Retirement Plan for Directors, Plum Creek Management Company. (Form 8 Amendment No. 1, filed April 1991). 10.B.6+ Long-term Incentive Plan, Plum Creek Management Company, L.P. (Form 10-K/A, Amendment No. 1, filed April 1994). 10.B.7+ Management Incentive Plan, Plum Creek Management Company, L.P. (Form 10-K/A, Amendment No. 1, filed April 1994). 10.B.8*+ Executive and Key Employee Salary and Incentive Compensation Deferral Plan, Plum Creek Management Company, L.P. See attached exhibit. 10.B.9*+ Deferred Compensation Plan for Directors, PC Advisory Corp. I. See attached exhibit. 21 Subsidiaries of the Registrant. (Form 8 Amendment No. 1, filed April 1991). 27* Financial Data Schedule. See attached exhibit.
(b) Reports on Form 8-K None. 15 EX-4.C.1 2 EXHIBIT 4.C.1 1 EXHIBIT 4.C.1 SENIOR NOTE AGREEMENT AMENDMENT PLUM CREEK TIMBER COMPANY, L.P. 999 THIRD AVENUE SEATTLE, WASHINGTON 98104 As of May 20, 1994 To each of the Purchasers listed on the attached Purchaser Schedule Dear Purchaser: RECITALS WHEREAS, you and Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Company"), have entered into Senior Note Agreements dated as of May 31, 1989 and as amended to the date hereof by amendments thereto dated as of January 1, 1991, April 22, 1993 and September 1, 1993 (the "Senior Note Agreements") pursuant to which the Company issued its 11-1/8% Senior Notes due June 8, 2007 (the "Senior Notes"); WHEREAS, Plum Creek Manufacturing, L.P., a Delaware limited partnership ("Manufacturing"), is the obligor with respect to certain 11-1/8% First Mortgage Notes due June 8, 2007 (the "Mortgage Notes"), pursuant to certain Mortgage Note Agreements, dated May 31, 1989 and as amended to the date hereof by amendments thereto dated as of January 1, 1991, April 22, 1993 and September 1, 1993, among Manufacturing, the Company and the several holders of the Mortgage Notes identified on the Purchaser Schedule attached thereto ("Mortgage Note Agreements"); WHEREAS, the Company purchased certain timberlands in the State of Montana ("Champion Timberlands") from Champion International Corporation; WHEREAS, the Company, in order to finance the purchase of the Champion Timberlands, entered into a Revolving Credit Agreement dated as of October 28, 1993 with Bank of America National Trust and Savings Association and the other lenders parties to such facility ("Bank of America Revolving Credit Agreement"); WHEREAS, the Company, in order to refinance a portion of the borrowing under the Bank of America Revolving Credit Agreement, proposes to enter into Senior Note Agreements with certain lenders (the "1994 Senior Note Agreements"). 2 WHEREAS, concurrently with the execution and delivery of this Agreement, Manufacturing is executing and delivering a Mortgage Note Agreement Amendment ("Mortgage Note Amendment Agreement") with the Required Holders (as defined in the Mortgage Note Agreement) of the Mortgage Notes; WHEREAS, consummation of certain of the foregoing transactions requires certain amendments to the Senior Note Agreements; NOW, THEREFORE, the Company hereby agrees with you that this Agreement shall become effective as of the date on which (a) the 1994 Senior Note Agreements are effective and (b) the conditions to effectiveness set forth in Section 2 hereof are completely satisfied (the "Effective Time") and that thereafter, all references to, and actions taken in connection with, the Senior Note Agreements shall incorporate this Agreement in its entirety. All capitalized terms used in this Agreement and not otherwise defined have the meanings ascribed to them in the Senior Note Agreements. 1. CERTAIN AMENDMENTS A. DEFINITIONS (1) The following definitions shall be added to Paragraph 10B of the Senior Note Agreements: "1994 Senior Note Agreements" shall mean the senior note agreements to be entered into between the Company and certain lenders pursuant to which the Company shall issue, and the lenders shall purchase, senior notes of the Company in an aggregate principal amount not to exceed $150,000,000. (2) The following definition contained in Paragraph 10B of the Senior Note Agreements shall be amended to read as follows: "Qualified Debt" shall mean, as to the Company, as of any date of determination, without duplication, all outstanding indebtedness of the Company for borrowed money, including, without limitation, Debt represented by the Notes, the Bank of America Revolving Credit Agreement and the 1994 Senior Note Agreements. 2. CONDITIONS TO EFFECTIVENESS The amendments to the Senior Note Agreements and the other agreements set forth herein shall become effective, subject to the fulfillment of the following conditions to your -2- 3 satisfaction or waiver by you thereof (as evidenced by your execution and delivery of this Agreement) on or prior to the Effective Time. A. REPRESENTATIONS AND WARRANTIES; NO DEFAULT The representations and warranties contained in Paragraph 3 hereof shall be true in all material respects on and as of the date of closing, except to the extent of changes caused by the transactions herein contemplated; and there shall exist on the date of closing no Event of Default or Default; and you shall receive a duly executed officer's certificate, dated as of the Effective Time, to both such effects. B. CERTAIN AGREEMENTS Each of (i) this Agreement, (ii) the 1994 Senior Note Agreements, and (iii) the Mortgage Note Amendment Agreement shall have been duly authorized, executed and delivered by the parties thereto (other than you) and by the Required Holders and shall be in full force and effect. C. PROCEEDINGS All proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in substance and form to you, and you shall have received all such counterpart originals or certified or other copies of such documents as you may reasonably request. D. OTHER CONSENTS The Company shall have sent all notices, and received all consents, approvals, waivers and other authorizations, that are necessary in connection with the modifications contained herein, and no default, event of default, material adverse change or other similar event or condition shall exist under any Debt or any agreement or instrument relating thereto as at the Effective Time. 3. REPRESENTATIONS AND WARRANTIES The Company represents and warrants as follows: A. ORGANIZATION The Company is a limited partnership duly organized, validly existing and in good standing under the Delaware Revised Uniform Limited Partnership Act and has all requisite partnership power and authority to own and operate its properties, to conduct its business as now conducted and as proposed to be conducted and to enter into this Agreement. -3- 4 B. QUALIFICATION The Company is duly qualified or registered for transaction of business and in good standing as a foreign limited partnership in each jurisdiction in which the failure so to qualify or be registered would have a material adverse effect on the business, property or assets, condition or operations of the Company, or on the ability of the Company to perform its obligations under this Agreement, or, after giving effect to the transactions contemplated hereby, the Senior Note Agreements or the Senior Notes. C. SUBSIDIARIES As of the Effective Time the General Partner owns a 2% general partner's interest and the Company owns a 98% limited partner's interest in Manufacturing, which interests have been duly authorized and validly issued, fully paid and non-assessable and are owned free and clear of any Liens. Manufacturing has issued no warrants or options to acquire, or instruments convertible into or exchangeable for any equity interest in Manufacturing. As of the Effective Time the General Partner owns 4% of the capital stock and the Company owns 96% of the capital stock of Marketing, which capital stock has been duly authorized and validly issued, fully paid and non-assessable and are owned free and clear of any liens. Marketing has issued no warrants or options to acquire or interests convertible into or exchangeable for any equity interest in Marketing. As of the Effective Time the Company has no Subsidiaries other than Manufacturing and Marketing. As of the Effective Time Manufacturing has no Subsidiaries. D. CHANGES, ETC. Except as contemplated by this Agreement, since March 31, 1994, the date of the most recent combined financial statements of the Company, (a) the Company has not incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions not in the ordinary course of business, and (b) there has not been any material adverse change in the business, properties or assets, condition (financial or otherwise) or operations of the Company. E. ACTIONS PENDING There is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened against the Company, or any properties or rights of the Company, by or before any court, arbitrator or administrative or governmental body which questions the validity of this Agreement, or any action taken or to be taken pursuant to this Agreement, which would be reasonably likely to result in any material adverse change in the business, properties or assets, condition (financial or otherwise) or operations of the Company, or in the inability of the Company to perform its obligations under this Agreement, the Senior Note Agreements or the Senior Notes, following the effectuation of the transactions described herein. -4- 5 F. COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not in violation of any provision of the Partnership Agreement or of any term of any agreement or instrument to which it is a party or by which it or any of its properties is bound or any term of any applicable law, ordinance, rule or regulation of any governmental authority or any term of any applicable order, judgment or decree of any court, arbitrator or governmental authority (collectively, "term"), the consequences of which violation would be reasonably likely to have a material adverse effect on its business, properties or assets, condition (financial or otherwise) or operations or on the ability of the Company to perform its obligations under this Agreement, or, after giving effect to the transactions contemplated hereby, the performance of the Senior Note Agreements or the Senior Notes, and the execution, delivery and performance by the Company of this Agreement, or, after giving effect to the transactions contemplated hereby, the Senior Note Agreements or the Senior Notes will not result in any violation of or be in conflict with or constitute a default under any such term or result in the creation of (or impose any obligation on the Company to create) any Lien upon any of the properties or assets of the Company, pursuant to any such term except for Liens permitted by paragraph 6B(1) of the Senior Note Agreements; and there is no such term which materially adversely affects or in the future would be likely to materially adversely affect the business, properties or assets, condition or operations of the Company or the ability of the Company to perform its obligations under this Agreement, or, after giving effect to the transactions contemplated hereby, the Senior Note Agreements or the Senior Notes. G. GOVERNMENTAL CONSENT No consent, approval or authorization of, or declaration or filing with, any governmental authority is required for the valid execution, delivery and performance by the Company of this Agreement, or, after giving effect to the transactions contemplated hereby, the Senior Note Agreements or the Senior Notes other than those which have been obtained on or prior to the Effective Time. H. FOREIGN ASSETS CONTROL REGULATIONS, ETC. The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated hereby will not violate the Foreign Assets Control Regulations, the Transaction Control Regulations, the Cuban Assets Control Regulations, the Foreign Funds Control Regulations, the Iranian Assets Control Regulations, the Nicaraguan Trade Control Regulations, the South African Transactions Regulations, the Libyan Sanctions Regulations, the Soviet Gold Coin Regulations or the Panamanian Transactions Regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or (i) Executive Orders 12722 and 12724 (55 Fed. Reg. 31803 and 55 Fed Reg. 33089), Blocking Iraqi Government Property and Prohibiting Transactions with Iraq, and (ii) Executive Orders 12723 and 12725 (55 Fed. -5- 6 Reg. 31805 and 55 Fed. Reg. 33091), Blocking Kuwaiti Government Property and Prohibiting Transactions with Kuwait. I. AUTHORIZATION; ENFORCEABILITY This Agreement has been duly authorized by all requisite action and duly executed and delivered by authorized officers of the Company and the General Partner, and the Senior Note Agreements, as amended by this Agreement, are valid obligations of the Company, legally binding upon and enforceable against the Company in accordance with their terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization or other similar law affecting the enforcement of creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in proceeding in equity or at law). J. DISCLOSURE Neither this Agreement nor any other document, certificate or statement furnished to you by or on behalf of the Company in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact peculiar to the Company which materially adversely affects or in the future may (so far as the Company can now reasonably foresee) materially adversely affect the businesses, property or assets, condition (financial or otherwise) or results of operations of the Company and which has not been set forth in this Agreement, or in the other documents, certificates and statements furnished to you by or on behalf of the Company, prior to the date hereof in connection with the transactions contemplated hereby. 4. EXPENSES; INDEMNIFICATION The Company shall, whether or not the transactions contemplated hereby are consummated, save each holder of Senior Notes harmless for all out-of-pocket expenses arising in connection with the execution and delivery or performance of this Agreement, including the reasonable fees and expenses of special counsel for the holders of Senior Notes. The Company shall also indemnify and save each holder of Senior Notes harmless from and against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever (including, without limitation, any taxes, and any additional taxes imposed on any amounts payable pursuant to this Paragraph 4) which may at any time be imposed on, incurred by or asserted against any holder of Senior Notes in any way arising out of, relating to or resulting from this Agreement or the transactions contemplated hereby. The obligations of the Company under this Paragraph 4 shall survive the transfer of any Senior Note or portion thereof or interest therein by a holder of Senior Notes or any transferee and the payment of any Senior Note. -6- 7 5. MISCELLANEOUS. A. CONTINUITY AND INTEGRATION OF AGREEMENTS. The Senior Note Agreements, as affected by this Agreement, shall remain in full force and effect and are hereby ratified and confirmed, and the Senior Note Agreements and this Agreement shall be deemed to be and are construed as a single agreement. B. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and warranties contained herein shall survive the execution and delivery of this Agreement, and the transfer of any Senior Note by a holder thereof. Such representations and warranties may be relied upon by any transferee of a Senior Note from a holder thereof. C. SUCCESSORS AND ASSIGNS. All covenants and agreements in this Agreement contained by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. D. DESCRIPTIVE HEADINGS. The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. E. LIMITED DURATION This Agreement shall terminate and be of no further force or effect if the Effective Time does not occur by November 30, 1994. F. COUNTERPARTS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK. THIS AGREEMENT SHALL BE BINDING UPON THE COMPANY AND THE HOLDERS OF SENIOR NOTES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. -7- 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the date first above written. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., General Partner DIANE M. IRVINE By: ___________________________________ Name: Diane M. Irvine Title: Vice President and Chief Financial Officer The foregoing is accepted and agreed to: TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA ANGELA BROCK-KYLE By: _______________________________ Name: Angela Brock-Kyle Title: Associate Director Company: Teachers Insurance and Annuity Association of America -8- EX-4.C.2 3 EXHIBIT 4.C.2 1 EXHIBIT 4.C.2 MORTGAGE NOTE AGREEMENT AMENDMENT PLUM CREEK MANUFACTURING, L.P. 999 Third Avenue Seattle, Washington 98104 As of May 20, 1994 To each of the Purchasers listed on the attached Purchaser Schedule Dear Purchaser: RECITALS WHEREAS, you, Plum Creek Manufacturing, L.P., a Delaware limited partnership (the "Company"), and Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Partnership"), are parties to Mortgage Note Agreements dated as of May 31, 1989 and as amended to the date hereof by amendments thereto dated as of January 1, 1991, April 22, 1993 and September l, 1993 (the "Mortgage Note Agreements") pursuant to which the Company is the obligor with respect to certain 11-1/8% First Mortgage Notes due June 8, 2007 (the "Mortgage Notes"); WHEREAS, the payment of the Mortgage Notes is guaranteed by the Partnership pursuant to Paragraph 7 of the Mortgage Note Agreements; WHEREAS, the Partnership purchased certain timberlands in the State of Montana ("Champion Timberlands") from Champion International Corporation; WHEREAS, the Partnership, in order to finance the purchase of the Champion Timberlands pursuant to the Purchase Agreement, entered into a Revolving Credit Agreement dated as of October 28, 1993 with Bank of America National Trust and Savings Association and the other lenders under to such facility ("Bank of America Revolving Credit Agreement"); WHEREAS, the Partnership, in order to refinance a portion of the borrowings under the Bank of America Revolving Credit Agreement, proposes to enter into Senior Note Agreements with certain lenders (the "1994 Senior Note Agreements"); WHEREAS, consummation of the foregoing transactions requires certain amendments to the Mortgage Note Agreements; 2 NOW, THEREFORE, the Company and the Partnership hereby agree with you that this Agreement shall become effective as of the date on which the 1994 Senior Note Agreements become effective (the "Effective Time") and that thereafter, all references to, and actions taken in connection with, the Mortgage Note Agreements shall incorporate this Agreement in its entirety. All capitalized terms used in this Agreement and not otherwise defined have the meanings ascribed to them in the Mortgage Note Agreements. 1. AMENDMENT The first part of Paragraph 7J of the Mortgage Note Agreements shall be amended to read as follows: 7J INCORPORATED COVENANTS. The provisions of paragraphs 5 and 6 of the Senior Note Agreements as originally in effect (except as amended to and as of May 20, 1994 between the Partnership and the Senior Noteholders (collectively, the "Amendments")) and the definitions set forth or specified by reference in the Senior Note Agreement as originally in effect (except as amended by the Amendments) of terms used in such paragraphs 5 and 6 or in such definitions (herein, collectively, the Incorporated Provisions") . . . The last sentence of Paragraph 7J shall be amended to read as follows: The Incorporated Provisions shall not be affected by any amendments, modification, waiver or termination of the Senior Note Agreements, except as amended by the Amendments, and may be amended, modified, waived or terminated only pursuant to Paragraph 12C of this Agreement. 2. CONDITIONS TO EFFECTIVENESS The amendments to the Mortgage Note Agreements and the other agreements set forth herein shall become effective, subject to the fulfillment of the following conditions to your satisfaction or waiver by you thereof (as evidenced by your execution and delivery of this Agreement) on or prior to the Effective Time: A. REPRESENTATIONS AND WARRANTIES; NO DEFAULT The representations and warranties contained in Paragraph 3 hereof shall be true in all material respects on and as of the closing, except to the extent of changes caused by the transactions herein contemplated; and there shall exist on the date of closing no Event of Default or Default; and you shall receive a duly executed officer's certificate, dated as of the Effective Time, to both such effects. -2- 3 B. CERTAIN AGREEMENTS Each of (i) this Agreement, (ii) the 1994 Senior Note Agreements, and (iii) the amendment to the Senior Note Agreement of even date herewith among the Partnership and the several holders of the Senior Notes (the "Senior Note Agreement Amendment") shall have been duly authorized, executed and delivered by the parties thereto (other than you) and by the Required Holders and shall be in full force and effect. C. PROCEEDINGS All proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in substance and form to you, and you shall have received all such counterpart originals or certified or other copies of such documents as you may reasonably request. 3. REPRESENTATIONS AND WARRANTIES Each of the Company and the Partnership represents and warrants: A. ORGANIZATION The Company is a limited partnership duly organized, validly existing and in good standing under the Delaware Revised Uniform Limited Partnership Act and has all requisite partnership power and authority to own and operate its properties, to conduct its business as now conducted and as proposed to be conducted, and to enter into and carry out the terms of this Agreement. The Partnership is a limited partnership duly organized, validly existing and in good standing under the Delaware Revised Uniform Limited Partnership Act and has all requisite partnership power and authority to own and operate its properties, to conduct its business as now conducted and as proposed to be conducted, and to enter into and carry out the terms of this Agreement. B. QUALIFICATION The Company is duly qualified or registered for transaction of business and in good standing as a foreign limited partnership in each jurisdiction in which the failure so to qualify or be registered would have a material adverse effect on the business, property or assets, condition or operations of the Company, or on the ability of the Company to perform its obligations under this Agreement, or, after giving effect to the transactions contemplated hereby, the Mortgage Note Agreements or the Mortgage Notes. C. SUBSIDIARIES As of the Effective Time the General Partner owns a 2% general partner's interest and the Company owns a 98% limited partner's interest in Manufacturing, which interests have been duly authorized and validly issued, fully paid and non-assessable and are owned -3- 4 free and clear of any Liens. Manufacturing has issued no warrants or options to acquire, or instruments convertible into or exchangeable for any equity interest in Manufacturing. As of the Effective Time the General Partner owns 4% of the capital stock and the Company owns 96% of the capital stock of Marketing, which capital stock has been duly authorized and validly issued, fully paid and non-assessable and are owned free and clear of any liens. Marketing has issued no warrants or options to acquire or interests convertible into or exchangeable for any equity interest in Marketing. As of the Effective Time the Company has no Subsidiaries other than Manufacturing and Marketing. As of the Effective Time Manufacturing has no Subsidiaries. D. CHANGES, ETC. Except as contemplated by this Agreement, since March 31, 1994, the date of the most recent consolidated financial statements of the Partnership, (i) neither the Company nor the Partnership has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions not in the ordinary course of business, and (ii) there has not been any material adverse change in the financial condition or operations of the Company or the Partnership. E. ACTIONS PENDING There is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened against the Company, or any properties or rights of the Company, by or before any court, arbitrator or administrative or governmental body which questions the validity of this Agreement, or any action taken or to be taken pursuant to this Agreement, which would be reasonably likely to result in any material adverse change in the business, properties or assets, condition (financial or otherwise) or operations of the Company, or in the inability of the Company to perform its obligations under this Agreement, the Mortgage Note Agreements or the Mortgage Notes, following the effectuation of the transactions described herein. F. COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not in violation of any provision of the Partnership Agreement or of any term of any agreement or instrument to which it is a party or by which it or any of its properties is bound or any term of any applicable law, ordinance, rule or regulation of any governmental authority or any term of any applicable order, judgment or decree of any court, arbitrator or governmental authority (collectively, "term"), the consequences of which violation would be reasonably likely to have a material adverse effect on its business, properties or assets, condition (financial or otherwise) or operations or on the ability of the Company to perform its obligations under this Agreement, or, after giving effect to the transactions contemplated -4- 5 hereby, the performance of the Mortgage Note Agreements or the Mortgage Notes, and the execution, delivery and performance by the Company of this Agreement, or, after giving effect to the transactions contemplated hereby, the Mortgage Note Agreements or the Mortgage Notes will not result in any violation of or be in conflict with or constitute a default under any such term or result in the creation of (or impose any obligation on the Company to create) any Lien upon any of the properties or assets of the Company, pursuant to any such term except for Liens permitted by paragraph 6B(l) of the Mortgage Note Agreements; and there is no such term which materially adversely affects or in the future would be likely to materially adversely affect the business, properties or assets, condition or operations of the Company or the ability of the Company to perform its obligations under this Agreement, or, after giving effect to the transactions contemplated hereby, the Mortgage Note Agreements or the Mortgage Notes. G. GOVERNMENTAL CONSENT No consent, approval or authorization of, or declaration or filing with, any governmental authority is required for the valid execution, delivery and performance by the Company of this Agreement, or, after giving effect to the transactions contemplated hereby, the Mortgage Note Agreements or the Mortgage Notes other than those which have been obtained on or prior to the Effective Time. H. FOREIGN ASSETS CONTROL REGULATIONS, ETC. The execution and delivery of this Agreement by the Company and the consummation of the transactions contemplated hereby will not violate the Foreign Assets Control Regulations, the Transaction Control Regulations, the Cuban Assets Control Regulations, the Foreign Funds Control Regulations, the Iranian Assets Control Regulations, the Nicaraguan Trade Control Regulations, the South African Transactions Regulations, the Libyan Sanctions Regulations, the Soviet Gold Coin Regulations or the Panamanian Transactions Regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or (i) Executive Orders 12722 and 12724 (55 Fed. Reg. 31803 and 55 Fed. Reg. 33089), Blocking Iraqi Government Property and Prohibiting Transactions with Iraq, and (ii) Executive Orders 12723 and 12725 (55 Fed. Reg. 31805 and 55 Fed. Reg. 33091), Blocking Kuwaiti Government Property and Prohibiting Transactions with Kuwait. I. AUTHORIZATION; ENFORCEABILITY This Agreement has been duly authorized by all requisite action and duly executed and delivered by authorized officers of the Company and the General Partner, and the Mortgage Note Agreements, as amended by this Agreement, are valid obligations of the Company, legally binding upon and enforceable against the Company in accordance with their terms, except as such enforceability may be limited by (i) bankruptcy, insolvency, reorganization or other similar law affecting the enforcement of creditors' rights generally, and (ii) general principles of equity (regardless of whether such enforceability is considered in proceeding in equity or at law). -5- 6 J. DISCLOSURE Neither this Agreement nor any other document, certificate or statement furnished to you by or on behalf of the Company in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact peculiar to the Company which materially adversely affects or in the future may (so far as the Company can now reasonably foresee) materially adversely affect the businesses, property or assets, condition (financial or otherwise) or results of operations of the Company and which has not been set forth in this Agreement, or in the other documents, certificates and statements furnished to you by or on behalf of the Company, prior to the date hereof in connection with the transactions contemplated hereby. 4. AFFIRMATION OF GUARANTEE The Partnership hereby agrees that its Guarantee in respect of the Mortgage Notes, as set forth in Paragraph 7 of the Mortgage Note Agreements, shall continue in full force and effect from and after the Effective Time. 5. EXPENSES; INDEMNIFICATION The Company shall, whether or not the transactions contemplated hereby are consummated, save each holder of Mortgage Notes harmless for all out-of-pocket expenses arising in connection with the execution and delivery or performance of this Agreement and the consummation of the transactions contemplated hereby, including the reasonable fees and expenses of special counsel for the holders of Mortgage Notes. The Company shall also indemnify and save each holder of Mortgage Notes harmless from and against all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever (including, without limitation, any taxes, and any additional taxes imposed on any amounts payable pursuant to this Paragraph 5) which may at any time be imposed on, incurred by or asserted against any holder of Mortgage Notes in any way arising out of, relating to or resulting from this Agreement or the transactions contemplated hereby. The obligations of the Operations Partnership under this Paragraph 5 shall survive the transfer of any Mortgage Note or portion thereof or interest therein by a holder of Mortgage Notes or any transferee and the payment of any Mortgage Note. 6. MISCELLANEOUS A. CONTINUITY AND INTEGRATION OF AGREEMENTS The Mortgage Note Agreements, as affected by this Agreement, shall remain in full force and effect and are hereby ratified and confirmed, and the Mortgage Note Agreements and this Agreement shall be deemed to be and construed as a single agreement. -6- 7 B. SURVIVAL OF REPRESENTATIONS AND WARRANTIES All representations and warranties contained herein shall survive the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby and the transfer of any Mortgage Note by a holder of Mortgage Notes. Such representations and warranties may be relied upon by any transferee of a Mortgage Note from a holder of Mortgage Notes. C. SUCCESSORS AND ASSIGNS All covenants and agreements in this Agreement contained by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto whether so expressed or not. D. DESCRIPTIVE HEADINGS The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. -7- 8 E. COUNTERPARTS This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK. THIS AGREEMENT SHALL BE BINDING UPON THE COMPANY, THE PARTNERSHIP, THE OPERATIONS PARTNERSHIP, THE MERGER COMPANY, AND THE HOLDERS OF MORTGAGE NOTES AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS. IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the date first above written. PLUM CREEK MARKETING, INC. /s/ Diane M. Irvine By: --------------------------------- Name: Diane M. Irvine Title: Vice President and Chief Financial Officer PLUM CREEK MANUFACTURING, L.P. By: Plum Creek Management Company, L.P., General Partner /s/ Diane M. Irvine By: -------------------------------- Name: Diane M. Irvine Title: Vice President and Chief Financial Officer 9 PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., General Partner /s/ Diane M. Irvine By: ------------------------------ Name: Diane M. Irvine Title: Vice President and Chief Financial Officer The foregoing is accepted and agreed to: TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA /s/ Angela Brock-Kyle By: --------------------------------------- Name: Angela Brock-Kyle Title: Associate Director Company: Teachers Insurance and Annuity Association of America EX-4.C.3 4 EXHIBIT 4.C.3 1 CONFORMED COPY EXHIBIT 4.C.3 - ------------------------------------------------------------------------------- PLUM CREEK TIMBER COMPANY, L.P. $150,000,000 8.73% SENIOR NOTES DUE AUGUST 1, 2009 - ------------------------------------------------------------------------------- SENIOR NOTE AGREEMENT - ------------------------------------------------------------------------------- Dated as of August 1, 1994 - ------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
1. AUTHORIZATION OF ISSUE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 2. PURCHASE AND SALE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3. CONDITIONS OF CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3A. Opinion of Purchaser's Special Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3B. Opinion of Company's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3C. Representations and Warranties; No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3D. Sale of Notes to Other Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3E. Purchase Permitted by Applicable Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3F. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 3G. Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4A. Optional Prepayment With Yield-Maintenance Premium . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4B. Notice of Optional Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4C. Partial Payments Pro Rata . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4D. Retirement of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 4E. Payments on Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5A. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5B. Inspection of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5C. Covenant to Secure Notes Equally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5D. Partnership Existence, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5E. Payment of Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5F. Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5G. Maintenance of Properties; Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 6A. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 6B. Lien, Indebtedness and Other Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 6B(1) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 6B(2) Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 6B(3) Loans, Advances, Investments and Contingent Liabilities . . . . . . . . . . . . . . . . . . . 18 6B(4) Sale of Stock and Debt of Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 6B(5) Merger and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 6B(6) Harvesting Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 6B(7) Sale and Lease-Back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 6B(8) Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 6B(9) Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 6C. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 6D. Issuance of Stock by Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
3 Page ---- 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7A. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7B. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 8. REPRESENTATIONS, COVENANTS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 8A. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 8B. General Partner Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 8C. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 8D. Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 8E. Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 8F. Business; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 8G. Changes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 8H. Tax Returns and Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 8I. Franchises, Licenses, Agreements, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 8J. Actions Pending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 8K. Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 8L. Compliance with Other Instruments, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 8M. Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 8N. Foreign Assets Control Regulations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 8O. Offering of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 8P. Regulation G, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 8Q. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 8R. Status Under Certain Federal Statutes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 8S. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 8T. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 8U. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 9. REPRESENTATIONS OF THE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 10. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 10A. Yield-Maintenance Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 10B. Other Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 11A. Note Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 11B. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 11C. Consent to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 11D. Solicitation of Holders of Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 11E. Form, Registration, Transfer and Exchange of Notes; Lost Notes . . . . . . . . . . . . . . . . . . . . 65 11F. Persons Deemed Owners; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 11G. Non-Recourse Nature of Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 11H. Survival of Representations and Warranties; Entire Agreement . . . . . . . . . . . . . . . . . . . . . 66 11I. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 11J. Disclosure to Other Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 11K. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 11L. Descriptive Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 11M. Substitution of Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
ii 4
Page ---- 11N. Satisfaction Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 11O. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 11P. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 PURCHASER SCHEDULE Exhibit A - Form of Note Exhibit B-1 - Form of Opinion of Purchaser's Counsel Exhibit B-2 - Form of Opinion of Company's Counsel Exhibit D - Liens Exhibit E - Investments Exhibit F - Environmental Notices Exhibit 8G - Material Transactions Exhibit 8K - Property Titles Exhibit 8T - Environmental Permits and Licenses Schedule 10B(1) - Investment Policy
iii 5 PLUM CREEK TIMBER COMPANY, L.P. 999 Third Avenue Seattle, Washington 98104 As of August 1, 1994 To each of the Purchasers listed in the attached Purchaser Schedule Dear Purchaser: The undersigned, Plum Creek Timber Company, L.P. (herein called the "Company"), a Delaware limited partnership, hereby agrees with you as follows: 1. AUTHORIZATION OF ISSUE OF NOTES The Company will authorize the issue of its senior promissory notes (herein called the "Notes") in the aggregate principal amount of $150,000,000, to be dated the date of issue thereof, to mature August 1, 2009, to bear interest on the unpaid balance thereof from the date thereof to but excluding the date the principal thereof shall have become due and payable at the rate of 8.73% per annum and on overdue principal, premium and interest at the rate specified therein, and to be substantially in the form of Exhibit A attached hereto. The term "Notes" as used herein shall include each Note delivered pursuant to any provision of this Agreement or the other Note Agreements referred to in paragraph 2 and each Note delivered in substitution or exchange for any such Note pursuant to any such provision. 2. PURCHASE AND SALE OF NOTES The Company hereby agrees to sell to you and, subject to the terms and conditions herein set forth, you agree to purchase from the Company the aggregate principal amount of Notes set forth opposite your name in the Purchaser Schedule attached hereto at 100% of such aggregate principal amount. The Company will deliver to you, at the offices of Debevoise & Plimpton at 875 Third Avenue, New York, New York 10022, one or more Notes registered in your name or in the name of your nominee, evidencing the aggregate principal amount of Notes to be purchased by you and in 6 the denomination or denominations specified with respect to you in the Purchaser Schedule, against payment of the purchase price thereof by transfer of immediately available funds for credit to the Company's account #12336-14205 at Bank of America, Seattle, Washington, ABA #121-000- 358, Message: Attn: Global Agency #5596-Ref: Plum Creek Timber Co., L.P. on the date of closing, which shall be August 1, 1994, or any other date on or before August 1, 1994 upon which the Company, you and the other purchasers referred to in the penultimate sentence of this paragraph 2 may mutually agree (herein called the "closing" or the "date of closing"). If at the closing the Company shall fail to tender such Notes to you as provided above in this paragraph 2, or any of the conditions specified in paragraph 3 shall not have been fulfilled to your satisfaction, you shall, at your election, be relieved of all further obligations under this Agreement, without thereby waiving any other rights you may have by reason of such failure or such nonfulfillment. Concurrently with the execution and delivery of this Agreement, the Company is entering into other Note Agreements (herein called the "Other Note Agreements") substantially identical with this Agreement (except as to the identity of the purchaser and the principal amount of Notes to be purchased) with the other purchasers (herein called the "Other Purchasers") named in the Purchaser Schedule. The sale to you and the sales to the Other Purchasers are to be separate and several sales. 3. CONDITIONS OF CLOSING Your obligation to purchase and pay for the Notes to be purchased by you hereunder is subject to the satisfaction, on or before the date of closing, of the following conditions: 3A. OPINION OF PURCHASER'S SPECIAL COUNSEL You shall have received from Debevoise & Plimpton, who are acting as special counsel for you in connection with this transaction, an opinion satisfactory to you and substantially in the form of Exhibit B-1 attached hereto and including such other matters as you may reasonably request. 3B. OPINION OF COMPANY'S COUNSEL You shall have received from James A. Kraft, Vice President, Law for the Company, a favorable opinion satisfactory to you and substantially in the form of Exhibit B-2 2 7 attached hereto and including such other matters as you may reasonably request. 3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT The representations and warranties contained in paragraph 8 shall be true in all material respects on and as of the date of closing, except to the extent of changes caused by the transactions herein contemplated; there shall exist on the date of closing no Event of Default or Default; and the Company shall have delivered to you an Officers' Certificate, dated the date of closing, to both such effects. 3D. SALE OF NOTES TO OTHER PURCHASERS The Company shall have sold to the Other Purchasers the Notes to be purchased by them at the closing and shall have received payment in full therefor. 3E. PURCHASE PERMITTED BY APPLICABLE LAWS The purchase of and payment for the Notes to be purchased by you on the date of closing on the terms and conditions herein provided (including the use of the proceeds of such Notes by the Company) shall not violate any applicable law or governmental regulation (including, without limitation, section 5 of the Securities Act or Regulation G, T or X of the Board of Governors of the Federal Reserve System), shall not subject you to any tax, penalty, liability or other onerous condition under or pursuant to any applicable law or governmental regulation, and shall be permitted by the laws and regulations of each jurisdiction to which you are subject, but without recourse to provisions (such as section 1405(a)(8) of the New York Insurance Law) permitting limited investments by life insurance companies without restriction as to the character of the particular investment. If required by you, you shall have received an Officers' Certificate of the Company certifying as to such matters of fact as you may reasonably specify to enable you to determine whether such purchase is permitted. 3F. INSURANCE The Company shall have delivered to you an Officers' Certificate, dated the date of closing, certifying that insurance with respect to its properties and business complying with the provisions of paragraph 5G (including, without limitation, the provisions of paragraph 5G permit- 3 8 ting the Company to self-insure) is in full force and effect. 3G. PROCEEDINGS All proceedings taken or to be taken in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in substance and form to you, and you shall have received all such counterpart originals or certified or other copies of such documents as you may reasonably request. If the above conditions (other than the conditions stated in paragraph 3D) are satisfied, the obligation of the Company to sell to you the Notes to be purchased by you hereunder is subject to the tendering by the Other Purchasers of the purchase price of the Notes to be purchased by them pursuant to the Other Note Agreements on the date of closing. 4. PREPAYMENTS The Notes shall be subject to prepayment under the circumstances set forth in paragraph 4A. 4A. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE PREMIUM The Notes shall be subject to prepayment, in whole at any time or from time to time in part (other than in the case of any prepayment pursuant to paragraph 6B(5)(viii) or 6B(6), in multiples of $5,000,000), at the option of the Company, at 100% of the principal amount so prepaid plus interest thereon to the prepayment date and the Yield-Maintenance Premium, if any, with respect to each Note. 4B. NOTICE OF OPTIONAL PREPAYMENT The Company shall give the holder of each Note irrevocable written notice of any prepayment pursuant to paragraph 4A not less than 20 Business Days prior to the prepayment date, specifying such prepayment date and the principal amount of the Notes, and of the Notes held by such holder, to be prepaid on such date and stating that such prepayment is to be made pursuant to paragraph 4A. Notice of prepayment having been given as aforesaid, the principal amount of the Notes specified in such notice, together with interest thereon to the prepayment date and together with the premium, if any, herein provided, shall become due and payable on such prepayment date. The Company shall deliver (i) two 4 9 (2) Business Days prior to each prepayment pursuant to paragraph 4A an Officers' Certificate stating whether a Yield-Maintenance Premium is payable in connection with such prepayment and setting forth the calculations made in making such determination based on an estimate of such Yield-Maintenance Premium and (ii) on the date of such prepayment, an Officers' Certificate stating whether such Yield-Maintenance Premium is payable and setting forth the actual calculation. 4C. PARTIAL PAYMENTS PRO RATA Upon any partial prepayment of the Notes, the principal amount so prepaid shall be allocated to all Notes at the time outstanding (including, for the purpose of this paragraph 4C only, all Notes prepaid or otherwise retired or purchased or otherwise acquired by the Company or any of its Subsidiaries or Affiliates other than by prepayment pursuant to paragraph 4A) in proportion to the respective outstanding principal amounts thereof. 4D. RETIREMENT OF NOTES The Company shall not, and shall not permit any of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or in part prior to their stated final maturity (other than a prepayment pursuant to paragraph 4A or upon acceleration of such final maturity pursuant to paragraph 7A), or purchase or otherwise acquire, directly or indirectly, Notes held by any holder unless the Company or such Subsidiary or Affiliate shall have offered to prepay or otherwise retire or purchase or otherwise acquire, as the case may be, the same proportion of the aggregate principal amount of Notes held by each other holder of Notes at the time outstanding upon the same terms and conditions. Any Notes so prepaid or otherwise retired or purchased or otherwise acquired by the Company or any of its Subsidiaries or Affiliates shall not be deemed to be outstanding for any purpose under this Agreement, except as provided in paragraph 4C. 4E. PAYMENTS ON BUSINESS DAYS If the date specified for any required payment under this Agreement falls on a day that is not a Business Day, the payment shall be made on the next succeeding Business Day and interest shall be payable to the date of such payment. 5 10 5. AFFIRMATIVE COVENANTS 5A. FINANCIAL STATEMENTS The Company covenants that it will deliver to each Significant Holder in duplicate: (i) as soon as available, but not later than 90 days after the end of each fiscal year, a copy of the audited combined balance sheet of the Company and its combined Subsidiaries as of the end of such year and the related combined statement of income and combined statement of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of Coopers & Lybrand, or another nationally recognized independent public accounting firm, which report shall state that such combined financial statements present fairly the financial position for the dates specified and the results of operations for the periods indicated in conformity with generally accepted accounting principles applied on a basis consistent with prior years; (ii) as soon as available, but not later than 120 days after the end of each fiscal year, a copy of a combining balance sheet of the Company and each of its Subsidiaries as at the end of such fiscal year and the related combining statement of income and combining statement of cash flows for such fiscal year, all in reasonable detail and satisfactory in scope to the Required Holder(s) and unaudited but certified by an appropriate Responsible Officer as having been used in connection with the preparation of the financial statements referred to in clause (i) of this paragraph 5A; (iii) as soon as available, but not later than 45 days after the end of each fiscal quarter (other than the last fiscal quarter) of each year, a copy of the unaudited combined balance sheet of the Company and its combined Subsidiaries as of the end of such quarter and the related combined statement of income and combined statement of cash flows for the period commencing on the first day and ending on the last day of such quarter, in each case setting forth in comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and satisfactory in scope to the Required Holder(s) (information in detail and scope comparable to information required to 6 11 be included in a Quarterly Report on Form 10-Q shall be deemed to be satisfactory for such purposes), such combined balance sheets to be as of the end of such quarter and such combined statements of income and combined statements of cash flows to be for such quarterly period and for the period from the beginning of the fiscal year to the end of such quarter, and certified by an appropriate Responsible Officer as being complete and correct and presenting fairly the financial position for the dates specified and the results of operations of the Company and the Subsidiaries for the periods indicated in conformity with generally accepted accounting principles applied on a consistent basis; (iv) as soon as available, but not later than 45 days after the end of each fiscal quarter (other than the last fiscal quarter) of each year, a copy of the unaudited combining balance sheet of the Company and each of its Subsidiaries, and the related combining statement of income and combining statement of cash flows for such quarter, in each case setting forth in comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and satisfactory in scope to the Required Holder(s), (information in detail and scope that would normally be required on interim financial statements, except as provided for in this paragraph, shall be deemed to be satisfactory for such purposes), such combining balance sheets to be as of the end of such quarter and such combining statements of income and combining statements of cash flows to be for such quarterly period and for the period from the beginning of the fiscal year to the end of such quarter, and certified by an appropriate Responsible Officer of the Company as having been used in connection with the preparation of the financial statements referred to in clause (iii) of this paragraph 5A; (v) to the extent not delivered pursuant to clauses (i), (ii), (iii) and (iv) above, promptly upon transmission thereof, copies of all such financial statements as are delivered to the Mortgage Noteholders pursuant to the Mortgage Note Agreements; (vi) to the extent not delivered pursuant to clause (i), (ii), (iii), (iv) or (v), promptly upon transmission thereof, copies of all such financial statements, proxy statements, notices and reports as it 7 12 sends to its public security holders and copies of all registration statements (without exhibits) and all reports which it files with the Securities and Exchange Commission and any governmental body or agency succeeding to the functions of the Securities and Exchange Commission; (vii) as soon as practicable, and in any event within 10 Business Days after the Company, any of its Subsidiaries or any Related Person knows of the occurrence or existence or expected occurrence or existence of any event or condition or series of events or conditions with respect to any Plan or Plans which are reasonably likely to result in (a) a material liability to the Company, any of its Subsidiaries or any Related Person pursuant to ERISA or the Code (other than liability for PBGC premiums or regular periodic contributions to any such Plan or Plans) or (b) the imposition of a Lien on any of the assets or other properties of the Company, any of its Subsidiaries or any Related Person pursuant to ERISA or the Code, the Company shall deliver to each Significant Holder a statement signed by the Chief Financial Officer of the Company setting forth details respecting such event or condition or series of events or conditions and the action, if any, that the Company, any of its Subsidiaries or any Related Person proposes to take with respect thereto (and a copy of any notice, report or other written communication, or a written description of any oral communication, with or from the PBGC, the Internal Revenue Service or the Department of Labor with respect to such event or condition or series of events or conditions); and (viii) with reasonable promptness, such other information and financial data as such Significant Holder may reasonably request. Together with each delivery of financial statements required by clauses (i) and (iii) above, the Company will deliver to each Significant Holder an Officers' Certificate demonstrating (with computations in reasonable detail) compliance by the Company and its Subsidiaries with the provisions of paragraph 6 (including, without limitation, paragraph 6A) and stating that there exists no continuing Event of Default or Default, or, if any continuing Event of Default or Default exists, specifying the nature and period of existence thereof and what action the Company proposes to take or is taking with respect thereto. Together with each delivery of 8 13 financial statements required by clause (i) above, the Company will deliver to each Significant Holder a certificate of such accountants stating that, in making the audit necessary to the certification of such financial statements, they have obtained no knowledge of any Event of Default or Default continuing, or, if they have obtained knowledge of any Event of Default or Default continuing, specifying the nature and period of existence thereof. Such accountants, however, shall not be required to engage in any auditing procedures other than those procedures required by generally accepted auditing standards, and shall not be liable to anyone by reason of their failure to obtain knowledge of any Event of Default or Default which would not be disclosed in the course of an audit conducted in accordance with generally accepted auditing standards. Notwithstanding the foregoing provisions of this paragraph 5A, the Company shall not be required to deliver any financial statements or other documents (other than documents or information which have become public information) to any Person engaged in any Permitted Business in competition with the Company or any Subsidiary. The Company also covenants that forthwith upon the chief executive officer, principal financial officer or principal accounting officer of the Company or the General Partner becoming aware of an Event of Default and within 5 Business Days after the chief executive officer, principal financial officer or principal accounting officer of the Company or the General Partner becomes aware of a Default, it will deliver to each Significant Holder an Officers' Certificate specifying the nature and period of existence thereof and what action the Company proposes to take with respect thereto, provided, however, no such officer shall be obligated to provide a certificate with respect to any such Event of Default or Default that has been cured on or before the date upon which such officer becomes aware thereof. 5B. INSPECTION OF PROPERTY The Company covenants that it will permit any Person designated in writing by (a) you or (b) any Significant Holder or Significant Holders of not less than 5% in aggregate principal amount of the Notes at the time outstanding (other than any Person acting on behalf of any holder which is engaged in any Permitted Business in competition with the Company or any Subsidiary), at such holder's or holders' expense, to visit and inspect any of the properties of the Company and its Subsidiaries, to examine the books and financial records of the Company and its Subsidiaries and make copies thereof or extracts therefrom and to discuss the affairs, finances and accounts of the Company or 9 14 any of such corporations with the principal officers of the Company and its independent public accountants, all upon reasonable notice and at such reasonable times and as often as such holder or holders may reasonably request. 5C. COVENANT TO SECURE NOTES EQUALLY The Company covenants that, if it shall create or assume any Lien upon any of its property or assets, whether now owned or hereafter acquired, other than Liens permitted by the provisions of paragraph 6B(1) (unless prior written consent to the creation or assumption thereof shall have been obtained pursuant to paragraph 11C), it will make or cause to be made effective provision whereby the Notes will be secured by such Lien equally and ratably with any and all other Debt thereby secured so long as any such other Debt shall be so secured. 5D. PARTNERSHIP EXISTENCE, ETC. Except as permitted by paragraph 6B(5) the Company covenants that it will, and will cause each of its Restricted Subsidiaries to, at all times preserve and keep in full force and effect its partnership or corporate existence, as the case may be, and rights and franchises material to its business, and those of each of its Restricted Subsidiaries, and will qualify, and cause each of its Restricted Subsidiaries to qualify, to do business in any jurisdiction where the failure to do so would have a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole, provided that the corporate existence of any Restricted Subsidiary or any rights and franchises of the Company or any Restricted Subsidiary may be terminated if, in the good faith judgment of the Company, such termination is in the best interests of the Company and would not have a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole. 5E. PAYMENT OF TAXES AND CLAIMS The Company covenants that it will, and will cause each of its Restricted Subsidiaries to, pay all material taxes, assessments and other governmental charges imposed upon it or any of its properties or assets or in respect of any of its franchises, business, income or profits before any penalty accrues thereon, and all material claims (in- 10 15 cluding, without limitation, claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or may become a Lien upon any of its properties or assets, provided that no such tax, assessment, charge or claim need be paid if it is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and if such accrual or other appropriate provision, if any, as shall be required by generally accepted accounting principles shall have been made therefor. 5F. COMPLIANCE WITH LAWS, ETC. The Company covenants that it will, and will cause each of its Subsidiaries to, comply with the requirements of all applicable laws, rules, regulations and orders of any governmental authority, the noncompliance with which would materially adversely affect the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole. 5G. MAINTENANCE OF PROPERTIES; INSURANCE The Company covenants that it will maintain or cause to be maintained in good repair, working order and condition (normal wear and tear excepted) all properties used or useful in the business of the Company and its Restricted Subsidiaries and from time to time will make or cause to be made all appropriate repairs, renewals and replacements thereof except where the failure to make such repair, renewal or replacement would not have a material adverse effect on the business, condition (financial or other), assets, properties or results of operations of the Company or the Company and its Restricted Subsidiaries taken as a whole. The Company will maintain or cause to be maintained, with financially sound and reputable insurers, insurance with respect to its properties and business and the properties and business of its Restricted Subsidiaries against loss or damage of the kinds customarily insured against by corporations of established reputation of similar size engaged in the same or similar business and similarly situated, of such types and in such amounts as are customarily carried under similar circumstances by such other corporations, provided that the Company may self-insure with respect to its properties and business and the properties and business of its Restricted Subsidiaries to the extent consistent with the practice of corporations of established 11 16 reputation of similar size engaged in the same or similar business and similarly situated. 6. NEGATIVE COVENANTS 6A. RESTRICTED PAYMENTS The Company covenants that it will not and will not permit any Subsidiary to directly or indirectly pay, declare, order, make or set apart any sum for any Restricted Payment, except that the Company may make, pay or set apart during each calendar quarter one or more Restricted Payments if (i) such Restricted Payments are in an aggregate amount not exceeding the amount by which Available Cash with respect to the immediately preceding calendar quarter exceeds any amount contributed to Available Cash with respect to such immediately preceding calendar quarter by any Subsidiary if and to the extent that the payment of such amount as a dividend or distribution to the Company has not been made and is not at the time permitted by the terms of such Subsidiary's charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary, provided that in determining Available Cash with respect to such immediately preceding calendar quarter, the Company will include in the amount of the reserves established during such quarter pursuant to clause (b)(iv) of the definition of Available Cash an amount not less than 50% of the aggregate amount of all interest in respect of the Notes to be paid on the interest payment date immediately following such immediately preceding calendar quarter, and the Company will not reduce the amount of the reserves so included, in determining Available Cash for any calendar quarter subsequent to such immediately preceding calendar quarter pursuant to clause (a)(iii) of the definition of Available Cash, unless and until the amount of interest in respect of which such amount has been reserved has in fact been paid, and (ii) immediately after giving effect to any such proposed action no condition or event shall exist which constitutes an Event of Default or Material Default. The Company will not, in any event, directly or indirectly declare, order, pay or make any Restricted Payment except in cash. 12 17 6B. LIEN, INDEBTEDNESS AND OTHER RESTRICTIONS The Company covenants that it will not, and will not permit any Restricted Subsidiary to: 6B(1) LIENS Create, assume or suffer to exist any Lien upon any of its property or assets, whether now owned or hereafter acquired, securing Debt, except (i) Liens for taxes, assessments or other governmental charges the payment of which is not at the time required by paragraph 5E, (ii) Liens of landlords and Liens of carriers, warehousemen, mechanics, suppliers and materialmen and similar liens incurred in the ordinary course of business for sums not yet due or the payment of which is not at the time required by paragraph 5E, (iii) Liens incurred or deposits made incidental to the conduct of its business or the ownership of its property including, without limitation, a) pledges or deposits in connection with worker's compensation, unemployment insurance and other social security legislation, (b) deposits to secure insurance, the performance of bids, tenders, contracts, leases, licenses, franchises and statutory obligations, each in the ordinary course of business, and c) other obligations which were not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property and which do not in the aggregate materially detract from the value of its property or assets or materially impair the use of such property or assets in the operation of its business, (iv) any attachment or judgment Lien, unless the judgment it secures shall not, within 45 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 45 days after expiration of any such stay, 13 18 (v) leases or subleases granted to others, easements, rights-of-way, restrictions and other similar charges or encumbrances, which, in each case, and in the aggregate, do not materially interfere with the ordinary conduct of the business of the Company or any Restricted Subsidiary, (vi) Liens on property or assets of any Restricted Subsidiary securing obligations of such Restricted Subsidiary owing to the Company or another Restricted Subsidiary, (vii) any Lien existing prior to the time of acquisition upon any property acquired by the Company or any Restricted Subsidiary after the date of closing through purchase, merger or consolidation or otherwise, whether or not assumed by the Company or such Subsidiary, or placed upon property at (or within 30 days after) the later of the time of acquisition or the completion of construction by the Company or any Restricted Subsidiary to secure all or a portion of (or to secure Debt incurred to pay all or a portion of) the purchase price thereof, provided that (w) any such Lien does not encumber any other property of the Company or such Restricted Subsidiary, (x) the Debt secured by such Lien is not prohibited by the provisions of paragraph 6B(2), (y) the aggregate principal amount of the Debt secured by any such Lien at no time exceeds 80% of the cost to the Company and its Restricted Subsidiaries of the property subject to such Lien, and (z) the aggregate outstanding principal amount (without duplication) of the Debt secured by all such Liens and the Debt of all Restricted Subsidiaries at no time (a) during the period commencing on the date of closing and ending on June 8, 1999 exceeds $25,000,000, (b) during the period commencing on June 9, 1999 and ending June 8, 2004 exceeds $50,000,000, and (c) thereafter exceeds $100,000,000, (viii) Liens on the accounts, rights to payment for goods sold or services rendered that are evidenced by chattel paper or instruments, and rights against persons who guarantee payment or collection of the foregoing, and on the Company's inventory and on the proceeds (as defined in the Uniform Commercial Code in any applicable jurisdiction) thereof securing the obligations of the Company under the Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof) permitted by paragraph 6B(2)(iv), 14 19 (ix) from and after the time that the Facilities Subsidiary becomes a Restricted Subsidiary, Liens on the accounts, rights to payment for goods sold or services rendered that are evidenced by chattel paper or instruments, and rights against persons who guarantee payment or collection of the foregoing, and on the Facilities Subsidiary's inventory and on the proceeds (as defined in the Uniform Commercial Code in any applicable jurisdiction) thereof securing the obligations of the Facilities Subsidiary under the Facilities Subsidiary's Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof) permitted by paragraph 6B(2)(x), (x) Liens existing on the property or assets of the Company or any Subsidiary on the date of closing and set forth on Exhibit D hereto, and (xi) any Lien renewing, extending, refunding or refinancing any Lien permitted by clause (vii) of this paragraph 6B(1), provided that the principal amount secured is not increased and the Lien is not extended to other property and further provided, that the maturity of the Lien is not extended beyond the maturity date of the Debt which, at the time the Lien was initially placed upon the property secured thereby, Responsible Representatives declare would have been the maturity date of Debt customary for the type of asset being financed; 6B(2) DEBT Create, incur, assume or suffer to exist any Funded or Current Debt, except (i) Funded Debt represented by the Notes and the 11 1/8% Senior Notes, (ii) Funded Debt which is unsecured and is incurred by the Company to finance the making of capital improvements, expansions and additions to the Company's property (including Timberlands), plant and equipment, provided that the aggregate outstanding principal amount of such Funded Debt shall at no time exceed $20,000,000, (iii) Funded or Current Debt of any Restricted Subsidiary owing to the Company or to a Restricted Subsidiary, 15 20 (iv) Debt, not in excess of an aggregate principal amount of $15,000,000 at any time outstanding, incurred by the Company pursuant to the Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof, including any refunding or refinancing in an amount in excess of the principal amount then outstanding under the Revolving Credit Facility), or any other Debt pursuant to a bank credit facility which is unsecured or is secured by Liens permitted by paragraph 6B(1)(viii), provided that the Company shall not suffer to exist any Debt permitted by this clause (iv) on any day unless there shall have been a period of at least 45 consecutive days within the 12 months immediately preceding such day during which the Company shall have been free from all Debt permitted by this clause (iv), (v) Debt represented by the Guarantee in an amount not greater than $145,100,000 at any time, (vi) the Company's guarantee of obligations incurred by the Facilities Subsidiary pursuant to the Facilities Subsidiary's Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof permitted by clause (iv) of paragraph 6B(2) of the Mortgage Note Agreements), provided that the aggregate outstanding principal amount of such Debt shall at no time exceed $20,000,000, and provided, further, that such guarantee shall be subordinated to the Notes upon the earlier of (x) January 31, 1995, and (y) the date of any extension, renewal, refunding or refinancing thereof by subordination provisions substantially the same as those contained in paragraph 7I of the Mortgage Note Agreements, (vii) the Company's guarantee of Funded Debt (and related obligations not constituting Debt) incurred by the Facilities Subsidiary to finance the making of capital improvements, expansions and additions to the Facilities Subsidiary's properties pursuant to the Facilities Subsidiary's Facility, provided that such guarantee shall be subordinated to the Notes by subordination provisions substantially the same as those contained in paragraph 7I of the Mortgage Note Agreements, and provided, further, that the aggregate outstanding principal amount of such Funded Debt shall at no time exceed $20,000,000, (viii) Funded Debt of the Company or any Restricted Subsidiary secured by a Lien permitted by clause (vii) 16 21 of paragraph 6B(1), provided that immediately after the acquisition of the property subject to such Lien or upon which such Lien is placed (or, if later, the incurrence of the Debt secured by such Lien), the Company could incur at least $1 of additional Funded Debt pursuant to clause (ix) below, (ix) Funded Debt of the Company (other than Funded Debt owing to a Restricted Subsidiary) in addition to that otherwise permitted by the foregoing clauses of this paragraph 6B(2), including guarantees of Debt to the extent permitted by paragraph 6B(3) and not otherwise permitted by the foregoing clauses of this paragraph 6B(2), provided that, on the date the Company becomes liable with respect to any such additional Funded Debt and immediately after giving effect thereto and to the concurrent retirement of any other Funded Debt, the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest Charges is not less than 2.25 to 1.0, (x) from and after the time that the Facilities Subsidiary becomes a Restricted Subsidiary, Debt incurred by the Facilities Subsidiary pursuant to the Facilities Subsidiary's Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof, including any refunding or refinancing in an amount in excess of the principal amount then outstanding under the Facilities Subsidiary's Revolving Credit Facility), or any other Debt incurred by the Facilities Subsidiary pursuant to a bank credit facility which is unsecured or is secured by Liens permitted by paragraph 6B(1)(ix), not in excess of an aggregate principal amount of $20,000,000 at any time outstanding, provided that to the extent that the Facilities Subsidiary is a Restricted Subsidiary, the Facilities Subsidiary shall not suffer to exist any Debt permitted by this clause (x) on any day unless there shall have been a period of at least 45 consecutive days within the 12 months immediately preceding such day during which the Facilities Subsidiary shall have been free from all Debt permitted by this clause (x), and (xi) from and after the time that the Facilities Subsidiary or any Designated Immaterial Subsidiary becomes a Restricted Subsidiary, Debt of the Facilities Subsidiary or any such Designated Immaterial Subsidiary outstanding at the time the Facilities Subsidiary or such Designated Immaterial Subsidiary becomes a Re- 17 22 stricted Subsidiary, provided that (a) immediately after the Facilities Subsidiary or any such Designated Immaterial Subsidiary becomes a Restricted Subsidiary, the Company could incur at least $1 of additional Funded Debt pursuant to clause (ix) above (the Facilities Subsidiary or any such Designated Immaterial Subsidiary shall be deemed to be a Restricted Subsidiary for the four consecutive fiscal quarters immediately prior to its becoming a Restricted Subsidiary for purposes of determining Pro Forma Free Cash Flow), and (b) the aggregate amount (without duplication) of such Debt and all other Debt, in each case, secured by Liens permitted by clause (vii) of paragraph 6B(1) does not violate subclause (z) of the proviso to such clause (vii); provided that notwithstanding any other provision in this paragraph 6B(2), other than as provided in paragraph 6B(2)(vi), any guarantee issued by the Company of any Funded Debt or Current Debt of any Subsidiary shall be subordinated to the Notes by subordination provisions substantially the same as those contained in paragraph 7I of the Mortgage Note Agreements; 6B(3) LOANS, ADVANCES, INVESTMENTS AND CONTINGENT LIABILITIES Make or permit to remain outstanding any loan or advance to, or guarantee, endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the obligations, stock or dividends of, or own, purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any Person (all of the foregoing, other than Designated Repurchases permitted by paragraph 6A hereof, being referred to herein as "Investments"), except that the Company or any Restricted Subsidiary may (i) make Investments in the Facilities Subsidiary, provided that the Company will not make or permit any Restricted Subsidiary to make any such Investment (including any guaranty of obligations of the Facilities Subsidiary not otherwise permitted by this paragraph 6B(3)) unless (a) immediately after giving effect to such Investment, no Event of Default or Default, or "Default" or "Event of Default" as defined in the Mortgage Note Agreements, shall exist, (b) immediately prior to giving effect to such Investment, no Default or Event of Default (other than under clause (xvi) of paragraph 7A) shall exist, and (c) immediately after 18 23 giving effect to such Investment, the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest Charges is not less than 2.5 to 1.0, (ii) own, purchase or acquire real or personal property to be used in the ordinary course of its business, (iii) own, purchase or acquire investments of the type specified in, and in accordance with the requirements and limitations of, the Investment Policy, (iv) continue to own Investments owned on the date of closing as set forth on Exhibit E, (v) endorse negotiable instruments for collection in the ordinary course of business, (vi) become and be obligated under the Guarantee and under the guarantees permitted by clauses (vi) and (vii) of paragraph 6B(2), and acquire and own subordinated subrogation rights upon performance of such guarantees, (vii) make advances in the ordinary course of conducting the business of the Company or any Restricted Subsidiary, including deposits permitted under paragraph 6B(1)(iii), advances to employees for travel, relocation and other employment related expenses, advances to contractors performing services for the Company or such Restricted Subsidiary, advances to owners of timber or timber properties to acquire rights to harvest timber and other similar advances, (viii) make Investments in Restricted Subsidiaries, or any entity which immediately after such Investment will be a Restricted Subsidiary, and (ix) make Investments not otherwise permitted by this paragraph 6B(3) in entities engaged solely in a Permitted Business, provided that the cumulative aggregate amount of such Investments at original cost (including the principal amount of any obligations guaranteed to the extent such guarantees are not otherwise permitted by this paragraph 6B(3)) made pursuant to this clause (ix) between the date of closing and any date thereafter shall not exceed the greater of $30,000,000 or 60% of the average annual Pro Forma Free Cash Flow for the two fiscal years preceding such date; 19 24 6B(4) SALE OF STOCK AND DEBT OF SUBSIDIARIES Sell or otherwise dispose of, or part with control of, any shares of stock or Debt of any Subsidiary, except to the Company or a Restricted Subsidiary, and except that all shares of stock and Debt of any Subsidiary (other than the Facilities Subsidiary) at the time owned by or owed to the Company and its Restricted Subsidiaries may be sold as an entirety for a cash consideration which represents the fair value (as determined in good faith by the Responsible Representatives of the General Partner) at the time of sale of the shares of stock and Debt so sold; provided that the assets of such Subsidiary do not include any assets which could not be disposed of pursuant to the provisions of paragraph 6B(5) unless the conditions to the sale of such assets set forth in paragraph 6B(5) are complied with, and further provided that, at the time of such sale, such Subsidiary shall not own, directly or indirectly, any shares of stock or Debt of any other Subsidiary (unless all of the shares of stock and Debt of such other Subsidiary owned, directly or indirectly, by the Company and its Subsidiaries are simultaneously being sold as permitted by this paragraph 6B(4)); 6B(5) MERGER AND SALE OF ASSETS Merge or consolidate with any other Person or sell, lease or transfer or otherwise dispose of any assets (other than inventory sold in the ordinary course of business) except that (i) any Restricted Subsidiary may merge with the Company (provided that the Company shall be the continuing or surviving corporation) or with any one or more other Restricted Subsidiaries, (ii) any Restricted Subsidiary may sell, lease, transfer or otherwise dispose of any of its assets to the Company or a Restricted Subsidiary, (iii) any Restricted Subsidiary may merge or consolidate with any other entity, provided that, immediately after giving effect to such merger or consolidation, (a) the continuing or surviving entity of such merger or consolidation shall be a solvent corporation or partnership organized under the laws of any State of the United States of America and shall constitute a Restricted Subsidiary, (b) no Event of Default or Material Default shall exist, and (c) following the 20 25 merger, the entity surviving the merger is not engaged in any business other than a Permitted Business, (iv) the Company may merge or consolidate with, or sell or dispose of all or substantially all of its assets to, any other entity, provided that (a) either (x) the Company shall be the continuing or surviving entity (in the case of any such merger), or (y) the successor or acquiring entity shall be a solvent corporation or partnership organized under the laws of any State of the United States of America and shall expressly assume in writing all of the obligations of the Company under this Agreement and on the Notes, including all covenants herein and therein contained, and such successor or acquiring corporation or partnership shall succeed to and be substituted for the Company with the same effect as if it had been named herein as a party hereto, provided, however, that no such sale shall release the Company from any of its obligations and liabilities under this Agreement or the Notes unless such sale is followed by the complete liquidation of the Company and substantially all the assets of the Company immediately following such sale are distributed in such liquidation, and (b) immediately after such merger or consolidation or such sale or other disposition, (x) no Event of Default or Material Default shall exist, (y) the Company could incur at least $1 of additional Funded Debt pursuant to paragraph 6B(2)(ix), and (z) the entity surviving the merger or consolidation or to which such assets have been transferred is not engaged in any business other than a Permitted Business, (v) the Company or any Restricted Subsidiary may sell Designated Acres for the fair value thereof as reasonably determined in good faith by the Responsible Representatives, (vi) the Company and its Restricted Subsidiaries may exchange Timberlands with other Persons in the ordinary course of business, provided that (a) the fair value of the Timberlands plus any net cash proceeds received in such exchange is, in the good faith judgment of the Responsible Representatives, not less than the fair value of Timberlands exchanged plus any other consideration paid, (b) such exchange would not materially and adversely affect the business, property or assets, condition or results of operations of the Company and its Restricted Subsidiaries on a combined basis or of the Facilities Subsidiary or impair the ability of the 21 26 Company to perform its obligations hereunder or under the Notes, and (c) any properties shall be deemed sold to the extent of cash proceeds received and such sales shall be allowed only to the extent otherwise permitted by this paragraph 6B(5), (vii) the Company and its Restricted Subsidiaries may sell properties for not less than the fair value thereof as determined in good faith by the Responsible Representatives, provided that the aggregate net proceeds of such sales in any calendar year do not exceed an amount (the "Permitted Amount") equal to (a) in the calendar year 1994, $3,210,000 and (b) in each calendar year thereafter, the sum of (1) the Permitted Amount for the preceding calendar year plus (2) an increase equal to the percentage increase, if any, in the consumer price index for goods and services for the United States, as published by the U.S. Bureau of Labor Statistics, or successor publication, for such preceding calendar year, times such Permitted Amount, and (viii) the Company and its Restricted Subsidiaries may otherwise sell for cash properties in an amount not less than the fair value thereof as determined in good faith by the Responsible Representatives if and only if (a) immediately after giving effect to such proposed sale, no condition or event shall exist which constitutes an Event of Default or Material Default, (b) the net proceeds of any such sale (x) are distributed to all holders of Qualified Debt pro rata based upon outstanding principal balances at the time of such distribution for application (either immediately or within 180 days after such sale) to the repayment of such Qualified Debt, which, in the case of the Notes, shall be a prepayment pursuant to paragraph 4A, or (y) are applied, within 180 days after such sale, to the purchase of productive assets in the same line of business, (c) the net proceeds of any such sale are either (x) distributed immediately upon receipt thereof to holders of Qualified Debt in accordance with subclause (b)(x) above for application (either immediately or within 180 days, and if in the case of the Notes such application is not made immediately, such application shall be made pursuant to an escrow agreement satisfactory in form and substance to the Required Holder(s)) to repayment of such Qualified Debt, or (y) if in excess of $25,000,000, placed immediately upon receipt thereof in an escrow or cash collateral account or accounts, pursuant to an agreement or agreements in 22 27 form and substance reasonably satisfactory to holders of 66 2/3% of the outstanding principal balance of the Qualified Debt, for the purpose of application in accordance with subclause (b)(y) above, provided that to the extent that the aggregate amount of net proceeds from all such asset sales received by the Company in a period of twelve consecutive months is equal to an amount greater than $50,000,000, the amount of such proceeds that exceeds $50,000,000 plus all net proceeds from any subsequent sales of more than $5,000,000 during such period of twelve consecutive months shall be placed immediately upon receipt thereof in such escrow or cash collateral account, and (d) immediately after giving effect to such sale (giving effect on a pro forma basis to any proposed retirement of Qualified Debt out of the proceeds thereof), the Company could incur $1 of additional Funded Debt pursuant to paragraph 6B(2)(ix); 6B(6) HARVESTING RESTRICTIONS In any calendar year, harvest Timber on the Timberlands then owned by the Company in excess of the amount set forth for such calendar year in the following table:
Maximum MMBF to Calendar Year Be Harvested ------------- ------------- 1994 through 1996 700 MMBF 1997 through 2000 675 MMBF 2001 through 2009 625 MMBF
plus, in each year, the amount, if any, by which (a) the sum of (x) the cumulative amount set forth in the table above for the years preceding such year of determination and (y) 735 MMBF, exceeds (b) the cumulative amount actually harvested in such years preceding such year of determination; unless (a) the net cash proceeds from such excess harvest are either (i) distributed to all holders of Qualified Debt pro rata based upon outstanding principal balances at the time of such distribution for application (either immediately or within 180 days after such excess harvest) to the repayment of such Qualified Debt, which, in the case of the Notes, shall be a prepayment pursuant to paragraph 4A, or (ii) applied, within 180 days after any such excess harvest, to purchase Timber (including Timber on Timberlands pur- 23 28 chased) having a fair value (in the good faith judgment of the Responsible Representatives) not less than the fair value of the Timber subject to such excess harvest and (b) the net proceeds of any such excess harvest are either (i) distributed immediately upon receipt thereof to holders of Qualified Debt in accordance with subclause (a)(i) above for application (either immediately or within 180 days, and if in the case of the Notes such application is not made immediately, such application shall be made pursuant to an escrow agreement satisfactory in form and substance to the Required Holder(s)) to repayment of such Qualified Debt, or (ii) if in excess of $25,000,000, placed immediately upon receipt thereof in an escrow or cash collateral account or accounts, pursuant to an agreement or agreements in form and substance reasonably satisfactory to holders of 66 2/3% of the outstanding principal balance of the Qualified Debt, for the purpose of application in accordance with subclause (a)(ii) above; 6B(7) SALE AND LEASE-BACK Enter into any arrangement with any lender or investor or to which such lender or investor is a party providing for the leasing by the Company or any Restricted Subsidiary of real or personal property which has been or is to be sold or transferred by the Company or any Restricted Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such property or rental obligations of the Company or any Restricted Subsidiary, provided that this paragraph 6B(7) shall not apply to any property sold pursuant to clause (vii) of paragraph 6B(5); 6B(8) CERTAIN CONTRACTS Enter into or be a party to (i) any contract providing for the making of loans, advances or capital contributions to any Person, or for the purchase of any property from any Person, in each case in order primarily to enable such Person to maintain working capital, net worth or any other balance sheet condition or to pay debts, dividends or expenses, or (ii) any contract for the purchase of materials, supplies or other property or services if such contract (or any related document) requires that payment for such materials, supplies or other property or services 24 29 shall be made regardless of whether or not delivery of such materials, supplies or other property or services is ever made or tendered, provided that nothing in this clause (ii) shall prevent the Company from (a) entering into take-or-pay contracts in the ordinary course of business with the United States Forest Service, the Bureau of Land Management, the Washington Department of Natural Resources or similar state or federal governmental agencies, or (b) making payments in satisfaction of contracts with such Persons which contracts are deemed by the Responsible Representatives to be disadvantageous to perform, or (iii) any contract to rent or lease (as lessee) any real or personal property if such contract (or any related document) provides that the obligation to make payments thereunder is absolute and unconditional under conditions not customarily found in commercial leases then in general use or requires that the lessee purchase or otherwise acquire securities or obligations of the lessor, or (iv) any contract for the sale or use of materials, supplies or other property, or the rendering of services, if such contract (or any related document) requires that payment for such materials, supplies or other property, or the use thereof, or payment for such services, shall be subordinated to any indebtedness (of the purchaser or user of such materials, supplies or other property or the Person entitled to the benefit of such services) owed or to be owed to any Person, or (v) any other contract which in economic effect, is substantially equivalent to a guarantee except as permitted by the provisions of clauses (i), (v), (vi), (vii), (viii) or (ix) of paragraph 6B(3); 6B(9) TRANSACTIONS WITH AFFILIATES Directly or indirectly engage in any transaction (including, without limitation, the purchase, sale or exchange of assets or the rendering of any service) with any Affiliate except in the ordinary course of and pursuant to the reasonable requirements of the Company's or such Restricted Subsidiary's business and upon fair and reasonable terms that are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those which might be obtained in an arm's length transaction at the time 25 30 from Persons which are not such an Affiliate. The foregoing shall not prohibit Designated Repurchases otherwise permitted by this Agreement. 6C. CONDUCT OF BUSINESS The Company covenants that it will not, and will not permit any Subsidiary to, engage in any business other than Permitted Businesses. 6D. ISSUANCE OF STOCK BY SUBSIDIARIES The Company covenants that it will not permit any Subsidiary (either directly, or indirectly by the issuance of rights or options for, or securities convertible into, such shares) to issue, sell or otherwise dispose of any shares of any class of its stock or partnership or other ownership interests (other than directors' qualifying shares) except to the Company or a Restricted Subsidiary and except to the extent that holders of minority interests may be entitled to purchase stock by reason of preemptive rights. 7. EVENTS OF DEFAULT 7A. ACCELERATION If any of the following events shall occur and be continuing for any reason whatsoever (and whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of law or otherwise): (i) the Company defaults in the payment of any principal or of premium on any Note when the same shall become due, either by the terms thereof or otherwise as herein provided; or (ii) the Company defaults in the payment of any interest on any Note for more than 10 days after the date due; or (iii) the Company or any Restricted Subsidiary (a) defaults in any payment of principal of or interest on any other obligation for money borrowed (or any payment obligation under the Guarantee, any Capital Lease Obligation, any obligation under a conditional sale or other title retention agreement, any obligation issued or assumed as full or partial payment for property whether or not secured by a purchase money mortgage or 26 31 any obligation under notes payable or drafts accepted representing extensions of credit) beyond any period of grace provided with respect thereto, or (b) fails to perform or observe any other agreement, term or condition contained in any agreement under which any such obligation is created within any applicable grace period provided therein (or if any other event thereunder or under any such agreement shall occur and be continuing) and the effect of such failure or other event is (x) to then cause such obligation to become due prior to any stated maturity or (y) to then permit the holder or holders of such obligation (or a trustee on behalf of such holder or holders) to cause such obligation to become due prior to any stated maturity, provided that the aggregate outstanding principal amount of all obligations as to which such payment defaults shall occur and be continuing or such failures or other events causing or permitting acceleration shall occur and be continuing exceeds $5,000,000; or (iv) any representation or warranty made by the Company herein or in any writing furnished in connection with or pursuant to this Agreement shall be false in any material respect on the date as of which made; or (v) the Company fails to perform or observe any agreement contained in the last sentence of paragraph 5A or in paragraph 6; or (vi) the Company fails to perform or observe any other agreement, term or condition contained herein and such failure shall not be remedied within 30 consecutive days after written notice thereof shall have been received by the Company from any holder of any Note; or (vii) the Company or the General Partner or any Restricted Subsidiary makes a general assignment for the benefit of creditors or is generally not paying its debts as such debts become due; or (viii) any decree or order for relief in respect of the Company or the General Partner or any Restricted Subsidiary is entered under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debt, dissolution or liquidation or similar law, whether now or hereafter in effect (herein called the "Bankruptcy Law"), of any jurisdiction; or 27 32 (ix) the Company or the General Partner or any Restricted Subsidiary petitions or applies to any tribunal for, or consents to, the appointment of, or taking possession by, a trustee, receiver, custodian, liquidator or similar official of the Company or the General Partner or any Restricted Subsidiary, or of any substantial part of the assets of the Company or the General Partner or any Restricted Subsidiary, or commences a voluntary case under the Bankruptcy Law of the United States or any proceedings (other than proceedings for the voluntary liquidation and dissolution of a Restricted Subsidiary) relating to the Company or the General Partner or any Restricted Subsidiary under the Bankruptcy Law of any other jurisdiction; or (x) any such petition or application is filed, or any such proceedings as described in clause (ix) above are commenced, against the Company or the General Partner or any Restricted Subsidiary and the Company or the General Partner or such Restricted Subsidiary by any act indicates its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree is entered appointing any such trustee, receiver, custodian, liquidator or similar official, or approving the petition in any such proceedings, and such order, judgment or decree remains unstayed and in effect for more than 60 consecutive days; or (xi) any order, judgment or decree is entered in any proceedings against the Company or the General Partner or any Restricted Subsidiary decreeing the dissolution, winding-up or liquidation of the Company or the General Partner or any Restricted Subsidiary and such order, judgment or decree remains unstayed and in effect for more than 60 consecutive days; or (xii) any order, judgment or decree is entered in any proceedings against the Company or any Restricted Subsidiary decreeing a split-up of the Company or such Restricted Subsidiary which requires the divestiture of assets representing a substantial part, or the divestiture of the stock of or partnership or other ownership interest in a Subsidiary whose assets represent a substantial part, of the combined assets of the Company and its Restricted Subsidiaries (determined in accordance with generally accepted accounting principles) or which requires the divestiture of assets, or stock of or partnership or other ownership interest in a Subsidiary, which shall have contributed a substantial 28 33 part of the combined net income of the Company and its Restricted Subsidiaries (determined in accordance with generally accepted accounting principles) for any of the three fiscal years then most recently ended, and such order, judgment or decree remains unstayed and in effect for more than 60 consecutive days; or (xiii) a final judgment (which is non-appealable or has not been stayed pending appeal or as to which all rights to appeal have been expired or been exhausted) in an amount in excess of $5,000,000 is rendered against the Company or any Restricted Subsidiary and, within 60 consecutive days after entry thereof, such judgment is not discharged or execution thereof stayed pending appeal, or within 60 consecutive days after the expiration of any such stay, such judgment is not discharged; or (xiv) this Agreement shall at any time, for any reason, cease to be in full force and effect or shall be declared to be null and void in whole or in any material part by the final judgment (which is nonappealable or has not been stayed pending appeal or as to which all rights to appeal have expired or been exhausted) of any court or other governmental or regulatory authority having jurisdiction in respect thereof, or the validity or the enforceability of this Agreement shall be contested by or on behalf of the Company, or the Company shall renounce this Agreement, or deny that it is bound by the terms hereof or has any further liability hereunder; or (xv) any "Event of Default" as defined in the Mortgage Note Agreements shall exist; or (xvi) the Facilities Subsidiary, any Subsidiary of the Facilities Subsidiary or any Designated Immaterial Subsidiary, immediately after they become Restricted Subsidiaries under the definition of "Restricted Subsidiary" contained in paragraph 10B, shall have any Debt outstanding which is not permitted by clause (x) or (xi) of paragraph 6B(2) insofar as it relates to such Facilities Subsidiary, Subsidiary of the Facilities Subsidiary or Designated Immaterial Subsidiary; or (xvii) if any of the events or conditions or series of events or conditions described in subparagraph (vii) of paragraph 5A occurs which events or conditions or series of events or conditions have, or could reason- 29 34 ably be expected to have, a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole; then (a) if such event is an Event of Default specified in clause (viii), (ix) or (x) of this paragraph 7A with respect to the Company, all of the Notes at the time outstanding shall automatically become immediately due and payable at par together with interest accrued thereon, without presentment, demand, protest or notice of any kind, all of which are hereby waived by the Company, and (b) if such event is any other continuing Event of Default, the holder or holders of a majority of the aggregate principal amount of the Notes at the time outstanding may at its or their option, by notice in writing to the Company, declare all of the Notes to be, and all of the Notes shall thereupon be and become, immediately due and payable together with interest accrued thereon and together with the Yield-Maintenance Premium, if any, with respect to each Note, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company and the Company shall give notice in writing of such declaration to the other holders, provided that (x) if such event is a continuing Event of Default specified in clause (i) or (ii) of this paragraph 7A in respect of any Note, any Significant Holder may, at its option, by notice in writing to the Company, declare the Notes held by such Significant Holder to be, and all of such Notes shall thereupon be and become, immediately due and payable together with interest accrued thereon and together with the Yield-Maintenance Premium, if any, with respect to each such Note, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Company, (y) if any Significant Holder shall have declared all of the Notes held by such Significant Holder to be due and payable pursuant to clause (x) of this proviso, then the Company shall give notice in writing of such declaration to the other holders and any other holder may at any time thereafter and until the later of (A) the expiration of 60 days after such other holder shall have received notice from the Company of such declaration and (B) the date on which all Events of Default and Defaults have been cured or waived pursuant to paragraph 11C, by notice in writing to the Company, declare all of the Notes held by such other holder to be immediately due and payable, together with interest accrued thereon and together with the Yield- Maintenance Premium, if any, with respect to each such Note without presentment, demand, protest or any other notice of any kind, all 30 35 of which are hereby waived by the Company, and (z) the Yield-Maintenance Premium, if any, with respect to each Note shall be due and payable upon any such declaration only if (1) such event is a continuing Event of Default specified in any of clauses (i) through (vi), inclusive, (xiii), (xiv), (xv), (xvi) and (xvii) of this paragraph 7A, (2) the holder or holders effecting such declaration shall have given to the Company, at least 10 Business Days before such declaration, written notice stating its or their intention so to declare the Notes to be immediately due and payable and identifying one or more such Events of Default whose occurrence on or before the date of such notice permits such declaration and (3) one or more of the Events of Default so identified shall be continuing at the time of such declaration. At any time after the principal of, and interest accrued on, any or all of the Notes are declared due and payable, the holders of not less than 66 2/3% aggregate principal amount of the Notes then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (x) the Company has paid all overdue interest on the Notes, the principal of and premium, if any, on any Notes which have become due otherwise than by reason of such declaration, and interest on such overdue principal and premium and (to the extent permitted by applicable law) any overdue interest in respect of such Notes at a rate per annum from time to time equal to the greater of (i) 9.73% or (ii) the rate of interest publicly announced by Morgan Guaranty Trust Company of New York from time to time in New York as its Prime Rate plus 2.0%, (y) all Events of Default and Defaults, other than non-payment of amounts which have become due solely by reason of such declaration, have been cured or waived pursuant to paragraph 11C, and (z) no judgment or decree has been entered for the payment of any monies due pursuant to the Notes or this Agreement; but no such rescission and annulment shall extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon. 7B. OTHER REMEDIES If any Event of Default shall occur and be continuing, the holder of any Note may proceed to protect and enforce its rights under this Agreement and such Note by exercising such remedies as are available to such holder in respect thereof under applicable law, either by suit in equity or by action at law, or both, whether for specific performance of any covenant or other agreement contained 31 36 in this Agreement or in aid of the exercise of any power granted in this Agreement. No remedy conferred in this Agreement upon the holder of any Note is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise. 8. REPRESENTATIONS, COVENANTS AND WARRANTIES The Company represents, covenants and warrants: 8A. ORGANIZATION The Company is a limited partnership duly organized, validly existing and in good standing under the Delaware Revised Uniform Limited Partnership Act and has all requisite partnership power and authority to own and operate its properties, to conduct its business as currently conducted, to enter into this Agreement, to issue and sell the Notes and to carry out the terms of this Agreement and the Notes. 8B. GENERAL PARTNER NET WORTH On the date of closing the General Partner will have a net worth (excluding its interest in the Company and any notes receivable from or payable to the Company) at least equal to the amount sufficient to meet the tax requirements for a general partner of a Delaware limited partnership (based on the fair market value of its assets). 8C. SUBSIDIARIES The General Partner owns 2% and the Company owns 98% of the limited partnership interest in Manufacturing. The General Partner owns 4% and the Company owns 96% of the issued and outstanding stock of Marketing. The Facilities Subsidiary Stock has been duly authorized and validly issued, is fully paid and non-assessable and is owned free and clear of any Liens. The Facilities Subsidiary has issued no rights, warrants or options to acquire or instruments convertible into or exchangeable for any equity interest in the Facilities Subsidiary. On the date of closing the Company will have no Subsidiaries other than the Facilities Subsidiary. 32 37 8D. PARTNERSHIP INTERESTS The only general partner of the Company is the General Partner, which on the date of closing will own a 2% interest in the Company. 8E. QUALIFICATION The Company is duly qualified or registered for the transaction of business and in good standing as a foreign limited partnership in each of the State of Idaho, the State of Montana and the State of Washington, which are the only jurisdictions in which the failure so to qualify or be registered would have a material adverse effect on the business, property or assets, condition, or results of operations of the Company, or on the ability of the Company to perform its obligations under this Agreement and the Notes. 8F. BUSINESS; FINANCIAL STATEMENTS (a) The Company and its Subsidiaries have not engaged in any business or activities prior to the date of this Agreement other than (i) owning, acquiring and disposing of Timber and Timberlands, and (ii) owning and operating lumber mills, plywood and fiberboard manufacturing plants, and wood chip plants. The Company and its Subsidiaries do not have any significant assets other than Timber, Timberlands and the facilities described in clause (ii) above, and, after giving effect to the application of the proceeds of the Notes in accordance with paragraph 8S, on the date of closing will not have any significant liabilities other than the Notes, the 11 1/8% Senior Notes, the Guarantee and the Mortgage Notes or indebtedness under the Bank of America Revolving Credit Agreement or the ABN Revolving Credit Agreements. (b) The Company has delivered or caused to be delivered to you complete and correct copies of (i) the Company's Form 10-K as filed with the Securities and Exchange Commission on March 14, 1994 and the Company's Form 10-Q as filed with the Securities and Exchange Commission on May 2, 1994 (together, the "1934 Act Reports") and (ii) the memorandum dated May 1994 prepared by the Company for use in connection with the Company's private placement of the Notes, as supplemented by supplementary information including but not limited to that supplementary information included in the Slide Presentation of June 16, 1994 (such memorandum, as so supplemented, being herein collectively called the "Memorandum"). The annual financial statements 33 38 and schedules included in the 1934 Act Reports have been prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the period specified and present fairly the financial position for the dates specified, and the results of their operations and cash flows of the Company for the respective periods specified. The quarterly financial statements and schedules included in the 1934 Act Reports present fairly the financial position for the dates specified and the results of operations for the quarterly periods presented. The pro forma financial information set forth in the Memorandum is based upon assumptions stated in the Memorandum that are reasonable in all material respects and the financial projections contained therein are reasonable based upon such reasonable assumptions and the best information available to the officers of the Company. 8G. CHANGES, ETC. Except as contemplated by this Agreement or disclosed in Exhibit 8G, subsequent to December 31, 1993, (a) neither the Company nor the Facilities Subsidiary has incurred any material liabilities or obligations, direct or contingent, or entered into any material transactions not in the ordinary course of business, and (b) there has not been (i) any material adverse change in the financial condition or operations of the Company or the Facilities Subsidiary or (ii) any Restricted Payment of any kind declared, paid or made by the Company. 8H. TAX RETURNS AND PAYMENTS The Company has filed all tax returns required by law to be filed by it (or obtained extensions with respect thereto) and has paid all material taxes, assessments and other material governmental charges levied upon it, or any of its properties, assets, income or franchises which are due and payable by it, other than those which are not past due or delinquent or the non-payment of which is permitted by paragraph 5E. 8I. FRANCHISES, LICENSES, AGREEMENTS, ETC. Except as disclosed in Exhibit 8T, the Company is in possession of and operating in substantial compliance with all franchises, grants, authorizations, approvals, licenses, permits, easements, consents, certificates and orders required to own or lease its properties and to permit the conduct of its business, except for those franchises, 34 39 grants, authorizations, approvals, licenses, permits, easements, consents, certificates and orders the failure of which to be obtained, given or complied with would not individually or in the aggregate materially and adversely affect the business, property or assets, condition or operations of the Company or impair the ability of the Company to perform its obligations hereunder or under the Notes or impair the validity or enforceability of this Agreement or the Notes. 8J. ACTIONS PENDING There is no action, suit, investigation or proceeding pending or, to the knowledge of the Company, threatened against the Company, or any properties or rights of the Company, by or before any court, arbitrator or administrative or governmental body which questions the validity of this Agreement or the Notes or any action taken or to be taken pursuant to this Agreement or the Notes or which would be reasonably likely to result in any material adverse change in the business, property or assets, condition or operations of the Company, or in the inability of the Company to perform its obligations hereunder or under the Notes. 8K. TITLE TO PROPERTIES Except as disclosed in Exhibit 8K, the Company has good title to its real properties (other than properties which it leases) and good title to all of its other properties and assets, subject to no Lien of any kind except Liens permitted by paragraph 6B(1), and except such Liens as do not materially interfere with the full ownership and enjoyment of such properties and assets. All leases necessary in any material respect for the conduct of the respective businesses of the Company and its Subsidiaries are valid and subsisting and are in full force and effect. 8L. COMPLIANCE WITH OTHER INSTRUMENTS, ETC. The Company is not in violation of any term of the Partnership Agreement or of any term of any other agreement or instrument to which it is a party or by which it or any of its properties is bound or any term of any applicable law, ordinance, rule or regulation of any governmental authority or any term of any applicable order, judgment or decree of any court, arbitrator or governmental authority, the consequences of which violation would be reasonably likely to have a material adverse effect on its business, property or assets, condition or operations or on the abil- 35 40 ity of the Company to perform its obligations under this Agreement or the Notes, and the execution, delivery and performance by the Company of this Agreement and the Notes will not result in any violation of or be in conflict with or constitute a default under any such term or result in the creation of (or impose any obligation on the Company to create) any Lien (other than the Liens contemplated by this Agreement) upon any of the properties or assets of the Company, pursuant to any such term except for Liens permitted by paragraph 6B(1); and there is no such term which materially adversely affects or in the future would be likely to materially adversely affect the business, property or assets, condition or operations of the Company, or the ability of the Company to perform its obligations under this Agreement or the Notes. 8M. GOVERNMENTAL CONSENT No consent, approval or authorization of, or declaration or filing with, any governmental authority is required for the valid execution, delivery and performance by the Company of this Agreement or the valid offer, issue, sale and delivery of the Notes pursuant to this Agreement. 8N. FOREIGN ASSETS CONTROL REGULATIONS, ETC. Neither the issue and sale of the Notes by the Company nor its use of the proceeds thereof as contemplated by this Agreement will violate any of the regulations administered by the Office of Foreign Assets Control, United States Department of the Treasury, including, without limitation, the Foreign Assets Control Regulations, the Transaction Control Regulations, the Cuban Assets Control Regulations, the Foreign Funds Control Regulations, the Iranian Assets Control Regulations, the Iranian Transactions Regulations, the Iraqi Sanctions Regulations, the Haitian Transactions Regulations, the Libyan Sanctions Regulations, and the Soviet Gold Coin Regulations (31 C.F.R., Subtitle B, Chapter V, as amended) or the restrictions set forth in Executive Orders No. 12543 (Libya), 12544 (Libya), 12801 (Libya), 12722 (Iraq) or 12724 (Iraq), 12775 (Haiti), 12779 (Haiti), 12808 (Yugoslavia), 12810 (Yugoslavia) or 12831 (Yugoslavia), as amended, of the President of the United States of America or of any rules or regulations issued thereunder. 36 41 8O. OFFERING OF NOTES Neither the Company nor any agent acting on behalf of the Company has, directly or indirectly, offered the Notes or any similar security of the Company for sale to, or solicited any offers to buy the Notes or any similar security of the Company from, or otherwise approached or negotiated with respect thereto with any Person other than 73 institutional investors, and neither the Company nor any agent acting on behalf of the Company has taken or will take any action which would subject the issuance or sale of the Notes to the provisions of section 5 of the Securities Act or to the provisions of any securities or Blue Sky law of any applicable jurisdiction. 8P. REGULATION G, ETC. The Company does not own or have any present intention of acquiring any "margin stock" as defined in Regulation G (12 CFR Part 207) of the Board of Governors of the Federal Reserve System (herein called "margin stock"). None of the proceeds of the sale of the Notes will be used, directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of purchasing or carrying any margin stock or for the purpose of maintaining, reducing or retiring any indebtedness which was originally incurred to purchase or carry any stock that is currently a margin stock or for any other purpose which might constitute this transaction a "purpose credit" within the meaning of such Regulation G. Neither the Company nor any agent acting on its behalf has taken or will take any action which might cause this Agreement or the Notes to violate Regulation G, Regulation T or any other regulation of the Board of Governors of the Federal Reserve System or to violate the Securities Exchange Act of 1934, as amended, in each case as in effect now or as the same may hereafter be in effect. 8Q. ERISA (a) Neither the Company nor any of its Subsidiaries has breached the fiduciary rules of ERISA or engaged in any prohibited transaction which, in any such case, could reasonably be expected to result in any direct or indirect material liability (including, without limitation, as a result of an indemnification obligation) to the Company or any of its Subsidiaries in connection with a suit for damages or pursuant to section 409, 502(i) or 502(l) of ERISA or section 4975 of the Code, which liability, either individually or in the aggregate, has had or could reasonably be 37 42 expected to have a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole. (b) None of the Company, any of its Subsidiaries or any Related Person has incurred any direct or indirect material liability (including, without limitation, as a result of an indemnification obligation) under or pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, which liability has had or could reasonably be expected to have a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole. No event, transaction or condition has occurred or exists or, to the Company's best knowledge, is expected to occur or exist with respect to any Plan that could reasonably be expected to result in any direct or indirect material liability to the Company, any of its Subsidiaries or any Related Person (including, without limitation, as a result of an indemnification obligation) under or pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, which liability has had or could reasonably be expected to have a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole. There has been no reportable event (within the meaning of section 4043(b) of ERISA) or any other event or condition with respect to any Plan which presents a risk of the termination of, or the appointment of a trustee to administer, any such Plan by the PBGC. (c) Full payment (made in a timely manner such that any incidental delay in making a payment, if any, has not resulted in any Lien or any material liability to the Company, any of its Subsidiaries or any Related Person) has been made of all amounts which the Company, any of its Subsidiaries or any Related Person is required under applicable law, the terms of each Plan or any collective bargaining agreement to have paid as contributions to each such Plan, and no accumulated funding deficiency (as defined in section 302 of ERISA or section 412 of the Code), whether or not waived, exists or is expected to exist with respect to any Plan (other than a Multiemployer Plan). 38 43 (d) The present value of the accumulated benefit obligations (whether or not vested) under each Plan (other than a Multiemployer Plan), determined as of the end of each such Plan's most recently ended Plan year on the basis of the actuarial assumptions specified for funding purposes in each such Plan's actuarial valuation report for such Plan year, each of which assumptions is reasonable and in compliance with section 412 of the Code, did not exceed the current value of the assets of each such Plan allocable to such accumulated benefit obligations by an amount which could have a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole, and no event has occurred since such date that could reasonably be expected to cause the present value of such accumulated benefit obligations to increase by a material amount. The terms "present value" and "current value" shall have the meanings assigned to such terms in section 3 of ERISA, and the term "accumulated benefit obligations" shall have the meaning assigned to such term in Statement of Financial Accounting Standards No. 87. (e) None of the Company, any of its Subsidiaries or any Related Person has incurred or expects to incur any withdrawal liability under Title IV of ERISA with respect to any Multiemployer Plan or any Plan that is a "multiple employer plan" within the meaning of section 4063 or 4064 of ERISA, which liability has had or could reasonably be expected to have a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole. The aggregate withdrawal liability of the Company, its Subsidiaries and the Related Persons with respect to all Multiemployer Plans and Plans that are "multiple employer plans" within the meaning of section 4063 or 4064 of ERISA, determined as if a complete withdrawal had occurred on the date hereof, does not exceed $25,000,000. No Multiemployer Plan is insolvent or in reorganization within the meaning of section 4241 or 4245 of ERISA. (f) The "expected postretirement benefit obligation" (determined as of the last day of the Company's most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by section 4980B of the Code) of the Company and its Subsidiaries under Plans which are "employee welfare benefit 39 44 plans" (as defined in section 3(1) of ERISA) did not exceed $1,000,000. (g) The execution and delivery of this Agreement and the Other Note Agreements and the issuance and sale of the Notes hereunder and thereunder will not involve any transaction which is subject to the prohibitions of section 406 of ERISA or in connection with which a tax could be imposed pursuant to section 4975 of the Code. With respect to each employee benefit plan identified in writing to the Company in accordance with paragraph 9(c), neither the Company nor any "affiliate" thereof (as defined in section V(c) of Prohibited Transaction Class Exemption 84-14 (the "QPAM Exemption")) has at this time, and has not exercised at any time within the preceding year, the authority to appoint or terminate the "QPAM" (as defined in the QPAM Exemption) identified in accordance with paragraph 9(c) as manager of any of the assets of any plan identified in accordance with paragraph 9(c), or to negotiate the terms of any management agreement with such QPAM on behalf of any such plan, the Company is not an "affiliate" (as defined in section V(c) of the QPAM Exemption) of such QPAM, and the Company is not a party in interest with respect to any plan identified in accordance with paragraph 9(c). The representations by the Company in this subparagraph (g) of paragraph 8Q are made in reliance upon and subject to the accuracy of your representation in paragraph 9 of this Agreement and the respective representations of the Other Purchasers in paragraph 9 of the Other Note Agreements as to the source of the funds to be used to pay the purchase price of the Notes to be purchased by you and the Other Purchasers and assumes the continued applicability and validity of paragraph (b) of Department of Labor Interpretive Bulletin 75-2, 29 C.F.R. Section 2509.75-2. As used in this paragraph 8Q, the terms "employee benefit plan" and "party in interest" have the respective meanings assigned to such terms in section 3 of ERISA. 40 45 8R. STATUS UNDER CERTAIN FEDERAL STATUTES The Company is not (i) an "investment company" or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended, (ii) a "holding company" or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company or of a "subsidiary company" of a "holding company", as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, (iii) a "public utility" as such term is defined in the Federal Power Act, as amended, nor (iv) a "rail carrier or a person controlled by or affiliated with a "rail carrier", within the meaning of Title 49, U.S.C., and neither the Company, the General Partner nor the Facilities Subsidiary is a "carrier" to which 49 U.S.C. Section 11301(b)(1) is applicable. 8S. USE OF PROCEEDS The Company will apply the proceeds of the sale of the Notes to you and the Other Purchasers to repay amounts owing under the Bank of America Revolving Credit Agreement. 8T. ENVIRONMENTAL MATTERS (a) Except as disclosed in Exhibit 8T, to the Company's knowledge, the Company and its Subsidiaries are in compliance in all material respects with all Environmental Laws applicable to them or to real property owned or leased by them, or to the ownership, use, operation or occupancy thereof except where the failure to be in compliance with such Environmental Laws would not result in liability of the Company or any of its Subsidiaries in an aggregate amount in excess of $25,000,000. To the Company's knowledge, neither the Company, its Subsidiaries nor any other Person acting at the direction of or on behalf of the Company has engaged in any activity in violation of any provision of any applicable Environmental Laws, which violation could reasonably be expected to have a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole. (b) Except as permitted by paragraph 8I or as disclosed in Exhibit 8T, the Company has or will have on the date of closing all environmental permits or licenses necessary for the conduct of its business as conducted on the date of closing and, as to any such permit or license that has expired or is about to expire or is needed for the pro- 41 46 posed conduct of its business, the Company has or will have timely and properly applied for renewal or receipt of the same. Exhibit F lists all material notices from Federal, state or local environmental agencies to the Company citing environmental violations that have not been finally resolved and disposed of; no such violation, individually or in the aggregate is reasonably expected to have a material adverse effect on the business, property or assets, condition or operations of the Company, and the Company is acting in compliance with all such notices. Notwithstanding any such notice, the Company is currently operating in compliance with the limits set forth in such environmental permits or licenses except for such noncompliance as could not reasonably be expected to have a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole and the Company has no knowledge of any threatened or pending proceeding for the revocation, loss or termination of any such environmental permits or licenses. Neither the Company nor any of its Subsidiaries is subject to any order or decree of any governmental authority under any Environmental Laws, which order or decree would reasonably be likely to result in a material adverse effect on the business, condition (financial or other), assets, properties or operations of the Company or the Company and its Restricted Subsidiaries taken as a whole, nor is there any basis for such order or decree. (c) All facilities located on the real property owned by the Company or the Facilities Subsidiary on the date of closing which are subject to regulation by the Federal Resource Conservation and Recovery Act, as in effect on the date hereof, are and to the knowledge of the Company (or the Facilities Subsidiary, as the case may be) have been operated in material compliance with such Act and the Company (or the Facilities Subsidiary, as the case may be) has not received or, to the knowledge of the Company (or the Facilities Subsidiary, as the case may be) upon reasonable inquiry, has not been threatened with, a notice of violation under such Act regarding such facilities which can reasonably be expected to have a material adverse effect on the business, property or assets, conditions or operations of the Company (or the Facilities Subsidiary, as the case may be), or the ability of the Company to perform its obligations under this Agreement or the Notes. 42 47 (d) Except as disclosed in Exhibit 8T, with respect to the real property owned by the Company (or the Facilities Subsidiary, as the case may be) on the date of closing, there has not occurred to the best knowledge of the Company (or the Facilities Subsidiary, as the case may be) (i) any Release of any Hazardous Substance in a Reportable Quantity, (ii) any discharge of any substance into ground, surface, or navigable waters for which a notice of violation has been received or threatened under any Federal, state or local laws, rules or regulations concerning water pollution, or (iii) any assertion of any Lien pursuant to Federal, state or local environmental law resulting from any use, spill, discharge or clean-up of any hazardous or toxic substance or waste, which occurrence can reasonably be expected to have a material adverse effect on the business, property or assets, condition or operations of the Company (or the Facilities Subsidiary, as the case may be). As used in this paragraph, the terms "Release," "Hazardous Substance," and "Reportable Quantity" shall have the meanings assigned such terms under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). 8U. DISCLOSURE Neither this Agreement, the Memorandum, the 1934 Act Reports nor any other document, certificate or statement furnished to you by or on behalf of the Company in writing, in connection herewith contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein not misleading. There is no fact peculiar to the Company which materially adversely affects or in the future may (so far as the Company can now reasonably foresee) materially adversely affect the business, property or assets, condition or results of operations of the Company and which has not been set forth in this Agreement, the Memorandum or the 1934 Act Reports or in the other documents, certificates and statements in writing furnished to you by or on behalf of the Company prior to the date hereof in connection with the transactions contemplated hereby. 9. REPRESENTATIONS OF THE PURCHASER You represent, and in making this sale to you it is specifically understood and agreed, that you are not acquiring the Notes to be purchased by you hereunder with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act, provided that the disposition of your property shall at all times be 43 48 and remain within your control. You understand that the Notes have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Notes. You also represent that at least one of the following statements is an accurate representation as to the source of funds to be used by you to pay the purchase price of the Notes purchased by you hereunder: (a) you are an insurance company subject to state regulation and no part of the funds being used by you to pay the purchase price of the Notes being purchased by you hereunder constitutes assets allocated to any separate account maintained by you in which any employee benefit plan or its related trust has any interest and, assuming the continued applicability and validity of paragraph (b) of Department of Labor Interpretive Bulletin 75-2, 29 C.F.R. Section 2509.75-2, no part of such funds constitutes assets of any employee benefit plan solely for purposes of determining whether such purchase is a prohibited transaction under ERISA or the Code; or (b) you are an insurance company subject to state regulation and to the extent that any part of the funds being used by you to pay the purchase price of the Notes being purchased by you hereunder constitutes assets allocated to any separate account maintained by you, (i) such separate account is an "insurance company pooled separate account" within the meaning of Prohibited Transaction Class Exemption 90-1, in which case you have disclosed to the Company the name of each employee benefit plan whose assets in such separate account exceed 10% of the total assets or are expected to exceed 10% of the total assets of such account as of the date of such purchase (and for the purposes of this subparagraph (b), all employee benefit plans maintained by the same employer or employee organization are deemed to be a single plan), or (ii) such separate account contains only the assets of a specific employee benefit plan, complete and accurate information as to the identity of which you have delivered to the Company; or (c) all of the funds being used by you to pay the purchase price of the Notes being purchased by you 44 49 hereunder constitute assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets which are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I(g) of the QPAM Exemption are satisfied and the identity of such QPAM and the names of each employee benefit plan whose assets are included in such investment fund have been disclosed to the Company; or (d) you are not an insurance company and all or a portion of the funds to be used by you to pay the purchase price of the Notes being purchased by you hereunder does not constitute assets of any employee benefit plan (other than a governmental plan exempt from the coverage of ERISA) and the remaining portion, if any, of such funds consists of funds which may be deemed to constitute assets of one or more specific employee benefit plans, complete and accurate information as to the identity of each of which you have delivered to the Company. As used in this paragraph 9, the terms "employee benefit plan", "party in interest" and "separate account" shall have the respective meanings assigned to such terms in section 3 of ERISA. 10. DEFINITIONS For the purpose of this Agreement, the terms defined in paragraphs 1 and 2 shall have the respective meanings specified therein, and the following terms shall have the meanings specified with respect thereto below: 10A. YIELD-MAINTENANCE TERMS "Business Day" shall mean any day other than a Saturday, a Sunday or a day on which commercial banks in New York City are required or authorized to be closed. 45 50 "Called Principal" shall mean, with respect to any Note, the principal of such Note that is to be prepaid pursuant to paragraph 4A (including partial prepayments made pursuant to paragraphs 6B(5)(viii) and 6B(6)) or is declared to be immediately due and payable pursuant to paragraph 7A, as the context requires. "Discounted Value" shall mean, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on a semiannual basis) equal to 50 basis points above the Reinvestment Yield with respect to such Called Principal. "Reinvestment Yield" shall mean, with respect to the Called Principal of any Note, the yield to maturity implied by (i) the yields reported, as of 10:00 A.M. (New York City time) on the Business Day next preceding the Settlement Date with respect to such Called Principal, on the display designated as the USD page in the Bloomberg Financial Markets Service (or such other display as may replace the USD page in the Bloomberg Financial Markets Service) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Life of such Called Principal as of such Settlement Date, or if such yields shall not be reported as of such time or the yields reported as of such time shall not be ascertainable, (ii) the Treasury Constant Maturity Series yields reported, for the latest day for which such yields shall have been so reported as of the Business Day next preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Life of such Called Principal as of such Settlement Date. Such implied yield shall be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between reported yields. "Remaining Life" shall mean, with respect to the Called Principal of any Note, the number of years (calculated to the nearest one-twelfth year) which will elapse between the Settlement Date with respect to such Called Principal and August 1, 2009. 46 51 "Remaining Scheduled Payments" shall mean, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due on or after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date. "Settlement Date" shall mean, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to paragraph 4A (including partial prepayments made pursuant to paragraphs 6B(5)(viii) and 6B(6)) or is declared to be immediately due and payable pursuant to paragraph 7A, as the context requires. "Yield-Maintenance Premium" shall mean, with respect to any Note, a premium equal to the excess, if any, of the Discounted Value of the Called Principal of such Note over the sum of (i) such Called Principal plus (ii) interest accrued thereon as of (including interest due on) the Settlement Date with respect to such Called Principal. The Yield-Maintenance Premium shall in no event be less than zero. 10B. OTHER TERMS "ABN Revolving Credit Agreements" shall mean the credit agreements (i) between the Company, ABN AMRO Bank N.V. ("ABN") as agent, and certain other lenders pursuant to which the lenders thereunder provide credit facilities to the Company in an aggregate principal amount not to exceed $15,000,000 and (ii) between Marketing, Manufacturing, ABN, as agent, and certain other lenders pursuant to which the lenders thereunder provide credit facilities to Marketing and Manufacturing in an aggregate principal amount not to exceed $20,000,000. "Affiliate" shall mean any Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, the Company, except a Restricted Subsidiary. A Person shall be deemed to control a corporation or other entity if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation or other entity, whether through the ownership of voting securities, by contract or otherwise. 47 52 "Available Cash" shall mean, with respect to any calendar quarter, (a) the sum of: (i) the Company's net income (or net loss) (excluding gain on the sale of any Capital Asset) for such quarter, (ii) the amount of depletion, depreciation, amortization and other noncash charges utilized in determining net income of the Company for such quarter, (iii) the amount of any reduction in reserves of the Company of the types referred to in clause (b)(iv) below, (iv) proceeds received by the Company from the sale of Designated Acres, and (v) any Cash from Capital Transactions received by the Company during such quarter in specific contemplation that such Cash from Capital Transactions will be used to refund or refinance any payment of Debt of the type specified in clause (b)(i) below which made in either of the two immediately preceding quarters, less (b) the sum of: (i) all payments of principal on Debt made by the Company in such quarter (excluding any payments of principal on Debt made with Cash from Capital Transactions received by the Company during such quarter or, to the extent such Cash from Capital Transactions remains available, received by the Company during the four immediately preceding quarters), (ii) capital expenditures made by the Company during such quarter (excluding any capital expenditures for such quarter made with Cash from Capital Transactions received by the Company during such quarter or, to the extent such Cash from Capital Transactions remains available, received by the Company during the four immediately preceding quarters, and capital expenditures which the General Partner reasonably anticipates will be financed with Cash from Capital Transactions within 90 days from the end of such quarter), (iii) the amount of any capital expenditures made by the Company in a prior quarter which was anticipated would be financed from Cash from Capital Transactions 48 53 but which have not been financed from such source within 90 days from the end of such quarter, (iv) the amount of any reserves of the Company established during such quarter which are necessary or appropriate (A) to provide funds for the future payment of items of the types specified in clauses (b)(i) and (b)(ii) above, (B) to provide additional working capital, (C) to provide funds for cash distributions with respect to any one or more of the next four quarters, or (D) to provide funds for the future payment of interest in an amount equal to the interest to be accrued in the next quarter, (v) the amount of any noncash items of income utilized in determining net income of the Company for such quarter, (vi) the amount of any Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) made by the Company during such quarter pursuant to clause (i), (viii) or (ix) of paragraph 6B(3) (or in the case of any Subsidiary, Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) of similar type) to the extent not included in capital expenditures or payments on principal on Debt made by the Company during such quarter (excluding any such Investments for such quarter made with Cash from Capital Transactions received by the Company during such quarter or, to the extent such Cash from Capital Transactions remains available, received by the Company during the four immediately preceding quarters, and Investments which the General Partner reasonably anticipates will be financed with Cash from Capital Transactions within 90 days from the end of such quarter), and (vii) the amount of any Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) made by the Company in a prior quarter pursuant to clause (i), (viii) or (ix) of paragraph 6B(3) (or in the case of any Subsidiary, Investments (other than guarantees, contingent liabilities or endorsements, 49 54 except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) of similar type) to the extent not included in capital expenditures made by the Company during such quarter which was anticipated would be financed from Cash from Capital Transactions but which have not been financed from such source within 90 days from the end of such quarter, provided, however, (i) net proceeds to the Company from the issuance of SPUs (as such term is defined in the Partnership Agreement) shall be deemed to be Available Cash, and shall be deemed to be received, for purposes of determining Available Cash, during the quarter in respect of which such SPUs are issued, even if such cash is received by the Company after the last day of such quarter, and (ii) any disbursements made of the types described in clauses (b)(i), (ii), (iii), (vi) and (vii) or reserves established, in accordance with clause (b)(iv), within 45 days after the end of any quarter as to which SPUs were purchased in respect of such quarter in accordance with the Distribution Support Agreement shall be deemed to be made or established, for purposes of determining Available Cash, within such quarter if the General Partner so determines, provided that the aggregate amount of such disbursements made or reserves established which are so determined as being made within such quarter shall not exceed the aggregate dollar amount of SPUs purchased in respect of such quarter. Notwithstanding the foregoing, "Available Cash" shall not take into account any reductions in reserves or disbursements made or reserves established after commencement of the dissolution and liquidation of the Company. In determining "Available Cash", (i) all items under clauses (a)(i), (ii), (iii), (iv) and (v) above and all items under clauses (b)(i), (ii), (iii), (iv), (v), (vi) and (vii) above shall be calculated on a combined basis with any Subsidiary of the Company whose income is accounted for on a consolidated or combined basis with the Company and, in accordance therewith, "Available Cash" shall include a percentage of each such item of each such Subsidiary equal to the Company's percentage ownership interest in such Subsidiary, provided, however, that the items under clauses (a)(i), (ii), (iii), (iv) and (v) above shall only be included in Available Cash to the extent that the General Partner determines such amount to be legally available for dividends or distributions to the Company by such Subsidiary; (ii) the amount of net income and the amount of depletion, depreciation, amortization and other noncash charges, utilized in 50 55 determining net income shall be determined, with respect to the Company, by the General Partner in accordance with generally accepted accounting principles and, with respect to any Subsidiary, by its Board of Directors (or by such other body or Person which has the ultimate management authority of such Subsidiary) in accordance with generally accepted accounting principles; (iii) the net income of any Subsidiary shall be determined on an after-tax basis; (iv) the amount of any reductions in, or additions to, reserves for purposes of clauses (a)(iii) and (b)(iv) above shall be determined, with respect to the Company, by the General Partner in its reasonable good faith judgment and, with respect to any Subsidiary, by its Board of Directors (or by such other body or Person which has the ultimate management authority of such Subsidiary) in its reasonable good faith judgment; and (v) any determination of whether any capital expenditures or Investments are financed, or anticipated to be financed, with Cash from Capital Transactions for purposes of clause (b)(ii) or (b)(vi) above shall be made, with respect to the Company, by the General Partner in its reasonable good faith judgment and, with respect to any Subsidiary, by its Board of Directors (or by such other body or Person which has the ultimate management authority of such Subsidiary) in its reasonable good faith judgment. "Bank of America Revolving Credit Agreement" shall mean the credit agreement between the Company, Bank of America National Trust and Savings Association, as Administrative Agent, and certain other lenders pursuant to which the lenders thereunder provide credit facilities to the Company in an aggregate principal amount not to exceed $260,000,000 and any extension, renewal, refunding or refinancing thereof provided that such renewal, refunding or refinancing shall not contain terms which are any less favorable to the Purchasers. "Bankruptcy Law" shall have the meaning specified in clause (viii) of paragraph 7A. "Board Foot" shall mean a unit of measurement one foot square and one inch thick. "Business Day" shall mean any day other than a Saturday, Sunday or other day on which commercial banking institutions in New York, New York or Seattle, Washington are authorized or required by law, regulation or executive order to be closed. 51 56 "Capital Asset" shall mean any asset on the Company's or any Subsidiary's balance sheet, as the case may be, other than inventory, accounts receivable or any other current asset and assets disposed of in connection with normal retirements or replacements. "Capital Lease Obligation" shall mean, with respect to any Person, any rental obligation which, under generally accepted accounting principles, is or will be required to be capitalized on the books of such Person, taken at the amount thereof accounted for as indebtedness (net of interest expenses) in accordance with such principles. "Capital Transaction" shall mean (i) borrowings and sales of debt securities (other than for working capital purposes and other than for items purchased on open account in the ordinary course of business) by the Company, (ii) sales of equity interests by the Company (other than the issuance of SPUs) and (iii) sales or other voluntary or involuntary dispositions of any assets of the Company (other than (x) sales or other dispositions of inventory in the ordinary course of business, (y) sales or other dispositions of other current assets including receivables and accounts and (z) sales or other dispositions of assets as a part of normal retirements or replacements), in each case prior to the commencement of the dissolution and liquidation of the Company provided, that in determining Cash from Capital Transactions, items (i), (ii) and (iii) above shall include, with respect to each Subsidiary of the Company whose income is accounted for on a consolidated or combined basis with the Company, a percentage of each such item of such Subsidiary equal to the Company's percentage ownership interest in such Subsidiary. "Cash from Capital Transactions" shall mean at any date, such amounts of cash as are determined by the General Partner to be cash made available to the Company from or by reason of a Capital Transaction. "Code" shall mean the Internal Revenue Code of 1986, as amended. "Company's knowledge" or "knowledge of the Company" shall mean the actual knowledge of Rick R. Holley, President and Chief Executive Officer, Charles P. Grenier, Executive Vice President, Robert E. Manne, Executive Vice President, Diane M. Irvine, Vice President and Chief Financial Officer, James A. Kraft, Vice President Law, 52 57 Susanna N. Duke, Director, Law and Secretary and Mitchell Leu, Environmental Engineer and any successor to the offices and officers, such persons being the principal persons employed by the Company ultimately responsible for environmental operations and compliance, ERISA and legal matters relating to the Company. "Debt" shall mean, as to any Person, as of any date of determination, without duplication, (i) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (ii) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds and other similar instruments guaranteeing payment or other performance of obligations by such Person, (iii) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any Lien on any property owned by such Person, to the extent attributable to such Person's interest in such property, even though such Person has not assumed or become liable for the payment thereof, (iv) lease obligations of such Person which, in accordance with generally accepted accounting principles, should be capitalized, (v) lease obligations of such Person under leases which have a term (including any option to renew exercisable at the discretion of the lessee thereunder) longer than 10 years or under leases under which the lessor, pursuant to an agreement with such Person, has acquired the property specifically for the purpose of leasing it to such Person, (vi) obligations payable out of the proceeds of production from property of such Person, even though such Person has not assumed or become liable for the payment thereof, and (vii) any obligations of any other Person of the type described in the above clauses (i) through and including (vi), inclusive, which are guaranteed or in effect guaranteed by such Person through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or other financial condition of the obligor of such obligation, or to make payment for any products, materials or supplies or for any transportation or services regardless of the non-delivery or nonfurnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the 53 58 holders of such obligation will be protected against loss in respect thereof. "Designated Acres" shall mean up to an aggregate of 114,000 acres owned by the Company which (based on the good faith determination of the Responsible Representatives that such acres have at the time such determination is made a higher value as recreational, residential, grazing or agricultural property than for timber production) may be reasonably designated by the General Partner at the time of the sale thereof as constituting Designated Acres (such aggregate number of acres to be determined over the term of existence of this Agreement). "Designated Immaterial Subsidiary" shall mean any entity which would otherwise be a Restricted Subsidiary and which at any time is designated by the Company as a Designated Immaterial Subsidiary, provided that no such designation of any entity as a Designated Immaterial Subsidiary shall be effective unless (i) at the time of such designation, such entity does not own any shares of stock or Debt of any Restricted Subsidiary which is not simultaneously being designated as a Designated Immaterial Subsidiary, (ii) immediately after giving effect to such designation, (a) the Company could incur at least $1 of additional Funded Debt pursuant to clause (ix) of paragraph 6B(2), and (b) no condition or event shall exist which constitutes an Event of Default or Material Default, (iii) the Company is permitted to make the Investment in such entity resulting from such designation pursuant to, and within the limitations specified in, clause (ix) of paragraph 6B(3), treating the aggregate book value (including equity in retained earnings) of the Investments of the Company and its Subsidiaries in such entity immediately prior to such designation as the cost of such Investment, and provided, further, that if at any time all Designated Immaterial Subsidiaries on a combined basis would be a "significant subsidiary" (assuming the Company is the registrant) within the meaning of Regulation S-X (17 CFR Part 210) the Company shall designate one or more Designated Immaterial Subsidiaries which are directly owned by the Company and its Restricted Subsidiaries as Restricted Subsidiaries such that the condition in this proviso is no longer applicable and the entities so designated shall no longer be Designated Immaterial Subsidiaries. Any entity which has been designated a Designated Immaterial Subsidiary shall not thereafter become a Restricted Subsidiary except pursuant to a designation required by the last proviso in the preceding sentence, and any Designated Immaterial Subsidiary which has been designated a Restricted 54 59 Subsidiary pursuant to the last proviso of the preceding sentence shall not thereafter be redesignated as a Designated Immaterial Subsidiary. "Designated Repurchases" shall mean and include purchases, redemptions or other acquisitions, in each case at a price not to exceed fair market value, of the publicly traded limited partnership interests in the Company, which are retired by the Company within six months of such purchase, redemption or other acquisition. "Distribution Support Agreement" shall mean the Distribution Support Agreement, dated as of June 8, 1989, between the Company and Burlington Resources Inc., a Delaware corporation. "11 1/8% Senior Note Agreements" shall mean the Note Agreements, dated as of May 31, 1989 and amended as of January 1, 1991, April 22, 1993, September 1, 1993 and May 20, 1994, providing for the issuance and sale by the Company of its 11 1/8% Senior Notes to the purchasers listed in the schedule of purchasers attached thereto. "11 1/8% Senior Notes" shall mean the 11 1/8% Senior Notes Due June 8, 2007 of the Company issued and sold pursuant to the 11 1/8% Senior Note Agreements. "Environmental Laws" shall mean Federal, state, local and foreign laws, rules or regulations relating to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, air, surface water, ground water or land), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "Event of Default" shall mean any of the events specified in paragraph 7A, provided that there has been satisfied any requirement in connection with such event for the giving of notice, or the lapse of time, or the happening of any further condition, event or act, and "Default" shall mean any of such events, whether or not any such requirement has been satisfied. 55 60 "Facilities Subsidiary" shall mean, collectively, Manufacturing and Marketing. "Facilities Subsidiary's Facility" shall mean any facility pursuant to which the Facilities Subsidiary may incur Debt for purposes of making capital improvements, additions to, or expansions of, property, plant and equipment of the Facilities Subsidiary or its Subsidiaries. "Facilities Subsidiary's Revolving Credit Facility" shall mean any facility pursuant to which the Facilities Subsidiary may obtain revolving credit, takedown credit, the issuance of standby and payment letters of credit and backup for the issuance of commercial paper. "Facilities Subsidiary Stock" shall mean, collectively, the limited partner interest of the Company in Manufacturing and the capital stock of Marketing that is owned by the Company. "Funded Debt" shall mean, without duplication, any Debt payable more than one year from the date of the creation thereof. "Current Debt" shall mean, without duplication, any Debt payable on demand or within a period of one year from the date of the creation thereof; provided that any Debt shall be treated as Funded Debt, regardless of its term, if such Debt is renewable pursuant to the terms thereof or of a revolving credit or similar agreement effective for more than one year after the date of the creation of such Debt, or may be payable out of the proceeds of similar Debt pursuant to the terms of such Debt or of any such agreement. "General Partner" shall mean Plum Creek Management Company, L.P., a limited partnership organized and existing under the laws of the State of Delaware, and its successors and assigns. "Guarantee" shall mean the guarantee in paragraph 7 of the Mortgage Note Agreements. "Investment Policy" shall mean the Corporate Investment Policy of the Company, as it exists on April 5, 1993 and as attached hereto as Schedule 10B(1). "Investments" shall have the meaning specified in paragraph 6B(3). 56 61 "Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction). "Manufacturing" shall mean Plum Creek Manufacturing, L.P., a Delaware limited partnership. "Marketing" shall mean Plum Creek Marketing, Inc., a Delaware corporation. "Material Default" shall mean any continuing Default as to which a written notice of such Default (which notice has not been rescinded) shall have been received by the Company or the General Partner from any holder of any Note, or any continuing Event of Default. "Maximum Pro Forma Annual Interest Charges" shall mean, as of any date, the highest total amount payable during any period of four consecutive fiscal quarters, commencing with the fiscal quarter in which such date occurs and ending with the fiscal quarter in which August 1, 2009 occurs, by the Company and its Restricted Subsidiaries on a combined basis, after eliminating all intercompany transactions, in respect of interest charges ((a) including amortization of debt discount and expense and imputed interest on Capital Lease Obligations and on other obligations included in Debt which do not have stated interest, (b) assuming, in the case of fluctuating interest rates which cannot be determined in advance, that the rate in effect on such date will remain in effect throughout such period, and (c) treating the principal amount of all Debt outstanding as of such date under a revolving credit or similar agreement as maturing and becoming due and payable on the scheduled maturity date thereof, without regard to any provision permitting such maturity date to be extended) on all Debt of the Company and its Restricted Subsidiaries outstanding on such date (excluding the Guarantee and the guarantees of the Facilities Subsidiary's Facility and the Facilities Subsidiary's Revolving Credit Facility but including, to the extent not already included, all other Debt outstanding on such date which is guaranteed or in effect guaranteed by the Company or any Restricted Subsidiaries), after giving effect to any Debt proposed to be created on such date and to the concurrent retirement of any other Debt. 57 62 "MMBF" shall mean one million Board Feet. "Mortgage Note Agreements" shall mean the Note Agreements, dated as of May 31, 1989 and amended as of January 1, 1991, April 22, 1993, September 1, 1993, and May 20, 1994, providing for the issuance and sale by the Facilities Subsidiary of its 11 1/8% First Mortgage Notes to the purchasers listed in the schedule of purchasers attached thereto. "Mortgage Noteholder" shall mean and include each holder from time to time of a Mortgage Note issued under the Mortgage Note Agreements. "Mortgage Notes" shall mean the 11 1/8% First Mortgage Notes of the Facilities Subsidiary issued and sold pursuant to the Mortgage Note Agreements. "Multiemployer Plan" shall mean any Plan which is a "multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA). "Officers' Certificate" shall mean, as to any corporation, a certificate executed on its behalf by the Chairman of the Board of Directors (if an officer) or its President or one of its Vice Presidents and its Treasurer, or Controller or one of its Assistant Treasurers or Assistant Controllers, and, as to any partnership, a certificate executed on behalf of such partnership by its general partner in a manner which would qualify such certificate as an Officers' Certificate of such general partner hereunder. "Partnership Agreement" shall mean the Amended and Restated Agreement of Limited Partnership of the Company, as in effect on the date of closing, and as the same may, from time to time be amended, modified or supplemented in accordance with the terms thereof. "PBGC" shall mean the Pension Benefit Guaranty Corporation or any governmental authority succeeding to any of its functions. "Permitted Business" shall mean any business engaged in by the Company or the Facilities Subsidiary on the date of closing, and any business substantially similar or related to any such business, which shall not include pulp or paper manufacturing. 58 63 "Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization and a government or any department or agency thereof. "Plan" shall mean an "employee benefit plan" (as defined in section 3(3) of ERISA) which is or has been established or maintained, or to which contributions are or have been made, by the Company, any of its Subsidiaries or any Related Person or with respect to which the Company, any of its Subsidiaries or any Related Person may have any liability. "Pro Forma Free Cash Flow" as of any date shall mean (i) net income of the Company and its Restricted Subsidiaries on a combined basis (excluding (a) gain on the sale of any Capital Asset, (b) non-cash items of income, and (c) any distributions or other income received from, or equity of the Company or any Restricted Subsidiary in the earnings of, any entity which is not a Restricted Subsidiary) for the period of four consecutive fiscal quarters immediately prior to such date determined in accordance with generally accepted accounting principles plus depreciation, depletion, amortization and other noncash charges, interest expense on Debt and provision for income taxes, minus (ii) capital expenditures made by the Company and its Restricted Subsidiaries during such period of four consecutive fiscal quarters to maintain their respective operations. "Qualified Debt" shall mean, as to the Company, as of any date of determination, without duplication, all outstanding indebtedness of the Company for borrowed money, including, without limitation, Debt represented by the Notes and the 11-1/8% Senior Notes. "Related Person" shall mean, as of any date of determination, any trade or business, whether or not incorporated, which, together with the Company or any of its Subsidiaries, is treated as a single employer under section 414(b) or (c) of the Code or the regulations promulgated thereunder. "Required Holder(s)" shall mean for the purpose of paragraph 11C the holder or holders of at least 55% of the aggregate principal amount of the Notes from time to time outstanding, and for all other purposes the holder or holders of at least 66 2/3% of the aggregate principal amount of the Notes from time to time outstanding. 59 64 "Responsible Officer" means the chief executive officer, the president or any vice president of the General Partner, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief financial officer or the treasurer of the General Partner, or any other officer having substantially the same authority and responsibility. "Responsible Representatives" shall mean (a) in the case of any transaction in which the value of any assets disposed of or received have a value of less than $5,000,000 or in which payments made are less than $5,000,000, the chief executive officer, chief financial officer or chief operating officer of the Company, and (b) in the case of any other transaction, the Board of Directors of the General Partner. "Restricted Payment" shall mean (a) any payment or other distribution, direct or indirect, in respect of any partnership interest in the Company, except a distribution payable solely in additional partnership interests in the Company, and (b) any payment, direct or indirect, on account of the redemption, retirement, purchase or other acquisition of any partnership interest in the Company including, without limitation, any Designated Repurchase; or, if the Company is at any time reorganized as or changed (by merger, sale of assets or otherwise) into a corporation, (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of the Company now or hereafter outstanding, except a dividend payable solely in shares of stock of the Company, and (ii) any redemption, retirement, purchase or other acquisition, direct or indirect, of any shares of any class of stock of the Company, now or hereafter outstanding, or of any warrants, rights or options to acquire any such shares, except to the extent that the consideration therefor consists of shares of stock of the Company. "Restricted Subsidiary" shall mean any Wholly-Owned Subsidiary other than (a) any Designated Immaterial Subsidiary and (b) the Facilities Subsidiary or any Subsidiary directly or indirectly owned by the Facilities Subsidiary, provided that after the Mortgage Notes shall have been paid in full and retired, the Facilities Subsidiary and its Subsidiaries shall become and be Restricted Subsidiaries. "Revolving Credit Facility" shall mean any facility pursuant to which the Company may obtain revolving cred- 60 65 it, take-down credit, the issuance of standby and payment letters of credit and back-up for the issuance of commercial paper. "Securities Act" shall mean the Securities Act of 1933, as amended. "Significant Holder" shall mean (i) you, so long as you shall hold (or be committed under this Agreement to purchase) any Note, or (ii) any other insurance company, bank, financial institution, public or governmental retirement or pension fund or other similar institutional holder of Notes, whether acting for itself or in a trust, agency or other fiduciary capacity. "Subsidiary" shall mean any corporation, partnership or other entity a majority of (i) the total combined voting power of all classes of Voting Stock of which or (ii) the outstanding equity interests of which shall, at the time as of which any determination is being made, be owned by the Company either directly or through Subsidiaries. "Timber" shall mean standing trees not yet harvested. "Timberlands" shall mean the timberlands owned as of the date of closing and any timberlands acquired by the Company or any Subsidiary after the date of closing. "Transferee" shall mean any direct or indirect transferee of all or any part of any Note purchased by you under this Agreement. "Voting Stock" shall mean, with respect to any corporation or other entity, any shares of stock or other ownership interests of such corporation or entity whose holders are entitled under ordinary circumstances to vote for the election of directors of such corporation or to manage any such other entity (irrespective of whether at the time stock or ownership interests of any other class or classes shall have or might have voting power by reason of the happening of any contingency). "Western Europe" shall mean Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain and the United Kingdom. "Wholly-Owned Subsidiary" shall mean any Subsidiary organized under the laws of any state of the United 61 66 States of America which conducts the major portion of its business in the United States of America and all of the stock or other ownership interests of every class of which, except director's qualifying shares, and except in the case of the Facilities Subsidiary not more than 5% of the outstanding Voting Stock shall, at the time as of which any determination is being made, be owned by the Company either directly or through Wholly-Owned Subsidiaries. 11. MISCELLANEOUS 11A. NOTE PAYMENTS The Company agrees that, so long as you shall hold any Note, it will make payments of principal thereof and premium, if any, and interest thereon, which comply with the terms of this Agreement, by wire or electronic funds transfer of immediately available funds for credit to your account or accounts as specified in the Purchaser Schedule attached hereto, or such other account or accounts in the United States as you may designate in writing, notwithstanding any contrary provision herein or in any Note with respect to the place of payment. You agree that, before disposing of any Note, you will make a notation thereon (or on a schedule attached thereto) of all principal payments previously made thereon and of the date to which interest thereon has been paid. The Company agrees to afford the benefits of this paragraph 11A to any Transferee which shall have made the same agreement as you have made in this paragraph 11A. 11B. EXPENSES Whether or not the transactions contemplated by this Agreement shall be consummated, the Company will pay and will indemnify and hold you and each holder of any Notes harmless in respect of all reasonable expenses in connection with such transactions and in connection with any amendments or waivers (whether or not the same become effective) under or in respect of this Agreement or the Notes, including: (a) the cost and expenses of preparing and reproducing this Agreement or the Notes, of furnishing all opinions by counsel for the Company and all other opinions referred to herein (including any opinions requested by Debevoise & Plimpton (or another firm selected by you and the other holders as your special counsel) as to any legal matter arising hereunder) and all certificates on behalf of the Company or any of its Subsidiaries or Affiliates, and of the performance of and compliance with all agreements and conditions contained 62 67 herein on the part of the Company to be performed or complied with, (b) the cost of delivering to your principal office, insured to your satisfaction, the Notes sold to you hereunder and any Notes delivered to you upon any substitution of Notes pursuant to paragraph 11E and of your delivering any Notes, insured to your satisfaction, upon any such substitution, (c) the reasonable fees, expenses and disbursements of your special counsel in connection with such transactions and any such amendments or waivers (whether or not such amendments or waivers become effective), (d) the reasonable out-of-pocket expenses incurred by you in connection with such transactions (including the costs and expenses incurred in connection with obtaining a private placement number) and any such amendments or waivers and (e) the cost and expenses, including attorneys' fees, incurred by you or any Transferee in enforcing any rights under this Agreement or the Notes or in responding to any subpoena or any other legal process issued in connection with this Agreement or the transactions contemplated hereby or thereby or by reason of your or any Transferee's having acquired any Note (as to any Person, other than under circumstances in which such Person has contravened the understanding contained in the second sentence of paragraph 9), including without limitation costs and expenses incurred in any bankruptcy case. The Company shall have no obligation to pay any legal fees incurred by you or any other holder other than the reasonable fees of special counsel for you and the other holders. The Company also will pay, and will indemnify and hold you and each holder of any Notes harmless from, all claims in respect of the fees, if any, of brokers and finders (unless engaged by you or any of the Other Purchasers) and any and all liabilities with respect to any and all taxes including interest and penalties which may be payable in respect of the execution, delivery, filing or recording of this Agreement, the issue of the Notes and any amendment or waiver under or in respect of this Agreement or the Notes. In furtherance of the foregoing, on the date of closing the Company will pay the fees and disbursements of Debevoise & Plimpton, your special counsel, which are reflected as unpaid in the statement of your special counsel delivered to the Company on or prior to the date of closing. The obligations of the Company under this paragraph 11B shall survive the transfer of any Note or portion thereof or interest therein by you or any Transferee and the payment of any Note. 63 68 11C. CONSENT TO AMENDMENTS This Agreement may be amended, and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, if the Company shall obtain the written consent to such amendment, action or omission to act, of the Required Holder(s) except that, without the written consent of the holder or holders of all Notes at the time outstanding, no amendment to this Agreement shall change the maturity of any Note, or change the principal of, or the rate or time of payment of interest or any premium payable with respect to any Note, or affect the time, amount or allocation of any required prepayments, or alter or amend the right of any Significant Holder to declare all of the Notes held by such Significant Holder to be due and payable in accordance with the provisions of paragraph 7A, or reduce the proportion of the principal amount of the Notes required with respect to any consent. Each holder of any Note at the time or thereafter outstanding shall be bound by any consent authorized by this paragraph 11C, whether or not such Note shall have been marked to indicate such consent, but any Notes issued thereafter may bear a notation referring to any such consent. No course of dealing between the Company and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein and in the Notes, the term "this Agreement" and references thereto shall mean this Agreement as it may from time to time be amended or supplemented. 11D. SOLICITATION OF HOLDERS OF NOTES The Company will not solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Agreement, the Other Note Agreements or the Notes unless each holder of any Note shall concurrently be informed thereof in writing by the Company and shall be afforded the opportunity to consider the same and shall be supplied by the Company with sufficient information to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any waiver or consent effected pursuant to the provisions of paragraph 11C shall be delivered by the Company to each holder of outstanding Notes forthwith following the date on which the same shall have been executed and delivered by the holder or holders of the requisite percentage of outstanding Notes. The Company will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supple- 64 69 mental or additional interest, fee or otherwise, to any holder of any Note as consideration for or as an inducement to the entering into by any such holder of any Note of any waiver or amendment of any of the terms and provisions of this Agreement, the Other Note Agreements or the Notes unless such remuneration is concurrently paid, on the same terms, ratably to each holder of the then outstanding Notes. 11E. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST NOTES The Notes are issuable as registered notes without coupons in minimum denominations equal to the lesser of (a) $1,000,000 (except as may be necessary to reflect any principal amount not evenly divisible by $1,000,000) and (b) the aggregate principal amount of Notes purchased by you hereunder (the "Minimum Note Amount"). The Company shall keep at its principal office a register in which the Company shall provide for the registration of Notes and of transfers of Notes. Upon surrender for registration of transfer of any Note at the principal office of the Company, the Company shall, at its expense, execute and deliver one or more new Notes of like tenor and of a like aggregate principal amount, registered in the name of such transferee or transferees, provided that no transfer shall be made to any Transferee which does not acquire Notes in a principal amount equal to not less than the lesser of the Minimum Note Amount or the entire principal amount of the Notes owned by the transferor thereof, and no holder shall transfer any Notes if thereafter such holder retains ownership of Notes and the aggregate principal amount retained is less than the Minimum Note Amount. At the option of the holder of any Note, such Note may be exchanged for other Notes of like tenor and of any authorized denominations, of a like aggregate principal amount, upon surrender of the Note to be exchanged at the principal office of the Company. Whenever any Notes are so surrendered for exchange, the Company shall, at its expense, execute and deliver the Notes which the holder making the exchange is entitled to receive. Every Note surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer duly executed, by the holder of such Note or such holder's attorney duly authorized in writing. Any Note or Notes issued in exchange for any Note or upon transfer thereof shall carry the rights to unpaid interest and interest to accrue which were carried by the Note so exchanged or transferred, so that neither gain nor loss of interest shall result from any such transfer or exchange. Upon receipt of written notice from the holder of any Note 65 70 of the loss, theft, destruction or mutilation of such Note and, in the case of any such loss, theft or destruction, upon receipt of such holder's unsecured indemnity agreement, or in the case of any such mutilation upon surrender and cancellation of such Note, the Company will make and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note. 11F. PERSONS DEEMED OWNERS; PARTICIPATIONS Prior to due presentment for registration of transfer, the Company may treat the Person in whose name any Note is registered as the owner and holder of such Note for the purpose of receiving payment of principal of and premium, if any, and interest on such Note and for all other purposes whatsoever, whether or not such Note shall be overdue, and the Company shall not be affected by notice to the contrary. You may without the consent of the Company sell participations in principal amounts of not less than the Minimum Note Amount or, in the case of any sale by a holder holding Notes in an aggregate principal amount less than the Minimum Note Amount, such aggregate principal amount of Notes so held, to one or more Persons who agree to be bound by the provisions of paragraph 11J in all or a portion of your rights in the Note or Notes held by you. 11G. NON-RECOURSE NATURE OF LIABILITY Notwithstanding anything to the contrary contained in this Agreement, you hereby acknowledge and agree that neither the General Partner, stockholder nor any general partner or limited partner, officer, employee, servant, controlling Person, executive, director or agent, as such, of the General Partner, nor any past, present or future general partner or limited partner, as such, of the General Partner, shall have any liability to you or any Transferee (such liability, including such as may arise by operation of law, being hereby expressly waived) for the payment of any sums now or hereafter owing by the Company under this Agreement or under the Notes or for the performance of any of the obligations of the Company contained herein. 11H. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT All representations and warranties contained herein or made in writing by or on behalf of the Company in connection herewith shall survive the execution and delivery of this Agreement and the Notes, the transfer by you of any 66 71 Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any Transferee, regardless of any investigation made at any time by or on behalf of you or any Transferee. All representations, warranties and covenants contained herein made by you or any holder shall survive the execution and delivery of this Agreement and the Notes, and may be relied upon by the Company and its successors and assigns. No holder of any Notes (including you) shall be responsible for the truth, correctness or performance of the representations or warranties of any other holder (including any Transferee). Subject to the preceding sentences, this Agreement and the Notes embody the entire agreement and understanding between you and the Company and supersede all prior agreements and understandings relating to the subject matter hereof. 11I. SUCCESSORS AND ASSIGNS All covenants and other agreements in this Agreement contained by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including, without limitation, any Transferee) whether so expressed or not. 11J. DISCLOSURE TO OTHER PERSONS You agree to use your best efforts to keep any information (other than information which has become public information) delivered or made available by the Company or the General Partner to you (including any information obtained pursuant to paragraph 5A or 5B) in connection with or pursuant to this Agreement which is proprietary in nature and clearly indicated to be confidential information, confidential from any one other than Persons employed or retained by you who are or are expected to become engaged in evaluating, approving, structuring or administering the Notes; provided that nothing herein shall prevent any holder of any Notes from disclosing such information to (i) such holder's trustees, directors, officers, employees, agents and professional consultants, (ii) any other holder of any Notes, (iii) any Person to whom such holder offers to sell such Note or any part thereof which has agreed in writing to be bound by the provisions of this paragraph 11J, (iv) any Person to whom such holder sells or offers to sell a participation in all or any part of such Notes who has agreed in writing to be bound by the provisions of this paragraph 11J, (v) any federal or state regulatory authority having jurisdiction over such holder, (vi) the National Association of Insurance Commissioners or any similar organization or 67 72 (vii) any other Person to whom such delivery or disclosure may be necessary or appropriate (a) in compliance with any law, rule, regulation or order applicable to such holder, (b) in response to any subpoena or other legal process, (c) in connection with any litigation to which such holder is a party or (d) in order to protect such holder's investment in such Note to the extent reasonably required in connection with the exercise of any remedy hereunder. 11K. NOTICES All written communications provided for hereunder shall be sent by first class mail or nationwide overnight delivery service (with charges prepaid) and (i) if to you, addressed to you at the address specified for such communications in the Purchaser Schedule attached hereto, or at such other address as you shall have specified to the Company in writing, (ii) if to any other holder of any Note, addressed to such other holder at such address as such other holder shall have specified to the Company in writing or, if any such other holder shall not have so specified an address to the Company, then addressed to such other holder in care of the last holder of such Note which shall have so specified an address to the Company, and (iii) if to the Company, addressed to it at 999 Third Avenue, Suite 2300, Seattle, Washington 98104, or at such other address as the Company shall have specified to the holder of each Note in writing; provided, however, that any such communication to the Company may also, at the option of the holder of any Note, be delivered by any other means either to the Company at its address specified above or to any officer of the Company. 11L. DESCRIPTIVE HEADINGS The descriptive headings of the several paragraphs of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 11M. SUBSTITUTION OF PURCHASER You shall have the right to substitute any one of your affiliates as the purchaser of the Notes which you have agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both you and such affiliate, shall contain such affiliate's agreement to be bound by this Agreement and shall contain a confirmation by such affiliate of the accuracy with respect to it of the representations set forth in paragraph 9. Upon receipt of such notice, wherever the word "you" is used in this Agree- 68 73 ment (other than in this paragraph 11M), such word shall be deemed to refer to such affiliate in lieu of you. In the event such affiliate is so substituted as a purchaser hereunder and such affiliate thereafter transfers to you all of the Notes then held by such affiliate, upon receipt by the Company of notice of such transfer, wherever the word "you" is used in this Agreement (other than in paragraph 11M), such word shall no longer be deemed to refer to such affiliate, but shall refer to you, and you shall have all the rights of an original holder of the Notes under this Agreement. 11N. SATISFACTION REQUIREMENT If any agreement, certificate or other writing, or any action taken or to be taken, is by the terms of this Agreement required to be satisfactory to you or to the Required Holder(s), the determination of such satisfaction shall be made by you or the Required Holder(s), as the case may be, in the sole and exclusive judgment (exercised in good faith) of the Person or Persons making such determination. 11O. GOVERNING LAW THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK. 11P. COUNTERPARTS This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. 69 74 If you are in agreement with the foregoing, please sign the form of acceptance on the enclosed counterpart of this letter and return the same to the Company, whereupon this letter shall become a binding agreement between you and the other parties hereto. Very truly yours, PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., as General Partner By: /s/ Diane M. Irvine ------------------------------------- Name: Diane M. Irvine Title: Vice President and Chief Financial Officer 70 75 The foregoing Agreement is hereby accepted as of the date first above written. CENTRAL LIFE ASSURANCE COMPANY By: /s/ Keith Gunzenhauser ----------------------------------- Name: Keith Gunzenhauser Title: Executive Vice President-Finance FARM BUREAU LIFE INSURANCE COMPANY By: /s/ Richard D. Warming ----------------------------------- Name: Richard D. Warming Title: VP-Chief Investment Officer FBL INSURANCE COMPANY By: /s/ Richard D. Warming ------------------------------------ Name: Richard D. Warming Title: VP-Chief Investment Officer FIRST COLONY LIFE INSURANCE COMPANY By: /s/ J. Alden Butler ------------------------------------ Name: J. Alden Butler Title: Senior Vice President GOLDMAN, SACHS & CO. By: /s/ Richard Coppersmith ------------------------------------ Name: Richard Coppersmith Title: VP 71 76 GUARANTEE MUTUAL LIFE COMPANY By: /s/ Beth A. True ------------------------------------ Name: Beth A. True Title: Director-Investment Administration MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/ Bruce E. Gaudette ------------------------------------ Name: Bruce E. Gaudette Title: Vice President MUTUAL OF OMAHA INSURANCE COMPANY By: /s/ M.G. Echtenkamp ------------------------------------ Name: M.G. Echtenkamp Title: Second Vice President OHIO CASUALTY INSURANCE COMPANY By: /s/ Richard B. Kelly ------------------------------------ Name: Richard B. Kelly Title: Senior Investment Officer PRINCIPAL MUTUAL LIFE INSURANCE COMPANY By: /s/ Warren Shank ------------------------------------ Name: Warren Shank Title: Counsel By: /s/ Nora M. Everett ------------------------------------ Name: Nora M. Everett Title: Counsel 72 77 TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA By: /s/ Angela Brock-Kyle ------------------------------------ Name: Angela Brock-Kyle Title: Associate Director TRANSAMERICA LIFE INSURANCE AND ANNUITY COMPANY By: /s/ John M. Casparian ------------------------------------ Name: John M. Casparian Title: Investment Officer TRANSAMERICA OCCIDENTAL LIFE INSURANCE COMPANY By: /s/ John M. Casparian ------------------------------------ Name: John M. Casparian Title: Investment Officer UNITED MUTUAL LIFE INSURANCE COMPANY By: /s/ M.G. Echtenkamp ------------------------------------ Name: M.G. Echtenkamp Title: Second Vice President 73 78 PURCHASER SCHEDULE PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE CENTRAL LIFE ASSURANCE COMPANY $5,000,000 (1) All payments on account of the Notes shall be made by wire transfer of immediately available funds to: Central Life Assurance Company Account No. 000-756 Norwest Bank Iowa, N.A. 7th and Walnut Street Des Moines, Iowa 50304 ABA No. 073-000-228 (2) All notice of and written communication of payment information should be directed to: Central Life Assurance Company 611 Fifth Avenue Des Moines, Iowa 50309 Attn: Vice President - Private Placements (3) All other communications should be directed to: Central Life Assurance Company 611 Fifth Avenue Des Moines, Iowa 50309 Attn: Vice President - Private Placements (4) Securities should be delivered to: Central Life Assurance Company 611 Fifth Avenue Des Moines, Iowa 50309 Attn: Diane Cortese (5) Tax Identification No. 42-0175-020 79 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE FARM BUREAU LIFE INSURANCE COMPANY $3,000,000 (registered in the name of Auer & Company) (1) All payments on account of the Notes shall be made by wire transfer of immediately available funds to: Bankers Trust Co. ABA No. 021-001-033 Private Placement Processing No. 99-991-145 For credit to #098642 Farm Bureau Life Insurance Co. Description of Payment (2) All financial reports (in duplicate) should be sent to: FARM BUREAU LIFE INSURANCE COMPANY 5400 University Avenue West Des Moines, IA 50266 Attn: Investment Dept. BANKERS TRUST COMPANY 16 Wall Street, 4th Floor New York, NY 10005 Attn: Rich McCormick (3) Securities should be delivered to: BANKERS TRUST COMPANY 16 Wall Street, 4th Floor New York, NY 10005 Attn: Rich McCormick (4) Taxpayer Identification No. 42-0623913 2 80 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE FBL INSURANCE COMPANY $2,000,000 (registered in the name of Auer & Company) (1) All payments on account of the Notes shall be made by wire transfer of immediately available funds to: Bankers Trust Co. ABA No. 021-001-033 Private Placement Processing No. 99-991-145 For credit to #098644 FBL Insurance Company Description of Payment (2) All financial reports (in duplicate) should be sent to: FBL INSURANCE COMPANY 5400 University Avenue West Des Moines, IA 50266 Attn: Investment Dept. BANKERS TRUST COMPANY 16 Wall Street, 4th Floor New York, NY 10005 Attn: Rich McCormick (3) Securities should be delivered to: BANKERS TRUST COMPANY 16 Wall Street, 4th Floor New York, NY 10005 Attn: Rich McCormick (4) Taxpayer Identification No. 42-1131824 3 81 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE FIRST COLONY LIFE INSURANCE COMPANY $10,000,000 (1) All payments on or in respect of the Notes to be by bank wire transfer of Federal or other immediately available funds (identifying each payment as "Plum Creek Timber Company, L.P., 8.73% Senior Notes, due 08/01/09") to: Crestar Bank Richmond, Virginia ABA No. 0510-0002-0 Credit - 2111 Attn: Income Processing Unit Number 27955 for credit to First Colony Life Insurance Company's Account No. 10765400 (2) All notices and communications, including notices with respect to payments and written confirmation of each such payment to: FIRST COLONY LIFE INSURANCE COMPANY 700 Main Street Lynchburg, Virginia 24504 Attn: Mr. George D. Vermilya, Jr. (3) Securities should be delivered by registered mail to: FIRST COLONY LIFE INSURANCE COMPANY 700 Main Street Lynchburg, Virginia 24504 Attn: Mr. George D. Vermilya, Jr. (4) Taxpayer Identification No. 540-596-414 4 82 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE GOLDMAN, SACHS & CO. $14,000,000 (1) All payments on account of the Notes shall be made by wire transfer of immediately available funds to: Chase Manhattan Bank 85 Broad Street New York, NY 10004 Account No. 930-1-011-483 Attn: John Ippolito Ref: Plum Creek Timber Company, L.P. (2) All notice of and written communication of payment information should be directed to: Chase Manhattan Bank 85 Broad Street New York, NY 10004 Account No. 930-1-011-483 Attn: John Ippolito Ref: Plum Creek Timber Company, L.P. (3) All other communications should be directed to: Chase Manhattan Bank 85 Broad Street New York, NY 10004 Account No. 930-1-011-483 Attn: John Ippolito Ref: Plum Creek Timber Company, L.P. (4) Securities should be delivered to: Chase Manhattan Bank 85 Broad Street New York, NY 10004 Account No. 930-1-011-483 Attn: John Ippolito Ref: Plum Creek Timber Company, L.P. (5) Tax Identification No. 13-510-8880 5 83 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE GUARANTEE MUTUAL LIFE COMPANY $3,000,000 (1) All payments on account of the Notes shall be made by wire transfer of immediately available funds to: Bankers Trust Company 16 Wall Street New York, NY 10015 ABA No. 021-001-033 Credit: Guarantee Mutual Life Company Account No. 50-035-201 (2) All notice of and written communication of payment information should be directed to: Guarantee Mutual Life Company 8801 Indian Hills Drive Omaha, NE 68114 Attn: Investment Division (3) All other communications should be directed to: Guarantee Mutual Life Company 8801 Indian Hills Drive Omaha, NE 68114 Attn: Investment Division (4) Securities should be delivered to: Guarantee Mutual Life Company 8801 Indian Hills Drive Omaha, NE 68114 Attn: Investment Division (5) Tax Identification No. 42-017-9235 6 84 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY $6,500,000 [IFM Traditional Account] (1) All payments on account for the Notes shall be made by wire transfer of immediately available funds to: Chemical Bank ABA No. 021-00128 Institutional Client Services 4 New York Plaza -- 4th Floor New York, NY 10004-2413 Account No. 321-029-852 (2) All notice of and written confirmation of payment information should be directed to: Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111 Attn: Securities Custody and Collection Dept., E381 Tel: (413) 788-8411 Fax: (413) 744-6263 (3) All other communications should be directed to: Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111 Tel: (413) 788-8411 Fax: (413) 744-6127 (4) Tax Identification Number: 04-1590850 7 85 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY $3,500,000 [Pension Management GIA Account] (1) All payments on account for the Notes shall be made by wire transfer of immediately available funds to: Chemical Bank ABA No. 021-00128 Institutional Client Services 4 New York Plaza -- 4th Floor New York, NY 10004-2413 Account No. 321-029-828 (2) All notice of and written confirmation of payment information should be directed to: Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111 Attn: Securities Custody and Collection Dept., E381 Tel: (413) 788-8411 Fax: (413) 744-6263 (3) All other communications should be directed to: Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111 Tel: (413) 788-8411 Fax: (413) 744-6127 (4) Tax Identification Number: 04-1590850 8 86 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE MUTUAL OF OMAHA INSURANCE COMPANY $4,000,000 (1) All principal and interest payments on the Notes shall be made by wire transfer of immediately available funds to: First National Bank Omaha ABA No. 1040-00016 16th & Dodge Street Omaha, NE 68102 For Credit to: Mutual of Omaha Insurance Company Account No. 26-743587 For payment on:______________ _____________________________ Interest Amount: Principal Amount: (2) Address for all notices in respect of payment: Mutual of Omaha Insurance Company Attn: Investments/Investment Accounting Mutual of Omaha Plaza Omaha, NE 68175 (3) Address for all other communications: Mutual of Omaha Insurance Company Attn: Investment Division Mutual of Omaha Plaza Omaha, NE 68175 (4) Address for delivery of securities Mutual of Omaha Insurance Company Attn: Investments/Securities Accounting Mutual of Omaha Plaza Omaha, NE 68175 (5) Taxpayer Identification No. 47-0246511 9 87 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE OHIO CASUALTY INSURANCE COMPANY $3,000,000 (registered in the name of Elite & Co.) (1) All payments on account of the Notes shall be made by wire transfer of immediately available funds to: Bank of America ABA No. 121000358 Credit: Custody Plus Insurance Account No. 1257-9-03422 Attn: Ohio Casualty Insurance Company Sender's Name________________________ Credit to: QD-7-15125-1 (2) All notices of and written confirmation of payment information should be directed to: The Ohio Casualty Group Jane A. Schriever, Investment Records 136 N. Third Street Hamilton, OH 45025 Tel: (513) 867-6316 Fax: (513) 867-3964 and also to: Bank of America Ruth Hankins, Senior Business Manager P.O. Box 93487 Pasadena, CA 91109-3487 or 299 N. Euclid Avenue, 4th Floor Pasadena, CA 91101 Tel: (818) 405-3460 Fax: (818) 449-9025 (3) All other communications should be directed to: Eric P. Scruggs, Portfolio Mngr., Prvt. Plcmt. Invstmt. 136 N. Third Street Hamilton, OH 45025 Tel: (513) 867-3696 Fax: (513) 867-3228 10 88 (4) Securities should be delivered to: BankAmerica National Trust Company One World Trade Center 13th Floor New York, NY 10048 For account of CPI Customer Account No. QD-7-15125-1 Account No. 4-09046 CPI (5) Taxpayer Identification No. 31-0396250 11 89 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE PRINCIPAL MUTUAL LIFE INSURANCE COMPANY $25,000,000 (1) All payments on account of the Note shall be made by wire transfer of immediately available funds to its Account No. 014752 at Norwest Bank Iowa, N.A., 7th & Walnut Streets, Des Moines, IA 50309, with sufficient information to identify the source and application of such funds, including identifying each payment as "Plum Creek Timber Company, L.P. 8.73% Senior Notes due August 1, 2009, the Bond No. (1-B-60129) and PPN (729237 A@ 6) of the issue. (2) Address for all notices in respect of payment: 711 High Street Des Moines, IA 50392-0960 Attn: Investment Accounting & Treasury - Securities Fax: (515) 248-2643 (3) Address for all other communications: 711 High Street Des Moines, IA 50392-0800 Attn: Investment Department Securities Division Fax: (515) 248-2490 (4) Taxpayer Identification No. 42-0127290 12 90 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE TEACHERS INSURANCE AND ANNUITY $50,000,000 ASSOCIATION OF AMERICA (1) All payments on account of Teachers Insurance and Annuity Association of America shall be made in immediately available funds at the opening of business on the due date by electronic funds transfer, identifying it as PLUM CREEK TIMBER COMPANY, L.P., PPN 729237 A@ 6, $50,000,000 8.73% Senior Note due August 1, 2009 (principal or interest), through the Automated Clearing House System to: Morgan Guaranty Trust Company of New York ABA No. 021-000-238 23 Wall Street New York, NY 10015 Account of: Teachers Insurance and Annuity Association of America Account No. 121-85-001 On Order of: Plum Creek Timber Company, L.P. (2) Contemporaneous with the above electronic funds transfer, mail or send by facsimile the following information setting forth: (i) the full name, private placement number, interest rate and maturity date of the Notes or other obligations; (ii) the allocation of payment between principal, interest, premium and any special payment; and (iii) the name and address of bank from which such electronic funds transfer was sent, to: Teachers Insurance and Annuity Association of America 730 Third Avenue New York, NY 10017 Attn: Securities Accounting Division Tel: (212) 916-4188 Fax: (212) 916-6199 13 91 (3) All of the communications shall be delivered or mailed to: Teachers Insurance and Annuity Association of America 730 Third Avenue New York, NY 10017 Attn: Securities Division Tel: (212) 916-5724 (Angela Brock-Kyle) or (212) 490-9000 (general number) Fax: (212) 916-6582 (4) Securities should be delivered to: Teachers Insurance and Annuity Association of America 730 Third Avenue New York, NY 10017 Attn: Timothy F. Hodgdon Corporate Finance Law (5) Taxpayer Identification No. 13-1624203N 14 92 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE TRANSAMERICA OCCIDENTAL LIFE $5,000,000 INSURANCE COMPANY (1) All payments on account for the Notes shall be made by wire transfer of immediately available funds to: Bank of America NT & SA Corporate Service Center #1233 1859 Gateway Blvd. Concord, CA 94520 Attn: Terry Peach ABA No. 121-000-358 Account No. 12353-04390 (2) All notice of and written confirmation of payment information should be directed to: TransAmerica Securities Accounting P.O. Box 2101 Los Angeles, CA 90051-0101 Attn: Elaine S. Farrell, Manager (3) All other communications should be directed to: John Casparian TransAmerica Investment Services 1150 South Olive Street Suite 2700 Los Angeles, CA 90015 (4) Securities should be delivered to: John Casparian TransAmerica Investment Services 1150 South Olive Street Suite 2700 Los Angeles, CA 90015 (5) Tax Identification Number: 95-1060502 15 93 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE TRANSAMERICA LIFE AND $5,000,000 ANNUITY INSURANCE COMPANY (1) All payments on account for the Notes shall be made by wire transfer of immediately available funds to: Bank of America NT & SA Corporate Service Center #1233 1859 Gateway Blvd. Concord, CA 94520 Attn: Terry Peach ABA No. 121-000-358 Account No. 12353-04395 (2) All notice of and written confirmation of payment information should be directed to: TransAmerica Securities Accounting P.O. Box 2101 Los Angeles, CA 90051-0101 Attn: Elaine S. Farrell, Manager (3) All other communications should be directed to: John Casparian TransAmerica Investment Services 1150 South Olive Street Suite 2700 Los Angeles, CA 90015 (4) Securities should be delivered to: John Casparian TransAmerica Investment Services 1150 South Olive Street Suite 2700 Los Angeles, CA 90015 (5) Tax Identification Number: 95-6140222 16 94 PRINCIPAL AMOUNT NAME OF PURCHASER OF NOTE UNITED OF OMAHA LIFE INSURANCE COMPANY $11,000,000 (1) All principal and interest payments on the Notes shall be made by wire transfer of immediately available funds to: FirsTier Bank - Omaha ABA No. 1040-0002-9 17th & Farnam Street Omaha, NE 68102 For Credit to: United of Omaha Life Insurance Company Account No. 144-7-076 For payment on:______________ _____________________________ Interest Amount: Principal Amount: (2) Address for all notices in respect of payment: United of Omaha Life Insurance Company Attn: Investments/Securities Accounting Mutual of Omaha Plaza Omaha, NE 68175 (3) Address for all other communications: United of Omaha Life Insurance Company Attn: Investment Division Mutual of Omaha Plaza Omaha, NE 68175 (4) Address for delivery of securities United of Omaha Life Insurance Company Attn: Investments/Securities Accounting Mutual of Omaha Plaza Omaha, NE 68175 (5) Taxpayer Identification No. 47-0322111 17 95 EXHIBIT A PLUM CREEK TIMBER COMPANY, L.P. 8.73% Senior Note due August 1, 2009 No. R-___ New York, New York $________ , 1994 PPN: 729237 A@ 6 FOR VALUE RECEIVED, the undersigned, PLUM CREEK TIMBER COMPANY, L.P. (the "Company"), a limited partnership duly organized under the Delaware Revised Uniform Limited Partnership Act, hereby promises to pay to _______________________________________, or registered assigns, the principal sum of ______________ DOLLARS on August 1, 2009, with interest (computed on the basis of a 360-day year consisting of twelve 30-day months) (a) on the unpaid balance thereof at the rate of 8.73% per annum from the date hereof, payable on the first day of February and August in each year, commencing with the February 1 or August 1 next succeeding the date hereof, until the principal hereof shall have become due and payable, and (b) on any overdue payment (including any overdue prepayment) of principal, any overdue payment of premium and, to the extent permitted by applicable law, any overdue payment of interest, payable semiannually as aforesaid (or, at the option of the registered holder hereof, on demand), at a rate per annum from time to time equal to the greater of (i) 9.73% or (ii) the rate of interest publicly announced by Morgan Guaranty Trust Company of New York from time to time in New York City as its Prime Rate plus 2.0%. Payments of principal, premium, if any, and interest are to be made at the main office of Morgan Guaranty Trust Company of New York in New York City or at such other place as the holder hereof shall designate to the Company in writing, in lawful money of the United States of America. This Note is one of the Company's 8.73% Senior Notes due August 1, 2009 (the "Notes") issued pursuant to separate identical Senior Note Agreements, each dated as of August 1, 1994 (the "Agreements"), between the Company and the respective original purchasers of the Notes named in the Purchaser Schedule attached thereto and is entitled to the benefits thereof. As provided in the Agreements, this Note is subject to prepayment, in whole or from time to time in part, with such premium as is specified in the Agreements. Form of Senior Note 96 This Note is a registered Note and, as provided in the Agreements, upon surrender of this Note for registration of transfer, duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder hereof or such holder's attorney duly authorized in writing, a new Note for a like principal amount will be issued to, and registered in the name of, the transferee. Prior to due presentment for registration of transfer, the Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary. In case an Event of Default, as defined in the Agreements, shall occur and be continuing, the principal of this Note may be declared or otherwise become due and payable in the manner and with the effect provided in the Agreements. 2 Form of Senior Note 97 THIS NOTE IS INTENDED TO BE PERFORMED IN THE STATE OF NEW YORK AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF SUCH STATE. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., as General Partner By: _______________________________ Title 3 Form of Senior Note 98 EXHIBIT B-1 August 1, 1994 To each of the Purchasers listed in the attached Purchaser Schedule: Plum Creek Timber Company, L.P. 8.73% Senior Notes due August 1, 2009 Dear Purchaser: We have acted as special counsel to you and the other purchasers listed in the attached Purchaser Schedule in connection with the issue and sale to you and such other purchasers today by Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Company"), of $150,000,000 aggregate principal amount of its 8.73% Senior Notes due August 1, 2009 (the "Senior Notes"), pursuant to separate Senior Note Agreements (the "Senior Note Agreements"), each dated as of August 1, 1994, between the Company and you and between the Company and each of such other purchasers, respectively. Capitalized terms used in this opinion without definition have the respective meanings specified in the Senior Note Agreements. 99 To each of the Purchasers 2 August 1, 1994 In so acting, we have participated in the preparation of the Senior Note Agreements and the Senior Notes. We have also examined and relied upon the representations and warranties as to factual matters contained in or made pursuant to the Senior Note Agreements and have examined and relied upon the originals, or copies certified or otherwise identified to our satisfaction, of such records, documents, certificates and other instruments, and have made such other investigations, as in our judgment are necessary or appropriate to enable us to render the opinion expressed below. We are of the following opinion: 1. Organization, Standing, etc. of the Company. The Company is a limited partnership duly organized, validly existing and in good standing under the Delaware Revised Uniform Limited Partnership Act (the "Act") amid has all requisite partnership power and authority to enter into and carry out the terms of the Senior Note Agreements and to issue and sell the Senior Notes. 2. Compliance with Partnership Agreement. The execution, delivery and performance by the Company of the Senior Note Agreements and the Senior Notes will not result in any violation of or be in conflict with or constitute a default under any term of the Partnership Agreement. 3. Governmental Consent. No consent, approval or authorization of, or declaration or filing with, any governmental authority on the part of the Company is required under Federal or New York law for the valid execution and delivery by the Company of the Senior Note Agreements or the valid offer, issue, sale and delivery of the Senior Notes pursuant to the Senior Note Agreements. 4. Senior Note Agreements and Senior Notes. The Senior Note Agreements and the Senior Notes have been duly authorized by all necessary action on the part of the Company. The Senior Note Agreement between the Company and you and the Senior Notes purchased by you today have been duly executed and delivered by the Company and constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws of general application relating to or affecting the rights and remedies of creditors and by general principles of equity. 2 100 To each of the Purchasers 3 August 1, 1994 5. Securities Act. The offer, issue, sale and delivery of the Senior Notes under the circumstances contemplated by the Senior Note Agreements constitute exempted transactions under the registration provisions of the Securities Act of 1933, as amended, and neither the registration of the Senior Notes thereunder nor the qualification of an indenture in respect of the Senior Notes under the Trust Indenture Act of 1939, as amended, is required in connection with such offer, issue, sale and delivery. We have reviewed the opinion, dated today and addressed to you, of James A. Kraft, Vice President, Law for the Company. Such opinion is satisfactory to us in scope and form, and, on the basis of such review, it is our opinion that you are justified in relying thereon. Our review of such opinion included such investigations and procedures as in our judgment were necessary or appropriate in order to enable us to reach the conclusion that your reliance thereon is reasonable under the circumstances. We are members of the Bar of the State of New York and our opinion is limited to the laws of the State of New York, the Delaware Revised Uniform Limited Partnership Act and the Federal Laws of the United States of America. Very truly yours, /s/ DEBEVOISE & PLIMPTON 3 101 PURCHASER SCHEDULE Central Life Assurance Company Farm Bureau Life Insurance Company FBL Life Insurance Company First Colony Life Insurance Company Goldman, Sachs & Co. Guarantee Mutual Life Company Massachusetts Mutual Life Insurance Company Mutual of Omaha Insurance Company Ohio Casualty Insurance Company Principal Mutual Life Insurance Company Teachers Insurance and Annuity Association of America Transamerica Occidental Life Insurance Company Transamerica Life and Annuity Insurance Company United of Omaha Life Insurance Company 102 EXHIBIT B-2 August 1, 1994 To each of the Purchasers listed in the attached Purchaser Schedule: Plum Creek Timber Company, L.P. 8.73% Senior Notes due August 1, 2009 Dear Purchaser: I am the Vice President, Law of Plum Creek Management Company, L.P., (the "General Partner") which serves as the general partner of Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Company"). In such capacity I have acted as counsel to the Company and as such I am familiar with transactions contemplated by those separate Senior Note Agreements, each dated as of August 1, 1994, between the Company, you and each of the Other Purchasers, respectively, (the "Note Agreements"). Capitalized terms used in this opinion without definition have the respective meanings specified in the Note Agreements. 103 To each of the Purchasers 2 August 1, 1994 In so acting, I have examined the following documents: (a) the Notes; and (b) the Note Agreements. The Notes and the Note Agreements described in items (a) and (b) above are sometimes herein collectively referred to as the "Loan Documents". This opinion is being delivered to you pursuant to paragraph 3B of the Note Agreements. In such capacity, I have participated in the preparation of the Loan Documents. For purposes of this opinion, I have (a) investigated such questions of law, (b) examined such certificates of public officials and of officers of the Company and other documents, as in my judgment are necessary or appropriate to enable me to render the opinions expressed below, and (c) relied upon the representations and warranties as to factual matters contained in or made pursuant to the Loan Documents and in the Memorandum. In addition, I have with your approval, assumed (i) the genuineness of the signatures of Persons signing all Loan Documents in connection with which this opinion is rendered on behalf of parties thereto (other than Persons signing on behalf of the Company), (ii) the authority of all Persons signing all documents on behalf of the parties thereto (other than Persons signing on behalf of the Company), (iii) the authenticity of all documents submitted to me as originals, (iv) the conformity to authentic original documents of all documents submitted to me as certified, conformed or photostatic copies, (v) that each of the parties to the Loan Documents other than the Company has all requisite power and authority to execute, deliver and perform the Loan Documents to which it is a party and (vi) the due authorization, execution and delivery of the Loan documents by all the parties thereto other than the Company. Based upon the foregoing, and subject to the further assumptions and qualifications hereinafter set forth, I am of the opinion, that: 1. The Company is a limited partnership duly organized, validly existing and in good standing under the Delaware Revised Uniform Limited Partnership Act and has all requisite partnership power and authority to own and operate 2 104 To each of the Purchasers 3 August 1, 1994 its properties, to conduct its business as currently conducted, to execute and deliver the Loan Documents, to issue and sell the Notes and to carry out the terms of the Note Agreements and the Notes. The Company has been qualified or registered and is in good standing as a foreign limited partnership for the transaction of business under the laws of the States of Washington, Idaho and Montana, which are the only jurisdictions in which the failure so to qualify or register would be likely, in my reasonable judgment, to subject the Company to any liability or disability which would be material to the financial condition or operations of the Company or to have a material adverse effect upon the ability of the Company to perform its obligations under the Loan Documents. 2. The Note Agreements and the Notes have been duly authorized by all necessary partnership action on the part of the Company. The Note Agreements between the Company and you and the Notes purchased by you today have been duly executed and delivered on behalf of the Company, and constitute the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, subject to the qualifications that (a) such enforceability may be limited by bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditor's rights generally, (b) such enforceability may be limited by public policy, and (c) the enforceability of equitable rights and remedies is subject to equitable defenses and judicial discretion and such enforceability may be limited by general equitable principles. 3. The Company is not in violation of any term of the Partnership Agreement or, to my knowledge, of any term of any other agreement or instrument to which it is a party or by which it or any of its properties is bound or, to my knowledge, of any term of any applicable law, ordinance, rule or regulation of any governmental authority or, to my knowledge, of any term of any applicable order, judgment or decree of any court, arbitrator or governmental authority, the consequences of which violations, individually or in the aggregate, would be reasonably likely to have a material adverse effect on its business, property or assets, condition or operations or on the ability of the Company to perform its obligations under the Loan Documents. The execution, delivery and performance by the Company of the Loan Documents will not result in any violation of or be in conflict with or constitute a default under any such term or 3 105 To each of the Purchasers 4 August 1, 1994 result in the creation of (or impose any obligation on the Company to create) any Lien (other than the Liens required by paragraph 5C of the Note Agreements) upon any of the properties or assets of the Company. 4. No consent, approval or authorization of, or declaration or filing with, or the taking of any other action in respect of, any commission, authority, governmental agency or body of the United States of America or the State of Washington, Idaho, Delaware or Montana is required for the valid execution, delivery and performance by the Company of the Loan Documents or the valid offer, issue, sale and delivery of the Notes pursuant to the Note Agreements except such consents, approvals or authorizations as have been obtained and such filings as may be required under state securities laws or Blue Sky Laws in connection with the offer, issue, sale and delivery of the Notes. 5. There are no legal or governmental proceedings to which the Company is a party or to which any property or assets of the Company is subject or which is pending or, to the best of my knowledge, threatened against the Company which questions the validity of the Loan Documents or any actions pursuant thereto or which would be reasonably likely to result in any material adverse change in the business, property or assets, condition or operations of the Company. 6. The company is not an "investment company" as defined under the Investment Company Act of 1940, as amended, nor is the Company or the issue and sale of the Notes by the Company subject to regulation thereunder. 7. Based upon the representations of the Purchasers contained in the Note Agreements, the offer, issue, sale and delivery of the Notes under the circumstances contemplated by the Note Agreements constitute exempt transactions under the registration provisions of the Securities Act of 1933, as amended, and neither the registration of the Notes thereunder nor the qualification of an indenture in respect of the Notes under the Trust Indenture Act of 1939, as amended, is required in connection with such offer, issue, sale and delivery. 8. Based upon the representation of the Company as to the use of the proceeds of the Notes contained in the Note Agreements, the issue and sale of the Notes do not violate Regulation G, T or X of the Board of Governors of the Federal Reserve System. 4 106 To each of the Purchasers 5 August 1, 1994 The opinions expressed herein are based upon and limited exclusively to the laws of the State of Washington, the Delaware Revised Uniform Limited Partnership Act, and federal laws of the United States of America insofar as any of such laws are applicable, and I render no opinion with respect to any other laws, except that the opinions expressed in paragraphs 1, 2, 3 and 4 cover the laws of the State of Idaho, Montana, New York, Delaware or Washington, in each case, insofar as any such laws are applicable. This opinion is solely for your benefit in connection with the transactions contemplated by the Note Agreements and may not be relied upon by any Person other than you or any transferee of any Note. This opinion is not to be quoted in whole or in part or otherwise referred to (except in a list of closing documents in connection with the transactions described herein), nor shall it be filed with any governmental agency or other Person without my prior written consent. I express no opinion with respect to any matter not expressly set forth in this opinion. Very truly yours, /s/ James A. Kraft James A. Kraft Vice President, Law 5 107 PURCHASER SCHEDULE Central Life Assurance Company Farm Bureau Life Insurance Company FBL Insurance Company First Colony Life Insurance Company Goldman, Sachs and Company Guarantee Mutual Life Company Massachusetts Mutual Life Insurance Company Mutual of Omaha Insurance Company Ohio Casualty Insurance Company Principal Mutual Life Insurance Company Teachers Insurance and Annuity Association of America Transamerica Occidental Life Insurance Company United of Omaha Life Insurance Company 108 EXHIBIT D LIENS Mortgage, Security Agreement and Fixture Filings dated June 8, 1989 recorded in Flathead, Lake and Lincoln Counties, Montana as supplemented and amended by Mortgage Recording Supplements and Security Agreement and Fixture Filings dated January 1, 1991; and Deed of Trust, Security Agreement and Fixture Filing dated June 8, 1989 recorded in Kittitas County, Washington; all of which were executed by Plum Creek Manufacturing, Inc. in favor of First Interstate Bank of Washington, N.A., as Trustee, to secure the indebtedness evidenced by the Mortgage Note Agreement dated May 31, 1989 among Plum Creek Manufacturing, Inc., Plum Creek Timber Company, L.P. as guarantor, and each of the purchasers of the Mortgage Notes, as amended by the Mortgage Note Agreement Amendment, Consent and Waiver dated as of January 1, 1991 among Plum Creek Manufacturing, Inc., Plum Creek Timber Company, L.P., Plum Creek Merger Company, Inc., Plum Creek Manufacturing, L.P., and the several holders of the 11-1/8% First Mortgage Notes. 109 EXHIBIT E Plum Creek Timber Company, L.P. Permitted Investments 1. 98% interest in Plum Creek Manufacturing, L.P. 2. 96% interest in Plum Creek Marketing, Inc. 110 EXHIBIT F Environmental notices from Federal, State and Local Environmental Agencies to the Company citing environmental violations that have not been finally resolved and disposed of: EPA/North American Environmental Inc. (Clearfield, UT) The Environmental Protection Agency ("EPA") has designated a storage facility for hazardous substances located in Clearfield, Utah, formerly run by North American Environmental, Inc. ("NAE"), as a superfund site. In August, 1992, the EPA notified approximately 225 potential responsible parties ("PRP") including Plum Creek, based on storage by the Company of hazardous waste at the site from 1989-1992. In 1989, Plum Creek contracted with a third party to remove and transport transformers and components ("transformers") from its Columbia Falls, Montana facility. These transformers, which contained polychlorinated biphenyls ("PCB"), a federally listed hazardous substance, were transported to the NAE facility for permanent storage. In 1992, Plum Creek contracted with certified third parties to identify, remove, transport and dispose of the transformers. The Company's transformers were identified, removed and transported to Coffeyville, Kansas. They have been destroyed and certificates of destruction have been provided to Plum Creek. To the best of Plum Creek's knowledge, no release, leak or discharge from the transformers occurred at the NAE facility. The EPA is encouraging a cooperative settlement among the potential generators through a PRP steering committee. The EPA also has issued a consent order of agreement to PRPs with waste remaining at Freeport. The Company was not included as a party to the cleanup agreement. Based on the fact that Plum Creek has already removed its stored items, has no knowledge of any release from any of its stored items and has no orphan items, the Company believes that it should not have any liability. 111 State of Montana / Evergreen Plywood glue pit (Kalispell, MT) The cite of a cistern which had been used by a prior owner at Plum Creek's Evergreen complex was placed on the "CERLIS" list of potential Superfund sites in 1980. When the cistern was later exhumed, visibly contaminated soil was removed and the area was refilled with clean soil. In conjunction with the construction of a new building, the site was excavated and samples were taken and analyzed in consultation and cooperation with a state representative. No visible evidence of contamination was found, and the state authorized Plum Creek to fill the excavation and construct the new building over it. Correspondence from the Montana Department of Health and Environmental Services states that there is no off-site migration of contaminants and the current status of the site is 'No Further Action.' EPA / Somers site (Somers, MT) Burlington Northern Railroad (the "Railroad") and predecessors had a railroad tie processing plant located at Somers, Montana. This site is a designated Superfund site and clean up is on-going. A predecessor company of Plum Creek owned a portion of the land, which now has been transferred to an affiliate of the Railroad. Burlington Northern Railroad has taken full responsibility for the Superfund clean up and Plum Creek does not anticipate any liability. DOE / Old Landsburg Mine Site (Ravensdale, WA) In March, 1990, the State of Washington Department of Ecology ("DOE") alleged that a release or threatened release of a hazardous substance had occurred in an area designated "The Old Landsburg Mine." Landowners are Palmer Coking Coal Company (Palmer) and Plum Creek. Plum Creek and other Potentially Liable Parties (PLP) are required to respond to the DOE regarding a high priority clean up of the site under the Model Toxics Control Act. From 1991 to the present, Plum Creek has participated on a PLP task force which has cooperated voluntarily with the DOE removed barrels and fenced the site and under an Agreed Order is participating in a 2 112 Remedial Investigation/Feasibility Study (RI/FS). Plum Creek does not believe it will be ultimately liable for disposal of barrels or hazardous waste at the site and is vigorously defending its position. To the extent liability is assessed against Plum Creek as a landowner, the Company believes that Palmer, by virtue of the terms of a lease entered between 1978 and 1983, and/or Burlington Northern Inc., by virtue of an indemnity contained in the deed that transferred the property to Plum Creek, will be responsible. Yakima Health District / Dump Site (Yakima County, WA) The Yakima Health District notified Plum Creek of the existence of a garbage dump site on lands owned by Plum Creek as well as adjacent lands owned by Champion International Corporation ("Champion"). Plum Creek and Champion have caused the garbage to be removed and anticipate receiving clearance from the Yakima Health Department. State of Montana / Columbia Falls Boiler (Columbia Falls, MT) The State of Montana Air Quality Board (AQB) issued Plum Creek a citation for construction of emission control equipment (an electrostatic precipitator) on the boiler without a permit. Plum Creek has met with the AQB and is awaiting further action. EPA / NOV under the Clean Air Act - Evergreen Veneer Dryers (Kalispell, MT) On May 1, 1992, the Company received a Notice of Violation ("NOV") from the EPA under the Clean Air Act. The NOV alleges that Plum Creek's Evergreen veneer dryers in Kalispell, Montana were not in compliance with an air quality permit on January 15, 1992 when allegedly visible emissions from the veneer dryers were observed by the EPA. These dryers were also the subject of a suit filed by the MAQB in March 1990. Prior to the January 15, 1992 alleged violation, the Company entered into a Consent Decree with the MAQB. The Company installed approximately $900,000 of emission control equipment on the dryers on April 14, 1992, in order to comply with the permit and all State and Federal visible emission limits. Plum Creek will work with the EPA to provide information and resolve 3 113 issues arising under the NOV. The EPA has not notified the Company what sanctions, if any, the EPA would seek as a result of the NOV. Plum Creek believes that there is no basis for the NOV and does not expect any EPA action. 4 114 EXHIBIT 8(G) Subsequent to December 31, 1993, neither the Company nor the Facilities Subsidiary has incurred any material liabilities or obligations or entered into any material transactions not in the ordinary course of business. Subsequent to December 31, 1993, there has not been any material adverse change in the financial condition or operations of the Company or the Facilities Subsidiary. Subsequent to December 31, 1993, there have been the following Restricted Payments declared, paid or made by the Company: 1. Fourth Quarter 1993 Distribution of Available Cash in the amount of $18.8 million paid to Unitholders in the first quarter of 1994; 2. First Quarter 1994 Distribution of Available Cash in the amount of $18.8 million paid to Unitholders in the second quarter of 1994; 3. Second Quarter 1994 Distribution of Available Cash in the amount of $22.1 million declared but not payable to Unitholders until August 26, 1994; 115 EXHIBIT 8(K) The Company's title to the timberlands it acquired during its formation in 1989 includes the related hard rock mineral interests. However, the Company did not obtain the hard rock mineral interest to most of the 865,000 acres of timberland purchased in 1993 from Champion International Corporation. In addition, the Company does not own oil and gas mineral interests to any of its timberlands. The title to the Company's timberlands is subject to presently existing easements, rights of way, flowage and flooding rights, servitudes, cemeteries, camping sites, hunting and other leases, licenses and permits, none of which materially adversely affect the value of the timberlands or materially restrict the harvesting of timber or other operations of the Company. 116 SCHEDULE 8 T Plum Creek Manufacturing, L.P. is in the process of applying for a groundwater discharge permit at the Columbia Falls complex. It has not been determined yet whether a groundwater discharge permit will be required at the Pablo facility. On May 1, 1992, the Company received a Notice of Violation ("NOV") from the Environmental Protection Agency ("EPA") under the Clean Air Act. The NOV alleges that Plum Creek's Evergreen veneer dryers in Kalispell, Montana were not in compliance with an air quality permit on January 15, 1992 when visible emissions from the veneer dryers were observed by the EPA. These dryers were also the subject of a suit filed by the Montana Air Quality Bureau ("MAQB") in March 1990. Prior to the January 15, 1992 alleged violation, the Company entered into a Consent Decree with the MAQB. The Company installed approximately $900,000 of emission control equipment on the dryers on April 14, 1992, in order to comply with the permit and all State and Federal visible emission limits. The Company will work with the EPA to provide information and resolve issues arising under the NOV. The EPA has not notified the Company what sanctions, if any, the EPA would seek as a result of the NOV. In July, 1990, the United States Fish and Wildlife Service ("USFWS") listed the Northern Spotted Owl ("Owl") as a threatened species throughout its range in Washington, Oregon, and California under the federal Endangered Species Act ("ESA"). At the time of the listing, the USFWS issued guidelines to be followed by landowners in order to comply with the ESA's prohibition against harming or harassing Owls. These guidelines were rescinded in response to an industry lawsuit, but continue to serve as the basis for USFWS enforcement of the ESA. The guidelines impose several requirements, including the restriction and preclusion of harvest activities in areas within a 1.8 mile radius (approximately 6,600 acres) of known nest sites or activity centers for pairs of Owls or territorial single Owls ("Activity Areas"). Under the guidelines, at least 40% in the aggregate of the area within Activity Areas has to be maintained as suitable Owl habitat. In addition, 70 acres immediately around nest sites has to be preserved. Under the guidelines, approximately 140,000 acres of the 330,000 117 acres in the Partnership's Cascade region lie within Activity Areas. The Company does not have an incidental take permit that would allow the Company to harvest below these thresholds. The USFWS announced on December 29, 1993, that it is proposing to draft a special rule ("Special Rule") to redefine private landowner obligations under the ESA. In its description of the proposed Special Rule, the USFWS indicated that the guidelines would serve as the basis for regulation in areas of special concern ("ASC") for the Owl. Outside of the ASCs, only 70 acres around nest sites would be restricted. A substantial majority of the Partnership's Timberlands that contain occupied Owl habitat lie within ASCs. Accordingly, the proposed Special Rule, if adopted in its current form, is not likely to materially alter the current level of regulation on the Partnership's activities due to the Owl. In March 1994, the U.S. Circuit Court of Appeals for the District of Columbia ruled in Sweet Home Chapter of Communities for a Great Oregon v. Babbitt, that Congress never intended habitat modifications to be a violation of the ESA. The court therefore found invalid the regulation that defines "harm" to a species to include habitat modification. This regulation provides the legal basis for the guideline. The government has announced that it will appeal the ruling. The government has also taken the position that the ruling does not apply to areas outside of the District of Columbia circuit. Accordingly, it is unclear whether the decision will reduce the regulatory impact of the ESA on the Partnership. All forest practice applications ("FPA's") within Activity Areas must also comply with the Washington State Environmental Policy Act ("SEPA") and Forest Practices Act. In June 1992, the Washington State Forest Practices Board (the "Board") adopted regulations which provide that SEPA will apply to FPA's for activities on the 500 acres of habitat surrounding nest sites or activity centers. By its terms, the rule was to have sunseted in March 1994. In February 1994, the Board, however, extended the rule for an additional four months. Compliance with the ESA and SEPA is causing delays and in some cases modification of Partnership FPA's in Owl Activity Areas and may cause denials of future Partnership FPA'S. 2 118 The ESA also prohibits the federal government from causing jeopardy to the Owl or destroying or adversely modifying its designated critical habitat. Private landowners are potentially affected by this restriction if a private activity requires federal action, such as the granting of access or federal funding. Where there is such a federal connection, the federal agency involved must consult the USFWS to determine that the proposed activity would not cause jeopardy to the Owl or direct or indirect adverse modification of its designated critical habitat; or if it would, then to propose, where possible, alternatives or modifications to the proposed activity. The Partnership's timberlands are often intermingled with federal land in or near areas that include the habitats of a number of threatened or endangered species such as the Owl and grizzly bear. Thus access across federal lands to certain of the Partnership's Timberlands in such areas has been and, is likely to continue to be, delayed by the administrative process and legal challenges and may be subjected to restriction under the ESA. On June 9, 1992, the USFWS published its draft recovery plan (the "Draft Plan") for the Owl. A recovery plan, once final is not legally binding, but it may form the basis for future regulation. The Draft Plan recommends that 7.5 million acres of federal land be set aside in designated conservation areas ("DCA's") where timber harvesting and road building would be prohibited. On July 16, 1993, the Clinton Administration proposed a new forest policy (the "Forest Plan") that would substantially reduce harvest from public lands in Owl forests and provide for the conservation of the Owl and numerous other species. In April 1994, the Clinton Administration formally adopted the Forest Plan and submitted it for judicial approval. Before the Forest Plan can be implemented the Clinton Administration intends to implement its policies administratively. However, it is likely to be subject to additional legal challenges and thus, its implementation remains uncertain. The ultimate impact of the Owl listing on the Partnership will depend on (i) the number of Activity Areas actually found on or near Partnership Timberlands, (ii) the availability and amount of suitable habitat within individual Activity Areas, (iii) the outcome of the Clinton Administration's forest policy, including the proposed Special Rule, (iv) future regulations and restrictions placed on private and public lands, (v) promulgation, interpretation and application of Owl regulations by both 3 119 the USFWS and the Washington State Department of Natural Resources, (vi) the impact of reduced harvests upon stumpage prices, and (vii) the outcome of pending litigation. Although continuing uncertainty surrounding efforts to conserve the Owl make it difficult to assess the future impact of the Owl listing on the Partnership, at this time the General Partner does not believe that federal and state laws and regulations related to the Owl will have a materially adverse effect on the financial position of the Company or the results of its operations. There can be no assurances, however, that (i) interpretation or administration of current laws and regulations, (ii) changes in laws or regulations, (iii) increases in the number of Owls on or near Partnership lands, or (iv) decreases in suitable habitat adjacent to Partnership lands will not adversely affect the operations or financial position of the Company. 4 120 SCHEDULE 10(B)(1) April 5, 1993 CORPORATE INVESTMENT POLICY I. OBJECTIVE This policy provides guidelines for the management of the Company's cash. It is essential that these assets be invested in a high quality portfolio which: . Preserves principal . Meets liquidity needs . Allows for appropriate diversification of investments . Delivers good yield in relationship to the guidelines and market conditions The Company is adverse to incurring market risk or credit risk, and will generally sacrifice yield in the interest of safety. Care must always be taken to insure that the Company's reported financial statements are never materially affected by decreases in the market value of securities held. II. MATURITY OR PUT Within the constraints provided throughout this document, or by addendum to this document, the maximum maturity or put of any investment instrument will be within two years from the purchase settlement date; however, the total portfolio must have an average maturity of less than 12 months. III. PERMISSIBLE INVESTMENTS A. Investments will be made in U.S. dollars only. B. The Company may own, purchase or acquire marketable direct obligations in the following: 1. Obligations (fixed and floating rate) issued by, or unconditionally guaranteed by the U.S. 121 April 5, 1993 Treasury, or any agency thereof, or issued by any political subdivision of any state or public agency, 2. Commercial paper rated as A-1 or better by Standard & Poor's, and P-1 or better by Moody's (or equivalent). 3. Floating rate and fixed rate obligations of corporations, banks and agencies including: medium term notes and bonds, deposit notes, and euro dollar/yankee notes and bonds. 4. Certificates of deposit, bankers acceptances and time deposits of commercial banks, domestic or foreign, whose short term credit ratings are A-1/P-1 (or equivalent). 5. Repurchase agreements collateralized by U.S. Treasury and agency securities. 6. Insurance company Funding Agreements, Investment Contracts, or similar obligations. 7. Asset backed and mortgage backed securities. 8. Master Notes. 9. Taxable money market preferreds. 10. Tax exempt securities including municipal bonds/notes, money market preferreds, and variable rate demand notes. C. Issuing institutions shall be Corporations, Trusts, Partnerships, and Banks domiciled in the U.S., Canada, Japan and Western Europe, or Insurance Companies domiciled in the U.S. IV. CREDIT REQUIREMENTS Safety shall always be a primary consideration in structuring the Company's investment portfolio. Credit ratings should be tied to duration as prescribed below in order to combine safety, liquidity and acceptable market performance: 2 122 April 5, 1993
Minimum Credit Rating --------------------- Duration S&P Moody's -------- --- ------- 6 months or less A- A3 6 - 18 months AA Aa2 18 months or more AAA Aaa
Original issue securities allowable under this policy with less than twelve months to maturity may substitute the issuers short term credit rating if that rating is A-1/P-1 or better. V. DIVERSIFICATION To diversify risk, no more than $2 million or 10% of the portfolio can be invested with any one issuer. Exceptions are issues of the U.S. Treasury or agency securities, insured or government collateralized issues and daily money market funds. 3 EX-10.A.1 5 EXHIBIT 10.A.1 1 EXHIBIT 10.A.1 ============================================================================== AMENDED AND RESTATED CREDIT AGREEMENT Dated as of November 15, 1994 among PLUM CREEK TIMBER COMPANY, L.P. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent ABN AMRO BANK, N.V., as Co-Agent and THE OTHER FINANCIAL INSTITUTIONS PARTY THERETO ============================================================================== 2 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.02 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . . . 37 1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 2.01 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . . . 38 2.02 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 2.03 Procedure for Committed Borrowing . . . . . . . . . . . . . . . . . . . . . 39 2.04 Conversion and Continuation Elections for Committed Borrowings . . . . . . 41 2.05 Bid Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 2.06 Procedure for Bid Borrowings . . . . . . . . . . . . . . . . . . . . . . . 43 2.07 Voluntary Termination or Reduction of Commitments . . . . . . . . . . . . . 48 2.08 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 2.09 Mandatory Prepayments of Loans; Mandatory Commitment Reductions . . . . . . 49 2.10 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 2.11 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 2.12 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 2.13 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . . 53 2.14 Payments by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 53 2.15 Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . . . . 54 2.16 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 55 2.17 Effect of Limitations in Facility B Credit Agreement . . . . . . . . . . . . 56 ARTICLE III THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 3.01 The Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . 56 3.02 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . . . . 58 3.03 Existing ABN Letters of Credit; Risk Participations, Drawings and Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 3.04 Repayment of Participations . . . . . . . . . . . . . . . . . . . . . . . . 64 3.05 Role of the Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . 64 3.06 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 3.07 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . 67 3.08 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 3.09 Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . . . . 68
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Page ---- ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . . . 68 4.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 4.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 4.03 Increased Costs and Reduction of Return . . . . . . . . . . . . . . . . . . 72 4.04 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 4.05 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . . 74 4.06 Certificate of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 4.07 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 ARTICLE V CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 5.01 Conditions of Initial Credit Extensions . . . . . . . . . . . . . . . . . . 75 5.02 Conditions to All Credit Extensions . . . . . . . . . . . . . . . . . . . . 78 ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . 79 6.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . 79 6.02 Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . 79 6.03 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . 80 6.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 6.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 6.06 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 6.07 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 6.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . 83 6.09 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 6.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 6.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 84 6.13 Regulated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 6.14 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . 85 6.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 6.16 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 6.17 Copyrights, Patents, Trademarks and Licenses, Etc. . . . . . . . . . . . . 85 6.18 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 6.19 Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 6.20 Broker's, Transaction Fees . . . . . . . . . . . . . . . . . . . . . . . . 86 6.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 6.22 Timber Harvest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 6.23 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 ARTICLE VII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 7.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 7.02 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . 88 7.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 7.04 Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . . . . . 91 7.05 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . 92
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Page ---- 7.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 7.07 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 92 7.08 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 7.09 Inspection of Property and Books and Records . . . . . . . . . . . . . . . 93 7.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 7.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 7.12 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 ARTICLE VIII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 8.01 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 8.02 Merger; Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . 96 8.03 Harvesting Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . 99 8.04 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 8.05 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 101 8.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 104 8.07 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104 8.08 Sale of Stock and Indebtedness of Subsidiaries . . . . . . . . . . . . . . 105 8.09 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 8.10 Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 8.11 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 106 8.12 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 8.13 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 8.14 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 8.15 Issuance of Stock by Subsidiaries . . . . . . . . . . . . . . . . . . . . . 109 8.16 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 8.17 Available Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 ARTICLE IX EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 9.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 9.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 9.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 10.01 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . 114 10.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 10.03 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 10.04 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 10.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 10.06 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 10.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 10.08 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . 119 10.09 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 10.10 Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
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Page ---- ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 11.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 120 11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 11.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . 122 11.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 11.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 11.06 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . 124 11.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . 124 11.08 Assignments, Participations, Etc. . . . . . . . . . . . . . . . . . . . . . 124 11.09 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 11.10 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . . . . . . 128 11.11 Notification of Addresses, Lending Offices, Etc. . . . . . . . . . . . . . 128 11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 11.14 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . . . . 129 11.15 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 11.16 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . 129 11.17 Arbitration; Reference . . . . . . . . . . . . . . . . . . . . . . . . . . 129 11.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 SCHEDULES Schedule 1.01 Corporate Investment Policy Schedule 2.01 Commitments Schedule 3.03 Existing ABN Letters of Credit Schedule 6.05 Litigation Schedule 6.07 ERISA Schedule 6.12 Environmental Matters Schedule 6.18 Subsidiaries and Equity Investments Schedule 8.01 Permitted Liens Schedule 8.04 Permitted Investments EXHIBITS Exhibit A Notice of Borrowing Exhibit B Notice of Conversion/Continuation Exhibit C-1 Legal Opinion of Counsel for the Company Exhibit C-2 Legal Opinion of Perkins Coie Exhibit D Compliance Certificate Exhibit E Form of Cash Collateral Account Agreement Exhibit F Form of Assignment and Acceptance Exhibit G Competitive Bid Request Exhibit H Invitation for Competitive Bid Exhibit I Competitive Bid Exhibit J Consent to Amendment and Restatement
iv 6 AMENDED AND RESTATED CREDIT AGREEMENT This AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of November 15, 1994, among Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Company"), the several financial institutions from time to time party to this Agreement (collectively, the "Banks"; individually, a "Bank"), ABN AMRO Bank N.V., as a letter of credit issuing bank and as co-agent for the Banks, and Bank of America National Trust and Savings Association, as a letter of credit issuing bank and as agent for the Banks. WHEREAS, the Company, certain of the Banks and BofA as agent for those Banks entered into a Credit Agreement dated as of October 28, 1993 (the "Original Credit Agreement"); WHEREAS, the Banks have agreed to make available to the Company a revolving credit facility with a letter of credit subfacility upon the terms and conditions set forth in this Agreement to refinance indebtedness outstanding under the Original Credit Agreement and certain other existing indebtedness and to use for general corporate purposes; WHEREAS, to give effect to the foregoing, the Company, the Banks, the Co-Agent and the Agent desire to enter into this Agreement to amend and restate the Original Credit Agreement; NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties hereby amend and restate the Original Credit Agreement in its entirety as follows: ARTICLE I DEFINITIONS 1.01 Defined Terms. In addition to the terms defined elsewhere in this Agreement, the following terms have the following meanings: "ABN" means ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands. "Absolute Rate" has the meaning specified in subsection 2.06(c). 1 7 "Absolute Rate Auction" means a solicitation of Competitive Bids setting forth Absolute Rates pursuant to Section 2.06. "Absolute Rate Bid Loan" means a Bid Loan that bears interest at a rate determined with reference to the Absolute Rate. "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract or otherwise. Without limitation, any director, executive officer or beneficial owner of 5% or more of the equity of a Person shall for the purposes of this Agreement, be deemed to control the other Person. Notwithstanding the foregoing, no Bank shall be deemed an "Affiliate" of the Company or of any Subsidiary of the Company. "Agent" means BofA in its capacity as agent for the Banks hereunder, and any successor agent. "Agent's Payment Office" means the address for payments set forth on the signature page hereto in relation to the Agent or such other address as the Agent may from time to time specify in accordance with Section 11.02. "Agent-Related Persons" means BofA, the Arranger, BofA as agent under the Original Credit Agreement, and any successor agent arising under Section 10.09 and any successor to BofA as a letter of credit issuing bank hereunder, together with their respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Aggregate Commitment" means the combined Commitments of the Banks, in the initial amount of one hundred million dollars ($100,000,000), as such amount may be reduced from time to time pursuant to this Agreement. "Agreement" means this Amended and Restated Credit Agreement, as amended from time to time in accordance with the terms hereof. 2 8 "Applicable Margin" means, in respect of all Committed Loans outstanding on any date (A) for the period from the Closing Date through December 31, 1994, 0.5000% for Offshore Rate Committed Loans, 0.6250% for CD Rate Committed Loans and 0.0000% for Base Rate Committed Loans, and (B) from January 1, 1995, the percentage specified below opposite the Fixed Charge Coverage Ratio (which ratio shall be calculated for the relevant four fiscal quarter period) calculated for the periods described below.
Fixed Charge Coverage Ratio at End of Fiscal Quarter Applicable Margin - --------------------------- ----------------- Offshore CD Base Rate Rate Rate ---- ---- ---- Greater than or equal to 3:25 to 1:00 0 .4375% 0 .5625% 0 .0000% Less than 3:25 to 1:00 but greater than or equal to 2:75 to 1:00 0 .5000% 0 .6250% 0 .0000% Less than 2:75 to 1:00 but greater than or equal to 2:00 to 1:00 0 .6250% 0 .7500% 0 .0000% Less than 2:00 to 1:00 0 .8750% 1 .0000% 0 .0000%
The Applicable Margin for each fiscal quarter commencing on and after January 1, 1995 shall be calculated in reliance on the financial reports delivered pursuant to subsection 7.01(c) and the certificate delivered pursuant to subsection 7.02(b) with respect to the fiscal quarter ending one fiscal quarter before the fiscal quarter in question (e.g., June 30 financials determine the Applicable Margin for the fiscal quarter beginning October 1). If the Company fails to deliver such financial reports and certificate to the Agent for any fiscal quarter by the beginning of the next succeeding fiscal quarter (e.g., by October 1 for the fiscal quarter ending June 30), then the Applicable Margin for the following fiscal quarter (e.g., October 1 through December 31) shall equal the next higher Applicable Margin as set forth in the chart above immediately below the previously effective Applicable Margin; thus if the Applicable Margin had previously been 0.5000% for Offshore Rate Committed Loans, 0.6250% for CD Rate Committed Loans and 0.0000% for Base Rate Committed Loans, a failure to deliver quarterly 3 9 financials by the first day of the next fiscal quarter would cause the Applicable Margin to be 0.6250%, 0.7500% and 0.0000%, respectively, for the duration of that quarter. In addition, if such financial reports and certificate when delivered indicate that the Applicable Margin for such period should have been higher than the Applicable Margin provided for in the previous sentence, then the Company shall pay on the date of delivery of such financial reports and certificate an amount equal to the positive difference, if any, between the interest that the Company should have paid hereunder had the financial reports and certificate been delivered on a timely basis over what the Company actually paid. The Applicable Margin shall be adjusted automatically as to all Committed Loans then outstanding (without regard to the timing of Interest Periods) as of the effective date of any change in the Applicable Margin. "Arranger" means BA Securities, Inc., a Delaware corporation. "Assignee" has the meaning specified in subsection 11.08(a). "Assignment and Acceptance" has the meaning specified in subsection 11.08(a). "Attorney Costs" means and includes all fees and disbursements of any law firm or other external counsel, the allocated cost of internal legal services and all disbursements of internal counsel. "Available Cash" means, with respect to any calendar quarter, (i) the sum of: (a) the Company's net income (or net loss) (excluding gain on the sale of any Capital Asset) for such quarter, (b) the amount of depletion, depreciation, amortization and other noncash charges utilized in determining net income of the Company for such quarter, (c) the amount of any reduction in reserves of the Company of the types referred to in clause (ii)(d) below, (d) proceeds received by the Company from the sale of Designated Acres, and 4 10 (e) any Cash from Capital Transactions received by the Company during such quarter in specific contemplation that such Cash from Capital Transactions will be used to refund or refinance any payment of Indebtedness of the type specified in clause (ii)(a) below which was made in either of the two immediately preceding quarters, less (ii) the sum of: (a) all payments of principal on Indebtedness made by the Company in such quarter (excluding any payments of principal on Indebtedness made with Cash from Capital Transactions received by the Company during such quarter or, to the extent such Cash from Capital Transactions remains available, received by the Company during the four immediately preceding quarters), (b) capital expenditures made by the Company during such quarter (excluding any capital expenditures for such quarter made with Cash from Capital Transactions received by the Company during such quarter or, to the extent such Cash from Capital Transactions remains available, received by the Company during the four immediately preceding quarters, and capital expenditures which the General Partner reasonably anticipates will be financed with Cash from Capital Transactions within 90 days from the end of such quarter), (c) the amount of any capital expenditures made by the Company in a prior quarter which was anticipated would be financed from Cash from Capital Transactions but which have not been financed from such source within 90 days from the end of such quarter, (d) the amount of any reserves of the Company established during such quarter which are necessary or appropriate (1) to provide funds for the future payment of items of the types specified in clauses (ii)(a) and (ii)(b) above, (2) to provide additional working capital, (3) to provide funds for cash distributions with respect to any one or more of the next four quarters, or (4) to provide funds for the future payment of interest in an amount equal to the interest to be accrued in the next quarter, (e) the amount of any noncash items of income utilized in determining net income of the Company for such quarter, 5 11 (f) the amount of any Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) made by the Company during such quarter pursuant to subsections 8.04(a), (h) or (i) (or in the case of any Subsidiary, Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) of similar type) to the extent not included in capital expenditures or payments on principal on Indebtedness made by the Company during such quarter (excluding any such Investments for such quarter made with Cash from Capital Transactions received by the Company during such quarter or, to the extent such Cash from Capital Transactions remains available, received by the Company during the four immediately preceding quarters, and Investments which the General Partner reasonably anticipates will be financed with Cash from Capital Transactions within 90 days from the end of such quarter), and (g) the amount of any Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) made by the Company in a prior quarter pursuant to subsections 8.04(a), (h) or (i) (or in the case of any Subsidiary, Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) of similar type) to the extent not included in capital expenditures made by the Company during such quarter which was anticipated would be financed from Cash from Capital Transactions but which have not been financed from such source within 90 days from the end of such quarter. Notwithstanding the foregoing, "Available Cash" shall not take into account any reductions in reserves or disbursements made or reserves established after commencement of the dissolution and liquidation of the Company. In determining "Available Cash", (i) all items under clauses (i)(a), (b), (c), (d) and (e) above and all items under clauses (ii)(a), (b), (c), (d), (e), (f) and (g) above shall be calculated on a combined basis with any Subsidiary of the Company whose income is accounted for on a consolidated or combined basis with the Company and, in accordance therewith, "Available Cash" shall include a percentage of each such item of each such Subsidiary equal to the Company's percentage 6 12 ownership interest in such Subsidiary, provided, however, that the items under clauses (i)(a), (b), (c), (d) and (e) above shall only be included in Available Cash to the extent that the General Partner determines such amount to be legally available for dividends or distributions to the Company by such Subsidiary; (ii) the amount of net income and the amount of depletion, depreciation, amortization and other noncash charges utilized in determining net income shall be determined, with respect to the Company, by the General Partner in accordance with generally accepted accounting principals and, with respect to any Subsidiary, by its Board of Directors (or by such other body or person which has the ultimate management authority of such Subsidiary) in accordance with generally accepted accounting principles; (iii) the net income of any Subsidiary shall be determined on an after-tax basis; (iv) the amount of any reductions in, or additions to, reserves for purposes of clauses (i)(c) and (ii)(d) above shall be determined, with respect to the Company, by the General Partner in its reasonable good faith judgment and, with respect to any Subsidiary, by its Board of Directors (or by such other body or person which has the ultimate management authority of such Subsidiary) in its reasonable good faith judgment; and (v) any determination of whether any capital expenditures or Investments are financed, or anticipated to be financed, with Cash from Capital Transactions for purposes of clause (ii)(b) or (ii)(f) above shall be made, with respect to the Company, by the General Partner in its reasonable good faith judgment and, with respect to any Subsidiary, by its Board of Directors (or by such other body or person which has the ultimate management authority of such Subsidiary) in its reasonable good faith judgment. "Bank" has the meaning specified in the introductory clause hereto. References to the "Banks" shall include BofA and ABN, including in their capacity as an Issuing Bank; for purposes of clarification only, to the extent that BofA or ABN may have any rights or obligations in addition to those of the Banks due to its status as an Issuing Bank, its status as such will be specifically referenced. "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. Section 101, et seq.). "Base Rate" means, for any day, the higher of: 7 13 (a) the rate of interest in effect for such day as publicly announced from time to time by BofA in San Francisco, California, as its "reference rate." It is a rate set by BofA based upon various factors including BofA's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate; and (b) 0.50% per annum above the latest Federal Funds Rate. Any change in the reference rate announced by BofA shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Committed Loan" means a Committed Loan or an L/C Advance that bears interest based on the Base Rate. "Bid Borrowing" means a Borrowing hereunder consisting of one or more Bid Loans made to the Company on the same day by one or more Banks. "Bid Loan" means a Loan by a Bank to the Company under Section 2.05, which may be a LIBOR Bid Loan or an Absolute Rate Bid Loan. "Bid Loan Lender" means, in respect of any Bid Loan, the Bank making such Bid Loan to the Company. "BofA" means Bank of America National Trust and Savings Association, a national banking association. "Board Foot" means a unit of measurement one foot square and one inch thick. "Borrowing" means a borrowing hereunder consisting of Loans of the same Type made to the Company on the same day by the Banks pursuant to Article II, and may be a Committed Borrowing or a Bid Borrowing and, other than in the case of Base Rate Committed Loans, having the same Interest Period. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco are authorized or required by law to close and, if the applicable Business Day relates to any Offshore Rate Loan, means such a day on which 8 14 dealings are carried on in the applicable offshore dollar interbank market. "Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. "Capital Asset" means any asset on the Company's or any Subsidiary's balance sheet, as the case may be, other than inventory, accounts receivable or any other current asset and assets disposed of in connection with normal retirements or replacements. "Capital Lease" has the meaning specified in the definition of "Capital Lease Obligations." "Capital Lease Obligations" means all monetary obligations of the Company or any of its Subsidiaries under any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease ("Capital Lease"). "Capital Transaction" means (i) borrowings and sales of debt securities (other than for working capital purposes and other than for items purchased on open account in the ordinary course of business) by the Company, (ii) sales of equity interests by the Company and (iii) sales or other voluntary or involuntary dispositions of any assets of the Company (other than (x) sales or other dispositions of inventory in the ordinary course of business, (y) sales or other dispositions of other current assets including receivables and accounts and (z) sales or other dispositions of assets as a part of normal retirements or replacements), in each case prior to the commencement of the dissolution and liquidation of the Company provided, that in determining Cash from Capital Transactions, items (i), (ii) and (iii) above shall include, with respect to each Subsidiary of the Company whose income is accounted for on a consolidated or combined basis with the Company, a percentage of each such item of such Subsidiary equal to the Company's percentage ownership interest in such Subsidiary. "Cash Collateral Account Agreement" means an agreement or agreements entered into between the Company and the Agent, substantially in the form of Exhibit E. 9 15 "Cash Collateralize" means to pledge and deposit with or deliver to the Agent, for the benefit of (i) in the case of L/C Obligations, the Agent, the Issuing Banks and the Banks, (ii) in the case of CD Rate Committed Loans and Offshore Rate Committed Loans, the Agent and the Banks, and (iii) in the case of Bid Loans, the Agent and the Bid Loan Lenders, in each case as collateral for the L/C Obligations, the Committed Loans or the Bid Loans, as the case may be, cash or deposit account balances pursuant to a Cash Collateral Account Agreement. Derivatives of such term shall have corresponding meaning. "Cash from Capital Transactions" means at any date, such amounts of cash as are determined by the General Partner to be cash made available to the Company from or by reason of a Capital Transaction. "CD Rate" means, for each Interest Period in respect of CD Rate Committed Loans comprising a part of the same Borrowing, the rate of interest (rounded upward to the nearest 1/100th of 1%) determined pursuant to the following formula: CD Rate = Certificate of Deposit Rate + Assessment --------------------------- Rate 1.00 - Reserve Percentage Where: "Assessment Rate" means for any day of any Interest Period for CD Rate Committed Loans, the rate determined by the Agent as equal to the annual assessment rate in effect on such day that is payable to the FDIC by a member of the Bank Insurance Fund that is classified as adequately capitalized and within supervisory subgroup "A" (or a comparable successor assessment risk classification within the meaning of 12 C.F.R. Section 327.3) for insuring time deposits at offices of such member in the United States, or, in the event that the FDIC shall at any time hereafter cease to assess time deposits based upon such classifications or successor classifications, equal to the maximum annual assessment rate in effect on such day that is payable to the FDIC by commercial banks for insuring time deposits at offices of such banks in the United States. "Certificate of Deposit Rate" means for any Interest Period for CD Rate Committed Loans the rate of interest per annum determined by the Agent 10 16 to be the arithmetic mean (rounded upward to the nearest 1/100th of 1%) of the rates notified to the Agent as the rates of interest bid by two or more certificate of deposit dealers of recognized standing selected by the Agent for the purchase at face value of dollar certificates of deposit issued by major United States banks, for a maturity comparable to such Interest Period and in the approximate amount of the CD Rate Committed Loans to be made, at the time selected by the Agent on the first day of such Interest Period. "Reserve Percentage" means for any day for any Interest Period for CD Rate Committed Loans the reserve percentage (expressed as a decimal, rounded upward to the nearest 1/100th of 1%), as determined by the Agent, in effect on such day (including any ordinary, marginal, emergency, supplemental, special and other reserve percentages) prescribed by the Federal Reserve Board for determining the reserves to be maintained by member banks of the Federal Reserve System with deposits exceeding $1,000,000,000 for new non-personal time deposits for a period comparable to such Interest Period and in an amount of $100,000 or more. The CD Rate shall be adjusted automatically as of the effective date of any change in the Reserve Percentage. "CD Rate Committed Loan" means a Committed Loan that bears interest based on the CD Rate. "CERCLA" has the meaning specified in the definition of "Environmental Laws." "Closing Date" means the date on which all conditions precedent set forth in Section 5.01 are satisfied or waived by all Banks. "Co-Agent" means ABN in its capacity as co-agent for the Banks hereunder. "Code" means the Internal Revenue Code of 1986, and regulations promulgated thereunder. "Columbia River Unit" means those certain approximately 63,000 acres located in southwest Washington and generally referred to on the date hereof as the Company's "Columbia River Unit." "Commitment", with respect to each Bank, has the meaning specified in Section 2.01. 11 17 "Commitment Fee Percentage" means (A) for the period from the Closing Date through December 31, 1994, 0.1750%, and (B) from January 1, 1995, the percentage specified below opposite the Fixed Charge Coverage Ratio (which ratio shall be calculated for the relevant four fiscal quarter period) calculated for the periods described below.
Fixed Charge Coverage Ratio at End of Fiscal Quarter Commitment Fee - --------------------------- -------------- Greater than or equal to 2:00 to 1:00 .1750% Less than 2:00 to 1:00 .2250%
The Commitment Fee Percentage for each fiscal quarter commencing on and after January 1, 1995, shall be calculated in reliance on the financial reports delivered pursuant to subsection 7.01(c) and the certificate delivered pursuant to subsection 7.02(b) with respect to the fiscal quarter before the fiscal quarter in question (e.g., June 30 financials determine the Commitment Fee Percentage for the fiscal quarter beginning October 1). If the Company fails to deliver such financial reports and certificate to the Agent for any fiscal quarter by the beginning of the next succeeding fiscal quarter (e.g., by October 1 for the fiscal quarter ending June 30), then the Commitment Fee Percentage for the following fiscal quarter (e.g., October 1 through December 31) shall equal 0.2250% for the duration of that quarter. "Commitment Percentage" means, as to any Bank, the percentage equivalent of such Bank's Commitment divided by the Aggregate Commitment. "Committed Borrowing" means a Borrowing hereunder consisting of Committed Loans made on the same day by the Banks ratably according to their respective Commitment Percentages and, in the case of CD Rate Committed Loans and Offshore Rate Committed Loans, having the same Interest Periods. "Committed Loan" has the meaning specified in Section 2.01, and may be a CD Rate Committed Loan, an Offshore Rate Committed Loan or a Base Rate Committed Loan (each, a "Type" of Committed Loan). "Company's Knowledge" or "Knowledge of the Company" shall mean the actual knowledge of (i) Rick R. Holley, President and Chief Executive Officer, Charles P. 12 18 Grenier, Executive Vice President, Robert E. Manne, Executive Vice President, Diane M. Irvine, Vice President and Chief Financial Officer, James A. Kraft, Vice President Law, Susanna N. Duke, Director, Law and Secretary, and Mitchell Leu, Environmental Engineer, and any successor to the offices and officers, such persons being the principal persons employed by the Company ultimately responsible for environmental operations and compliance, ERISA and legal matters relating to the Company and (ii) the Treasurer or any other person having the primary responsibility for the day-to-day administration of, and dealings with the Agent and the Banks in connection with, this Agreement. "Competitive Bid" means an offer by a Bank to make a Bid Loan in accordance with subsection 2.06(b). "Competitive Bid Request" has the meaning specified in subsection 2.06(a). "Contractual Obligations" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "Controlled Group" means the Company and all Persons (whether or not incorporated) under common control or treated as a single employer with the Company pursuant to Section 414(b), (c), (m) or (o) of the Code. "Conversion/Continuation Date" means any date on which, under Section 2.04, the Company (a) converts Committed Loans of one Type to another Type, or (b) continues as Committed Loans of the same Type, but with a new Interest Period, Committed Loans having Interest Periods expiring on such date. "Credit Extension" means and includes (a) the making of any Committed Loans or Bid Loans hereunder, including any conversion or continuation thereof, and (b) the Issuance of any Letter of Credit hereunder. "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. "Departing Bank" means Chemical Bank. 13 19 "Designated Acres" means up to an aggregate of 200,000 acres owned by the Company which (based on the good faith determination of the Responsible Representatives that such acres have at the time such determination is made a higher value as recreational, residential, grazing or agricultural property than for timber production) may be reasonably designated by the General Partner at the time of the sale thereof as constituting Designated Acres (such aggregate number of acres to be determined over the term of existence of the Note Agreements). "Designated Immaterial Subsidiary" means any entity which would otherwise be a Restricted Subsidiary and which at any time is designated by the Company as a Designated Immaterial Subsidiary, provided that no such designation of any entity as a Designated Immaterial Subsidiary shall be effective unless (i) at the time of such designation, such entity does not own any shares of stock or Indebtedness of any Restricted Subsidiary which is not simultaneously being designated as a Designated Immaterial Subsidiary, (ii) immediately after giving effect to such designation, (a) the Company could incur at least $1 of additional Funded Debt pursuant to subsection 8.05(i), and (b) no condition or event shall exist which constitutes an Event of Default or Material Default, (iii) the Company is permitted to make the Investment in such entity resulting from such designation pursuant to, and within the limitations specified in, subsection 8.04(i), treating the aggregate book value (including equity in retained earnings) of the Investments of the Company and its Subsidiaries in such entity immediately prior to such designation as the cost of such Investment, and provided, further, that if at any time all Designated Immaterial Subsidiaries on a combined basis would be a "significant subsidiary" (assuming the Company is the registrant) within the meaning of Regulation S-X (17 C.F.R. Part 210) the Company shall designate one or more Designated Immaterial Subsidiaries which are directly owned by the Company and its Restricted Subsidiaries as Restricted Subsidiaries such that the condition in this proviso is no longer applicable and the entities so designated shall no longer be Designated Immaterial Subsidiaries. Any entity which has been designated a Designated Immaterial Subsidiary shall not thereafter become a Restricted Subsidiary except pursuant to a designation required by the last proviso in the preceding sentence, and any Designated Immaterial Subsidiary which has been designated a Restricted Subsidiary pursuant to the last proviso of the preceding sentence shall not thereafter be redesignated as a Designated Immaterial Subsidiary. 14 20 "Designated Repurchases" means and includes purchases, redemptions or other acquisitions, in each case at a price not to exceed fair market value, of the publicly traded limited partnership interests in the Company, which are retired by the Company within six months of such purchase, redemption or other acquisition. "Dollars", "dollars" and "$" each mean lawful money of the United States. "Domestic Lending Office" means, with respect to each Bank, the office of that Bank designated as such in the signature pages hereto or such other office of the Bank as it may from time to time specify to the Company and the Agent. "EBITDA" means, for any period, for the Company and its Subsidiaries on a combined basis, determined in accordance with GAAP, the sum of (a) the net income (or net loss) for such period, plus (b) all amounts treated as expenses for depreciation, depletion and interest and the amortization of intangibles of any kind to the extent included in the determination of such net income (or loss), plus (c) all adjustments arising by virtue of the conversion from average cost accounting to a LIFO basis with respect to inventory to the extent included in the determination of such net income, plus (d) all accrued taxes on or measured by income to the extent included in the determination of such net income (or loss); provided, however, that net income (or loss) shall be computed for these purposes without giving effect to extraordinary losses or extraordinary gains. "Effective Amount" means (i) with respect to any Committed Loans or Bid Loans, as the case may be, on any date, the aggregate outstanding principal amount thereof after giving effect to any Borrowings and prepayments or repayments thereof occurring on such date; and (ii) with respect to any outstanding L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any Issuances of Letters of Credit occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions in the maximum amount available for drawing under Letters of Credit taking effect on such date. 15 21 "Eligible Assignee" means (i) a commercial bank organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $250,000,000; (ii) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having a combined capital and surplus of at least $250,000,000, provided that such bank is acting through a branch or agency located in the United States; and (iii) a Person that is primarily engaged in the business of commercial banking and that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a Person of which a Bank is a Subsidiary, or (C) a Person of which a Bank is a Subsidiary. "Environmental Claims" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon (a) the presence, placement, discharge, emission or release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental placement, spills, leaks, discharges, emissions or releases) of any Hazardous Material at, in, or from Property, whether or not owned by such person, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety, land use, conservation, and timber harvesting matters; including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, 16 22 the Toxic Substances Control Act, the Emergency Planning and Community Right-to-Know Act. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Company within the meaning of Section 414(b) or 414(c) of the Code. "ERISA Event" means (a) a Reportable Event with respect to a Qualified Plan or a Multiemployer Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA); (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure by the Company or any ERISA Affiliate to make required contributions to a Qualified Plan or Multiemployer Plan; (f) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Qualified Plan or Multiemployer Plan; (g) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate; (h) an application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code with respect to any Plan; (i) a non-exempt prohibited transaction occurs with respect to any Plan for which the Company may be directly or indirectly liable; or (j) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the Code by any fiduciary or disqualified person with respect to any Plan for which the Company may be directly or indirectly liable. "Eurodollar Reserve Percentage" has the meaning specified in the definition of "Offshore Rate". "Event of Default" means any of the events or circumstances specified in Section 9.01. 17 23 "Exchange Act" means the Securities and Exchange Act of 1934, as amended, and regulations promulgated thereunder. "Existing ABN Letters of Credit" means the letters of credit described in Schedule 3.03. "Facilities Subsidiary" means, collectively, Plum Creek Manufacturing, L.P., a Delaware limited partnership, and Plum Creek Marketing, Inc., a Delaware corporation. "Facilities Subsidiary's Facility" means any facility pursuant to which the Facilities Subsidiary may incur Indebtedness for purposes of making capital improvements, additions to, or expansions of, property, plant and equipment of the Facilities Subsidiary or its Subsidiaries. "Facilities Subsidiary's Revolving Credit Facility" means any facility pursuant to which the Facilities Subsidiary may obtain revolving credit, take-down credit, the issuance of standby and payment letters of credit and backup for the issuance of commercial paper. "Facility B Credit Agreement" means the $35,000,000 Credit Agreement dated as of the date hereof between the Company, the Banks, the Co-Agent and the Agent. "FDIC" means the Federal Deposit Insurance Corporation, or any entity succeeding to any of its principal functions. "Federal Funds Rate" means, for any period, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such day opposite the caption "Federal Funds (Effective)". If on any relevant day such rate is not yet published in H.15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. Quotation") for such day under the caption "Federal Funds Effective Rate". If on any relevant day the appropriate rate for such previous day is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined by the Agent 18 24 of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Agent. "Federal Reserve Board" means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions. "Fixed Charge Coverage Ratio" means, as measured quarterly on the last day of each fiscal quarter for, except as set forth below, the four fiscal quarter period then ending, the ratio of (i) EBITDA; to (ii) an amount equal to the sum of (A) the combined interest expense (including capitalized interest) of the Company and its Subsidiaries for the four fiscal quarter period then ending calculated in accordance with GAAP, plus (B) the aggregate amount of scheduled principal repayment on the Indebtedness of the Company and its Subsidiaries for such period;provided that the aggregate amount of scheduled principal repayment on the Indebtedness (x) shall not include the amount of any prepayment of Indebtedness except to the extent such prepayment includes any amounts that would have been scheduled principal repayments during such period, (y) shall not include the amount of any scheduled principal repayment to the extent the Company refinanced such scheduled repayments and the scheduled principal repayments under the refinancing have been or will be included in the calculation of the aggregate amount of scheduled principal repayments, and (z) with respect to the Facility B Credit Agreement, shall only include (1) the scheduled installments to be made by the Company pursuant to subsection 2.10(c) thereof during such period, and (2) the amount of any repayment made by the Company thereunder pursuant to subsection 2.10(b) thereof. "Form 1001" has the meaning specified in subsection 4.01(f). "Form 4224" has the meaning specified in subsection 4.01(f). 19 25 "Funded Debt" means, without duplication, any Indebtedness payable more than one year from the date of the creation thereof; provided that any Indebtedness shall be treated as Funded Debt, regardless of its term, if such Indebtedness is renewable at the option of the Company pursuant to the terms thereof or of a revolving credit or similar agreement effective for more than one year after the date of the creation of such Indebtedness, or may be payable out of the proceeds of similar Indebtedness pursuant to the terms of such Indebtedness or any such agreement. "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such other entity as may be in general use by significant segments of the U.S. accounting profession, which are applicable to the circumstances as of the date of determination. "General Partner" means Plum Creek Management Company, L.P., a Delaware limited partnership, the managing general partner of the Company, and any successor managing general partner of the Company. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Guarantee" means the guarantee in paragraph 7 of the Mortgage Note Agreements. "Hazardous Materials" means all those substances which are regulated by, or which may form the basis of liability under, any Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, or petroleum or petroleum derived substance or waste. 20 26 "Honor Date" has the meaning specified in subsection 3.03(c). "Indebtedness" of any Person means, as of any date of determination, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (b) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds, banker's acceptances and other similar instruments guaranteeing payment or other performance of obligations by such Person, (c) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any Lien on any property owned by such Person, to the extent attributable to such Person's interest in such property, even though such Person has not assumed or become liable for the payment thereof, (d) lease obligations of such Person which, in accordance with GAAP, should be capitalized, (e) lease obligations of such Person under leases which have a term (including any option to renew exercisable at the discretion of the lessee thereunder) longer than 10 years or under leases under which the lessor, pursuant to an agreement with such Person, has acquired the property specifically for the purpose of leasing it to such Person, (f) obligations payable out of the proceeds of production from property of such Person, even though such Person has not assumed or become liable for the payment thereof, (g) all net obligations with respect to Rate Contracts, and (h) any obligations of any other Person of the type described in the above clauses (a) through (g), inclusive, which are guaranteed or in effect guaranteed by such Person through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or other financial condition of the obligor of such obligation, or to make payment for any property, securities, products, materials or supplies or for any transportation or services regardless of the non-delivery or nonfurnishing thereof, in any such case if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected against loss in respect thereof or to otherwise assure or hold harmless the holder of any primary obligation against loss in respect thereof. The 21 27 amount of any obligations of the type described in clause (h) of this definition shall be deemed equal to the stated or determinable amount of the primary obligation in respect of which such obligation is made or, if not stated or if not determinable, the maximum reasonably anticipated liability in respect thereof. The amount of any obligations of the type described in clause (g) of this definition shall be marked to market on a current basis in accordance with GAAP. "Indemnified Person" has the meaning specified in subsection 11.05. "Indemnified Liabilities" has the meaning specified in subsection 11.05. "Independent Auditor" has the meaning specified in subsection 7.01(a). "Insolvency Proceeding" means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or foreign law, including the Bankruptcy Code. "Interest Payment Date" means, as to any Loan other than a Base Rate Committed Loan, the last day of each Interest Period applicable to such Loan and, as to Base Rate Committed Loans, the last Business Day of each calendar quarter and each date a Base Rate Committed Loan is converted into another Type of Committed Loan, provided, however, that (a) if any Interest Period for a CD Rate Committed Loan or Offshore Rate Committed Loan exceeds 90 days or three months, respectively, the date which falls 90 days or three months (as the case may be) after the beginning of such Interest Period and after each Interest Payment Date thereafter shall also be an Interest Payment Date, and (b) as to any Bid Loan, such intervening dates prior to the maturity thereof as may be specified by the Company and agreed to by the applicable Bid Loan Lender in the applicable Competitive Bid shall also be Interest Payment Dates. 22 28 "Interest Period" means, (a) with respect to any Offshore Rate Committed Loan, the period commencing on the Business Day the Loan is disbursed or on the Conversion/Continuation Date on which the Loan is converted into or continued as an Offshore Rate Committed Loan, and ending on the date that is one week or one, two, three or six months thereafter, as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation, as the case may be; (b) with respect to any CD Rate Committed Loan, the period commencing on the Business Day the CD Rate Committed Loan is disbursed or on the Conversion/Continuation Date on which the Loan is converted into or continued as a CD Rate Committed Loan and ending 30, 60, 90 or 180 days thereafter, as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation; (c) with respect to any LIBOR Bid Loan, the period commencing on the Business Day the Loan is disbursed and ending on the date one, two, three, six, or twelve months thereafter, as selected by the Company in the applicable Competitive Bid Request; and (d) with respect to any Absolute Rate Bid Loan, a period not less than 7 days and not more than 365/366 days, as applicable, as selected by the Company in the applicable Competitive Bid Request; provided that: (i) if any Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless, in the case of an Offshore Rate Loan, the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period pertaining to an Offshore Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and (iii) no Interest Period for any Loan shall extend beyond the Maturity Date. 23 29 "Invitation for Competitive Bids" means a solicitation for Competitive Bids, substantially in the form of Exhibit H. "Investment Policy" means the Corporate Investment Policy of the Company, as it existed on April 5, 1993 and as attached hereto as Schedule 1.01 (without giving effect to any later amendments thereto). "Investments" has the meaning specified in Section 8.04. "Issuance Date" has the meaning specified in subsection 3.01(a)." "Issue" means, with respect to any Letter of Credit, to incorporate the Existing ABN Letters of Credit into this Agreement, or to issue or to extend the expiry of, or to renew or increase the amount of, such Letter of Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding meanings. "Issuing Bank" means each of BofA and ABN in its capacity as issuer of one or more Letters of Credit hereunder, together with any replacement letter of credit issuer arising under subsection 10.01(b) or Section 10.09. "Joint Venture" means a partnership, joint venture or other similar legal arrangement (whether created pursuant to contract or conducted through a separate legal entity) now or hereafter formed by the Company or any of its Restricted Subsidiaries with another Person in order to conduct a common venture or enterprise with such Person. "L/C Advance" means each Bank's participation in any L/C Borrowing in accordance with its Commitment Percentage. "L/C Amendment Application" means an application form for amendment of outstanding standby letters of credit as shall at any time be in use at an Issuing Bank, as such Issuing Bank shall request. "L/C Application" means an application form for issuances of standby letters of credit as shall at any time be in use at an Issuing Bank, as such Issuing Bank shall request. 24 30 "L/C Borrowing" means an extension of credit resulting from a drawing under any Letter of Credit which shall not have been reimbursed on the date when made nor converted into a Borrowing of Committed Loans under subsection 3.03(d). "L/C Commitment" means the commitment of the Issuing Banks to Issue, and the commitment of the Banks severally to participate in, Letters of Credit (including the Existing ABN Letters of Credit) from time to time Issued or outstanding under Article III, in an aggregate amount not to exceed on any date five million dollars $5,000,000, minus the L/C Obligations under and as defined in the Facility B Credit Agreement, as the same shall be reduced as a result of a reduction in the L/C Commitment pursuant to Section 2.07; provided that the L/C Commitment is a part of the Aggregate Commitment, rather than a separate, independent commitment. "L/C Obligations" means at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of all unreimbursed drawings under all Letters of Credit, including all outstanding L/C Borrowings. "L/C-Related Documents" means the Letters of Credit, the L/C Applications, the L/C Amendment Applications and any other document relating to any Letter of Credit, including any Issuing Bank's standard form documents for letter of credit issuances. "Lending Office" means, with respect to any Bank, the office or offices of the Bank specified as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending Office", as the case may be, opposite its name on the applicable signature page hereto, or such other office or offices of the Bank as it may from time to time notify the Company and the Agent. "Letters of Credit" means the Existing ABN Letters of Credit and any standby letters of credit Issued by the Issuing Banks pursuant to Article III. "Letter of Credit Rate" means, for any period, a rate per annum equal to the Applicable Margin with respect to Offshore Rate Committed Loans in effect for such period. The Letter of Credit Rate shall be adjusted automatically as to all Letters of Credit then outstanding as of the effective date of any change in the Letter of Credit Rate. 25 31 "LIBO Rate" means, for any Interest Period with respect to a LIBOR Bid Loan, the rate of interest per annum determined by the Agent to be the arithmetic mean (rounded upward to the nearest 1/16th of 1%) of the rates of interest per annum notified to the Agent by BofA as the rate of interest at which dollar deposits in the approximate amount of the LIBOR Bid Loans to be borrowed in such Bid Loan Borrowing, and having a maturity comparable to such Interest Period, would be offered to major banks in the London interbank market at their request at approximately 11:00 a.m. (London Time) two Business Days prior to the commencement of such Interest Period. "LIBOR Auction" means a solicitation of Competitive Bids setting forth a LIBOR Bid Margin pursuant to Section 2.06. "LIBOR Bid Loan" means any Bid Loan that bears interest at a rate based upon the LIBO Rate. "LIBOR Bid Margin" has the meaning specified in subsection 2.06(c)(ii)(C). "Lien" means any mortgage, pledge, security interest, encumbrance, lien, preference or priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction). "Loan" means an extension of credit by a Bank to the Company under Article II or Article III, and may be a Committed Loan, a Bid Loan or an L/C Advance. "Loan Documents" means this Agreement, the L/C-Related Documents, and all documents delivered to the Agent in connection herewith and therewith. "Majority Banks" means (a) at any time prior to the Revolving Termination Date, or after the Revolving Termination Date if no Loans are then outstanding, Banks then holding at least 66-2/3% of the Commitments, and (b) otherwise, Banks then holding at least 66-2/3% of the then aggregate unpaid principal amount of the Loans. "Margin Stock" means "margin stock" as such term is defined in Regulation G, T, U or X of the Federal Reserve Board. 26 32 "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, any of the operations, business, properties, condition (financial or otherwise) or prospects of the Company or the Company and its Subsidiaries taken as a whole or as to any Restricted Subsidiary; (b) a material impairment of the ability of the Company to perform under any Loan Document and avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Loan Document. "Material Default" means any continuing Default as to which a written notice of such Default (which notice has not been rescinded) shall have been received by the Company or the General Partner from the Agent or any Bank, or any continuing Event of Default. "Maturity Date" means October 31, 1999. "Maximum Pro Forma Annual Interest Charges" means, as of any date, the highest total amount payable during any period of four consecutive fiscal quarters, commencing with the fiscal quarter in which such date occurs and ending with the fiscal quarter in which the Maturity Date occurs, by the Company and its Restricted Subsidiaries on a combined basis, after eliminating all intercompany transactions, in respect of interest charges ((a) including amortization of debt discount and expense and imputed interest on Capital Lease Obligations and on other obligations included in Indebtedness which do not have stated interest, (b) assuming, in the case of fluctuating interest rates which cannot be determined in advance, that the rate in effect on such date will remain in effect throughout such period, and (c) treating the principal amount of all Indebtedness outstanding as of such date under a revolving credit or similar agreement as maturing and becoming due and payable on the scheduled maturity date thereof, without regard to any provision permitting such maturity date to be extended) on all Indebtedness of the Company and its Restricted Subsidiaries outstanding on such date (excluding the Guarantee and the guarantees of the Facilities Subsidiary's Facility and the Facilities Subsidiary's Revolving Credit Facility but including, to the extent not already included, all other Indebtedness outstanding on such date which is guaranteed or in effect guaranteed by the Company or any Restricted Subsidiaries), after giving effect to any Indebtedness proposed to be created on such date and to the concurrent retirement of any other Indebtedness. 27 33 "MMBF" means one million Board Feet. "Mortgage Note Agreements" means the Note Agreements, dated as of May 31, 1989, providing for the issuance and sale by the Facilities Subsidiary of its 11 1/8% First Mortgage Notes to the purchasers listed in the schedule of purchasers attached thereto, as amended by (a) those certain Mortgage Note Agreement Amendment, Consent and Waivers dated as of January 1, 1991, (b) that certain letter agreement dated April 22, 1993, (c) that certain Mortgage Note Agreement Amendment dated as of September 1, 1993, and (d) that certain Mortgage Note Agreement Amendment dated as of May 20, 1994. "Mortgage Notes" means the 11 1/8% First Mortgage Notes of the Facilities Subsidiary issued and sold pursuant to the Mortgage Note Agreements. "Multiemployer Plan" means a "multiemployer plan" (within the meaning of Section 4001(a)(3) of ERISA) and to which any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "Net Proceeds" means proceeds in cash as and when received by the Person making a sale of Property, net of: (a) the direct costs relating to such sale excluding amounts payable to the Company or any Affiliate of the Company, (b) sale, use or other transaction taxes paid or payable as a result thereof, and (c) amounts required to be applied to repay principal, interest and prepayment premiums and penalties on Indebtedness secured by a Lien on the asset which is the subject of such disposition. "1994 Notes" means the 8.73% Senior Notes due August 1, 2009 in the aggregate principal amount of $150,000,000 issued and sold pursuant to the 1994 Senior Note Agreements. "1994 Senior Note Agreements" means those certain Senior Note Agreements dated as of August 1, 1994 providing for the issuance and sale by the Company of the 1994 Senior Notes to the purchasers listed in the schedule of purchasers attached thereto. "Notes" means those certain senior promissory notes in the aggregate principal amount of $165,000,000 issued and sold pursuant to the Note Agreements. 28 34 "Note Agreements" means those certain Note Agreements dated as of May 31, 1989, providing for the issuance and sale by the Company of the Notes to the purchasers listed in the schedule of purchasers attached thereto, as amended by (a) those certain Senior Note Agreement Amendment, Consent and Waivers dated as of January 1, 1991, (b) that certain letter agreement dated April 22, 1993, (c) that certain Senior Note Agreement Amendment dated as of September 1, 1993, and (d) that certain Senior Note Agreement Amendment dated as of May 20, 1994. "Notice of Borrowing" means a notice given by the Company to the Agent pursuant to Section 2.03, in substantially the form of Exhibit A. "Notice of Conversion/Continuation" means a notice given by the Company to the Agent pursuant to Section 2.04, in substantially the form of Exhibit B. "Notice of Lien" means any "notice of lien" or similar document intended to be filed or recorded with any court, registry, recorder's office, central filing office or other Governmental Authority for the purpose of evidencing, creating, perfecting or preserving the priority of a Lien securing obligations owing to a Governmental Authority. "Obligations" means all Loans, and other Indebtedness, advances, debts, liabilities, obligations, covenants and duties owing by the Company to any Bank, the Agent, the Co-Agent, the Issuing Banks, or any other Person required to be indemnified, that arises under any Loan Document, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. "Offshore Lending Office" means with respect to each Bank, the office of such Bank designated as such in the signature pages hereto or such other office of such Bank as such Bank may from time to time specify to the Company and the Agent. "Offshore Rate" means, for each Interest Period in respect of Offshore Rate Committed Loans comprising part of the same Borrowing, an interest rate per annum 29 35 (rounded upward to the nearest 1/16th of 1%) determined pursuant to the following formula: Offshore Rate = IBOR ------------------------------------ 1.00 - Eurodollar Reserve Percentage Where, "Eurodollar Reserve Percentage" means for any day for any Interest Period the reserve percentage (expressed as a decimal, rounded upward to the nearest 1/100th of 1%) in effect for such day under regulations issued from time to time by the Federal Reserve Board for determining the reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities") having a term comparable to such Interest Period; and "IBOR" means the rate of interest per annum determined by the Agent as the rate at which dollar deposits in the approximate amount of BofA's Offshore Rate Committed Loan and having a maturity comparable to such Interest Period would be offered by BofA's Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be designated for such purpose by BofA), to major banks in the offshore dollar interbank market upon request of such banks at approximately 11:00 a.m. (New York City time) two Business Days prior to the commencement of such Interest Period. The Offshore Rate shall be adjusted automatically as to all Offshore Rate Committed Loans then outstanding as of the effective date of any change in the Eurodollar Reserve Percentage. "Offshore Rate Committed Loan" means any Committed Loan that bears interest based on the Offshore Rate. "Offshore Rate Loan" means any LIBOR Bid Loan or any Offshore Rate Committed Loan. "Operating Lease" means, as applied to any Person, any lease of Property which is not a Capital Lease. "Ordinary Course of Business" means, in respect of any transaction involving the Company or any Subsidiary of the Company, the ordinary course of such Person's business, as conducted by any such Person in accordance 30 36 with past practice and undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Loan Document. "Organization Documents" means, for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, any shareholder rights agreement, and all applicable resolutions of the board of directors (or any committee thereof) of such corporation; and, for any limited partnership, the certificate of limited partnership, the limited partnership agreement, and all applicable partnership resolutions. "Original Credit Agreement" has the meaning specified in the Recitals hereto. "Other Taxes" has the meaning specified in subsection 4.01(b). "Participant" has the meaning specified in subsection 11.08(d). "Partnership Agreement" means the Amended and Restated Agreement of Limited Partnership of the Company, as in effect on the Closing Date, and as the same may, from time to time, be amended, modified or supplemented in accordance with the terms thereof. "Partner Entities" means the General Partner, the PCMC General Partner and the PC Advisory General Partner. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any of its principal functions under ERISA. "PC Advisory General Partner" means PC Advisory Corp. I, a Delaware corporation, the managing general partner of the PCMC General Partner, and any successor managing general partner of the PCMC General Partner. "PCMC General Partner" means PC Advisory Partners I, L.P., a Delaware limited partnership, the managing general partner of the General Partner, and any successor managing general partner of the General Partner. 31 37 "Permitted Business" means any business engaged in by the Company or the Facilities Subsidiary on the Closing Date, and any business substantially similar or related to any such business, which shall not include pulp or paper manufacturing. "Permitted Liens" has the meaning specified in Section 8.01. "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority. "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which the Company or any ERISA Affiliate sponsors or maintains or to which the Company or any ERISA Affiliate makes, is making or is obligated to make contributions, and includes any Multiemployer Plan or Qualified Plan. "Pro Forma Free Cash Flow" as of any date means (i) net income of the Company and its Restricted Subsidiaries on a pro forma combined basis (excluding (a) gain on the sale of any Capital Asset, (b) non-cash items of income, and (c) any distributions or other income received from, or equity of the Company or any Restricted Subsidiary in the earnings of, any entity which is not a Restricted Subsidiary) for the period of four consecutive fiscal quarters immediately prior to such date determined in accordance with GAAP plus depreciation, depletion, amortization and other noncash charges, interest expense on Indebtedness and provision for income taxes, minus (ii) capital expenditures made by the Company and its Restricted Subsidiaries during such period of four consecutive fiscal quarters to maintain their respective operations. "Property" means any estate or interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible. "Qualified Debt" means, as to the Company, as of any date of determination, without duplication, all outstanding indebtedness of the Company for borrowed money, including Indebtedness represented by the Notes, the 1994 Senior Notes and this Agreement (including L/C Borrowings and Loans used to repay L/C Borrowings, but excluding L/C Obligations with respect to undrawn Letters of Credit). 32 38 "Qualified Plan" means a pension plan (as defined in Section 3(2) of ERISA) intended to be tax-qualified under Section 401(a) of the Code and which any ERISA Affiliate sponsors, maintains, or to which it makes, is making or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding period covering at least five (5) plan years, but excluding any Multiemployer Plan. "Rate Contracts" means swap agreements (as such term is defined in Section 101 of the Bankruptcy Code) and any other agreements or arrangements designed to provide protection against fluctuations in interest or currency exchange rates. "Reportable Event" means, as to any Plan, (a) any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC, (b) a withdrawal from a Plan described in Section 4063 of ERISA, or (c) a cessation of operations described in Section 4062(e) of ERISA. "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "Responsible Officer" means the chief executive officer, the president or any vice president of the General Partner, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief financial officer or the treasurer of the General Partner, or any other officer having substantially the same authority and responsibility. "Responsible Representatives" means (a) in the case of any transaction in which the value of any assets disposed of or received have a value of less than $5,000,000 or in which payments made are less than $5,000,000, the chief executive officer, chief financial officer or chief operating officer of the Company, and (b) in the case of any other transaction, the Board of Directors of the PC Advisory General Partner. 33 39 "Restricted Payment" means (a) any payment or other distribution, direct or indirect, in respect of any partnership interest in the Company, except a distribution payable solely in additional partnership interests in the Company, and (b) any payment, direct or indirect, on account of the redemption, retirement, purchase or other acquisition of any partnership interest in the Company including, without limitation, any Designated Repurchases; or, if the Company is at any time reorganized as or changed (by merger, sale of assets or otherwise) into a corporation, (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of the Company now or hereafter outstanding, except a dividend payable solely in shares of stock of the Company, and (ii) any redemption, retirement, purchase or other acquisition, direct or indirect, of any shares of any class of stock of the Company, now or hereafter outstanding, or of any warrants, rights or options to acquire any such shares, except to the extent that the consideration therefor consists of shares of stock of the Company. "Restricted Subsidiary" means any Wholly-Owned Subsidiary other than (a) any Designated Immaterial Subsidiary and (b) the Facilities Subsidiary or any Subsidiary directly or indirectly owned by the Facilities Subsidiary, provided that after the Mortgage Notes shall have been paid in full and retired, the Facilities Subsidiary and its Subsidiaries shall become and be Restricted Subsidiaries. "Revolving Credit Facility" means any facility pursuant to which the Company may obtain revolving credit, take-down credit, the issuance of standby and payment letters of credit and back-up for the issuance of commercial paper, other than that established pursuant to this Agreement. "Revolving Termination Date" means the earlier to occur of: (a) the Maturity Date; and (b) the date on which the Aggregate Commitment shall terminate in accordance with the provisions of this Agreement. "SEC" means the Securities and Exchange Commission, or any entity succeeding to any of its principal functions. 34 40 "Solvent" means, as to any Person at any time, that (a) (i) in the case of a Person that is not a partnership, the fair value of the Property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities), and (ii) in the case of a Person that is a partnership, the sum of (A) the fair value of the Property of such Person plus (B) the sum of the excess of the fair value of each general partner's non-partnership Property over such partner's non-partnership debts (together, the "Applicable Property") is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities), as such value for purposes of both clauses (i) and (ii) is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the Property of such Person (or, in the case of a partnership, the Applicable Property for such Person) is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its Property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's Property would constitute unreasonably small capital. "Subsidiary" of a Person means any corporation, partnership or other entity a majority of (i) the total combined voting power of all classes of Voting Stock of which or (ii) the outstanding equity interests of which shall, at the time of which any determination is being made, be owned by the Company either directly or through Subsidiaries. "Taxes" has the meaning specified in subsection 4.01(a). "Timber" means standing trees not yet harvested. "Timberlands" means the timberlands owned by the Company as of the Closing Date and any timberlands acquired by the Company or any Subsidiary after the Closing Date. 35 41 "Transferee" has the meaning specified in subsection 11.08(e). "Type" has the meaning specified in the definition of "Committed Loan." "UCC" means the Uniform Commercial Code as in effect in the State of California. "UCP" has the meaning specified in Section 3.09. "Unfunded Pension Liabilities" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used by the Plan's actuaries for funding the Plan pursuant to section 412 for the applicable plan year. "United States" and "U.S." each means the United States of America. "Voting Stock" means, with respect to any corporation or other entity, any shares of stock or other ownership interests of such corporation or entity whose holders are entitled under ordinary circumstances to vote for the election of directors of such corporation or to manage any such other entity (irrespective of whether at the time stock or ownership interests of any other class or classes shall have or might have voting power by reason of the happening of any contingency). "Wholly-Owned Subsidiary" means any Subsidiary organized under the laws of any state of the United States which conducts the major portion of its business in the United States, and all of the stock or other ownership interests of every class of which, except director's qualifying shares, and except in the case of the Facilities Subsidiary not more than 5% of the outstanding Voting Stock shall, at the time as of which any determination is being made, be owned by the Company either directly or through Wholly-Owned Subsidiaries. "Withdrawal Liabilities" means, as of any determination date, the aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA if the Controlled Group made a complete withdrawal from all Multiemployer Plans and any increase in contributions pursuant to Section 4243 of ERISA. 36 42 1.02 Other Interpretive Provisions. (a) Defined Terms. Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto. The meaning of defined terms shall be equally applicable to the singular and plural forms of the defined terms. Terms (including uncapitalized terms) not otherwise defined herein and that are defined in the UCC shall have the meanings therein described. (b) The Agreement. The words "hereof", "herein", "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, section, schedule and exhibit references are to this Agreement unless otherwise specified. (c) Certain Common Terms. (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. (ii) The term "including" is not limiting and means "including without limitation." (d) Performance; Time. Whenever any performance obligation hereunder (other than a payment obligation) shall be stated to be due or required to be satisfied on a day other than a Business Day, such performance shall be made or satisfied on the next succeeding Business Day. In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including". If any provision of this Agreement refers to any action taken or to be taken by any Person, or which such Person is prohibited from taking, such provision shall be interpreted to encompass any and all means, direct or indirect, of taking, or not taking, such action. (e) Contracts. Unless otherwise expressly provided herein, references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document. 37 43 (f) Laws. References to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (g) Captions. The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. (h) Independence of Provisions. The parties acknowledge that this Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters, and that such limitations, tests and measurements are cumulative and must each be performed, except as expressly stated to the contrary in this Agreement. (i) Interpretation. This Agreement is the result of negotiations among and has been reviewed by counsel to the Agent, the Company and other parties, and is the product of all parties hereto. Accordingly, this Agreement and the other Loan Documents shall not be construed against the Banks, the Co-Agent or the Agent merely because of the Agent's, the Co-Agent's or Banks' involvement in the preparation of such documents and agreements. 1.03 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. (b) References herein to "fiscal year" and "fiscal quarter" refer to such fiscal periods of the Company. ARTICLE II THE CREDITS 2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on the terms and conditions hereinafter set forth, to make loans to the Company (each such loan, a "Committed Loan") from time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date, in an aggregate amount not to exceed at any time outstanding the amount set forth opposite the Bank's name in Schedule 2.01 under the heading "Commitment" (such amount as the same may be reduced pursuant to 38 44 Section 2.07 or Section 2.09, or as a result of one or more assignments pursuant to Section 11.08, the Bank's "Commitment"); provided, however, that, after giving effect to any Committed Borrowings, the Effective Amount of all Committed Loans and Bid Loans and the Effective Amount of all L/C Obligations shall not at any time exceed the Aggregate Commitment and provided, further, that the Effective Amount of the Committed Loans of any Bank plus such Bank's Commitment Percentage of the Effective Amount of all L/C Obligations shall not at any time exceed such Bank's Commitment. Within the limits of each Bank's Commitment, and subject to the other terms and conditions hereof, the Company may borrow under this Section 2.01, prepay pursuant to Section 2.08 and reborrow pursuant to this Section 2.01. The amendment and restatement of the Original Credit Agreement shall not be deemed a repayment, satisfaction, cancellation, or novation of the loans outstanding thereunder or any other obligations of the Company under the Original Credit Agreement or any of the Loan Documents (as defined therein), which shall instead continue and constitute Obligations hereunder and under the other Loan Documents, provided, however, that upon the Closing Date, all outstanding Loans under the Original Credit Agreement, subject to Section 4.04 thereof, shall be prepaid in full with the proceeds of Loans hereunder. 2.02 Loan Accounts. The Loans made by each Bank and the Letters of Credit Issued by an Issuing Bank shall be evidenced by one or more loan accounts maintained by such Bank or Issuing Bank, as the case may be, in the ordinary course of business. The loan accounts or records maintained by the Agent, the Co-Agent, each Issuing Bank and each Bank shall be conclusive absent manifest error of the amount of the Loans made by the Banks to the Company and the Letters of Credit issued for the account of the Company, and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder to pay any amount owing with respect to the Loans or any Letter of Credit. 2.03 Procedure for Committed Borrowing. (a) Each Committed Borrowing shall be made upon the Company's irrevocable written notice delivered to the Agent in accordance with Section 11.02 in the form of a Notice of Borrowing (which notice must be received by the Agent prior to 9:00 a.m. (San Francisco time)) (i) three Business Days prior to the requested Borrowing date, in the case of Offshore Rate Committed Loans; (ii) three Business Days prior to the requested Borrowing date, in the case of 39 45 CD Rate Committed Loans, and (iii) on the requested Borrowing date, in the case of Base Rate Committed Loans, specifying: (A) the amount of the Committed Borrowing, which shall be in an aggregate minimum principal amount of three million dollars ($3,000,000) except in the case of Offshore Rate Committed Loans with a proposed Interest Period of one week in which case the aggregate minimum principal amount shall be twelve million dollars ($12,000,000), or, in either case, any multiple of five hundred thousand dollars ($500,000) in excess thereof; (B) the requested Committed Borrowing date, which shall be a Business Day; (C) whether the Committed Borrowing is to be comprised of Offshore Rate Committed Loans, CD Rate Committed Loans or Base Rate Committed Loans; (D) the duration of the Interest Period applicable to such Committed Loans included in such notice. If the Notice of Borrowing shall fail to specify the duration of the Interest Period for any Committed Borrowing comprised of CD Rate Committed Loans or Offshore Rate Committed Loans, such Interest Period shall be 90 days or three months, respectively. (b) Upon receipt of the Notice of Borrowing, the Agent will promptly notify each Bank thereof and of the amount of such Bank's Commitment Percentage of the Committed Borrowing. (c) Each Bank will make the amount of its Commitment Percentage of the Committed Borrowing available to the Agent for the account of the Company at the Agent's Payment Office by 12:00 noon (San Francisco time) on the Committed Borrowing date requested by the Company in funds immediately available to the Agent. The proceeds of all such Committed Loans will then be made available to the Company by the Agent at such office by crediting the account of the Company on the books of BofA with the aggregate of the amounts made available to the Agent by the Banks and in like funds as received by the Agent, unless on the date of the Borrowing all or any portion of the proceeds thereof shall then be required to be applied to the reimbursement of any outstanding drawings under Letters of Credit pursuant to 40 46 Section 3.03, in which case such proceeds or portion thereof shall be applied to the reimbursement of such Letter of Credit drawings. (d) Unless the Majority Banks shall otherwise agree, during the existence of a Default or Event of Default, the Company may not elect to have a Committed Loan be made as, or converted into or continued as, an Offshore Rate Committed Loan or a CD Rate Committed Loan. (e) After giving effect to any Committed Borrowing, there shall not be more than six different Interest Periods in effect in respect of all Committed Loans and Bid Loans together then outstanding. 2.04 Conversion and Continuation Elections for Committed Borrowings. (a) The Company may upon irrevocable written notice to the Agent in accordance with subsection 2.04(b): (i) elect to convert on any Business Day, any Base Rate Committed Loans (or any part thereof in an amount not less than $3,000,000 except in the case of a conversion into an Offshore Rate Committed Loan for an Interest Period of one week which shall be in an amount not less than $12,000,000, or that is in an integral multiple of $500,000 in excess thereof) into Offshore Rate Committed Loans or CD Rate Committed Loans; (ii) elect to convert on the last day of the applicable Interest Period any Offshore Rate Committed Loans having Interest Periods maturing on such day (or any part thereof in an amount not less than $3,000,000, or that is in an integral multiple of $500,000 in excess thereof) into CD Rate Committed Loans or Base Rate Committed Loans; (iii) elect to convert on the last day of the applicable Interest Period any CD Rate Committed Loans having Interest Periods maturing on such day (or any part thereof in an amount not less than $3,000,000 except in the case of a conversion into an Offshore Rate Committed Loan for an Interest Period of one week which shall be in an amount not less than $12,000,000, or that is in an integral multiple of $500,000 in excess thereof) into Offshore Rate Committed Loans or Base Rate Committed Loans; or (iv) elect to continue on the last day of the applicable Interest Period any Offshore Rate Committed 41 47 Loans or CD Rate Committed Loans having Interest Periods maturing on such day (or any part thereof in an amount not less than $3,000,000 except in the case of a continuation of an Offshore Rate Committed Loan for an Interest Period of one week which shall be in an amount not less than $12,000,000, or that is in an integral multiple of $500,000 in excess thereof); provided, that if the aggregate amount of CD Rate Committed Loans or Offshore Rate Committed Loans in respect of any Committed Borrowing shall have been reduced, by payment, prepayment, or conversion of part thereof to be less than $500,000, such CD Rate Committed Loans or Offshore Rate Committed Loans shall automatically convert into Base Rate Committed Loans, and on and after such date the right of the Company to continue such Committed Loans as, and convert such Committed Loans into, Offshore Rate Committed Loans or CD Rate Committed Loans, as the case may be, shall terminate. (b) The Company shall deliver a Notice of Conversion/Continuation in accordance with Section 11.02 to be received by the Agent not later than 9:00 a.m. (San Francisco time) (i) at least three Business Days in advance of the Conversion/Continuation Date, if the Committed Loans are to be converted into or continued as Offshore Rate Committed Loans; (ii) at least three Business Days in advance of the Conversion/Continuation Date, if the Committed Loans are to be converted into or continued as CD Rate Committed Loans; and (iii) on the Conversion/Continuation Date, if the Committed Loans are to be converted into Base Rate Committed Loans, specifying: (A) the proposed Conversion/Continuation Date; (B) the aggregate amount of Committed Loans to be converted or continued; (C) the nature of the proposed conversion or continuation; and (D) other than in the case of Base Rate Committed Loans, the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to CD Rate Committed Loans or Offshore Rate Committed Loans, the Company has failed to select timely a new Interest Period to be applicable to such CD Rate Committed Loans or Offshore Rate Committed Loans, as the case may be, or if any Default or Event of Default shall 42 48 then exist, the Company shall be deemed to have elected to convert such CD Rate Committed Loans or Offshore Rate Committed Loans into Base Rate Committed Loans effective as of the expiration date of such current Interest Period. (d) Upon receipt of a Notice of Conversion/ Continuation, the Agent will promptly notify each Bank thereof, or, if no timely notice is provided by the Company, the Agent will promptly notify each Bank of the details of any automatic conversion. All conversions and continuations shall be made pro rata according to the respective outstanding principal amounts of the Committed Loans with respect to which the notice was given held by each Bank. (e) Unless the Majority Banks shall otherwise agree, during the existence of a Default or Event of Default, the Company may not elect to have a Committed Loan converted into or continued as an Offshore Rate Committed Loan or a CD Rate Committed Loan. (f) Notwithstanding any other provision contained in this Agreement, after giving effect to any conversion or continuation of any Committed Loans, there shall not be more than six different Interest Periods in effect in respect of all Committed Loans and Bid Loans, together then outstanding. 2.05 Bid Borrowings. In addition to Committed Borrowings pursuant to Section 2.03, each Bank severally agrees that the Company may, as set forth in Section 2.06, from time to time request the Banks prior to the Revolving Termination Date to submit offers to make Bid Loans to the Company; provided, however, that the Banks may, but shall have no obligation to, submit such offers and the Company may, but shall have no obligation to, accept any such offers; and provided, further, that at no time shall (a) the Effective Amount of all Committed Loans, Bid Loans and L/C Obligations exceed the Aggregate Commitment; or (b) the number of Interest Periods for Bid Loans then outstanding plus the number of Interest Periods for Committed Loans then outstanding exceed six different Interest Periods. 2.06 Procedure for Bid Borrowings. (a) When the Company wishes to request the Banks to submit offers to make Bid Loans hereunder, it shall transmit to the Agent by telephone call followed promptly by facsimile transmission, delivered in accordance with Section 11.02, a notice in substantially the form of Exhibit G (a "Competitive Bid Request") so as to be received no later than 7:00 a.m. (San Francisco time) (x) four 43 49 Business Days prior to the date of a proposed Bid Borrowing in the case of a LIBOR Auction, or (y) two Business Days prior to the date of a proposed Bid Borrowing in the case of an Absolute Rate Auction, specifying: (i) the date of such proposed Bid Borrowing, which shall be a Business Day; (ii) the aggregate amount of such proposed Bid Borrowing, which shall be in an aggregate minimum principal amount of $5,000,000 or any multiple of $1,000,000 in excess thereof; (iii) whether the Competitive Bids requested are to be for LIBOR Bid Loans or Absolute Rate Bid Loans or both; and (iv) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of "Interest Period" herein. Subject to subsection 2.06(c), the Company may not request Competitive Bids for more than three Interest Periods in a single Competitive Bid Request and may not request Competitive Bids more than once in any period of five consecutive Business Days. (b) Upon receipt of a Competitive Bid Request, the Agent will promptly send to the Banks by facsimile transmission an Invitation for Competitive Bids, which shall constitute an invitation by the Company to each Bank to submit Competitive Bids offering to make the Bid Loans to which such Competitive Bid Request relates in accordance with this Section 2.06. (c) (i) Each Bank may at its discretion submit a Competitive Bid maintaining an offer or offers to make Bid Loans in response to any Invitation for Competitive Bids. Each Competitive Bid must comply with the requirements of this subsection 2.06(c) and must be submitted to the Agent by facsimile transmission at the Agent's office for notices set forth on the signature pages hereto not later than (A) 6:30 a.m. (San Francisco time) three Business Days prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or (B) 6:30 a.m. (San Francisco time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction; provided that Competitive Bids submitted by the Agent (or any Affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such Affiliate notifies the Company of the terms of the offer or offers contained therein not later than 44 50 (A) 6:15 a.m. (San Francisco time) three Business Days prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (B) 6:15 a.m. (San Francisco time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction. (ii) Each Competitive Bid shall be in substantially the form of Exhibit I, specifying therein: (A) the proposed date of Borrowing; (B) the principal amount of each Bid Loan for which such Competitive Bid is being made, which principal amount (x) may be equal to, greater than or less than the Commitment of the quoting Bank, (y) shall be in an aggregate minimum principal amount of $5,000,000 or any multiple of $1,000,000 in excess thereof, and (z) may not exceed the principal amount of Bid Loans for which Competitive Bids were requested; (C) in case the Company elects a LIBOR Auction, the margin above or below LIBOR (the "LIBOR Bid Margin") offered for each such Bid Loan, expressed as a percentage (rounded to the nearest 1/16th of 1%) to be added to or subtracted from the applicable LIBOR and the Interest Period applicable thereto; (D) in case the Company elects an Absolute Rate Auction, the rate of interest per annum (rounded upward to the nearest 1/100th of 1%) (the "Absolute Rate") offered for each such Bid Loan; and (E) the identity of the quoting Bank. A Competitive Bid may contain up to three separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Competitive Bids. (iii) Any Competitive Bid shall be disregarded if it: (A) is not substantially in conformity with Exhibit I or does not specify all of the information required by subsection (c)(ii) of this Section; (B) contains qualifying, conditional or similar language; 45 51 (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bids; or (D) arrives after the time set forth in subsection (c)(i). (d) Promptly on receipt and not later than 7:00 a.m. (San Francisco time) three Business Days prior to the proposed date of Borrowing in the case of a LIBOR Auction, or 7:00 a.m. (San Francisco time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction, the Agent will notify the Company of the terms (i) of any Competitive Bid submitted by a Bank that is in accordance with subsection 2.06(c), and (ii) of any Competitive Bid that amends, modifies or is otherwise inconsistent with a previous Competitive Bid submitted by such Bank with respect to the same Competitive Bid Request. Any such subsequent Competitive Bid shall be disregarded by the Agent unless such subsequent Competitive Bid is submitted solely to correct a manifest error in such former Competitive Bid and only if received within the times set forth in subsection 2.06(c). The Agent's notice to the Company shall specify (1) the aggregate principal amount of Bid Loans for which offers have been received for each Interest Period specified in the related Competitive Bid Request; and (2) the respective principal amounts and LIBOR Bid Margins or Absolute Rates, as the case may be, so offered. Subject only to the provisions of Sections 4.02, 4.05 and 5.02 hereof and the provisions of this subsection (d), any Competitive Bid shall be irrevocable except with the written consent of the Agent given on the written instructions of the Company. (e) Not later than 7:30 a.m. (San Francisco time) three Business Days prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or 7:30 a.m. (San Francisco time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction, the Company shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection 2.06(d). The Company shall be under no obligation to accept any offer and may choose to reject all offers. In the case of acceptance, such notice shall specify the aggregate principal amount of offers for each Interest Period that is accepted. The Company may accept any Competitive Bid in whole or in part; provided that: (i) the aggregate principal amount of each Bid Borrowing may not exceed the applicable amount set forth in the related Competitive Bid Request; 46 52 (ii) the principal amount of each Bid Borrowing must be an amount not less than $5,000,000 or any multiple of $1,000,000 in excess thereof and the principal amount of each Bid Loan shall be an integral multiple of $1,000,000; (iii) acceptance of offers may only be made on the basis of ascending LIBOR Bid Margins or Absolute Rates within each Interest Period, as the case may be; and (iv) the Company may not accept any offer that is described in subsection 2.06(c)(iii) or that otherwise fails to comply with the requirements of this Agreement. (f) If offers are made by two or more Banks with the same LIBOR Bid Margins or Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Bid Loans in respect of which such offers are accepted shall be allocated by the Agent among such Banks as nearly as possible (in such integral multiples of $1,000,000 as the Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determination by the Agent of the amounts of Bid Loans shall be conclusive in the absence of manifest error. (g) (i) The Agent will promptly notify each Bank having submitted a Competitive Bid if its offer has been accepted and, if its offer has been accepted, of the amount of the Bid Loan or Bid Loans to be made by it on the date of the Bid Borrowing. (ii) If, on or before the proposed date of Bid Borrowing, the Commitments have not been terminated and if, on such proposed date of Borrowing all applicable conditions to funding referenced in Sections 4.02, 4.05 and 5.02 hereof are satisfied, each Bank that has received notice pursuant to subsection 2.06(g)(i) that its Competitive Bid has been accepted shall make the amounts of such Bid Loans available to the Agent for the account of the Company at the Agent's Payment Office in immediately available funds by 11:00 a.m. (San Francisco time) on such date of Bid Borrowing. (iii) Promptly following each Bid Borrowing, the Agent shall notify each Bank of the ranges of bids submitted and the highest and lowest Bids accepted for each Interest Period requested by the Company and the aggregate amount borrowed pursuant to such Bid Borrowing. 47 53 (iv) From time to time, the Company and the Banks shall furnish such information to the Agent as the Agent may request relating to the making of Bid Loans, including the amounts, interest rates, dates of borrowings and maturities thereof, for purposes of the allocation of amounts received from the Company for payment of all amounts owing hereunder. 2.07 Voluntary Termination or Reduction of Commitments. The Company may, upon not less than five Business Days prior notice to the Agent, terminate the Aggregate Commitment or permanently reduce the Aggregate Commitment by an aggregate minimum amount of $5,000,000 or any multiple of $5,000,000 in excess thereof; provided that no such reduction or termination shall be permitted if, after giving effect thereto and to any prepayments of the Committed Loans made on the effective date thereof, the Effective Amount of Committed Loans, Bid Loans and L/C Obligations would exceed the amount of the Aggregate Commitment then in effect. Once reduced in accordance with this Section 2.07, the Aggregate Commitment may not be increased. Any reduction of the Aggregate Commitment shall be applied to each Bank's Commitment in accordance with such Bank's Commitment Percentage. All accrued commitment fees to the effective date of any reduction or termination of Commitments shall be paid on the effective date of such reduction or termination. 2.08 Optional Prepayments. (a) Subject to Section 4.04, the Company may, at any time or from time to time, by written notice delivered to the Agent (i) at least three Business Days prior to the proposed prepayment date in the case of Offshore Rate Committed Loans and CD Rate Committed Loans, and (ii) on the proposed prepayment date (which notice must be received by the Agent not later than 9:00 a.m. (San Francisco time)) in the case of Base Rate Committed Loans, ratably prepay Committed Loans in whole or in part, in minimum principal amounts of $3,000,000 or any multiple of $1,000,000 in excess thereof. Such notice of prepayment shall specify the date and amount of such prepayment and whether such prepayment is of Base Rate Committed Loans, CD Rate Committed Loans or Offshore Rate Committed Loans, or any combination thereof. Such notice shall not thereafter be revocable by the Company and the Agent will promptly notify each Bank thereof and of such Bank's Commitment Percentage of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest 48 54 to each such date on the amount prepaid and any amounts required pursuant to Section 4.04. (b) Bid Loans may not be voluntarily prepaid. 2.09 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. (a) Mandatory Prepayments. (i) Asset Dispositions. If the Company or any of its Restricted Subsidiaries shall at any time or from time to time make or agree to make a sale of Properties permitted by subsection 8.02(i), or harvest excess Timber permitted by Section 8.03, then (A) the Net Proceeds of such sale shall either be paid pro-rata by the Company as a prepayment of Loans or reinvested in accordance with the provisions of subsection 8.02(i), or (B) the Net Proceeds from such excess harvest shall either be paid pro-rata by the Company as a prepayment of Loans or reinvested in accordance with the provisions of Section 8.03, each as applicable. (ii) L/C Obligations. If on any date the Effective Amount of L/C Obligations exceeds the L/C Commitment, the Company shall Cash Collateralize on such date the outstanding Letters of Credit in an amount equal to the excess of the maximum amount then available to be drawn under the Letters of Credit over the aggregate L/C Commitment. The Company hereby grants to the Agent, for the benefit of the Agent, the Issuing Banks and the Banks, a security interest in all such cash and deposit account balances used to Cash Collateralize such L/C Obligations. Subject to Section 4.04, if on any date after giving effect to any Cash Collateralization made on such date pursuant to the preceding sentence, the Effective Amount of all Loans then outstanding plus the Effective Amount of all L/C Obligations exceeds the Aggregate Commitments, the Company shall immediately, and without notice or demand, prepay the outstanding principal amount of the Loans and L/C Advances by an amount equal to the applicable excess. (iii) Bid Loans. If any mandatory prepayments pursuant to subsections 2.09(a)(i) or (ii) would otherwise require prepayment of Bid Loans in accordance with subsection 2.09(c), the Company shall Cash Collateralize the outstanding Bid Loans in an amount equal to the prepayment amount applicable to Bid Loans, which amount shall be applied by the Agent to Bid Loans when such Loans mature. The Company hereby grants to the Agent, for the benefit of the Agent and the Bid Loan Lenders, a security interest in 49 55 all such cash and deposit account balances used to Cash Collateralize such prepayment of Bid Loans. (b) Mandatory Commitment Reductions. (i) The Aggregate Commitment shall be reduced from time to time by the amount of any mandatory prepayment required by subsection 2.09(a)(i). (ii) No reduction in the Aggregate Commitment pursuant to Section 2.07 or subsection 2.09(b)(i) shall reduce the L/C Commitment unless and until the combined Commitment has been reduced to $5,000,000; thereafter, any reduction in the combined Commitment pursuant to Section 2.07 shall equally reduce the L/C Commitment. (c) General. Any prepayments pursuant to subsections 2.09(i) or (ii) shall be applied first to any Base Rate Committed Loans then outstanding, second, at the Company's option, to Cash Collateralize or to prepay in the inverse order of their stated maturity CD Rate Committed Loans and Offshore Rate Committed Loans, and third to Bid Loans as provided in Section 2.09(a)(iii). The Company hereby grants to the Agent for the benefit of the Agent and the Banks, a security interest in all such cash and deposit account balances used to Cash Collateralize Loans to be prepaid pursuant to this subsection 2.09(c). The Company shall pay, together with each prepayment under this Section 2.09, accrued interest on the amount prepaid and any amounts required pursuant to Section 4.04. (d) Reduction of Commitment. Upon the making of any mandatory prepayment under subsection 2.09(a)(i), the Commitment of each Bank shall automatically be reduced by an amount equal to such Bank's ratable share of the aggregate of principal repaid, effective as of the earlier of the date that such prepayment is made or the date by which such prepayment is due and payable hereunder. All accrued commitment fees to, but not including the effective date of any reduction or termination of Commitments, shall be paid on the effective date of such reduction or termination. 2.10 Repayment. (a) The Company shall repay to the Banks in full on the Revolving Termination Date the aggregate principal amount of the Loans outstanding on the Revolving Termination Date. 50 56 (b) The Company shall repay each Bid Loan on the last day of the relevant Interest Period. 2.11 Interest. (a) Subject to subsection 2.11(c), each Committed Loan shall bear interest on the outstanding principal amount thereof from the date when made until it becomes due at a rate per annum equal to the CD Rate, the Offshore Rate or the Base Rate, as the case may be, plus the Applicable Margin. Each Bid Loan shall bear interest on the outstanding principal amount thereof from the date when made until it becomes due at a rate per annum equal to the LIBO Rate plus (or minus) the LIBOR Bid Margin, or at the Absolute Rate, as the case may be. (b) Interest on each Loan shall be paid in arrears on each Interest Payment Date. Interest shall also be paid on the date of any prepayment of Committed Loans pursuant to Section 2.08 and 2.09 for the portion of the Loans so prepaid and upon payment (including prepayment) in full thereof and, during the existence of any Event of Default, interest shall be paid on demand of the Agent at the request or with the consent of the Majority Banks. (c) While any Event of Default exists or after acceleration, the Company shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all Obligations due and unpaid, at a rate per annum that is determined, in the case of Loans other than Base Rate Committed Loans, by adding 2% per annum to the Applicable Margin then in effect for such Loans and, in the case of other Obligations, at a rate equal to the Base Rate plus 2%. (d) Anything herein to the contrary notwithstanding, the obligations of the Company hereunder shall be subject to the limitation that payments of interest shall not be required, for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by the respective Bank would be contrary to the provisions of any law applicable to such Bank limiting the highest rate of interest which may be lawfully contracted for, charged or received by such Bank, and in such event the Company shall pay such Bank interest at the highest rate permitted by applicable law. 51 57 2.12 Fees. In addition to certain fees described in Section 3.08: (a) Agency and Participation Fees. The Company shall pay to BofA for BofA's own account fees in the amounts and at the times set forth in a letter agreement between the Company, BofA and the Arranger dated August 29, 1994 and the term sheet attached thereto. The Company shall pay to the Agent on the Closing Date for the account of each Bank a participation fee in an amount equal to the product of (i) 0.075% times (ii) such Bank's Commitment as set forth in Schedule 2.01 hereof. The foregoing fees shall be non-refundable. (b) Commitment Fees. On or before the Closing Date, the Company shall pay to BofA as agent under the Original Credit Agreement for the account of each Bank and the Departing Bank in accordance with their respective Commitment Percentage (as defined in the Original Credit Agreement) all commitment fees accrued until the Closing Date under Section 2.10(b) of the Original Credit Agreement. The Company shall pay to the Agent for the account of each Bank a commitment fee on the average daily unused portion of such Bank's Commitment, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon the daily utilization for that quarter as calculated by the Agent, equal to the Commitment Fee Percentage. For purposes of calculating utilization under this subsection, (i) the Aggregate Commitment shall be deemed used to the extent of the Effective Amount of Committed Loans then outstanding, plus the Effective Amount of L/C Obligations then outstanding and (ii) with respect to the Commitment of each Bid Loan Lender, the making of any Bid Loan shall not be considered a use of a portion of such Bid Loan Lender's Commitment. Such commitment fee shall accrue from the Closing Date to the Revolving Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter, commencing on the first such day after this Agreement is executed by the Company through the Revolving Termination Date, with the final payment to be made on the Revolving Termination Date; provided that, in connection with any reduction or termination of Commitments pursuant to Section 2.07 or Section 2.09, the accrued commitment fee calculated for the period ending on such date shall also be paid on the date of such reduction or termination, with the next succeeding quarterly payment being calculated on the basis of the period from the reduction or termination date to such quarterly payment date. The commitment fees provided in this subsection shall accrue at all times after the above-mentioned commencement date, including at any time during which one or more conditions in Article V are not met. 52 58 (c) Bid Loan Fee. The Company shall pay to the Agent for its own account a Bid Loan fee for each Competitive Bid Request submitted by the Company in the amounts set forth in the letter agreement between the Company, BofA and the Arranger dated August 29, 1994 and the term sheet attached thereto. Such Bid Loan fee shall be due and payable on each date the Company submits a Competitive Bid Request. 2.13 Computation of Fees and Interest. (a) All computations of interest payable in respect of Base Rate Committed Loans at all times as the Base Rate is determined by BofA's "reference rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest under this Agreement shall be made on the basis of a 360-day year and actual days elapsed, which results in more interest being paid than if computed on the basis of a 365-day year. Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. (b) The Agent will, with reasonable promptness, notify the Company and the Banks of each determination of an Offshore Rate, LIBO Rate or of a CD Rate; provided that any failure to do so shall not relieve the Company of any liability hereunder or provide the basis for any claim against the Agent. Any change in the interest rate on a Committed Loan resulting from a change in the Applicable Margin, Reserve Percentage, Eurocurrency Reserve Percentage, or the Assessment Rate shall become effective as of the opening of business on the day on which such change in the Applicable Margin, Reserve Percentage, Eurocurrency Reserve Percentage, or the Assessment Rate becomes effective. The Agent will with reasonable promptness notify the Company and the Banks of the effective date and the amount of each such change, provided that any failure to do so shall not relieve the Company of any liability hereunder or provide the basis for any claim against the Agent. (c) Each determination of an interest rate by the Agent pursuant hereto shall be conclusive and binding on the Company and the Banks in the absence of manifest error. 2.14 Payments by the Company. (a) All payments (including prepayments) to be made by the Company on account of principal, interest, fees and other amounts required hereunder shall be made without set-off, recoupment or counterclaim; shall, except as 53 59 otherwise expressly provided herein, be made to the Agent for the ratable account of the Banks at the Agent's Payment Office, and shall be made in dollars and in immediately available funds, no later than 10:00 a.m. (San Francisco time) on the date specified herein. The Agent will promptly distribute to each Bank its Commitment Percentage (or other applicable share as expressly provided herein) of such principal, interest, fees or other amounts, in like funds as received. Any payment which is received by the Agent later than 10:00 a.m. (San Francisco time) shall be deemed to have been received on the immediately succeeding Business Day and any applicable interest or fee shall continue to accrue. (b) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be; subject to the provisions set forth in the definition of "Interest Period" herein. (c) Unless the Agent shall have received notice from the Company prior to the date on which any payment is due to the Banks hereunder that the Company will not make such payment in full as and when required hereunder, the Agent may assume that the Company has made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent the Company shall not have made such payment in full to the Agent, each Bank shall repay to the Agent on demand such amount distributed to such Bank, together with interest thereon for each day from the date such amount is distributed to such Bank until the date such Bank repays such amount to the Agent, at the Federal Funds Rate as in effect for each such day. 2.15 Payments by the Banks to the Agent. (a) Unless the Agent shall have received notice from a Bank on the Closing Date or, with respect to each Borrowing after the Closing Date, at least one Business Day prior to the date of any proposed Committed Borrowing, that such Bank will not make available to the Agent as and when required hereunder for the account of the Company the amount of that Bank's Commitment Percentage of the Committed Borrowing, the Agent may assume that each Bank has made such amount available to the Agent in immediately available funds on the Committed Borrowing date and the Agent may (but shall not be so required), in reliance upon such assumption, make 54 60 available to the Company on such date a corresponding amount. If and to the extent any Bank shall not have made its full amount available to the Agent in immediately available funds and the Agent in such circumstances has made available to the Company such amount, that Bank shall on the next Business Day following the date of such Committed Borrowing make such amount available to the Agent, together with interest at the Federal Funds Rate for and determined as of each day during such period. A notice of the Agent submitted to any Bank with respect to amounts owing under this subsection 2.15(a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Agent shall constitute such Bank's Loan on the date of such Committed Borrowing for all purposes of this Agreement. If such amount is not made available to the Agent on the next Business Day following the date of such Committed Borrowing, the Agent shall notify the Company of such failure to fund and, upon demand by the Agent, the Company shall pay such amount to the Agent for the Agent's account, together with interest thereon for each day elapsed since the date of such Committed Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Committed Loans comprising such Committed Borrowing. (b) The failure of any Bank to make any Committed Loan on any date of borrowing shall not relieve any other Bank of any obligation hereunder to make a Committed Loan on the date of such borrowing, but no Bank shall be responsible for the failure of any other Bank to make the Committed Loan to be made by such other Bank on the date of any borrowing. 2.16 Sharing of Payments, Etc. If, other than as expressly provided elsewhere herein, any Bank shall obtain on account of the Committed Loans made by it any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) in excess of its Commitment Percentage of payments on account of the Committed Loans obtained by all the Banks, such Bank shall forthwith (a) notify the Agent of such fact, and (b) purchase from the other Banks such participations in the Committed Loans made by them as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Bank, such purchase shall to that extent be rescinded and each other Bank shall repay to the purchasing Bank the purchase price paid therefor, together with an amount equal to such paying Bank's proportionate share (according to the proportion of (i) the amount of such paying Bank's required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or 55 61 payable by the purchasing Bank in respect of the total amount so recovered. The Company agrees that any Bank so purchasing a participation from another Bank pursuant to this Section 2.16 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 11.09) with respect to such participation as fully as if such Bank were the direct creditor of the Company in the amount of such participation. The Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased pursuant to this Section 2.16 and will in each case notify the Banks following any such purchases or repayments. Any Bank having outstanding both Committed Loans and Bid Loans at any time a right of set-off is exercised by such Bank shall apply the proceeds of such set-off first to such Bank's Committed Loans, until its Committed Loans are reduced to zero, and thereafter to its Bid Loans. 2.17 Effect of Limitations in Facility B Credit Agreement. Unless otherwise stated herein to the contrary, the limitations imposed in Article II and III hereof on the minimum principal amount of each Credit Extension, the number of Interest Periods in effect and the frequency of Borrowings shall operate independently of any such limitations imposed on Credit Extensions as defined in and pursuant to the Facility B Credit Agreement and shall not be affected by or combined with any such limitations therein. ARTICLE III THE LETTERS OF CREDIT 3.01 The Letter of Credit Facility. (a) On the terms and conditions set forth herein, (i) each Issuing Bank agrees, (A) from time to time on any Business Day during the period from the Closing Date until 30 days before the Revolving Termination Date to issue Letters of Credit for the account of the Company or the Facilities Subsidiary, and to amend or renew Letters of Credit previously issued by it, in accordance with subsections 3.02(c) and 3.02(d), and (B) to honor drafts under the Letters of Credit; and (ii) the Banks severally agree to participate in Letters of Credit Issued for the account of the Company or the Facilities Subsidiary; provided, that the Issuing Banks shall not be obligated to Issue, and no Bank shall be obligated to participate in, any Letter of Credit if as of the date of Issuance of such Letter of Credit (the "Issuance Date") (1) the Effective 56 62 Amount of all L/C Obligations plus the Effective Amount of all Committed Loans and Bid Loans exceeds the Aggregate Commitment, (2) the participation of any Bank in the Effective Amount of all L/C Obligations plus the Effective Amount of the Committed Loans of such Bank exceeds such Bank's Commitment, or (3) the Effective Amount of L/C Obligations exceeds the L/C Commitment. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company's ability to obtain Letters of Credit shall be fully revolving, and, accordingly, the Company may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit which have expired or which have been drawn upon and reimbursed. The Company shall be primarily liable for all obligations hereunder and under the L/C-Related Documents with respect to any Letter of Credit Issued for the account of the Facilities Subsidiary. (b) Each of the Issuing Banks is under no obligation to Issue any Letter of Credit if: (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law applicable to such Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrain from, the Issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such Issuing Bank in good faith deems material to it; (ii) such Issuing Bank has received written notice from any Bank, the Agent or the Company, on or prior to the Business Day prior to the requested date of Issuance of such Letter of Credit, that one or more of the applicable conditions contained in Article V is not then satisfied; (iii) the expiry date of any requested Letter of Credit is (A) more than one year after the date of Issuance, unless the Majority Banks have approved such expiry date in writing, or (B) less than 30 days prior to the Revolving Termination Date, unless all of the Banks have approved such expiry date in writing; 57 63 (iv) the expiry date of any requested Letter of Credit is prior to the maturity date of any financial obligation to be supported by the requested Letter of Credit, unless such Letter of Credit is issued in connection with worker's compensation or to secure self-insurance deductibles or certain payments required in connection with export log yards, or all of the Banks have approved such expiry date in writing; (v) any requested Letter of Credit does not provide for drafts, or is not otherwise in form and substance reasonably acceptable to such Issuing Bank, or the Issuance of a Letter of Credit may violate any policies of such Issuing Bank applicable to customers and credits of a type similar to the Company and the transactions contemplated by this Agreement; (vi) any standby Letter of Credit is for the purpose of supporting the issuance of any letter of credit by any other Person; (vii) such Letter of Credit is in a face amount less than $100,000 or to be denominated in a currency other than Dollars; or (viii) the requested Letter of Credit provides for payment thereunder sooner than the Business Day following the presentation to such Issuing Bank of the documentation required thereunder. 3.02 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter of Credit shall be issued upon the irrevocable written request of the Company (or, if such Letter of Credit is to be for the account of the Facilities Subsidiary, the joint and several irrevocable written request of the Company and the applicable Facilities Subsidiary) received by an Issuing Bank (with a copy sent by the Company to the Agent) at least five days (or such shorter time as such Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of issuance. Each such request for issuance of a Letter of Credit shall be made by an original writing or by facsimile, confirmed immediately in an original writing, in the form of an L/C Application, and shall specify in form and detail satisfactory to such Issuing Bank: (i) the proposed date of issuance of the Letter of Credit (which shall be a Business Day); (ii) the face amount of the Letter of Credit; 58 64 (iii) the expiry date of the Letter of Credit; (iv) the name and address of the beneficiary thereof; (v) the documents to be presented by the beneficiary of the Letter of Credit in case of any drawing thereunder; (vi) the full text of any certificate to be presented by the beneficiary in case of any drawing thereunder; and (vii) such other usual and customary matters as the Issuing Bank may require. (b) At least three Business Days prior to the Issuance of any Letter of Credit or any amendment or renewal of a Letter of Credit, the Issuing Bank issuing such Letter of Credit will confirm with the Agent (by telephone or in writing) that the Agent has received a copy of the L/C Application or L/C Amendment Application from the Company and, if not, such Issuing Bank will provide the Agent with a copy thereof. Unless such Issuing Bank has received notice on or before the Business Day immediately preceding the date such Issuing Bank is to issue, amend or renew a requested Letter of Credit from the Agent (A) directing such Issuing Bank not to issue, amend or renew such Letter of Credit because such issuance amendment or renewal is not then permitted under subsection 3.01(a) as a result of the limitations set forth in clauses (1) through (3) thereof or subsection 3.01(b)(ii); or (B) that one or more conditions specified in Article V are not then satisfied; then, subject to the terms and conditions hereof, such Issuing Bank shall, on the requested date, issue a Letter of Credit for the account of the Company or amend or renew a Letter of Credit, as the case may be, in accordance with such Issuing Bank's usual and customary business practices. (c) From time to time while a Letter of Credit is outstanding and prior to the Revolving Termination Date, an Issuing Bank will, upon the written request of the Company received by such Issuing Bank (with a copy sent by the Company to the Agent) at least five days (or such shorter time as such Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of amendment, amend any Letter of Credit issued by it. Each such request for amendment of a Letter of Credit shall be made by an original writing or by facsimile, confirmed immediately in an original writing, made in the form of an 59 65 L/C Amendment Application and shall specify in form and detail satisfactory to such Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of amendment of the Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; and (iv) such other usual and customary matters as such Issuing Bank may require. Such Issuing Bank shall be under no obligation to amend any Letter of Credit if: (A) such Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms of this Agreement; or (B) the beneficiary of any such letter of Credit does not accept the proposed amendment to the Letter of Credit. The Agent will promptly notify the Banks of the receipt by it of any L/C Application or L/C Amendment Application. (d) Each Issuing Bank and the Banks agree that, while a Letter of Credit is outstanding and prior to the Revolving Termination Date, at the option of the Company and upon the written request of the Company received by an Issuing Bank (with a copy sent by the Company to the Agent) at least five days (or such shorter time as such Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of notification of renewal, such Issuing Bank shall be entitled to authorize the automatic renewal of any Letter of Credit issued by it. Each such request for renewal of a Letter of Credit shall be made by an original writing or by facsimile, confirmed immediately in an original writing, in the form of an L/C Amendment Application, and shall specify in form and detail satisfactory to such Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of notification of renewal of the Letter of Credit (which shall be a Business Day); (iii) the revised expiry date of the Letter of Credit; and (iv) such other usual and customary matters as the Issuing Bank may require. Such Issuing Bank shall be under no obligation so to renew any Letter of Credit if: (A) such Issuing Bank would have no 60 66 obligation at such time to issue or amend such Letter of Credit in its renewed form under the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit does not accept the proposed renewal of the Letter of Credit. If any outstanding Letter of Credit shall provide that it shall be automatically renewed unless the beneficiary thereof receives notice from such Issuing Bank that such Letter of Credit shall not be renewed, and if at the time of renewal such Issuing Bank would be entitled to authorize the automatic renewal of such Letter of Credit in accordance with this subsection 3.02(d) upon the request of the Company but such Issuing Bank shall not have received any L/C Amendment Application from the Company with respect to such renewal or other written direction by the Company with respect thereto, such Issuing Bank shall nonetheless be permitted to allow such Letter of Credit to renew, and the Company and the Banks hereby authorize such renewal, and, accordingly, such Issuing Bank shall be deemed to have received an L/C Amendment Application from the Company requesting such renewal. (e) In connection with Letters of Credit that automatically renew or extend their expiry date, each Issuing Bank may, at its election (or as required by the Agent at the direction of the Majority Banks), deliver any notices of termination or other communications to any Letter of Credit beneficiary or transferee, and take any other action as necessary or appropriate, at any time and from time to time, in order to cause the expiry date of such Letter of Credit to be a date not later than the Revolving Termination Date. (f) This Agreement shall control in the event of any conflict with any L/C-Related Document (other than any Letter of Credit). (g) Each Issuing Bank will also deliver to the Agent, concurrently or promptly following its delivery of a Letter of Credit, or amendment to or renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and complete copy of each such Letter of Credit or amendment to or renewal of a Letter of Credit. (h) Each Issuing Bank shall deliver to the Agent such reports with respect to the Letters of Credit as the Agent may reasonably request from time to time. 3.03 Existing ABN Letters of Credit; Risk Participations, Drawings and Reimbursements. (a) On and after the Closing Date, the Existing ABN Letters of Credit shall be deemed for all purposes, 61 67 including for purposes of the fees to be collected pursuant to subsections 3.08(a) and 3.08(c), and reimbursement of costs and expenses to the extent provided herein, Letters of Credit outstanding under this Agreement and entitled to the benefits of this Agreement and the other Loan Documents, and shall be governed by the applications and agreements pertaining thereto (which shall be deemed L/C Related Documents) and by this Agreement (which, as between the Company, the Issuing Banks, the Agent and the Banks, shall control in the event of a conflict). Each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from ABN as the Issuing Bank on the Closing Date a participation in each such Letter of Credit and each drawing thereunder in an amount equal to the product of (i) such Bank's Commitment Percentage times (ii) the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. For purposes of subsection 2.01 and subsection 2.12, the Existing ABN Letters of Credit shall be deemed to utilize pro rata the Commitment of each Bank. The Company hereby assumes all obligations of the Facilities Subsidiary with respect to Existing ABN Letters of Credit Issued for the account of the Facilities Subsidiary. (b) Immediately upon the Issuance of each Letter of Credit, each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank issuing such Letter of Credit a participation in such Letter of Credit and each drawing thereunder in an amount equal to the product of (i) the Commitment Percentage of such Bank, times (ii) the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. For purposes of Section 2.01, each Issuance of a Letter of Credit shall be deemed to utilize the Commitment of each Bank by an amount equal to the amount of such participation. (c) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank which issued such Letter of Credit will promptly notify the Company. The Company shall reimburse such Issuing Bank, directly or with the proceeds of a Loan, prior to 10:00 a.m. (San Francisco time), on each date that any amount is paid by such Issuing Bank under any Letter of Credit (each such date, an "Honor Date"), in an amount equal to the amount so paid by such Issuing Bank. If the Company fails to reimburse such Issuing Bank for the full amount of any drawing under any Letter of Credit by 10:00 a.m. (San Francisco time) on the Honor Date, such Issuing Bank will promptly notify the Agent and the Agent will promptly notify each Bank thereof, and the Company shall be deemed to have requested that Base Rate Committed 62 68 Loans be made by the Banks to be disbursed on the Honor Date under such Letter of Credit, subject to the amount of the unutilized portion of the Commitment and subject to the conditions set forth in Section 5.02. Any notice given by such Issuing Bank or the Agent pursuant to this subsection 3.03(c) may be oral if immediately confirmed in writing (including by facsimile); provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (d) Each Bank shall upon any notice pursuant to subsection 3.03(c) make available to the Agent for the account of the relevant Issuing Bank an amount in Dollars and in immediately available funds equal to its Commitment Percentage of the amount of the drawing, whereupon the participating Banks shall (subject to subsection 3.03(e)) each be deemed to have made a Loan consisting of a Base Rate Committed Loan to the Company in that amount. If any Bank so notified fails to make available to the Agent for the account of such Issuing Bank the amount of such Bank's Commitment Percentage of the amount of the drawing by no later than 12:00 noon (San Francisco time) on the Honor Date, then interest shall accrue on such Bank's obligation to make such payment, from the Honor Date to the date such Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in effect from time to time during such period. The Agent will promptly give notice of the occurrence of the Honor Date, but failure of the Agent to give any such notice on the Honor Date or in sufficient time to enable any Bank to effect such payment on such date shall not relieve such Bank from its obligations under this Section 3.03. (e) With respect to any unreimbursed drawing that is not converted into Loans consisting of Base Rate Committed Loans to the Company in whole or in part, because of the Company's failure to satisfy the conditions set forth in Section 5.02 or for any other reason, the Company shall be deemed to have incurred from the relevant Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at a rate per annum equal to the Base Rate plus 2% per annum, and each Bank's payment to such Issuing Bank pursuant to subsection 3.03(d) shall be deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Bank in satisfaction of its participation obligation under this Section 3.03. (f) Each Bank's obligation in accordance with this Agreement to make the Loans or L/C Advances, as contemplated by this Section 3.03, as a result of a drawing under a 63 69 Letter of Credit, shall be absolute and unconditional and without recourse to the relevant Issuing Bank and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which such Bank may have against such Issuing Bank, the Company or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default, an Event of Default or a Material Adverse Effect; or (iii) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided, however, that each Bank's obligation to make Committed Loans under this Section 3.03 is subject to the conditions set forth in Section 5.02. 3.04 Repayment of Participations. (a) Upon (and only upon) receipt by the Agent for the account of an Issuing Bank of immediately available funds from the Company (i) in reimbursement of any payment made by such Issuing Bank under the Letter of Credit with respect to which any Bank has paid the Agent for the account of such Issuing Bank for such Bank's participation in the Letter of Credit pursuant to Section 3.03 or (ii) in payment of interest thereon, the Agent will pay to each Bank, in the same funds as those received by the Agent for the account of such Issuing Bank, the amount of such Bank's Commitment Percentage of such funds, and such Issuing Bank shall receive the amount of the Commitment Percentage of such funds of any Bank that did not so pay the Agent for the account of such Issuing Bank. (b) If the Agent or an Issuing Bank is required at any time to return to the Company, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of the payments made by the Company to the Agent for the account of such Issuing Bank pursuant to subsection 3.04(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Bank shall, on demand of the Agent, forthwith return to the Agent or such Issuing Bank the amount of its Commitment Percentage of any amounts so returned by the Agent or such Issuing Bank plus interest thereon from the date such demand is made to the date such amounts are returned by such Bank to the Agent or such Issuing Bank, at a rate per annum equal to the Federal Funds Rate in effect from time to time. 3.05 Role of the Issuing Bank. (a) Each Bank and the Company agree that, in paying any drawing under a Letter of Credit, each of the Issuing Banks shall not have any responsibility to obtain any document (other than any sight draft and certificates 64 70 expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. (b) No Agent-Related Person, ABN, nor any of the respective correspondents, participants or assignees of the Issuing Banks shall be liable to any Bank for: (i) any action taken or omitted in connection herewith at the request or with the approval of the Banks (including the Majority Banks, as applicable); (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any L/C-Related Document. (c) The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Company's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. No Agent-Related Person, ABN, nor any of the respective correspondents, participants or assignees of an Issuing Bank, shall be liable or responsible for any of the matters described in clauses (i) through (vii) of Section 3.06; provided, however, anything in such clauses to the contrary notwithstanding, that the Company may have a claim against an Issuing Bank, and such Issuing Bank may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by such Issuing Bank's willful misconduct or gross negligence or such Issuing Bank's willful or grossly negligent failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing: (i) each Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; and (ii) such Issuing Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. 3.06 Obligations Absolute. The obligations of the Company under this Agreement and any L/C-Related Document to reimburse each Issuing Bank for a drawing under a Letter of 65 71 Credit, and to repay any L/C Borrowing and any drawing under a Letter of Credit converted into Loans shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and each such other L/C-Related Document under all circumstances, including the following: (i) any lack of validity or enforceability of this Agreement or any L/C-Related Document; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of any Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the L/C-Related Documents; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against any beneficiary or any transferee of any Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Issuing Banks or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the L/C-Related Documents or any unrelated transaction; (iv) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit; (v) any payment by an Issuing Bank under any Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of any Letter of Credit; or any payment made by such Issuing Bank under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of any Letter of Credit, including any arising in connection with any Insolvency Proceeding; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guarantee, for all or any of the obligations of the Company in respect of any Letter of Credit; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, 66 72 including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. 3.07 Cash Collateral Pledge. Upon (i) the request of the Agent, (A) if an Issuing Bank has honored any full or partial drawing request on any Letter of Credit and such drawing has resulted in an L/C Borrowing hereunder, or (B) if, as of the Revolving Termination Date, any Letters of Credit may for any reason remain outstanding and partially or wholly undrawn, or (ii) the occurrence of the circumstances described in subsection 2.09 requiring the Company to Cash Collateralize Letters of Credit, then, the Company shall immediately Cash Collateralize the L/C Obligations in an amount equal to the L/C Obligations. The Company hereby grants to the Agent, for the benefit of the Agent, the Issuing Banks and the Banks, a security interest in all such cash and deposit account balances used to Cash Collateralize the Company's obligations hereunder. 3.08 Letter of Credit Fees. (a) The Company shall pay to the Agent for the account of each of the Banks a letter of credit fee with respect to the Letters of Credit on the average daily maximum amount available to be drawn of the outstanding Letters of Credit, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon Letters of Credit outstanding for that quarter as calculated by the Agent, equal to the Letter of Credit Rate. Such letter of credit fees shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter during which Letters of Credit are outstanding, commencing on the first such quarterly date to occur after the Closing Date, through the Revolving Termination Date (or such later date upon which the outstanding Letters of Credit shall expire), with the final payment to be made on the Revolving Termination Date (or such later expiration date). (b) The Company shall pay to the Agent for the account of each Issuing Bank a letter of credit fronting fee per annum with respect to the outstanding Letters of Credit issued by such Issuing Bank equal to 0.125% per annum of the average daily maximum amount available to be drawn under such outstanding Letters of Credit, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon Letters of Credit issued by such Issuing Bank outstanding for that quarter as calculated by the Agent. Such fronting fees shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter during which Letters of Credit are outstanding, commencing on the first such quarterly date to 67 73 occur after the Closing Date, through the Revolving Termination Date (or such later date upon which the outstanding Letters of Credit shall expire), with the final payment to be made on the Revolving Termination Date (or such later expiration date). (c) The Company shall pay to each Issuing Bank from time to time on demand the normal issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such Issuing Bank relating to letters of credit as from time to time in effect. 3.09 Uniform Customs and Practice. The Uniform Customs and Practice for Documentary Credits as published by the International Chamber of Commerce ("UCP") most recently at the time of issuance of any Letter of Credit shall (unless otherwise expressly provided in the Letters of Credit) apply to the Letters of Credit. ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY 4.01 Taxes. (a) Subject to subsection 4.01(g), any and all payments by the Company to each Bank or the Agent under this Agreement shall be made free and clear of, and without deduction or withholding for, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Bank and the Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by each Bank's net income by the jurisdiction under the laws of which such Bank or the Agent, as the case may be, is organized or maintains a Lending Office or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). (b) In addition, the Company shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents (hereinafter referred to as "Other Taxes"). (c) Subject to subsection 4.01(g), the Company shall indemnify and hold harmless each Bank and the Agent for the full amount of Taxes or Other Taxes (including any 68 74 Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 4.01) paid by the Bank or the Agent and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days from the date the Bank or the Agent makes written demand therefor. (d) If the Company shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Bank or the Agent, then, subject to subsection 4.01(g): (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4.01) such Bank or the Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made; (ii) the Company shall make such deductions; and (iii) the Company shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (e) Within 30 days after the date of any payment by the Company of Taxes or Other Taxes, the Company shall furnish to the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Agent. (f) Each Bank which is a foreign person (i.e., a person other than a United States person for United States Federal income tax purposes) agrees that: (i) it shall, no later than the Closing Date (or, in the case of a Bank which becomes a party hereto pursuant to Section 11.08 after the Closing Date, the date upon which the Bank becomes a party hereto) deliver to the Company through the Agent two accurate and complete signed originals of Internal Revenue Service Form 4224 or any successor thereto ("Form 4224"), or two accurate and complete signed originals of Internal Revenue Service Form 1001 or any successor thereto ("Form 1001"), as appropriate, in each case indicating that the Bank is on the date of delivery thereof entitled to receive payments of principal, interest and fees under this Agreement free from withholding of United States Federal income tax; 69 75 (ii) if at any time the Bank makes any changes necessitating a new Form 4224 or Form 1001, it shall with reasonable promptness deliver to the Company through the Agent in replacement for, or in addition to, the forms previously delivered by it hereunder, two accurate and complete signed originals of Form 4224; or two accurate and complete signed originals of Form 1001, as appropriate, in each case indicating that the Bank is on the date of delivery thereof entitled to receive payments of principal, interest and fees under this Agreement free from withholding of United States Federal income tax; (iii) it shall, before or promptly after the occurrence of any event (including the passing of time but excluding any event mentioned in (ii) above) requiring a change in or renewal of the most recent Form 4224 or Form 1001 previously delivered by such Bank, deliver to the Company through the Agent two accurate and complete original signed copies of Form 4224 or Form 1001 in replacement for the forms previously delivered by the Bank; and (iv) it shall, promptly upon the Company's or the Agent's reasonable request to that effect, deliver to the Company or the Agent (as the case may be) such other forms or similar documentation as may be required from time to time by any applicable law, treaty, rule or regulation in order to establish such Bank's tax status for withholding purposes. (g) The Company will not be required to pay any additional amounts in respect of United States Federal income tax pursuant to subsection 4.01(d) to any Bank for the account of any Lending Office of such Bank: (i) if the obligation to pay such additional amounts would not have arisen but for a failure by such Bank to comply with its obligations under subsection 4.01(f) in respect of such Lending Office; (ii) if such Bank shall have delivered to the Company a Form 4224 in respect of such Lending Office pursuant to subsection 4.01(f), and such Bank shall not at any time be entitled to exemption from deduction or withholding of United States Federal income tax in respect of payments by the Company hereunder for the account of such Lending Office for any reason other than a change in United States law or regulations or in the official interpretation of such law or regulations by any governmental authority charged with the 70 76 interpretation or administration thereof (whether or not having the force of law) after the date of delivery of such Form 4224; or (iii) if the Bank shall have delivered to the Company a Form 1001 in respect of such Lending Office pursuant to subsection 4.01(f), and such Bank shall not at any time be entitled to exemption from deduction or withholding of United States Federal income tax in respect of payments by the Company hereunder for the account of such Lending Office for any reason other than a change in United States law or regulations or any applicable tax treaty or regulations or in the official interpretation of any such law, treaty or regulations by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) after the date of delivery of such Form 1001. (h) If, at any time, the Company requests any Bank to deliver any forms or other documentation pursuant to subsection 4.01(f)(iv), then the Company shall, on demand of such Bank through the Agent, reimburse such Bank for any costs and expenses (including Attorney Costs) reasonably incurred by such Bank in the preparation or delivery of such forms or other documentation. (i) If the Company is required to pay additional amounts to any Bank or the Agent pursuant to subsection 4.01(d), then such Bank shall use its reasonable best efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment by the Company which may thereafter accrue if such change in the judgment of such Bank is not otherwise disadvantageous to such Bank. 4.02 Illegality. (a) If any Bank shall determine that the introduction of any Requirement of Law, or any change in any Requirement of Law or in the interpretation or administration thereof, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Bank or its Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank to the Company through the Agent, the obligation of that Bank to make Offshore Rate Loans (including in respect of any LIBOR Bid Loan as to which the Company has accepted such Bank's Competitive Bid, but as to which the borrowing date thereof has not arrived) shall be suspended until the 71 77 Bank shall have notified the Agent and the Company that the circumstances giving rise to such determination no longer exist. (b) If a Bank shall determine that it is unlawful to maintain any Offshore Rate Loan, the Company shall prepay in full all Offshore Rate Loans of that Bank then outstanding, together with interest accrued thereon, either on the last day of the Interest Period thereof if the Bank may lawfully continue to maintain such Offshore Rate Loans to such day, or immediately, if the Bank may not lawfully continue to maintain such Offshore Rate Loans, together with any amounts required to be paid in connection therewith pursuant to Section 4.04. If the Company is required to so prepay any Offshore Rate Committed Loan, then concurrently with such prepayment, the Company may borrow from the affected Bank, in the amount of such repayment, a Base Rate Committed Loan. (c) If the obligation of any Bank to make or maintain Offshore Rate Committed Loans has been so terminated or suspended, the Company may elect, by giving notice to the Bank through the Agent that all Loans which would otherwise be made by the Bank as Offshore Rate Committed Loans shall be instead Base Rate Committed Loans. (d) Before giving any notice to the Agent under this Section, the affected Bank shall designate a different Lending Office with respect to its Offshore Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of the Bank, be illegal or otherwise disadvantageous to the Bank. 4.03 Increased Costs and Reduction of Return. (a) If any Bank shall determine that, due to either (i) the introduction of or any change after the date hereof (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the CD Rate or the Offshore Rate or in respect of the assessment rate payable by any Bank to the FDIC for insuring U.S. deposits) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Bank of agreeing to make or making, funding or maintaining any Offshore Rate Loans or CD Rate Committed Loans or participating in Letters of Credit, or, in the case of an Issuing Bank, any increase in the cost to such Issuing Bank of agreeing to issue, issuing or maintaining any Letter of Credit or of agreeing 72 78 to make or making, funding or maintaining any unpaid drawing under any Letter of Credit, then the Company shall be liable for, and shall from time to time, upon demand therefor by such Bank (with a copy of such demand to the Agent), pay to the Agent for the account of such Bank, additional amounts as are sufficient to compensate such Bank for such increased costs. (b) If any Bank shall have determined that (i) the introduction of any Capital Adequacy Regulation after the date hereof, (ii) any change in any Capital Adequacy Regulation after the date hereof, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof after the date hereof, or (iv) compliance by the Bank (or its Lending Office) or any corporation controlling the Bank, with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by the Bank or any corporation controlling the Bank and (taking into consideration such Bank's or such corporation's policies with respect to capital adequacy and such Bank's desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitment, loans, credits or obligations under this Agreement, then, upon demand of such Bank (with a copy to the Agent), the Company shall upon demand pay to the Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank for such increase. 4.04 Funding Losses. The Company agrees to reimburse each Bank and to hold each Bank harmless from any loss or expense which the Bank may sustain or incur as a consequence of: (a) the failure of the Company to make any payment or mandatory prepayment of principal of any Offshore Rate Loan or CD Rate Committed Loan (including payments made after any acceleration thereof); (b) the failure of the Company to borrow, continue or convert a Loan after the Company has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation; (c) the failure of the Company to make any prepayment of any Committed Loan after the Company has given a notice in accordance with Section 2.08; (d) the prepayment (including pursuant to Section 2.08 or 2.09) of an Offshore Rate Loan, CD Rate 73 79 Committed Loan or Absolute Rate Bid Loan on a day which is not the last day of the Interest Period with respect thereto; (e) the conversion pursuant to Section 2.04 of (i) any Offshore Rate Committed Loan to a CD Rate Committed Loan or a Base Rate Committed Loan, or (ii) any CD Rate Committed Loan to an Offshore Rate Committed Loan or Base Rate Committed Loan, on a day that is not the last day of the respective Interest Period; or (f) the failure of the Company to borrow any Bid Loan after having accepted a Competitive Bid therefor; including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans or CD Rate Committed Loans or Absolute Rate Bid Loan hereunder or from fees payable to terminate the deposits from which such funds were obtained. 4.05 Inability to Determine Rates. If the Majority Banks shall have determined that for any reason adequate and reasonable means do not exist for ascertaining the Offshore Rate, LIBO Rate or the CD Rate for any requested Interest Period with respect to a proposed Offshore Rate Loan or CD Rate Committed Loan or that the Offshore Rate, LIBO Rate or the CD Rate applicable pursuant to subsection 2.11(a) for any requested Interest Period with respect to a proposed Offshore Rate Loan or CD Rate Committed Loan does not adequately and fairly reflect the cost to such Banks of funding such Loan, the Agent will forthwith give notice of such determination to the Company and each Bank. Thereafter, the obligation of the Banks to make or maintain CD Rate Committed Loans or Offshore Rate Loans, as the case may be, hereunder shall be suspended until the Agent upon the instruction of the Majority Banks revokes such notice in writing. Upon receipt of such notice, the Company may revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it. If the Company does not revoke such notice, the Banks shall make, convert or continue the Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Committed Loans instead of CD Rate Committed Loans or Offshore Rate Committed Loans, as the case may be. 4.06 Certificate of Bank. Each Bank, if claiming reimbursement or compensation pursuant to this Article IV, shall deliver to the Company, a certificate setting forth in reasonable detail the amount payable to such Bank hereunder 74 80 and such certificate shall be conclusive and binding on the Company in the absence of manifest error. 4.07 Survival. The covenants, agreements and obligations of the Company in this Article IV shall survive the payment of all other Obligations. ARTICLE V CONDITIONS PRECEDENT 5.01 Conditions of Initial Credit Extensions. The obligation of each Bank to make its initial Credit Extension hereunder is subject to the condition that the Agent shall have received on or before the Closing Date all of the following, in form and substance satisfactory to the Agent and, as to the items referenced in subsection 5.01(h) and (i), the Majority Banks, and in sufficient copies for each Bank: (a) Credit Agreement. This Agreement executed by the Company, the Agent, the Co-Agent and each of the Banks; (b) Resolutions; Incumbency. (i) Copies of the resolutions of the board of directors of the PC Advisory General Partner, as general partner of the PCMC General Partner, as general partner of the General Partner, as general partner of the Company, approving and authorizing the execution, delivery and performance by such entities on behalf of the Company of this Agreement and the other Loan Documents to be delivered hereunder, and authorizing the borrowing of the Loans, certified as of the Closing Date by the Secretary or an Assistant Secretary of the PC Advisory General Partner; and (ii) A certificate of the Secretary or Assistant Secretary of the PC Advisory General Partner certifying the names and true signatures of the duly authorized officers of the General Partner, as general partner of the Company, authorized to execute, deliver and perform, as applicable, this Agreement on behalf of the Company, and all other Loan Documents to be delivered hereunder; (c) Articles of Incorporation; By-laws; Partnership Documents and Good Standing. Each of the following documents: 75 81 (i) the partnership certificate of each of the Company, the General Partner, and the PCMC General Partner as in effect on the Closing Date, certified by the Secretary of State (or similar, applicable Governmental Authority) of the state of formation of such entities as of a recent date and by the Secretary or Assistant Secretary of the PC Advisory General Partner as of the Closing Date, and the partnership agreement of each of the Company, the General Partner, and the PCMC General Partner as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of the PC Advisory General Partner as of the Closing Date; (ii) the articles or certificate of incorporation of the PC Advisory General Partner as in effect on the Closing Date, certified by the Secretary of State (or similar, applicable Governmental Authority) of the state of incorporation of the PC Advisory General Partner as of a recent date and by the Secretary or Assistant Secretary of the PC Advisory General Partner as of the Closing Date, and the bylaws of the PC Advisory General Partner as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of the PC Advisory General Partner as of the Closing Date; and (iii) a good standing certificate for each of the Company, the General Partner, the PCMC General Partner, and the PC Advisory General Partner from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation or formation, as applicable and each state where the Company is qualified to do business as a foreign corporation or limited partnership, as applicable, as of a recent date, together with a bring down certificate by facsimile, dated the Closing Date, provided, however, that if the Company is unable to deliver on the Closing Date any such bring down certificate (other than the bring down certificate from the state of incorporation or formation of such Person) because bring down certificates are not readily provided by the applicable Secretary of State, the Company shall not be required to deliver such bring down certificate on the Closing Date but instead shall deliver it to the Agent within five days of the Closing Date; (d) Legal Opinions. An opinion of (i) James A. Kraft, Vice President, Law and Corporate Affairs of the Company and (ii) Perkins Coie, counsel to the Company, each addressed to the Agent and the Banks and substantially in 76 82 the form of Exhibits C-1 and C-2, respectively; (e) Payment of Fees. The Company shall have paid all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with Attorney Costs of BofA to the extent invoiced prior to or on the Closing Date, together with such additional amounts of Attorney Costs as shall constitute BofA's reasonable estimate of Attorney Costs incurred or to be incurred through the closing proceedings, provided that such estimate shall not thereafter preclude final settling of accounts between the Company and BofA; including any such costs, fees and expenses arising under or referenced in Sections 2.12, 4.01 and 11.04; (f) Certificate. A certificate signed by a Responsible Officer, dated as of the Closing Date, stating that: (i) the representations and warranties contained in Article VI are true and correct on and as of such date, as though made on and as of such date; (ii) no Default or Event of Default exists or would result from the initial Credit Extension; and (iii) there has occurred since December 31, 1993, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect; (g) Financial Statements. A copy certified by the chief financial officer of the Company of the financial statements of the Company and its Subsidiaries referred to in Section 6.11; (h) Credit Agreements. Copies certified by a Responsible Officer of the Note Agreements, as amended, the Mortgage Note Agreements, as amended, and the 1994 Senior Note Agreements; (i) Other Documents. Such other approvals, opinions, documents or materials as the Agent or the Majority Banks may request; (j) Facility B Credit Agreement. All conditions precedent to the initial extension of credit under the Facility B Credit Agreement shall have occurred prior to or simultaneously with the Closing; 77 83 (k) Consent to Amendment and Restatement. A Consent to Amendment and Restatement executed by the Departing Bank, substantially in the form of Exhibit J; and (l) Termination of Existing ABN Credit Facilities. On or before the Closing Date, the Company shall have terminated (i) that certain $15,000,000 Revolving Credit Agreement dated as of May 1, 1993 between the Company, ABN, as agent, and the banks party thereto, as amended, and (ii) that certain $20,000,000 Revolving Credit Agreement dated as of May 1, 1993 between the Facilities Subsidiary, ABN, as agent, and the banks party thereto, as amended. 5.02 Conditions to All Credit Extensions. The obligation of each Bank to make any Committed Loan to be made by it, or any Bid Loan as to which the Company has accepted the relevant Competitive Bid (including its initial Loan) or to continue or convert any Committed Loan pursuant to Section 2.04, and the obligation of each Issuing Bank to Issue any Letter of Credit (including the initial Letter of Credit) is subject to the satisfaction of the following conditions precedent on the relevant date of Borrowing, Conversion/Continuation Date or Issuance Date: (a) Notice, Application. As to any Committed Loan, the Agent shall have received (with, in the case of the initial Loan only, a copy for each Bank) a Notice of Borrowing or a Notice of Conversion/Continuation, as applicable, or in the case of any Issuance of any Letter of Credit, the relevant Issuing Bank and the Agent shall have received an L/C Application or L/C Amendment Application, as required under Section 3.02; (b) Continuation of Representations and Warranties. The representations and warranties made by the Company contained in Article VI shall be true and correct on and as of such date of Borrowing or Conversion/Continuation Date with the same effect as if made on and as of such date of Borrowing or Conversion/Continuation Date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they shall be true and correct as of such earlier date); and (c) No Existing Default. No Default or Event of Default shall exist or shall result from such Credit Extension. Each Notice of Borrowing, Notice of Conversion/Continuation, Competitive Bid Request and L/C Application or L/C Amendment Application submitted by the Company hereunder shall constitute a representation and warranty by the Company 78 84 hereunder, as of the date of each such notice, request or application and as of the date of each Borrowing, each Conversion/Continuation Date, or Issuance Date, as applicable, that the conditions in Section 5.02 are satisfied. ARTICLE VI REPRESENTATIONS AND WARRANTIES The Company represents and warrants to the Agent and each Bank that: 6.01 Corporate Existence and Power. (a) The Company, each of its Subsidiaries, and each of the Partner Entities: (i) is a limited partnership or corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; (ii) is duly qualified as a foreign partnership or corporation, as applicable, and licensed and in good standing, under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license; and (iii) is in compliance with all Requirements of Law except where failure to so comply would not reasonably be expected to have a Material Adverse Effect. (b) The Company and each of its Subsidiaries has the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets and carry on its business; and the Company and each of the Partner Entities has the power and authority and all governmental licenses, authorizations, consents and approvals to execute, deliver, and perform its obligations under, the Loan Documents. 6.02 Authorization; No Contravention. The execution, delivery and performance by the Company of this Agreement, and any other Loan Document to which the Company is party, have been duly authorized by all necessary corporate and partnership action on behalf of the PC Advisory General Partner, as general partner of the PCMC General Partner, as general partner of the General Partner, as general partner of the Company, and by all necessary partnership action on behalf of the Company, and do not and will not: 79 85 (a) contravene the terms of the Organization Documents of any of the Company or the Partner Entities; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which such Person is a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its Property is subject; or (c) violate any Requirement of Law. 6.03 Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Company, the Partner Entities or any of their Subsidiaries of the Agreement or any other Loan Document. 6.04 Binding Effect. This Agreement and each other Loan Document to which the Company is a party constitute the legal, valid and binding obligations of the Company and the Partner Entities, enforceable against the Company and the Partner Entities in accordance with their respective terms except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditor's rights generally or by equitable principles relating to enforceability. 6.05 Litigation. There are no actions, suits, proceedings, claims or disputes pending, or to the Company's Knowledge and to the knowledge of the Partner Entities, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Company, the Partner Entities or their Subsidiaries or any of their respective Properties which: (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby; or (b) have a reasonable probability of success on the merits and which, if determined adversely to the Company, the Partner Entities or their Subsidiaries, would reasonably be expected to have a Material Adverse Effect. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any other Loan Document, or directing that the transactions 80 86 provided for herein or therein not be consummated as herein or therein provided. 6.06 No Default. No Default or Event of Default exists or would result from the incurring of any Obligations by the Company. Neither the Company, the Partner Entities, nor any of their Subsidiaries is in default under or with respect to any Contractual Obligation in any respect which, individually or together with all such defaults, would reasonably be expected to have a Material Adverse Effect or that would, if such default had occurred after the Closing date, create an Event of Default under subsection 9.01(f). 6.07 ERISA Compliance. (a) Schedule 6.07 lists all Plans and separately identifies Plans intended to be Qualified Plans and Multiemployer Plans. All written descriptions thereof provided to the Agent are true and complete in all material respects. (b) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state law, including all requirements under the Code or ERISA for filing reports (which are true and correct in all material respects as of the date filed), and benefits have been paid in accordance with the provisions of the Plan. (c) Except as specifically disclosed in Schedule 6.07, each Qualified Plan has been determined by the IRS to qualify under Section 401 of the Code, and the trusts created thereunder have been determined to be exempt from tax under the provisions of Section 501 of the Code, and to the Company's Knowledge nothing has occurred which would cause the loss of such qualification or tax-exempt status. (d) Except as specifically disclosed in Schedule 6.07, there is no outstanding liability under Title IV of ERISA with respect to any Plan maintained or sponsored by the Company or any ERISA Affiliate, nor with respect to any Plan to which the Company or any ERISA Affiliate contributes or is obligated to contribute. (e) Except as specifically disclosed in Schedule 6.07, no Plan subject to Title IV of ERISA has any Unfunded Pension Liability. (f) Except as specifically disclosed in Schedule 6.07, no member of the Controlled Group has ever represented, promised or contracted (whether in oral or 81 87 written form) to any current or former employee (either individually or to employees as a group) that such current or former employee(s) would be provided, at any cost to any member of the Controlled Group, with life insurance or employee welfare plan benefits (within the meaning of section 3(1) of ERISA) following retirement or termination of employment. To the extent that any member of the Controlled Group has made any such representation, promise or contract, such member has expressly reserved the right to amend or terminate such life insurance or employee welfare plan benefits with respect to claims not yet incurred. (g) Members of the Controlled Group have complied in all material respects with the notice and continuation coverage requirements of Section 4980B of the Code. (h) Except as specifically disclosed in Schedule 6.07, no ERISA Event has occurred or, to the Company's Knowledge is reasonably expected to occur with respect to any Plan. (i) There are no pending or, to the Company's Knowledge, threatened claims, actions or lawsuits, other than routine claims for benefits in the usual and ordinary course, asserted or instituted against (i) any Plan maintained or sponsored by the Company or its assets, (ii) any member of the Controlled Group with respect to any Qualified Plan, or (iii) any fiduciary with respect to any Plan for which the Company may be directly or indirectly liable, through indemnification obligations or otherwise. This representation is not made with respect to any Multiemployer Plan. (j) Except as specifically disclosed in Schedule 6.07, neither the Company nor any ERISA Affiliate has incurred nor, to the Company's Knowledge, reasonably expects to incur (i) any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan or (ii) any liability under Title IV of ERISA (other than premiums due and not delinquent under Section 4007 of ERISA) with respect to a Plan. (k) Except as specifically disclosed in Schedule 6.07, neither the Company nor any ERISA Affiliate has transferred any Unfunded Pension Liability to a Person other than the Company or an ERISA Affiliate or otherwise engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. 82 88 (l) The Company has not engaged, directly or indirectly, in a non-exempt prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in connection with any Plan which would reasonably be expected to have a Material Adverse Effect. 6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are intended to be and shall be used solely for the purposes set forth in and permitted by Section 7.11, and are intended to be and shall be used in compliance with Section 8.07. Neither the Company, the Partner Entities, nor any of their Subsidiaries is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. 6.09 Title to Properties. The Company and each of its Subsidiaries have good record and marketable title in fee simple to, or valid leasehold interests in, all real Property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. As of the Closing Date, the Property of the Company and its Subsidiaries is subject to no Liens, other than Permitted Liens. 6.10 Taxes. The Company, the Partner Entities and their Subsidiaries have filed all Federal and other material tax returns and reports required to be filed, and have paid all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their Properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP and no Notice of Lien has been filed or recorded. There is no proposed tax assessment against the Company, the Partner Entities or any of their Subsidiaries which would, if the assessment were made, have a Material Adverse Effect. 6.11 Financial Condition. (a) The audited combined financial statements of financial condition of the Company and its Subsidiaries dated December 31, 1993, and the related combined statements of income and combined statement of cash flows for the fiscal year ended on that date: (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; 83 89 (ii) fairly present the financial condition of the Company and its Subsidiaries as of the date thereof and results of operations for the period covered thereby; and (iii) show all material Indebtedness and other liabilities, direct or contingent of the Company and its combined Subsidiaries as of the date thereof, including liabilities for taxes and material commitments. (b) Since December 31, 1993, there has been no Material Adverse Effect. 6.12 Environmental Matters. (a) Except as specifically disclosed in Schedule 6.12, the on-going operations of the Company, the Partner Entities and each of their Subsidiaries comply in all respects with all Environmental Laws, except such non-compliance which would not (if enforced in accordance with applicable law) result in liability in excess of $25,000,000 in the aggregate. (b) Except as specifically disclosed in Schedule 6.12, the Company, the Partner Entities and each of their Subsidiaries have obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental Permits") and necessary for their respective ordinary course operations, all such Environmental Permits are in good standing, and the Company, the Partner Entities and each of their Subsidiaries are in compliance with all terms and conditions of such Environmental Permits except where the failure to obtain, maintain in good standing or comply with such Environmental Permits would not reasonably be expected to have a Material Adverse Effect. (c) Except as specifically disclosed in Schedule 6.12, none of the Company, the Partner Entities, any of their Subsidiaries or any of their respective present Property or operations, is subject to any outstanding written order from or agreement with any Governmental Authority, nor subject to any judicial or docketed administrative proceeding, respecting any Environmental Law, Environmental Claim or Hazardous Material arising out of a violation or alleged violation of any Environmental Law. (d) Except as specifically disclosed in Schedule 6.12, there are no Hazardous Materials or other conditions or circumstances existing with respect to any Property, or arising from operations prior to the Closing Date, of the Company, the Partner Entities, or any of their 84 90 Subsidiaries that would reasonably be expected to give rise to Environmental Claims with a potential liability of the Company and its Subsidiaries in excess of $25,000,000 in the aggregate for any such condition, circumstance or Property. In addition, (i) neither the Company, the Partner Entities nor any of their Subsidiaries has any underground storage tanks (x) that are not properly registered or permitted under applicable Environmental Laws, or (y) that are leaking or disposing of Hazardous Materials off-site, and (ii) the Company, the Partner Entities and their Subsidiaries have notified all of their employees of the existence, if any, of any health hazard arising from the conditions of their employment and have met all notification requirements under Title III of CERCLA and all other Environmental Laws. 6.13 Regulated Entities. None of the Company, the Partner Entities, any Person controlling the Company or the Partner Entities, or any Subsidiary of the Company or the Partner Entities, is (a) an "Investment Company" within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness. 6.14 No Burdensome Restrictions. Neither the Company nor any of its Subsidiaries is a party to or bound by any Contractual Obligation, or subject to any charter or corporate restriction, or any Requirement of Law, which would reasonably be expected to have a Material Adverse Effect. 6.15 Solvency. The Company, the General Partner, the Facilities Subsidiary, and the Restricted Subsidiaries are each Solvent. 6.16 Labor Relations. There are no material strikes, lockouts or other labor disputes against the Company or any of its Subsidiaries, or, to the Company's Knowledge, threatened against or affecting the Company or any of its Subsidiaries, and no significant unfair labor practice complaint is pending against the Company or any of its Subsidiaries or, to the Company's Knowledge, threatened against any of them before any Governmental Authority. 6.17 Copyrights, Patents, Trademarks and Licenses, Etc. The Company or its Subsidiaries own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and other rights that are reasonably necessary for the operation of their 85 91 respective businesses, without conflict with the rights of any other Person. To the Company's Knowledge, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Company or any of its Subsidiaries infringes upon any rights held by any other Person; except as specifically disclosed in Schedule 6.05, no claim or litigation regarding any of the foregoing is pending or, to the Company's Knowledge, threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the Company's Knowledge, proposed, which, in either case, would reasonably be expected to have a Material Adverse Effect. 6.18 Subsidiaries. The Company has no Subsidiaries other than those specifically disclosed in part (a) of Schedule 6.18 hereto and has no equity investments in any other corporation or entity other than those specifically disclosed in part (b) of Schedule 6.18. Except as disclosed in part (a) of Schedule 6.18, the Company owns 100% of the ownership interests of its Subsidiaries. The Facilities Subsidiary has issued no rights, warrants or options to acquire or instruments convertible into or exchangeable for any equity interest in the Facilities Subsidiary. 6.19 Partnership Interests. The only general partner of the Company is the General Partner, which on the Closing Date will own a 2% interest in the Company. The only general partners of the General Partner are (i) the PCMC General Partner, which is the managing general partner of the General Partner, and (ii) Sub Advisory Corp. I, a Delaware corporation. The only general partner of the PCMC General Partner is the PC Advisory General Partner. 6.20 Broker's, Transaction Fees. Neither the Company nor any of its Subsidiaries has any obligation to any Person in respect of any finder's, broker's or investment banker's fee in connection with the transactions contemplated hereby. 6.21 Insurance. The Properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Company, in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar Properties in localities where the Company or such Subsidiary operates. 6.22 Timber Harvest. The Company and its Restricted Subsidiaries harvested 1,663 MMBF of its fee Timber during the calendar years 1989 (including harvest by the Company's predecessor prior to closing under the Note Agreements) 86 92 through 1991, 469 MMBF of its fee Timber during calendar year 1992 and 458 MMBF of its fee Timber during calendar year 1993. 6.23 Full Disclosure. None of the representations or warranties made by the Company, the General Partners, or any of their Subsidiaries in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in each exhibit, report, written statement or certificate furnished by or on behalf of the Company or any of its Subsidiaries in connection with the Loan Documents, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered. ARTICLE VII AFFIRMATIVE COVENANTS The Company covenants and agrees that, so long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit remains outstanding, unless the Majority Banks waive compliance in writing: 7.01 Financial Statements. The Company shall deliver to the Agent in form and detail satisfactory to the Agent and the Majority Banks, with sufficient copies for each Bank: (a) as soon as available, but not later than 90 days after the end of each fiscal year, a copy of the audited combined balance sheet of the Company as at the end of such year and the related combined statements of income and statements of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of Coopers & Lybrand, or another nationally-recognized independent public accounting firm ("Independent Auditor") which report shall state that such combined financial statements present fairly the financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years. Such opinion shall not be qualified or limited because of a restricted or limited examination by Independent Auditor of any material portion of the Company's or any Subsidiary's records and shall be delivered to the Agent pursuant to a reliance agreement in favor of the Agent and Banks by such Independent Auditor in 87 93 form and substance satisfactory to the Agent and the Majority Banks; (b) as soon as available, but not later than 120 days after the end of each fiscal year, a copy of an audited combining balance sheet of the Company and each of its Subsidiaries as at the end of such fiscal year and the related combining statements of income and statement of cash flows for such fiscal year, all in reasonable detail certified by an appropriate Responsible Officer as having been used in connection with the preparation of the financial statements referred to in subsection (a) of this Section 7.01; (c) as soon as available, but not later than 45 days after the end of each fiscal quarter of each year, a copy of the unaudited combined balance sheet of the Company and its combined Subsidiaries as of the end of such quarter and the related combined statements of income and statement of cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by an appropriate Responsible Officer as being complete and correct and fairly presenting, in accordance with GAAP, the financial position and the results of operations of the Company and the Subsidiaries; (d) as soon as available, but not later than 45 days after the end of each fiscal quarter of each year, a copy of the unaudited combining balance sheets of the Company and each of its Subsidiaries, and the related combining statements of income and statement of cash flows for such quarter, all certified by an appropriate Responsible Officer of the Company as having been used in connection with the preparation of the financial statements referred to in subsection (c) of this Section 7.01; (e) as soon as available, but not later than September 30 of each year, a business plan which shall include five years' pro-forma projections of the Company accompanied by appropriate assumptions on which such projections are based. 7.02 Certificates; Other Information. The Company shall furnish to the Agent, with sufficient copies for each Bank: (a) concurrently with the delivery of the financial statements referred to in subsection 7.01(a) above, a certificate of the Independent Auditor stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate; 88 94 (b) concurrently with the delivery of the financial statements referred to in subsections 7.01(a) through (d) above, a certificate of a Responsible Officer substantially in the form of Exhibit D (i) stating that, to the best of such officer's knowledge, the Company, during such period, has observed and performed all of its covenants and other agreements, and satisfied every condition contained in this Agreement to be observed, performed or satisfied by it, and that such officer has obtained no knowledge of any Default or Event of Default except as specified (by applicable subsection reference) in such certificate, (ii) stating the Applicable Margin to be in effect for the immediately following fiscal quarter, and (iii) showing in detail the calculations supporting such statement in respect of subsection 8.02(h), Section 8.03, subsection 8.04(i), Section 8.05 and Section 8.13, and supporting the computation of the Fixed Charge Coverage Ratio; (c) promptly after the same are sent, copies of all financial statements and reports which the Company sends to its limited partners (excluding the Form K-1s); and promptly after the same are filed, copies of all financial statements and regular, periodical or special reports which the Company may make to, or file with, the SEC or any successor or similar Governmental Authority; and (d) promptly, such additional business, financial, corporate affairs and other information as the Agent, at the request of any Bank, may from time to time reasonably request. 7.03 Notices. The Company shall promptly upon becoming aware thereof notify the Agent and each Bank: (a) (i) of the occurrence of any Default or Event of Default, (ii) of the occurrence or existence of any event or circumstance that foreseeably will become a Default or Event of Default, and (iii) of the occurrence or existence of any event or circumstance that would cause the condition to Credit Extension set forth in subsection 5.02(b) not to be satisfied if a Credit Extension were requested on or after the date of such event or circumstance; (b) of (i) any breach or non-performance of, or any default under, any Contractual Obligation of the Company, the Partner Entities, or any of their Subsidiaries which could result in a Material Adverse Effect; and (ii) any dispute, litigation, investigation, proceeding or suspension which may exist at any time between the Company, the Partner Entities, or any of their Subsidiaries and any 89 95 Governmental Authority which, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; (c) of the commencement of, or any material development in, any litigation or proceeding affecting the Company or any Subsidiary (i) which, if adversely determined, would reasonably be expected to have a Material Adverse Effect, or (ii) in which the relief sought is an injunction or other stay of the performance of this Agreement or any Loan Document; (d) upon, but in no event later than 10 days after, becoming aware of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Company or any of its Subsidiaries or any of their respective Properties pursuant to any applicable Environmental Laws where, if adversely determined, the potential liability or expense relating thereto could exceed $25,000,000 or the potential remedy with respect thereto would otherwise reasonably be expected to have a Material Adverse Effect, (ii) all other Environmental Claims which allege liability in excess of $25,000,000 or have the possibility of remedies that would, if adversely determined, otherwise reasonably be expected to constitute a Material Adverse Effect, and (iii) any environmental or similar condition on any real property adjoining or in the vicinity of the property of the Company or any Subsidiary that would reasonably be anticipated to cause such property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws where the net book value of such property exceeds $25,000,000; (e) of any other litigation or proceeding affecting the Company or any of its Subsidiaries which the Company would be required to report to the SEC pursuant to the Exchange Act, within four days after reporting the same to the SEC; (f) of any of the following ERISA events affecting the Company or any member of its Controlled Group (but in no event more than 10 days after such event), together with a copy of any notice with respect to such event that may be required to be filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Company or any member or its Controlled Group with respect to such event: 90 96 (i) an ERISA Event; (ii) the adoption of any new Plan that is subject to Title IV of ERISA or section 412 of the Code by any member of the Controlled Group; (iii) the adoption of any amendment to a Plan that is subject to Title IV of ERISA or section 412 of the Code, if such amendment results in a material increase in benefits or unfunded liabilities; or (iv) the commencement of contributions by any member of the Controlled Group to any Plan that is subject to Title IV of ERISA or section 412 of the Code; (g) any Material Adverse Effect subsequent to the date of the most recent audited financial statements of the Company delivered to the Banks pursuant to subsection 7.01(a) or 5.01(g); and (h) of any material labor controversy resulting in or threatening to result in any strike, work stoppage, boycott, shutdown or other labor disruption against or involving the Company or any of its Subsidiaries. Each notice pursuant to this Section shall be accompanied by a written statement by a Responsible Officer of the Company setting forth details of the occurrence referred to therein, and stating what action the Company proposes to take with respect thereto and at what time. Each notice under subsection 7.03(a) shall describe with particularity any and all clauses or provisions of this Agreement or other Loan Document that have been breached or violated. 7.04 Preservation of Corporate Existence, Etc. The Company shall, except as permitted by Section 8.02, and shall cause each of its Subsidiaries to: (a) preserve and maintain in full force and effect its partnership or corporate existence and good standing under the laws of its state or jurisdiction of formation or incorporation; (b) preserve and maintain in full force and effect all rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business; 91 97 (c) use its reasonable efforts, in the Ordinary Course of Business, to preserve its business organization and preserve the goodwill and business of the customers, suppliers and others having material business relations with it; and (d) preserve or renew all of its registered trademarks, trade names and service marks, the non-preservation of which would reasonably be expected to have a Material Adverse Effect. 7.05 Maintenance of Property. The Company shall maintain, and shall cause each of its Subsidiaries to maintain, and preserve all its Property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted. 7.06 Insurance. The Company shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable independent insurers, insurance with respect to its Properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. 7.07 Payment of Obligations. The Company shall, and shall cause its Subsidiaries to, pay and discharge as the same shall become due and payable, all their respective obligations and liabilities, including: (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary; and (b) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. 7.08 Compliance with Laws. The Company shall comply, and shall cause each of its Subsidiaries to comply with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act) the non-compliance with which would reasonably be expected to have a Material Adverse Effect, except such as may be contested in good faith or as to which a bona fide dispute may exist. 92 98 7.09 Inspection of Property and Books and Records. The Company shall maintain and shall cause each of its Subsidiaries to maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company and such Subsidiaries. The Company shall permit, and shall cause each of its Subsidiaries to permit, representatives and independent contractors of the Agent or any Bank to visit and inspect any of their respective Properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at the expense of the Company and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; provided, however, when an Event of Default exists the Agent or any Bank may do any of the foregoing at the expense of the Company such Properties at any time during normal business hours and without advance notice. 7.10 Environmental Laws. (a) The Company shall, and shall cause each of its Subsidiaries to, conduct its operations and keep and maintain its Property in compliance with all Environmental Laws, the non-compliance with which would reasonably be expected to have a Material Adverse Effect. (b) Upon the written request of the Agent or any Bank, the Company shall submit and cause each of its Subsidiaries to submit, to the Agent and with sufficient copies for each Bank, at the Company's sole cost and expense, at reasonable intervals, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report required pursuant to subsection 7.03(d), that could, individually or in the aggregate, result in liability in excess of $25,000,000. 7.11 Use of Proceeds. The Company shall use the proceeds of the Loans solely as follows: (a) to refinance existing Indebtedness, and (b) for working capital and other general corporate purposes not in contravention of any Requirement of Law or of any Loan Document. 7.12 Solvency. The Company shall at all times be, and shall cause each of its Restricted Subsidiaries to be, Solvent. 93 99 ARTICLE VIII NEGATIVE COVENANTS The Company hereby covenants and agrees that, so long as any Bank shall have any Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, unless the Majority Banks waive compliance in writing: 8.01 Limitation on Liens. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its Property, whether now owned or hereafter acquired, other than the following ("Permitted Liens"): (a) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 7.07, provided that no Notice of Lien has been filed or recorded under the Code; (b) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the Ordinary Course of Business which are not delinquent or remain payable without penalty or unless such lien is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and if such accrual or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor; (c) Liens (other than any Lien imposed by ERISA) incurred or deposits made incidental to the conduct of its business or the ownership of its Property including (i) pledges or deposits in connection with worker's compensation, unemployment insurance and other social security legislation, (ii) deposits to secure insurance, the performance of bids, tenders, contracts, leases, licenses, franchises and statutory obligations, each in the Ordinary Course of Business, and (iii) other obligations which were not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of the deferred purchase price of property and which do not in the aggregate materially detract from the value of its Property or materially impair the use of such Property in the operation of its business; (d) any attachment or judgment Lien, unless the judgment it secures shall not, within 45 days after the 94 100 entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 45 days after expiration of any such stay; (e) easements, rights-of-way, restrictions and other similar charges or encumbrances incurred in the Ordinary Course of Business which, in each case, and in the aggregate, do not materially interfere with the ordinary conduct of the business of the Company or any Restricted Subsidiary; (f) Liens on Property of any Restricted Subsidiary securing obligations of such Restricted Subsidiary owing to the Company or another Restricted Subsidiary; (g) any Lien existing prior to the time of acquisition upon any Property acquired by the Company or any Restricted Subsidiary after the Closing Date through purchase, merger or consolidation or otherwise, whether or not assumed by the Company or such Subsidiary, or placed upon Property at (or within 30 days after) the later of the time of acquisition or the completion of construction by the Company or any Restricted Subsidiary to secure all or a portion of (or to secure Indebtedness incurred to pay all or a portion of) the purchase price thereof, provided that (i) any such Lien does not encumber any other property of the Company or such Restricted Subsidiary, (ii) the Indebtedness secured by such Lien is not prohibited by the provisions of Section 8.05, (iii) the aggregate principal amount of the Indebtedness secured by such Lien at no time exceeds 80% of the cost to the Company and its Restricted Subsidiaries of the Property subject to such Lien, and (iv) the aggregate outstanding principal amount (without duplication) of the Indebtedness secured by all such Liens and the Indebtedness of all Restricted Subsidiaries at no time (a) from May 31, 1994 to May 31, 1999, exceeds $25,000,000, and (b) from May 31, 1999 to the Maturity Date, exceeds $50,000,000; (h) Liens on the accounts, rights to payment for goods sold or services rendered that are evidenced by chattel paper or instruments, and rights against persons who guarantee payment or collection of the foregoing, and on the Company's inventory and on the proceeds (as defined in the UCC in any applicable jurisdiction) thereof securing the obligations of the Company under the Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof) permitted by subsection 8.05(d); (i) any Lien existing on the Property of the Company or its Restricted Subsidiaries on the Closing Date 95 101 and set forth in Schedule 8.01 securing Indebtedness outstanding on such date; and (j) any Lien renewing, extending, refunding or refinancing any Lien permitted by subsection (i) of this Section, provided that the principal amount secured is not increased and the Lien is not extended to other Property and further provided, that the maturity of the Lien is not extended beyond the maturity date of the Indebtedness which, at the time the Lien was initially placed upon the Property secured thereby, Responsible Representatives declare would have been the maturity date of Indebtedness customary for the type of Property being financed. 8.02 Merger; Disposition of Assets. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, merge or consolidate with any Person or, directly or indirectly, sell, lease or transfer or otherwise dispose of (whether in one or a series of transactions) any Property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except that: (a) any Restricted Subsidiary of the Company may merge with the Company (provided that the Company shall be the continuing or surviving corporation) or with any one or more other Restricted Subsidiaries; (b) any Restricted Subsidiary of the Company may sell, lease, transfer or otherwise dispose of any of its assets to the Company or a Restricted Subsidiary; (c) any Restricted Subsidiary may merge or consolidate with any other entity, provided that, immediately after giving effect to such merger or consolidation (i) the continuing or surviving entity of such merger or consolidation shall constitute a Restricted Subsidiary, (ii) no Event of Default or Material Default shall exist, and (iii) following the merger, the entity surviving the merger is not engaged in any business other than a Permitted Business; (d) the Company may merge or consolidate with, or sell or dispose of all or substantially all of its assets to, any other entity, provided that (i) either (x) the Company shall be the continuing or surviving entity (in the case of such merger) or (y) the successor or acquiring entity shall be a solvent corporation or partnership organized under the laws of any state of the United States and shall expressly assume in writing all of the obligations of the Company under this Agreement, the Facility B Credit 96 102 Agreement, the Note Agreements, the 1994 Senior Note Agreements and the Mortgage Note Agreements, including all covenants herein and therein contained, and such successor or acquiring corporation or partnership shall succeed to and be substituted for the Company with the same effect as if it had been named herein as a party hereto, provided, however, that no such sale shall release the Company from any of its obligations and liabilities under this Agreement, the Facility B Credit Agreement, the Note Agreements, the 1994 Senior Note Agreements and the Mortgage Note Agreements unless such sale is followed by the complete liquidation of the Company and substantially all the assets of the Company immediately following such sale are distributed in such liquidation, and (ii) immediately after such merger or consolidation or such sale or other disposition, (x) no Event of Default or Material Default shall exist, (y) the Company could incur at least $1 of additional Funded Debt pursuant to subsection 8.05(i), and (z) the entity surviving the merger or consolidation or to which such assets have been transferred is not engaged in any business other than a Permitted Business; (e) the Company or any Restricted Subsidiary may make dispositions of inventory in the Ordinary Course of Business; (f) the Company or any Restricted Subsidiary may sell Designated Acres (or notes receivable arising from the sale of Designated Acres) for the fair value thereof as reasonably determined in good faith by Responsible Representatives; (g) the Company and its Restricted Subsidiaries may exchange Timberlands with other Persons in the Ordinary Course of Business, provided that (i) the fair value of the Timberlands plus any Net Proceeds received in such exchange is, in the good faith judgment of the Responsible Representatives, not less than the fair value of Timberlands exchanged plus any other consideration paid, (ii) such exchange would not materially and adversely affect the business, Property, condition or results of operations of the Company and its Restricted Subsidiaries on a combined basis or of the Facilities Subsidiary or impair the ability of the Company to perform its obligations hereunder and under the Facility B Credit Agreement, the Note Agreements, the 1994 Senior Note Agreements and the Mortgage Note Agreements, and (iii) any Properties shall be deemed sold to the extent of Net Proceeds received and such sales shall be allowed only to the extent otherwise permitted by this Section 8.02; 97 103 (h) the Company and its Restricted Subsidiaries may sell Properties for cash for not less than the fair value thereof as determined in good faith by the Responsible Representatives, provided that the aggregate Net Proceeds of such sales in any calendar year do not exceed an amount (the "Permitted Amount") equal to (i) in calendar year 1994, $3,210,000 and (ii) in each calendar year thereafter, the sum of (x) the Permitted Amount for the preceding calendar year plus (y) an increase equal to the percentage increase, if any, in the consumer price index for goods and services in the United States, as published by the U.S. Bureau of Labor Statistics, or successor publication, for such preceding calendar year, times such permitted amount; and (i) the Company and its Restricted Subsidiaries may otherwise sell Properties for cash in an amount not less than the fair value thereof as determined in good faith by the Responsible Representatives, if and only if (i) immediately after giving effect to such proposed sale, no condition or event shall exist which constitutes an Event of Default or Material Default, (ii) the Net Proceeds of any such sale (x) are applied, within 180 days after such sale, pro rata (based on the then outstanding principal of all Qualified Debt) to the holders of all Qualified Debt, or (y) are applied, within 180 days after such sale, to the purchase of productive assets in the same line of business, provided, that the Company shall have notified the Agent promptly after its determination to so apply the Net Proceeds, (iii) if the Net Proceeds of (x) any such sale exceed $25,000,000, the entire amount of such Net Proceeds are placed immediately upon receipt thereof in an escrow or cash collateral account or accounts, pursuant to an agreement or agreements in form and substance reasonably satisfactory to holders of 66-2/3% of the outstanding principal balance of the Qualified Debt, for the purpose of application in accordance with clause (ii) above, and (y) all such sales which are not then held in escrow or cash collateral accounts pursuant to subclause (iii)(x) and which have not been applied to the purchase of productive assets in the same line of business or distributed to the holders of all Qualified Debt for application to the repayment of such Qualified Debt exceed $50,000,000 in the aggregate at any time, all such Net Proceeds in excess of $50,000,000 are placed immediately upon receipt thereof in an escrow or cash collateral account or accounts, pursuant to an agreement or agreements in form and substance reasonably satisfactory to holders of 66-2/3% of the outstanding principal balance of the Qualified Debt, for the purpose of application in accordance with clause (ii) above, and (iv) immediately after giving effect to such sale (giving effect on a pro forma basis to any proposed retirement of Qualified Debt out of proceeds thereof), the Company could incur $1 of 98 104 additional Funded Debt pursuant to subsection 8.05(i); provided, however, that the Company and its Restricted Subsidiaries may not sell properties that constitute the Company's Columbia River Unit unless the Note Agreements shall have been amended so as (A) to delete paragraph 6B(5)(viii) thereof as set forth in that certain Senior Note Agreement Amendment dated as of September 1, 1993 and (B) to provide for the application of Net Proceeds of the sale of properties that constitute the Columbia River Unit substantially as provided in this subsection 8.02(i). 8.03 Harvesting Restrictions. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, in any calendar year, harvest Timber on the Timberlands then owned by the Company in excess of the amount set forth for such calendar year in the following table:
Maximum MMBF to be Calendar Year Harvested ------------- ------------ 1994 (including 735 MMBF of prior years cumulative carryover harvest) 1435 MMBF 1995 through 1996 700 MMBF 1997 through 2000 675 MMBF 2001 625 MMBF
plus, in each year, the amount, if any, by which the cumulative amount set forth in the table above for the preceding years exceeds the cumulative amount actually harvested in such years; unless (a) the Net Proceeds from such excess harvest are either (i) applied, within 180 days after any such excess harvest, pro rata (based on the then outstanding principal of all Qualified Debt) to the holders of all Qualified Debt, or (ii) applied, within 180 days after any such excess harvest, to purchase Timber (including Timber on Timberlands purchased) having a fair value (in the good faith judgment of the Responsible Representatives) not less than the fair value of the Timber subject to such excess harvest, provided, that the Company shall have notified the Agent promptly after its determination to so apply the Net Proceeds. 8.04 Loans and Investments. The Company shall not suffer or permit any of its Restricted Subsidiaries to make 99 105 or commit to make or permit to remain outstanding any loan or advance to, or guarantee, endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the obligations, stock or dividends of, or own, purchase or acquire (or commit to own, purchase or acquire) any stock, obligations or securities of, or any other interest in (including, without limitation, the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person), or make or commit to make any capital contribution to, any Person (all of the foregoing (but excluding any Designated Repurchases permitted by Section 8.13 hereof) being referred to herein as "Investments"), except that the Company or any Restricted Subsidiary may: (a) make Investments in the Facilities Subsidiary, provided that the Company will not make or permit any Restricted Subsidiary to make any such Investment (including any guaranty of obligations of the Facilities Subsidiary otherwise permitted by this Section 8.04) unless (i) immediately after giving effect to such Investment, no Event of Default or Default, or "Default" or "Event of Default" as defined in the Mortgage Note Agreements, shall exist, (ii) immediately prior to giving effect to such Investment, no Default or Event of Default (other than an "Event of Default" as defined in the Mortgage Note Agreements) shall exist, and (iii) immediately after giving effect to such Investment, the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest Charges is not less than 2.5 to 1.0. (b) own, purchase or acquire real or personal property to be used in the Ordinary Course of Business; (c) own, purchase or acquire investments of the type specified in, and in accordance with the requirements and limitations of, the Investment Policy; (d) continue to own Investments owned on the Closing Date as set forth on Schedule 8.04; (e) endorse negotiable instruments for collection in the Ordinary Course of Business; (f) become and be obligated under the Guarantee and under the guarantees permitted by subsections 8.05(f) and (h), and acquire and own subordinated subrogation rights upon performance of such guarantees; (g) make advances in the Ordinary Course of Business of the Company or any Restricted Subsidiary, 100 106 including deposits permitted under subsection 8.01(c), advances to employees for travel, relocation and other employment related expenses, advances to contractors performing services for the Company or such Restricted Subsidiary, advances to owners of timber or timber properties to acquire rights to harvest timber and other similar advances; (h) make Investments in Restricted Subsidiaries, or any entity which immediately after such Investment will be a Restricted Subsidiary; and (i) make Investments not otherwise permitted by this Section 8.04 in entities engaged solely in a Permitted Business, provided that the cumulative aggregate amount of such Investments at original cost (including the principal amount of any obligations guaranteed to the extent such guarantees are not otherwise permitted by this Section 8.04) made pursuant to this subsection (i) between the closing date of the Note Agreements and any date thereafter shall not exceed the greater of $30,000,000 or 60% of the average annual Pro Forma Free Cash Flow for the two fiscal years preceding such date. 8.05 Limitation on Indebtedness. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: (a) Funded Debt represented by the Notes and the 1994 Notes and any refinancing thereof so long as such refinancing does not increase the principal amount thereof and is on terms no less favorable to the Company, and to the rights of the Agent and the Banks hereunder, than those contained on the Closing Date in the Notes and the 1994 Notes and the documentation relating thereto; (b) Funded Debt which is unsecured and is incurred by the Company to finance the making of capital improvements, expansions and additions to the Company's property (including Timberlands), plant and equipment, provided that the aggregate outstanding principal amount of such Funded Debt shall at no time exceed $20,000,000; (c) Indebtedness of any Restricted Subsidiary owing to the Company or to a Restricted Subsidiary; (d) Indebtedness incurred by the Company pursuant to the Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof, including any 101 107 refunding or refinancing in an amount in excess of the principal amount then outstanding under the Revolving Credit Facility), or any other Indebtedness pursuant to a bank credit facility which is unsecured or is secured by Liens permitted by subsection 8.01(h), not in excess of an aggregate principal amount of $15,000,000 at any time outstanding, provided that the Company shall not suffer to exist any Indebtedness permitted by this subsection (d) on any day unless there shall have been a period of at least 45 consecutive days within the 12 months immediately preceding such day during which the Company shall have been free from all Indebtedness permitted by this subsection (d); (e) Indebtedness represented by the Guarantee and any refinancing thereof so long as such refinancing does not increase the principal amount thereof and is on terms no less favorable to the Company, and to the rights of the Agent and the Banks hereunder, than those contained on the Closing Date in the Guarantee and the documentation relating thereto; (f) the Company's guarantee of obligations incurred by the Facilities Subsidiary pursuant to the Facilities Subsidiary's Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof permitted by clause (iv) of paragraph 6B(2) of the Mortgage Note Agreements), provided that the aggregate outstanding principal amount of such Indebtedness shall at no time exceed $20,000,000, and provided further that such guarantee shall be subordinated to the Notes by subordination provisions substantially the same as those contained in paragraph 7I of the Mortgage Note Agreements; (g) the Company's guarantee of Funded Debt (and related obligations not constituting Indebtedness) incurred by the Facilities Subsidiary to finance the making of capital improvements, expansions and additions to the Facilities Subsidiaries' Properties pursuant to the Facilities Subsidiary's Facility, provided that such guarantee shall be subordinated to the Notes by subordination provisions substantially the same as those contained in paragraph 7I of the Mortgage Note Agreements, and provided, further, that the aggregate outstanding principal amount of such Funded Debt shall at no time exceed $20,000,000; (h) Funded Debt of the Company or any Restricted Subsidiary secured by a Lien permitted by subsection 8.01(g), provided that immediately after the acquisition of the Property subject to such Lien or upon which such Lien is placed (or, if later, the incurrence of 102 108 the Indebtedness secured by such Lien), the Company could incur at least $1 of additional Funded Debt pursuant to subsection (i) below; (i) Funded Debt of the Company (other than Funded Debt owing to a Restricted Subsidiary) in addition to that otherwise permitted by the foregoing subsections of this Section 8.05, including guarantees of Indebtedness to the extent permitted by Section 8.04 and not otherwise permitted by the foregoing subsections of this Section 8.05, provided that, on the date the Company becomes liable with respect to any such additional Funded Debt and immediately after giving effect thereto and to the concurrent retirement of any other Funded Debt, the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest Charges is not less than 2.25 to 1.00; and provided, further, that the aggregate outstanding principal amount of such additional Funded Debt (but not including Funded Debt incurred under this Agreement or the Facility B Credit Agreement) shall not exceed $400,000,000; (j) from and after the time that the Facilities Subsidiary becomes a Restricted Subsidiary, Indebtedness incurred by the Facilities Subsidiary pursuant to the Facilities Subsidiary's Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof, including any refunding or refinancing in an amount in excess of the principal amount then outstanding under the Facilities Subsidiary's Revolving Credit Facility) or any other Indebtedness incurred by the Facilities Subsidiary pursuant to a bank credit facility which is unsecured or is secured by Liens permitted by subsection 8.01(h), not in excess of an aggregate principal amount of $20,000,000 at any time outstanding, provided that to the extent that the Facilities Subsidiary is a Restricted Subsidiary, the Facilities Subsidiary shall not suffer to exist any Indebtedness permitted by this subsection (j) on any day unless there shall have been a period of at least 45 consecutive days within the 12 months immediately preceding such day during which the Facilities Subsidiary shall have been free from all Indebtedness permitted by this subsection (j); and (k) from and after the time that the Facilities Subsidiary or any Designated Immaterial Subsidiary becomes a Restricted Subsidiary, Indebtedness of the Facilities Subsidiary or any such Designated Immaterial Subsidiary outstanding at the time the Facilities Subsidiary or such Designated Immaterial Subsidiary becomes a Restricted Subsidiary, provided that (i) immediately after the Facilities Subsidiary or any such Designated Immaterial 103 109 Subsidiary becomes a Restricted Subsidiary, the Company could incur at least $1 of additional Funded Debt pursuant to subsection (i) above (the Facilities Subsidiary or any such Designated Immaterial Subsidiary shall be deemed to be a Restricted Subsidiary for the four consecutive fiscal quarters immediately prior to its becoming a Restricted Subsidiary for purposes of determining Pro Forma Free Cash Flow), and (ii) the aggregate amount (without duplication) of such Indebtedness and all other Indebtedness, in each case, secured by Liens permitted by subsection 8.01(g) does not violate subclause (iv) to the proviso to such subsection (g). 8.06 Transactions with Affiliates. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to directly or indirectly engage in any transaction (including, without limitation, the purchase, sale or exchange of assets or the rendering of any service), with any Affiliate of the Company or of any such Restricted Subsidiary, except in the Ordinary Course of Business and pursuant to the reasonable requirements of the business of the Company or such Restricted Subsidiary and upon fair and reasonable terms that are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those which might be obtained in an arm's-length transaction at the time from Persons not an Affiliate of the Company or such Restricted Subsidiary. 8.07 Use of Proceeds. (a) The Company shall not and shall not suffer or permit any of its Subsidiaries to use any portion of the proceeds of the Loans or other Credit Extension, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act. (b) The Company shall not and shall not suffer or permit any of its Subsidiaries to use any portion of the proceed of the Loans or other Credit Extension, directly or indirectly, (i) knowingly to purchase Ineligible Securities from a Section 20 Subsidiary during any period in which such Section 20 Subsidiary makes a market in such Ineligible Securities, (ii) knowingly to purchase during the underwriting or placement period Ineligible Securities being underwritten or privately placed by a Section 20 Subsidiary, or (iii) to make payments of principal or interest on 104 110 Ineligible Securities underwritten or privately placed by a Section 20 Subsidiary and issued by or for the benefit of the Company or any Affiliate of the Company. As used in this Section, "Section 20 Subsidiary" means the Subsidiary of the bank holding company controlling any Bank, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities; and "Ineligible Securities" means securities which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (as U.S.C. Section 24, Seventh), as amended. 8.08 Sale of Stock and Indebtedness of Subsidiaries. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, sell or otherwise dispose of, or part with control of, any shares of stock or Indebtedness of any Subsidiary, except to the Company or a Restricted Subsidiary, and except that all shares of stock and Indebtedness of any Subsidiary (other than the Facilities Subsidiary) at the time owned by or owed to the Company and its Restricted Subsidiaries may be sold as an entirety for a cash consideration which represents the fair value (as determined in good faith by the Responsible Representatives of the PC Advisory General Partner) at the time of sale of the shares of stock and Indebtedness so sold, provided that the assets of such Subsidiary do not include any assets which could not be disposed of pursuant to the provisions of Section 8.02 unless the conditions to the sale of such assets set forth in Section 8.02 are complied with, and further provided that, at the time of such sale, such Subsidiary shall not own, directly or indirectly, any shares of stock or Indebtedness of any other Subsidiary (unless all of the shares of stock and Indebtedness of such other Subsidiary owned, directly or indirectly, by the Company and its Subsidiaries are simultaneously being sold as permitted by this Section 8.08). 8.09 Certain Contracts. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to enter into or be a party to: (a) any contract providing for the making of loans, advances or capital contributions to any Person, or for the purchase of any Property from any Person, in each case in order primarily to enable such Person to maintain working capital, net worth or any other balance sheet condition or to pay debts, dividends or expenses; or (b) any contract for the purchase of materials, supplies or other property or services if such contract (or 105 111 any related document) requires that payment for such materials, supplies or other property or services shall be made regardless of whether or not delivery of such materials, supplies or other property or services is ever made or tendered, provided that nothing in this subsection (b) shall prevent the Company from (i) entering into take-or-pay contracts in the Ordinary Course of Business with the United States Forest Service, the Bureau of Land Management, the Bureau of Indian Affairs, the Washington Department of Natural Resources or similar state or federal governmental agencies, or (ii) making payments in satisfaction of contracts with such Persons which contracts are deemed by the Responsible Representatives to be disadvantageous to perform; or (c) any contract to rent or lease (as lessee) any real or personal property if such contract (or any related document) provides that the obligation to make payments thereunder is absolute and unconditional under conditions not customarily found in commercial leases then in general use or requires that the lessee purchase or otherwise acquire securities or obligations of the lessor; or (d) any contract for the sale or use of materials, supplies or other property, or the rendering of services, if such contract (or any related document) requires that payment for such materials, supplies or other property, or the use thereof, or payment for such services, shall be subordinated to any indebtedness (of the purchaser or user of such materials, supplies or other property or the Person entitled to the benefit of such services) owed or to be owed to any Person; or (e) any other contract which in economic effect, is substantially equivalent to a guarantee, except as permitted by the provisions of subsection 8.04(a), (e), (f), (g), (h) or (i). 8.10 Joint Ventures. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to enter into any Joint Venture, other than in Permitted Businesses and so long as any such Joint Venture is not entered into for the purposes of evading any covenant or restriction in any Loan Documents. 8.11 Compliance with ERISA. The Company shall not, and shall not suffer or permit any of its Subsidiaries to, without the consent of the Majority Banks, (i) terminate any Plan subject to Title IV of ERISA so as to result in any material (in the opinion of the Majority Banks) liability to 106 112 the Company or any ERISA Affiliate, (ii) permit to exist any ERISA Event or any other event or condition with respect to any Plan other than a Multiemployer Plan, which presents the risk of a material (in the opinion of the Majority Banks) liability to the Company, (iii) make a complete or partial withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer Plan so as to result in any material (in the opinion of the Majority Banks) liability to the Company or any ERISA Affiliate, (iv) enter into any new Plan or modify any existing Plan so as to increase its obligations thereunder which could result in any material (in the opinion of the Majority Banks) liability to any member of the Controlled Group, or (v) permit the present value of all nonforfeitable accrued benefits under any Plan (using the actuarial assumptions utilized by the PBGC upon termination of a Plan) materially (in the opinion of the Majority Banks) to exceed the fair market value of Plan assets allocable to such benefits, all determined as of the most recent valuation date for each such Plan. 8.12 Sale and Leaseback. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, enter into any arrangement with any lender or investor or to which such lender or investor is a party providing for the leasing by the Company or any Restricted Subsidiary of real or personal property which has been or is to be sold or transferred by the Company or any Restricted Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such property or rental obligations of the Company or any Restricted Subsidiary, provided that this Section 8.12 shall not apply to any property sold pursuant to subsection 8.02(h). 8.13 Restricted Payments. The Company shall not and shall not permit or suffer any Subsidiary to directly or indirectly pay, declare, order, make or set apart any sum for any Restricted Payment, except that the Company may make, pay or set apart during each calendar quarter one or more Restricted Payments if: (a) such Restricted Payments are in an aggregate amount not exceeding the amount by which Available Cash with respect to the immediately preceding calendar quarter exceeds any amount contributed to Available Cash with respect to such immediately preceding calendar quarter by any Subsidiary if and to the extent that the payment of such amount as a dividend or distribution to the Company has not been made and is not at the time permitted by the terms of such Subsidiary's charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental 107 113 regulation applicable to such Subsidiary, provided that in determining Available Cash with respect to such immediately preceding calendar quarter, the Company will include in the amount of reserves established during such quarter pursuant to clause (ii)(d) of the definition of Available Cash an amount not less than (i) 50% of the aggregate amount of all interest in respect of the Notes and the 1994 Notes to be paid on the interest date immediately following such immediately preceding calendar quarter, (ii) 100% of the aggregate amount of all interest in respect of the Loans and the "Loans" as defined in the Facility B Credit Agreement to be paid on the respective Interest Payment Dates for such Loans and such "Loans" during the calendar quarter immediately following such immediately preceding calendar quarter, (iii) 25% of the aggregate amount of all principal in respect of the Notes and the 1994 Notes scheduled to be paid (determined in accordance with the proviso in clause (ii) of the definition of "Fixed Charge Coverage Ratio") during the 12 calendar months immediately following such immediately preceding calendar quarter, and (iv) 25% of the aggregate amount of payments required to be made on account of any scheduled reductions (determined in accordance with the proviso in clause (ii) of the definition of "Fixed Charge Coverage Ratio") in the Commitments and the "Commitments" as defined in the Facility B Credit Agreement during the 12 calendar months immediately following such immediately preceding calendar quarter, and the Company will not reduce the amount of the reserves so included, in determining Available Cash for any calendar quarter subsequent to such immediately preceding calendar quarter pursuant to clause (i)(c) of the definition of Available Cash, unless and until (A) the amount of interest or principal in respect of which such amount has been reserved has in fact been paid and (B) in the case of clause (iv) of this subsection 8.13(a), the amount of the reserves so included exceeds fifty percent (50%) of the aggregate amount of payments required to be made on account of the Commitments and the "Commitments" as defined in the Facility B Credit Agreement during the 12 calendar months immediately following such immediately preceding calendar quarter; and (b) immediately after giving effect to any such proposed action no condition or event shall exist which constitutes an Event of Default or Material Default. The Company will not, in any event, directly or indirectly declare, order, pay or make any Restricted Payment except in cash. 8.14 Change in Business. The Company shall not, and shall not permit any of its Subsidiaries to, engage in any business other than a Permitted Business. 108 114 8.15 Issuance of Stock by Subsidiaries. The Company covenants that it will not permit any Subsidiary to (either directly, or indirectly by the issuance of rights or options for, or securities convertible into, such shares) issue, sell or otherwise dispose of any shares of any class of its stock or partnership or other ownership interests (other than directors' qualifying shares) except to the Company or a Restricted Subsidiary, and except to the extent that holders of minority interests may be entitled to purchase stock by reason of preemptive rights. 8.16 Amendments. The Company shall not, and shall not suffer or permit any of its Subsidiaries to amend, modify, supplement, waive or otherwise modify any provision of any agreement evidencing Funded Debt in excess of $35,000,000 which amendment, modification, supplement or waiver would reasonably be expected to affect the Agent's or the Banks' rights hereunder or the ability of the Company to perform its obligations under any Loan Document. 8.17 Available Cash. The Company shall not at any time permit Available Cash to be less than zero. For purposes of this Section 8.17, in determining Available Cash with respect to the immediately preceding calendar quarter, the Company will include in the amount of reserves established during such quarter pursuant to clause (ii)(d)(1) (with respect to principal on Indebtedness) and clause (ii)(d)(4) of the definition of "Available Cash" an amount not less than (a) 50% of the aggregate amount of all interest in respect of the Notes and the 1994 Notes to be paid on the interest date immediately following such immediately preceding calendar quarter, (b) 100% of the aggregate amount of all interest in respect of the Loans and the "Loans" as defined in the Facility B Credit Agreement to be paid on the respective Interest Payment Dates for such Loans and such "Loans" during the calendar quarter immediately following such immediately preceding calendar quarter, (c) 25% of the aggregate amount of all principal in respect of the Notes and the 1994 Notes scheduled to be paid (determined in accordance with the proviso in clause (ii) of the definition of "Fixed Charge Coverage Ratio") during the 12 calendar months immediately following such immediately preceding calendar quarter, and (d) 25% of the aggregate amount of payments required to be made on account of any scheduled reductions (determined in accordance with the proviso in clause (ii) of the definition of "Fixed Charge Coverage Ratio") in the Commitments and the "Commitments" as defined in the Facility B Credit Agreement during the 12 calendar months immediately following such immediately preceding calendar quarter, and the Company will not reduce the amount 109 115 of the reserves so included in determining Available Cash for any calendar quarter subsequent to such immediately preceding calendar quarter pursuant to clause (i)(c) of the definition of Available Cash, unless and until (i) the amount of interest or principal in respect of which such amount has been reserved has in fact been paid and (ii) in the case of clause (d) of this Section 8.17, the amount of the reserves so included exceeds fifty percent (50%) of the aggregate amount of payments required to be made on account of the Commitments and the "Commitments" as defined in the Facility B Credit Agreement during the 12 calendar months immediately following such immediately preceding calendar quarter. ARTICLE IX EVENTS OF DEFAULT 9.01 Event of Default. Any of the following shall constitute an "Event of Default": (a) Non-Payment. The Company fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan or of any L/C Obligation, or any amount of interest on any Bid Loan, or (ii) within 5 days after the same shall become due, any interest (other than interest on Bid Loans), fee or any other amount payable hereunder or pursuant to any other Loan Document; or (b) Representation or Warranty. Any representation or warranty by the Company or any of its Subsidiaries made or deemed made herein, in any Loan Document, or which is contained in any certificate, document or financial or other statement by the Company, its Responsible Representatives, any of its Subsidiaries, or their respective Responsible Officers, furnished at any time under this Agreement, or in or under any Loan Document, shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) Specific Defaults. The Company fails to perform or observe any term, covenant or agreement contained in Sections 7.03 or 7.09 or Article VIII; or (d) Other Defaults. The Company fails to perform or observe any other term or covenant contained in this Agreement or any Loan Document, and such default shall continue unremedied for a period of 20 days after the earlier of (i) the date upon which a Responsible Officer or Responsible Representative of the Company knew or should 110 116 have known of such failure or (ii) the date upon which written notice thereof is given to the Company by the Agent or any Bank; or (e) Facility B Credit Agreement Cross-Default. An Event of Default shall have occurred as that term is defined in the Facility B Credit Agreement; or (f) Cross-Default. The Company or any of its Subsidiaries (i) fails to make any payment in respect of any Indebtedness having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $5,000,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise); or (ii) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness, if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated maturity, or with respect to any contingent obligations, to become payable or cash collateral in respect thereof to be demanded; or (g) Insolvency; Voluntary Proceedings. The Company, any of its Subsidiaries, or any Partner Entity (i) ceases or fails to be Solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or (h) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company, the Facilities Subsidiary, any Restricted Subsidiary of the Company, or any Partner Entity, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company's, any of its Restricted Subsidiaries', any Partner Entities' or the Facilities Subsidiaries' Properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated 111 117 or fully bonded within 60 days after commencement, filing or levy; (ii) the Company, any Partner Entity, the Facilities Subsidiary, or any of the Company's Restricted Subsidiaries admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company, any Partner Entity, any of the Company's Restricted Subsidiaries, or the Facilities Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its Property or business; or (i) ERISA. (i) A member of the Controlled Group shall fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under a Multiemployer Plan; (ii) the Company or an ERISA Affiliate shall fail to satisfy its contribution requirements under Section 412(c)(11) of the Code, whether or not it has sought a waiver under Section 412(d) of the Code; (iii) in the case of an ERISA Event involving the withdrawal from a Plan of a "substantial employer" (as defined in Section 4001(a)(2) or Section 4062(e) of ERISA), the withdrawing employer's proportionate share of that Plan's Unfunded Pension Liabilities is more than $10,000,000; (iv) in the case of an ERISA Event involving the complete or partial withdrawal from a Multiemployer Plan, the withdrawing employer has incurred a withdrawal liability in an aggregate amount exceeding $10,000,000; (v) in the case of an ERISA Event not described in clause (iii) or (iv), the Unfunded Pension Liabilities of the relevant Plan or Plans exceed $10,000,000; (vi) a Plan that is intended to be qualified under Section 401(a) of the Code shall lose its qualification, and the loss can reasonably be expected to impose on members of the Controlled Group liability (for additional taxes, to Plan participants, or otherwise) in the aggregate amount of $10,000,000 or more; (vii) the commencement or increase of contributions to, or the adoption of or the amendment of a Plan by, a member of the Controlled Group shall result in a net increase in unfunded liabilities to the Controlled Group in excess of $10,000,000; (viii) any member of the Controlled Group engages in or otherwise becomes liable for a non-exempt prohibited transaction and the initial tax or additional tax under section 4975 of the Code relating thereto might reasonably be expected to exceed $10,000,000; (ix) a violation of section 404 or 405 of ERISA or the exclusive benefit rule under section 401(a) of the Code if such violation might reasonably be expected to expose a member or 112 118 members of the Controlled Group to monetary liability in excess of $10,000,000; (x) any member of the Controlled Group is assessed a tax under section 4980B of the Code in excess of $10,000,000; or (xi) the occurrence of any combination of events listed in clauses (iii) through (x) that involves a potential liability, net increase in aggregate Unfunded Pension Liabilities, unfunded liabilities, or any combination thereof, in excess of $10,000,000; or (j) Monetary Judgments. One or more non-interlocutory judgments, orders or decrees shall be entered against the Company or any of its Subsidiaries involving in the aggregate a liability (not fully covered by independent third-party insurance) as to any single or related series of transactions, incidents or conditions, of $25,000,000 or more, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 30 days after the entry thereof; or (k) Non-Monetary Judgments. Any non-monetary judgment, order or decree shall be rendered against the Company or any of its Subsidiaries which does or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or (l) Auditors. The Agent or any Bank shall receive notice from the Independent Auditor that the Agent and the Banks should no longer use or rely upon any audit report or other financial data provided by the Independent Auditor; or (m) Adverse Change. There shall occur (i) a material adverse change in, or a material adverse effect upon, any of the operations, business, properties, or condition (financial or otherwise) of the Company or the Company and its Subsidiaries taken as a whole or as to any Restricted Subsidiary which materially impairs the ability of the Company to perform under any Loan Document and avoid any Event of Default, or (ii) a material adverse effect upon the legality, validity, binding effect or enforceability of any Loan Document. 9.02 Remedies. If any Event of Default occurs, the Agent shall, at the request of, or may, with the consent of, the Majority Banks, (a) declare the Commitment of each Bank to make Committed Loans and any obligation of the Issuing Banks to 113 119 issue Letters of Credit to be terminated, whereupon such Commitments and obligations shall forthwith be terminated; (b) declare an amount equal to the maximum aggregate amount that is or at any time thereafter may become available for drawing under any outstanding Letters of Credit (whether or not any beneficiary shall have presented, or shall be entitled at such time to present, the drafts or other documents required to draw under such Letters of Credit) to be immediately due and payable, and declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable; without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and (c) exercise on behalf of itself and the Banks all rights and remedies available to it and the Banks under the Loan Documents or applicable law; provided, however, that upon the occurrence of any event specified in paragraph (g) or (h) of Section 9.01 above (in the case of clause (i) of paragraph (h) upon the expiration of the 60-day period mentioned therein), the obligation of each Bank to make Loans and any obligation of the Issuing Banks to Issue Letters of Credit shall automatically terminate and the unpaid principal amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Agent, the Issuing Banks, or any Bank. 9.03 Rights Not Exclusive. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising. ARTICLE X THE AGENT 10.01 Appointment and Authorization. (a) Each Bank and each Issuing Bank hereby irrevocably appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to 114 120 it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto, including, without limitation, to enter into Cash Collateral Account Agreements from time to time in accordance with this Agreement, and to release funds to the Company in accordance with Section 1(b) of the Cash Collateral Account Agreement and, if applicable, pursuant to an Officer's Certificate substantially in the form attached thereto as Exhibit A. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Bank or any Issuing Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. (b) Each Issuing Bank shall act on behalf of the Banks with respect to any Letters of Credit Issued by it and the documents associated therewith until such time and except for so long as the Agent may agree at the request of the Majority Banks to act for such Issuing Bank with respect thereto; provided, however, that each Issuing Bank shall have all of the benefits and immunities (i) provided to the Agent in this Article X with respect to any acts taken or omissions suffered by such Issuing Bank in connection with Letters of Credit Issued by it or proposed to be Issued by it and the application and agreements for letters of credit pertaining to the Letters of Credit as fully as if the term "Agent", as used in this Article X, included such Issuing Bank with respect to such acts or omissions, and (ii) as additionally provided in this Agreement with respect to the Issuing Banks. 10.02 Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 10.03 Liability of Agent. None of the Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Banks for any recital, statement, representation or warranty made by the 115 121 Company or any Subsidiary or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Company or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the Properties, books or records of the Company or any of the Company's Subsidiaries or Affiliates. 10.04 Reliance by Agent. (a) The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Majority Banks as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Majority Banks and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Banks. (b) For purposes of determining compliance with the conditions specified in Section 5.01, each Bank that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter either sent or made available by the Agent to such Bank for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Bank, unless an officer of the Agent responsible for the 116 122 transactions contemplated by the Loan Documents shall have received notice from the Bank prior to the initial Credit Extension specifying its objection thereto and either such objection shall not have been withdrawn by notice to the Agent to that effect or the Bank shall not have made available to the Agent the Bank's ratable portion of such Credit Extension. 10.05 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Banks, unless the Agent shall have received written notice from a Bank or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Banks. The Agent shall take such action with respect to such Default or Event of Default as shall be requested by the Majority Banks in accordance with Article IX; provided, however, that unless and until the Agent shall have received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Banks. 10.06 Credit Decision. Each Bank expressly acknowledges that none of the Agent-Related Persons has made any representation or warranty to it and that no act by the Agent hereinafter taken, including any review of the affairs of the Company and its Subsidiaries shall be deemed to constitute any representation or warranty by any of the Agent-Related Persons to any Bank. Each Bank represents to the Agent that it has, independently and without reliance upon any of the Agent-Related Persons and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Company and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated thereby, and made its own decision to enter into this Agreement and extend credit to the Company hereunder. Each Bank also represents that it will, independently and without reliance upon any of the Agent-Related Persons and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to 117 123 the business, prospects, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly herein required to be furnished to the Banks by the Agent, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Company which may come into the possession of any of the Agent-Related Persons. 10.07 Indemnification. Whether or not the transactions contemplated hereby shall be consummated, the Banks shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), ratably from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind whatsoever which may at any time (including at any time following the termination of the Letters of Credit, the repayment of the Loans and the termination or resignation of the Agent) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement, the Original Credit Agreement, or any document contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any such Person under or in connection with any of the foregoing; provided, however, that no Bank shall be liable for the payment to the Agent-Related Persons of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Bank shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including reasonable Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or the Original Credit Agreement, or any document contemplated by or referred to herein to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Company. Without limiting the generality of the foregoing, if the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Bank hereunder or under the Original 118 124 Credit Agreement (because the appropriate form was not delivered, was not properly executed, or because such Bank failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Bank shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all costs and expenses and attorneys' fees (including reasonable Attorney Costs). The obligation of the Banks in this Section shall survive the payment of all Obligations hereunder. 10.08 Agent in Individual Capacity. BofA and ABN and their Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory or other business with the Company and its Subsidiaries and Affiliates as though neither BofA nor ABN was the Agent and the Co-Agent, respectively, or an Issuing Bank hereunder and without notice to or consent of the Banks. With respect to its Loans and participation in Letters of Credit, each of BofA and ABN shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Agent or the Co-Agent, as the case may be, and the terms "Bank" and "Banks" shall include each of BofA and ABN in its individual capacity. 10.09 Successor Agent. The Agent may, and at the request of the Majority Banks shall, resign as Agent upon 30 days notice to the Banks. If the Agent shall resign as Agent under this Agreement, the Majority Banks shall appoint from among the Banks a successor agent for the Banks. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Banks and the Company, a successor agent from among the Banks. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall 119 125 nevertheless thereupon become effective and the Banks shall perform all of the duties of the Agent hereunder until such time, if any, as the Majority Banks appoint a successor agent as provided for above. Notwithstanding the foregoing, however, BofA may not be removed as the Agent at the request of the Majority Banks unless BofA shall also simultaneously be replaced as an "Issuing Bank" hereunder pursuant to documentation in form and substance satisfactory to BofA. 10.10 Co-Agent. None of the Banks identified on the facing page or signature pages of this Agreement as a "co-agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Banks as such. Each Bank acknowledges that it has not relied, and will not rely, on any of the Banks so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE XI MISCELLANEOUS 11.01 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by the Company therefrom, shall be effective unless the same shall be in writing and signed by the Majority Banks, the Company and acknowledged by the Agent, and then such waiver shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Banks, the Company and acknowledged by the Agent, do any of the following: (a) increase or extend the Commitment of any Bank (or reinstate any Commitment terminated pursuant to subsection 9.02(a)), including, without limitation, any amendment to or waiver of subsection 2.09(b) or any other provision providing for a mandatory commitment reduction, or subject any Bank to any additional obligations; (b) postpone or delay any date fixed for any payment of principal, interest, fees or other amounts due to the Banks (or any of them) hereunder or under any other Loan Document; (c) reduce the principal of, or the rate of interest specified herein on any Loan, or (subject to clause (iii) below) of any fees or other amounts payable hereunder or under any other Loan Document; 120 126 (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which shall be required for the Banks or any of them to take any action hereunder; or (e) amend this Section 11.01 or Section 2.16 or any provision providing for consent or other action by all Banks; and, provided further, that (i) no amendment, waiver or consent shall, unless in writing signed by the relevant Issuing Bank in addition to the Majority Banks or all the Banks, as the case may be, affect the rights or duties of such Issuing Bank under this Agreement or any L/C-Related Document relating to any Letter of Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Majority Banks or all the Banks, as the case may be, affect the rights or duties of the Agent under this Agreement or any other Loan Document, and (iii) the fee letter between the Company and BofA may be amended, or rights and privileges thereunder waived, in a writing executed by the parties thereto. 11.02 Notices. (a) All notices, requests and other communications provided for hereunder shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on the applicable signature page hereof, and (ii) shall be followed promptly by a hard copy original thereof) and mailed, faxed or delivered, to the address or facsimile number specified for notices on the applicable signature page hereof; or, as directed to the Company or the Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to each other party, at such other address as shall be designated by such party in a written notice to the Company and the Agent. (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery; except that, notwithstanding the foregoing, notices pursuant to 121 127 Article III to an Issuing Bank shall not be effective until actually received by the Issuing Bank at the address specified for the "Issuing Bank" on the signature page hereof, and notices to the Company or the Agent shall not be effective until actually received by the Company or the Agent, respectively. (c) The Company acknowledges and agrees that any agreement of the Agent, the Issuing Banks, and the Banks at Article II and Article III herein to receive certain notices by telephone and facsimile is solely for the convenience and at the request of the Company. The Agent, the Issuing Banks, and the Banks shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice and the Agent, the Issuing Banks and the Banks shall not have any liability to the Company or other Person on account of any action taken or not taken by the Agent, the Issuing Banks or the Banks in reliance upon such telephonic or facsimile notice. The obligation of the Company to repay the Loans and L/C Obligations shall not be affected in any way or to any extent by any failure by the Agent, the Issuing Banks, and the Banks to receive written confirmation of any telephonic or facsimile notice or the receipt by the Agent, the Issuing Banks and the Banks of a confirmation which is at variance with the terms understood by the Agent, the Issuing Banks, and the Banks to be contained in the telephonic or facsimile notice. 11.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 11.04 Costs and Expenses. The Company shall, whether or not the transactions contemplated hereby shall be consummated: (a) pay or reimburse BofA (including in its capacity as Agent) within five Business Days after demand (subject to subsection 5.01(e)) for all reasonable costs and expenses incurred by BofA (including in its capacity as Agent) in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, the Original Credit Agreement, any Loan Document and any other 122 128 documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including the reasonable Attorney Costs incurred by BofA (including in its capacity as Agent) with respect thereto; provided, however, that this subsection (a) shall not apply to any such costs and expenses incurred by BofA after any date that BofA is no longer the Agent hereunder and after any such date any references in this subsection (a) to BofA shall be deemed a reference to the successor Agent; and (b) pay or reimburse each Bank, the Agent, and the Arranger within five Business Days after demand (subject to subsection 5.01(e)) for all costs and expenses incurred by them in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies (including in connection with any "workout" or restructuring regarding the Loans, and including in any Insolvency Proceeding or appellate proceeding) under this Agreement, any other Loan Document, and any such other documents, including Attorney Costs and appraisal (including the allocated cost of internal appraisal services), audit, environmental inspection and review (including the allocated cost of such internal services), and search and filing costs, fees and expenses, incurred by the Agent, the Arranger and any Bank. 11.05 Indemnity. Whether or not the transactions contemplated hereby shall be consummated: The Company shall pay, indemnify, and hold each Bank, the Agent, BofA as agent under the Original Credit Agreement, and each of their respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Attorney Costs) of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the Original Credit Agreement, any Loan Documents, or the transactions contemplated hereby and thereby, and with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to this Agreement, the Original Credit Agreement, or the Loans or the Letters of Credit or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided, that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of such Indemnified Person. The 123 129 agreements in this Section shall survive payment of all other Obligations. 11.06 Marshalling; Payments Set Aside. Neither the Agent nor the Banks shall be under any obligation to marshall any assets in favor of the Company or any other Person or against or in payment of any or all of the Obligations. To the extent that the Company makes a payment or payments to the Agent or the Banks, or the Agent or the Banks enforce their Liens or exercise their rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent in its discretion) to be repaid to a trustee, receiver or any other party in connection with any Insolvency Proceeding, or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred, and (b) each Bank severally agrees to pay to the Agent upon demand its ratable share of the total amount so recovered from or repaid by the Agent. 11.07 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Agent and each Bank. 11.08 Assignments, Participations, Etc. (a) Any Bank may, with the written consent of the Company at all times other than during the existence of an Event of Default and the Agent, which consents shall not be unreasonably withheld or delayed, at any time assign and delegate to one or more Eligible Assignees (provided that no written consent of the Company or the Agent shall be required in connection with any assignment and delegation by a Bank to an Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all, or any ratable part of all, of the Loans, the Commitments, the L/C Obligations and the other rights and obligations of such Bank hereunder; provided, however, that (i) no assignment shall in any event be less than $10,000,000 of the combined Commitments of the assigning Bank under this Agreement and under and as defined in the Facility B Credit Agreement unless as a result of such assignment the assigning Bank's rights and obligations 124 130 hereunder shall be reduced to zero; (ii) if a Bank assigns less than all of its rights and obligations hereunder, such Bank's remaining Commitment plus such Bank's Commitment under and as defined in the Facility B Credit Agreement, after giving effect to such assignment, shall not be less than $10,000,000; (iii) the Company and the Agent may continue to deal solely and directly with such Bank in connection with the interest so assigned to an Assignee until (A) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Company and the Agent by such Bank and the Assignee; (B) such Bank and its Assignee shall have delivered to the Company and the Agent an Assignment and Acceptance in the form of Exhibit F ("Assignment and Acceptance") and (C) the assignor Bank or Assignee has paid to the Agent a processing fee in the amount of $3,500; and (iv) no assignment of Committed Loans shall be effective, and shall instead be void and of no effect, unless performed simultaneously with an assignment of an identical percentage of the rights and obligations of the assigning Bank in Committed Loans under and as defined in the Facility B Credit Agreement. (b) From and after the date that the Agent notifies the assignor Bank that it has received (and provided its consent with respect to) an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents. (c) Immediately upon each Assignee's making its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Bank pro tanto. (d) Any Bank may at any time sell to one or more commercial banks or other Persons not Affiliates of the Company (a "Participant") participating interests in any Loans, the Commitment of that Bank and the other interests 125 131 of that Bank (the "originating Bank") hereunder and under the other Loan Documents; provided, however, that (i) the originating Bank's obligations under this Agreement shall remain unchanged, (ii) the originating Bank shall remain solely responsible for the performance of such obligations, (iii) the Company, the Issuing Bank and the Agent shall continue to deal solely and directly with the originating Bank in connection with the originating Bank's rights and obligations under this Agreement and the other Loan Documents, (iv) no such participation of Committed Loans shall be effective, and shall instead be void and of no effect, unless performed simultaneously with a participation of an identical percentage of the rights and obligations of the selling Bank in Committed Loans under and as defined in the Facility B Credit Agreement, and (v) no Bank shall transfer or grant any participating interest under which the Participant shall have rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would require unanimous consent of the Banks as described in the first proviso to Section 11.01, or the right to grant subparticipations in Committed Loans except in strict compliance with the immediately preceding clause (iv) applied mutatis mutandis to such subparticipation. In the case of any such participation, the Participant shall be entitled to the benefit of Sections 4.01, 4.03 and 11.05 as though it were also a Bank hereunder, and if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement. (e) Each Bank agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" by the Company and provided to it by the Company or any Subsidiary of the Company, or by the Agent on such Company's or Subsidiary's behalf, in connection with this Agreement, the Original Loan Agreement, or any Loan Document, and neither it nor any of its Affiliates shall use any such information for any purpose or in any manner other than pursuant to the terms contemplated by this Agreement; provided, however, that any Bank may disclose such information (A) to the extent that such information was or becomes generally available to the public other than as a result of a disclosure by the Bank; (B) to the extent such information was or becomes available to such Bank to whom it 126 132 was furnished on a non-confidential basis; (C) at the request or pursuant to any requirement of any Governmental Authority to which the Bank is subject or in connection with an examination of such Bank by any such authority; (D) pursuant to subpoena or other court process; (E) when required to do so in accordance with the provisions of any applicable Requirement of Law; (F) to the extent reasonably required in connection with any litigation or proceeding to which the Agent, any Bank or their respective Affiliates may be party; (G) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document; (H) to such Bank's independent auditors and other professional advisors and (I) to such Bank's Affiliates. Notwithstanding the foregoing, the Company authorizes each Bank to disclose to any Participant or Assignee (each, a "Transferee") and to any prospective Transferee, such financial and other information in such Bank's possession concerning the Company or its Subsidiaries which has been delivered to the Agent or the Banks pursuant to this Agreement or which has been delivered to the Agent or the Banks by the Company in connection with the Banks' credit evaluation of the Company prior to entering into this Agreement; provided that, unless otherwise agreed by the Company, such Transferee agrees in writing to such Bank to keep such information confidential to the same extent required of the Banks hereunder. (f) Notwithstanding any other provision contained in this Agreement or any other Loan Document to the contrary, any Bank may assign all or any portion of the Loans held by it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Federal Reserve Board and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned Loans made by the Company to or for the account of the assigning or pledging Bank in accordance with the terms of this Agreement shall satisfy the Company's obligations hereunder in respect to such assigned Loans to the extent of such payment. No such assignment shall release the assigning Bank from its obligations hereunder. 11.09 Set-off. In addition to any rights and remedies of the Banks provided by law, if an Event of Default exists, each Bank is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing to, such Bank to or for the credit or the account of the Company 127 133 against any and all Obligations owing to such Bank, now or hereafter existing, irrespective of whether or not the Agent or such Bank shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Bank agrees promptly to notify the Company and the Agent after any such set-off and application made by such Bank; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Bank under this Section 11.09 are in addition to the other rights and remedies (including other rights of set-off) which the Bank may have. 11.10 Automatic Debits of Fees. With respect to any commitment fee, facility fee, letter of credit fee or other fee, or any other cost or expense (including Attorney Costs) due and payable to the Agent, the Issuing Banks or BofA under the Loan Documents, the Company hereby irrevocably authorizes BofA to debit any deposit account of the Company with BofA in an amount such that the aggregate amount debited from all such deposit accounts does not exceed such fee or other cost or expense. If there are insufficient funds in such deposit accounts to cover the amount of the fee or other cost or expense then due, such debits will be reversed (in whole or in part, in BofA's sole discretion) and such amount not debited shall be deemed to be unpaid. No such debit under this Section 11.10 shall be deemed a setoff. 11.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall notify the Agent in writing of any changes in the address to which notices to the Bank should be directed, of addresses of its Offshore Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Agent shall reasonably request. 11.12 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Agent. 11.13 Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder. 128 134 11.14 No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Company, the Banks, the Issuing Banks, the Co-Agent and the Agent, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. Neither the Agent, the Co-Agent, the Issuing Banks nor any Bank shall have any obligation to any Person not a party to this Agreement or other Loan Documents. 11.15 Time. Time is of the essence as to each term or provision of this Agreement and each of the other Loan Documents. 11.16 Governing Law and Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. 11.17 Arbitration; Reference. (a) Mandatory Arbitration. Any controversy or claim between or among the parties, including but not limited to those arising out of or relating to this Agreement or any agreements or instruments relating hereto or delivered in connection herewith and any claim based on or arising from an alleged tort, shall at the request of any party be determined by arbitration. The arbitration shall be conducted in accordance with the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this Agreement, and under the Commercial Rules of the American Arbitration Association ("AAA"). The arbitrator(s) shall give effect to applicable statutes of limitation in determining any claim. Any controversy concerning whether an issue is arbitrable shall be determined by the arbitrator(s). Judgment upon the arbitration award may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. (b) Judicial Reference. At the request of any party a controversy or claim which is not submitted to arbitration as provided and limited in subparagraph (a) shall be determined by a reference in accordance with California Code 129 135 of Civil Procedure Section 638 et seq. If such an election is made, the parties shall designate to the court a referee or referees selected under the auspices of the AAA in the same manner as arbitrators are selected in AAA-sponsored proceedings. The presiding referee of the panel, or the referee if there is a single referee, shall be an active attorney or retired judge. Judgment upon the award rendered by such referee or referees shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645. (c) Provisional Remedies, Self-Help and Foreclosure. No provision of this paragraph shall limit the right of any party to this Agreement to exercise self-help remedies such as setoff, foreclosure against or sale of any real or personal property collateral or security, or obtaining provisional or ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of any arbitration or other proceeding. The exercise of a remedy does not waive the right of either party to resort to arbitration or reference. 11.18 Entire Agreement. This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the Company, the Banks, the Issuing Banks, the Co-Agent and the Agent, and supersedes all prior or contemporaneous Agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof; provided, however, that (a) the fee letter referenced in subsections 2.12(a) and (c), (b) any prior arrangements made with respect to the payment by the Company of (or any indemnification for) any fees, costs or expenses payable to or incurred (or to be incurred) by or on behalf of the Agent or the Banks, and (c) the representations and warranties (as of the dates made and deemed made) and the indemnities of the Company set forth in the Original Credit Agreement and the Loan Documents (as 130 136 defined therein) shall, in each case, survive the execution and delivery of this Agreement. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in San Francisco, California by their proper and duly authorized officers as of the day and year first above written. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: /s/ Diane M. Irvine ------------------------------------------ Title: Vice President and CFO --------------------------------- Address for notices: 999 Third Avenue, Suite 2300 Seattle, WA 98104 Attn: Chief Financial Officer Facsimile: (206) 467-3797 Tel: (206) 467-3600 131 137 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, As Agent By: /s/ Ivo Bakovic --------------------------------------- Title: Vice President ----------------------------------------- Address for notices: 1455 Market Street, 12th Floor San Francisco, CA 94103 Attn: Agency Management Services #5596 Facsimile: (415) 622-4894 Tel: (415) 622-1158 Attention: Shannon Collins Address for payments: Bank of America NT&SA ABA 121-000-358 Attention: Agency Management Services #5596 1850 Gateway Blvd. Concord, CA 94520 for credit to Account No. 1233-6-14205 132 138 ABN AMRO BANK N.V. as a Co-Agent By: /s/ David McGinnis ------------------------------------------ Title: Vice President --------------------------------------- By: /s/ Paul Calderon ------------------------------------------ Title: Vice President --------------------------------------- Address for notices: 600 University Street Suite 2323 Seattle, WA 98101 Attention: David McGinnis, Vice President Facsimile: (206) 682-5641 Tel: (206) 587-0342 Address for payments: ABN AMRO Bank N.V., New York ABA 026009580 for credit to ABN AMRO Seattle, Account No. 651001085541 Reference: Plum Creek 133 139 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank and as an Issuing Bank By: /s/ Michael J. Balok ------------------------------------------ Title: Vice President --------------------------------------- Address for notices (BofA as a Bank): San Francisco Credit Products (#3838) 555 California Street, 41st Floor San Francisco, CA 94104 Attention: Michael J. Balok Facsimile: (415) 622-4585 Tel: (415) 622-2018 Address for payments: Bank of America National Trust and Savings Association Global Payment Operations Customer Service Americas (#5693) 1850 Gateway Boulevard Concord, CA 94520 Attention: Terry Peach ABA 121-000-358 SF Domestic and Offshore Lending Office: Same as address for payments Address for Notices (BofA as an Issuing Bank): International Trade Banking Division #2621 333 S. Beaudry Ave., 19th Floor Los Angeles, California 90017 Attention: Cybele Sierra Telephone: (213) 345-6630 Facsimile: (213) 345-6684 134 140 ABN AMRO BANK N.V. as a Bank and as an Issuing Bank By: /s/ David McGinnis ------------------------------------------- Title: Vice President ---------------------------------------- By: /s/ Paul Calderon ------------------------------------------ Title: Vice President --------------------------------------- Address for notices: 600 University Street Suite 2323 Seattle, WA 98101 Attention: David McGinnis, Vice President Facsimile: (206) 682-5641 Tel: (206) 587-0342 Address for payments: ABN AMRO Bank N.V., New York ABA 026009580 for credit to ABN AMRO Seattle, Account No. 651001085541 Reference: Plum Creek Domestic and Offshore Lending Offices: Same as notice address 135 141 NATIONSBANK OF NORTH CAROLINA, N.A. By: /s/ Michael O. Lincoln ------------------------------------------ Title: Sr. Vice President --------------------------------------- Address for notices: 1 NationsBank Plaza NC1-002-06-19 Charlotte, NC 28255 Attention: Kay Ostwalt Facsimile: (704) 386-8694 Tel: (704) 386-1110 Address for payments: NationsBank of North Carolina, N.A. ABA 053-000-196 Specialized Loan Support Account No. 13662122506 Domestic and Offshore Lending Office: Forest Products NationsBank Corporate Center, 8th Fl. Charlotte, NC 28255 136 142 U.S. BANK OF WASHINGTON, N.A. By: /s/ Peter G. Bentley ------------------------------------------ Title: Senior Vice President --------------------------------------- Address for Notices: U.S. Bank of Washington, N.A. 1420 Fifth Avenue WWH276 Seattle, WA 98101 Attention: Peter G. Bentley, Vice President Facsimile: (206) 587-5259 Tel: (206) 587-5237 Address for payments: U.S. Bank of Washington, N.A. Commercial Note Department Attention: Jackie Ainsworth Reference: Plum Creek Domestic and Offshore Lending Office: Same as notice address 137 143 WELLS FARGO BANK, N.A. By: /s/ Ralph Turner ------------------------------------------ Title: Vice President --------------------------------------- Address for notices: 20 Montgomery St., 9th Floor San Francisco, CA 94163 (for notices of Borrowings) Attention: Joan Nitis Facsimile: (415) 989-4319 Tel: (415) 396-4916 (for all other notices) Attention: Ralph Turner Facsimile: (415) 421-1352 Tel: (415) 396-4932 Address for payments: Wells Fargo Bank, N.A. ABA 121000248 Corporate Note Dept., SR 703 Account No. 2712-507201 Reference: Plum Creek Timber Company, L.P. Attention: Joan Nitis Domestic and Offshore Lending Office: same as notice address 138 144 SEATTLE FIRST NATIONAL BANK By: /s/ John Wilson ------------------------------------------ Title: Vice President --------------------------------------- Address for notices: 701 Fifth Avenue, 12th Floor Box 94010 Seattle, WA 98120-9410 Attention: John Wilson, Vice President, Northwest National Division Facsimile: (206) 358-3113 Tel: (206) 358-8945 Address for payments: Seattle First National Bank ABA 125000024 LSC Loans RC #94680 Reference: Plum Creek Timber Company, L.P., AFS #7007143921 Domestic and Offshore Lending Office: same as notice address 139 145 THE BANK OF TOKYO, LTD. By: /s/ Stanley Lance ------------------------------------------ Title: Vice President --------------------------------------- Address for notices: 1201 Third Avenue, Suite 1100 Seattle, WA 98101 Attention: Corey W. Kalbfleisch, Corporate Banking Officer Facsimile: (206) 382-6067 Tel: (206) 382-6021 Address for payments: The Bank of Tokyo, Ltd., Seattle Branch ABA 1250-0162-9 Reference: Plum Creek Timber Co. (CBD) Domestic and Lending Offices: Seattle Branch 1201 Third Avenue, Suite 1100 Seattle, WA 98101 140 146 THE BANK OF CALIFORNIA, N.A. By: /s/ Kevin Sullivan ------------------------------------------ Title: Vice President --------------------------------------- Address for notices: 400 California Street, 17th Fl. San Francisco, CA 94104 Attention: Kevin Sullivan Vice President Facsimile: (415) 765-3146 Tel: (415) 765-3148 Address for payments: The Bank of California, N.A. ABA 1210-000-15 for credit to Corporate Banking Note Dept., Bancontrol Acct. #001060235 Attention: E. DeLeon Reference: Plum creek Domestic and Offshore Lending Offices: Same as notice address 141 147 SCHEDULE 1.01 April 5, 1993 Page 1 of 2 CORPORATE INVESTMENT POLICY I. OBJECTIVE This policy provides guidelines for the management of the Company's cash. It is essential that these assets be invested in a high quality portfolio which: o Preserves principal o Meets liquidity needs o Allows for appropriate diversification of investments o Delivers good yield in relationship to the guidelines and market conditions The Company is adverse to incurring market risk or credit risk, and will generally sacrifice yield in the interest of safety. Care must always be taken to insure that the Company's reported financial statements are never materially affected by decreases in the market value of securities held. II. MATURITY OR PUT Within the constraints provided throughout this document, or by addendum to this document, the maximum maturity or put of any investment instrument will be within two years from the purchase settlement date; however, the total portfolio must have an average maturity of less than 12 months. III. PERMISSIBLE INVESTMENTS A. Investments will be made in U.S. dollars only. B. The Company may own, purchase or acquire marketable direct obligations in the following: 1. Obligations (fixed and floating rate) issued by, or unconditionally guaranteed by the U.S. Treasury, or any agency thereof, or issued by any political subdivision of any state or public agency, 2. Commercial paper rated as A-1 or better by Standard & Poor's, and P-1 or better by Moody's (or equivalent). 3. Floating rate and fixed rate obligations of corporations, banks and agencies including: medium term notes and bonds, deposit notes, and euro dollar/yankee notes and bonds. 148 April 5, 1993 Page 2 of 2 4. Certificates of deposit, bankers acceptances and time deposits of commercial banks, domestic or foreign, whose short term credit ratings are A-1/P-1 (or equivalent). 5. Repurchase agreements collateralized by U.S. Treasury and agency securities. 6. Insurance company Funding Agreements, Investment Contracts, or similar obligations. 7. Asset backed and mortgage backed securities. 8. Master Notes. 9. Taxable money market preferreds. 10. Tax exempt securities including municipal bonds/notes, money market preferreds, and variable rate demand notes. C. Issuing institutions shall be Corporations, Trusts, Partnerships, and Banks domiciled in the U.S., Canada, Japan and Western Europe, or Insurance Companies domiciled in the U.S. IV. CREDIT REQUIREMENTS Safety shall always be a primary consideration in structuring the Company's investment portfolio. Credit ratings should be tied to duration as prescribed below in order to combine safety, liquidity and acceptable market performance:
DURATION MINIMUM CREDIT RATING -------- --------------------- S&P MOODY'S --- ------- 6 months or less A- A3 6 - 18 months AA Aa2 18 months or more AAA Aaa
Original issue securities allowable under this policy with less than twelve months to maturity may substitute the issuers short term credit rating if that rating is A-1/P-1 or better. V. DIVERSIFICATION To diversiffy risk, no more than $2 million or 10% of the portfolio can be invested with any one issuer. Exceptions are issues of the U.S. Treasury or agency securities, insured or government collateralized issues and daily money market funds. 149 SCHEDULE 2.01 COMMITMENTS
Commitment Bank Commitment Percentage - ---- --------------- ------------ Bank of America National Trust and Savings Association $ 18,518,518.52 18.51851852% ABN AMRO Bank N.V $ 18,518,518.52 18.51851852% NationsBank of North Carolina, N.A. $ 11,111,111.11 11.11111111% U.S. Bank of Washington, N.A. $ 11,111,111.11 11.11111111% Wells Fargo Bank, N.A. $ 11,111,111.11 11.11111111% Seattle First National Bank $ 11,111,111.11 11.11111111% The Bank of Tokyo, Ltd. $ 11,111,111.11 11.11111111% The Bank of California, N.A. $ 7,407,407.41 7.40740741% --------------- ------------- $100,000,000.00 100.00000000%
150 SCHEDULE 3.03 EXISTING ABN LETTERS OF CREDIT PLUM CREEK TIMBER COMPANY
Letter of Number of Auto-renew Credit Balance Expiry Notification Days Beneficiary - --------- ------- ------ --------------------- ----------- IM60268 165,000 6/8/95 60 Home Indemnity Co. IM60293 580,000 6/1/95 45 United Pacific Insurance Co. IM60396 89,073 3/26/95 45 United Pacific Insurance Co. IM60496 250,000 6/1/95 30 Federal Insurance Co.
PLUM CREEK MANUFACTURING, INC.
Letter of Number of Auto-renew Credit Balance Expiry Notification Days Beneficiary - --------- ------- ------ --------------------- ----------- IM60269 335,000 6/15/95 60 Home Indemnity Co. IM60299 125,335 6/15/95 45 United Pacific Co.
151 PLUM CREEK TIMBER COMPANY, L.P. SCHEDULE 6.05 LITIGATION NONE 152 SCHEDULE 6.07 6.07(a) QUALIFIED PLANS: Plum Creek Pension Plan Plum Creek Thrift and Profit Sharing Plan Plum Creek Welfare Plan - Component Documents listed in Appendix II, thereto NON-QUALIFIED PLANS: Plum Creek Management Company, L.P. Executive Unit Award Plan Plum Creek Management Company, L.P. Key Employee Long Term Incentive Plan Plum Creek Management Company, L.P. Long Term Incentive Plan Plum Creek Management Company, L.P. Management Incentive Plan Plum Creek Management Company, L.P. Key Employee Unit Award Plan Plum Creek Management Company, L.P. Executive and Key Employee Salary and Incentive Compensation Deferral Plan Plum Creek Management Company, L.P. Executive Incentive Sharing Plan Plum Creek Supplemental Benefits Plan Plum Creek Timber Company, L.P. Key Employee Supplemental Pension Plan PC Advisory Corp I Deferred Compensation Plan for Directors MULTI-EMPLOYER PLANS: None 153 SCHEDULE 6.07 - CONTINUED 6.07(c) A favorable determination letter from the IRS has been received for the Plum Creek Thrift and Profit Sharing Plan. The Plum Creek Pension Plan, adopted in March 1990, is intended to be a qualified plan pursuant to Internal Revenue Code section 401(a) and the Trust is intended to be tax exempt pursuant to Code section 501(a). The current plan has not been submitted for a determination letter which will confirm it is qualified. The Plum Creek Pension Plan will be submitted for a favorable determination letter request no later than the last day of its plan year (December 31, 1994) and the Company will adopt any appropriate amendments and take any action requested by the Internal Revenue Service as a condition of issuing a favorable determination letter on the Plum Creek Pension Plan. 6.07(d) and (e) None 6.07(f) Retiree Life Insurance: -- Insured plan -- $10,000 coverage per salaried retiree -- Approximately 50 retirees covered -- Plan continues to be available to salaried retirees Retiree Medical: -- Liability to cover four retirees for life and two retirees to age 65 -- Plan continues to be available to salaried retirees at retiree-pay-all basis -- Liability to provide Mr. Leland and family with coverage until Mr. Leland is no longer a Board member. Active Medical -- Liability to provide Mr. Sletten and family with continuing medical coverage, under its "COBRA" coverage until December 31, 1995. The Retiree Life, Retiree Medical, and Active Medical Communications contain disclaimers regarding the rights of the Company to modify, amend or terminate the Plans. The Accumulated Post-retirement Benefit Obligation at December 31, 1993 was $393,725. 6.07(h), (j), and (k) None 154 SCHEDULE 6.12 ENVIRONMENTAL MATTERS 6.12(a) None. 6.12(b) Plum Creek Manufacturing L.P. is in the process of applying for a groundwater discharge permits at the Columbia Falls complex. It has not been determined yet whether a Groundwater Discharge Permit will be required at the Pablo or Ksanka facilities. 6.12(c) Consent Decrees: Columbia Falls Veneer Dryers, May 21, 1990 Evergreen Veneer Dryers, May 26, 1991 Evergreen Boiler, May 19, 1992 Notice of Violation or Citation: EPA NOV/Evergreen Veneer Dryers, February 21, 1991, May 1, 1992 Montana Air Quality Bureau Citation/Columbia Falls Boiler, April 25, 1994 Montana Air Quality Bureau Citation/Columbia Falls Boiler, August 31, 1994 Environmental Claims related to: EPA/North American Environmental Inc. (Clearfield, UT) EPA/Evergreen Plywood glue pit EPA/Somers site (Somers, MT) DOE/Old Landsburg Mine Site (Ravensdale, WA) 6.12(d) None. 155 PLUM CREEK TIMBER COMPANY, L.P. SCHEDULE 6.18 SUBSIDIARIES 6.18(a) Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Company") has direct ownership in two subsidiaries, and indirect ownership of two additional subsidiaries. The Company owns 98% of Plum Creek Manufacturing, L.P., a Delaware limited partnership. The remaining 2% of Plum Creek Manufacturing, L.P. is owned by Plum Creek Management Company, L.P., a Delaware limited partnership, general partner of the Company. The Company owns 96% of the issued and outstanding stock of Plum Creek Marketing, Inc., a Delaware corporation. The remaining 4% of the issued and outstanding stock of Plum Creek Marketing, Inc. is owned by Plum Creek Management Company, L.P., general partner of the Company. Plum Creek Marketing, Inc. owns 100% of the issued and outstanding stock of Plum Creek remanufacturing, Inc., a Washington corporation, and Plum Creek Foreign Sales Corp., a Guam corporation. Plum Creek Foreign Sales Corp. is an inactive corporation. 6.18(b): None 156 PLUM CREEK TIMBER COMPANY, L.P. SCHEDULE 8.01 PERMITTED LIENS NONE 157 SCHEDULE 8.04 PERMITTED INVESTMENTS 1. 98% interest in Plum Creek Manufacturing, L.P. 2. 96% interest in Plum Creek Marketing, Inc. 158 EXHIBIT A NOTICE OF BORROWING Date: __________________ To: Bank of America National Trust and Savings Association, as Agent for the Banks parties to the Amended and Restated Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Amended and Restated Credit Agreement") among Plum Creek Timber Company, L.P., certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank, and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Ladies and Gentlemen: The undersigned, Plum Creek Timber Company, L.P, (the "Company"), refers to the Amended and Restated Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.03 of the Amended and Restated Credit Agreement, of the Borrowing specified herein: 1. The aggregate amount of the proposed Committed Borrowing is $_____________________. 2. The Business Day of the proposed Committed Borrowing is _____________________________, 19___. 3. The Borrowing is to be comprised of $___________ of [CD Rate] [Offshore Rate] [Base Rate] Committed Loans. 4. [If applicable] The duration of the Interest Period for the [CD Rate Committed Loans] [Offshore Rate Committed Loans] included in the Borrowing shall be [____________ days] [_________ months]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Committed Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom: 1 159 (a) the representations and warranties of the Company contained in Article VI of the Amended and Restated Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct as of such earlier date); (b) no Default or Event of Default exists; and (c) the proposed Borrowing will not cause the Effective Amount of all outstanding Committed Loans and Bid Loans plus the Effective Amount of all L/C Obligations to exceed the Aggregate Commitment. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: _________________________________ Title: ______________________________ 2 160 EXHIBIT B NOTICE OF CONVERSION/CONTINUATION Date: __________________ To: Bank of America National Trust and Savings Association, as Agent for the Banks parties to the Amended and Restated Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Amended and Restated Credit Agreement") among Plum Creek Timber Company, L.P., certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Ladies and Gentlemen: The undersigned, Plum Creek Timber Company, L.P. (the "Company"), refers to the Amended and Restated Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.04 of the Amended and Restated Credit Agreement, of the [conversion] [continuation] of the Committed Loans specified herein, that: 1. The date of the [conversion] [continuation] is ______________________, 19__. 2. The aggregate amount of the Committed Loans [converted] [continued] is $______________. 3. The Committed Loans are to be [converted into] [continued as] [CD Rate] [Offshore Rate] [Base Rate] Committed Loans. 4. [If applicable] The duration of the Interest Period for the Committed Loans included in the [conversion] [continuation] shall be [____ days] [____ months]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed [conversion][continuation], before and after giving effect thereto and to the application of the proceeds therefrom: 1 161 (a) the representations and warranties of the Company contained in Article VI of the Amended and Restated Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct as of such earlier date); (b) no Default or Event of Default exists; and (c) the proposed [conversion] [continuation] will not cause the Effective Amount of all outstanding Committed Loans and Bid Loans plus the Effective Amount of all L/C Obligations to exceed the Aggregate Commitment. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: _________________________________ Title: ______________________________ 2 162 EXHIBIT C-1 LEGAL OPINION OF COUNSEL FOR THE COMPANY [Unless otherwise defined herein, capitalized terms used in this Exhibit C-1 have the meanings assigned to them in the Agreement.] (a) Each of the Company, the General Partner, PCMC General Partner and Plum Creek Manufacturing, L.P. is a limited partnership duly formed under the laws of the State of Delaware, with a stated term beyond the term of the Loan Documents (in those cases where the Loan Documents have a fixed term) and is duly qualified and in good standing in each state in which the failure to so qualify would have a Material Adverse Effect. (b) Each of PC Advisory General Partner and Plum Creek Marketing, Inc. is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified and in good standing in each state in which the failure to so qualify would have a Material Adverse Effect. (c) The Company and each of the Partner Entities have the partnership or corporate, as applicable, power and authority to execute and deliver, and to perform and observe the provisions of, the Loan Documents. (d) The execution, delivery and performance by the Company of the Loan Documents have been duly authorized by all necessary corporate and partnership action on behalf of PC Advisory General Partner, as general partner of PCMC General Partner, as general partner of the General Partner, as general partner of the Company. (e) The Loan Documents have been duly executed and delivered by the Company. (f) The Company and each of its Subsidiaries has the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets and carry on its business, except for such governmental licenses, authorizations, consents and approvals, the lack thereof would not have a Material Adverse Effect. (g) No registration with, consent or approval of, notice to, or other action by, any Governmental Authority is 1 163 required on the part of the Company or the Partner Entities or any of their Subsidiaries for the execution, delivery or performance by the Company of the Loan Documents, or if required, such registration has been made, such consent or approval has been obtained, such notice has been given or such other appropriate action has been taken. (h) The execution, delivery and performance of the Loan Documents by the Company are not in violation of the partnership documents of the Company, the General Partner or the PCMC General Partner or the Articles of Incorporation and Bylaws of the PC Advisory General Partner. (i) The execution, delivery and performance of the Loan Documents by the Company will not violate or result in a breach of any of the terms of or constitute a default under or result in a creation of any Lien on any property or assets of the Company or any of the Partner Entities, pursuant to the terms of any indenture, mortgage, deed of trust or other agreement to which such Person is a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its property is subject. (j) The execution, delivery and performance of the Loan Documents will not conflict with or contravene any of Regulations G, T, U and X promulgated by the Federal Reserve Board. (k) Neither the Company, the Partner Entities, any Person controlling the Company or the Partner Entities, or any Subsidiary of the Company or the Partner Entities, is an "Investment Company" within the meaning of the Investment Company Act of 1940, as amended, or subject to regulation under the Public Utility Holding Company Act of 1935, as amended. (l) There are no actions, suits, proceedings, claims or disputes pending or, to the best of my knowledge, threatened against the Company, the Partner Entities or any of their Subsidiaries or any of their respective properties before any court, regulatory body, administrative agency, at law, in equity, in arbitration or before any Governmental Authority which (a) purport to affect or pertain to the Loan Documents, or any of the transactions contemplated thereby, (b) have a reasonable probability of success on the merits and which, if determined adversely to the Company, the Partner Entities or their Subsidiaries, would reasonably be expected to have a Material Adverse Effect. 2 164 EXHIBIT C-2 LEGAL OPINION OF PERKINS COIE [Unless otherwise defined herein, capitalized terms used in this Exhibit C-2 have the meanings assigned to them in the Agreement.] (a) The Agreement constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms. 165 EXHIBIT D PLUM CREEK TIMBER COMPANY, L.P. COMPLIANCE CERTIFICATE DATE: __________________ Reference is made to that certain Amended and Restated Credit Agreement dated as of November 15, 1994 (the "Credit Agreement") among Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Company"), certain financial institutions from time to time parties to the Amended and Restated Credit Agreement (the "Banks"), ABN Amro Bank N.V., as co-agent and a letter of credit issuing bank and Bank of America National Trust and Savings Association, a national banking association, as agent for the Banks (in such capacity, the "Agent") and as a letter of credit issuing bank. Unless otherwise defined herein, capitalized terms used herein have the respective meanings assigned to them in the Amended and Restated Credit Agreement. The undersigned Responsible Officer of the Company, hereby certifies as of the date hereof that he/she is the ____________________ of the Company, and that, as such, he/she is authorized to execute and deliver this Certificate to the Banks and the Agent on the behalf of the Company and its Subsidiaries and not as an individual, and that: [Use the following paragraph if this Certificate is delivered in connection with the financial statements required by subsection 7.01(a) of the Amended and Restated Credit Agreement.] 1. Attached as Schedule 1 hereto are (a) a true and correct copy of the audited combined balance sheet of the Company as at the end of the fiscal year ended December 31, ____ and (b) the related combined statements of income and statement of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of Coopers & Lybrand or another nationally-recognized certified independent public accounting firm. Such opinion is not qualified or limited because of a restricted or limited examination by such accountant of any material portion of the Company's or any Subsidiary's records and is delivered to the Agent pursuant to a reliance agreement 1 166 between the Agent and Banks and such accounting firm which you have advised us is in form and substance satisfactory to the Agent and the Majority Banks; or [Use the following paragraph if this Certificate is delivered in connection with the financial statements required by subsection 7.01(b) of the Amended and Restated Credit Agreement.] 1. Attached as Schedule 1 hereto are (a) a true and correct copy of the audited combining balance sheets of the Company and each of its Subsidiaries as at the end of the fiscal year ended December 31, ____ and (b) the related combining statements of income and statement of cash flows for such fiscal year; which financial statements were used in connection with the preparation of the audited combined balance sheet of the Company as of the end of such fiscal year and the related combined statements of income and statement of cash flows for such fiscal year. or [Use the following paragraph if this Certificate is delivered in connection with the financial statements required by subsections 7.01(c) and (d) of the Amended and Restated Credit Agreement.] 1. (a) Attached as Schedule 1A hereto is (i) a true and correct copy of the unaudited combined balance sheet of the Company and its combined Subsidiaries as of the end of the fiscal quarter ended __________ __, ____ and (ii) the related combined statements of income and statement of cash flows of the Company and its combined Subsidiaries for the period commencing on the first day and ending on the last day of such quarter, setting forth in each case in comparative form the figures for the previous year (subject to normal year-end audit adjustments). (b) Attach as Schedule 1B hereto is (i) a true and correct copy of the unaudited combining balance sheets of the Company and each of its Subsidiaries as of the end of the fiscal quarter ended __________ __, ____ and (ii) the related combining statements of income and statement of cash flows for such quarter, which financial statements were used in connection with the preparation of the financial statements referred to in paragraph 1(a) above of this Certificate. 2 167 2. The undersigned has reviewed and is familiar with the terms of the Amended and Restated Credit Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and conditions (financial or otherwise) of the Company during the accounting period covered by the attached financial statements. 3. The attached financial statements are complete and correct, and have been prepared in accordance with GAAP on a basis consistent with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 4. The attached financial statements are certified by a Responsible Officer of the Company and fairly state the financial position and results of operations of the Company and its combined Subsidiaries. 5. To the best of the undersigned's knowledge, the Company, during such period, has observed, performed or satisfied all of its covenants and other agreements, and satisfied every condition in the Amended and Restated Credit Agreement to be observed, performed or satisfied by the Company, and the undersigned has no knowledge of any Default or Event of Default. 6. The financial covenant analyses and information set forth on Schedule 2 attached hereto are true and accurate on and as of the date of this Certificate. 7. For the fiscal quarter commencing ___________, the Applicable Margin is (i) _____% in the case of Offshore Rate Committed Loans, (ii) _____% in the case of CD Rate Committed Loans and (iii) 0.0000% in the case of Base Rate Committed Loans. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of ____________________, ____. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: ________________________________ Title: _____________________________ 3 168 PLUM CREEK TIMBER COMPANY, L.P. SCHEDULE 2 COMPLIANCE CERTIFICATE COMPUTATION STATEMENT ($ IN THOUSANDS) Fixed Charge Coverage Ratio (used for Applicable Margin and Commitment Fee Percentage) EBITDA Net Income Plus: DD&A LIFO Adjustments Accrued Income Taxes ----- Total $0 (A) ----- To: 4 Qtrs. Combined Interest Expense plus: scheduled principal repayments ----- Total $0 (B) ----- "A" divided "B" 0.00 x NEGATIVE COVENANTS 1) SECTION 8.02(H): ASSET SALES Maximum Allowed calendar year ________ $0 Sales as of ________ $0 2) SECTION 8.03: HARVESTING RESTRICTIONS (MMBF) 199__ Maximum Allowable Harvest 0 Add: Prior year Cumulative Carryover Harvest 0 ----- Available to Harvest in 199__ 0 Actual 199__ Harvest 0 ----- 199__ Carryover Harvest 0 ===== 3) SECTION 8.04(I): INVESTMENTS NOT OTHERWISE PERMITTED: The greater of $30 million or 60% of the Average annual Pro Forma Free Cash Flow from the two fiscal years preceding 2 Year Average Proforma Free Cash Flow $0 The greater of $30 million or Average (above) $0 Cumulative investments made through _________ $0 169 4) SECTION 8.05(b): FUNDED DEBT INCURRED TO FINANCE CAPITAL IMPROVEMENTS: Maximum Allowed $20,000 Outstanding at ____________ $0 5) SECTION 8.05(d): INDEBTEDNESS INCURRED FOR THE REVOLVING CREDIT FACILITY Maximum Allowed $15,000 Outstanding at ____________ $0 6) SECTION 8.05(f): GUARANTEE OF FACILITIES SUBSIDIARY REVOLVING CREDIT FACILITY: Maximum Allowed $20,000 Outstanding at ____________ $0 7) SECTION 8.05(g): GUARANTEE OF FACILITY SUBSIDIARY CAPITAL IMPROVEMENT FUNDED DEBT: Maximum Allowed $20,000 Outstanding at ____________ $0 8) SECTION 8.05(h): AGGREGATE PRINCIPAL AMOUNT OF INDEBTEDNESS SECURED BY LIENS: Maximum Allowed $20,000 Outstanding at ____________ $0 9) SECTION 8.05(i): ADDITIONAL FUNDED DEBT: Pro Forma Free Cash Flow $0 to Maximum Pro Forma Annual Interest Charges $0 Ratio = 0.00 x Amount Outstanding $0 Not to exceed $400 million $400,000 170 10) SECTION 8.13 (a): RESTRICTED PAYMENTS: Available Cash means, with respect to any calendar quarter, (i)(a) Net Income $0 (a) Excluding Gain on sale of any Capital Assets 0 Plus: (b) DD&A 0 (b) Other non-cash charges (incl. LIFO inventory) 0 (c) Reduction in reserves of the types referred to in clause (ii)(d) below, Interest 0 Principal 0 (d) Proceeds received from the sale of Designated Acres 0 (e) Cash from Capital Transactions used to Refinance or refund indebtedness 0 Less (ii) the sum of: (a) All payments of Principal Indebtedness 0 (b) Capital Expenditures 0 (c) Capital Expenditures made in prior quarter, anticipated to financed, but have not been refinanced 0 (d) Reserve for future Principal Payments: Bank 0 Senior and First Mortgage Notes 0 (d) Reserve for future Capital Expenditures 0 (d) Reserve for additional Working Capital 0 (d) Reserve for future Distributions 0 (d) Reserve for future Interest Payments 0 (e) Other noncash credits 0 (f) The amount of any investments 0 (g) Any investments made in prior quarter anticipated to be financed, but have not been refinanced 0 -- Available cash - __________ $0 == General Partner 2% Interest 0 General Partner Incentive Distribution 0 Allocable to Unitholders - net 0 -- Total Distribution $0 == 171 EXHIBIT E FORM OF CASH COLLATERAL ACCOUNT AGREEMENT This CASH COLLATERAL ACCOUNT AGREEMENT ("Agreement") dated as of ______________, 199_ is entered into by and between PLUM CREEK TIMBER COMPANY, L.P., a Delaware limited partnership (the "Company"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent (solely in such capacity, "Agent") for the financial institutions from time to time parties to the Amended and Restated Credit Agreement referred to below (such entities, together with their respective successors and assigns, being collectively referred to as the "Banks"). RECITALS A. The Company, Agent, ABN Amro Bank N.V., as co-agent ("Co-Agent") and the Banks have entered into an Amended and Restated Credit Agreement dated as of November 15, 1994 (as the same may from time to time be amended, amended and restated, modified, supplemented or renewed, the "Amended and Restated Credit Agreement"). Capitalized terms used herein without definition shall have the meanings given to them in the Amended and Restated Credit Agreement. [B. Pursuant to Section 3.07 or subsection 2.09(a)(ii) of the Amended and Restated Credit Agreement, Agent has required that the Company immediately Cash Collateralize all or a portion of the L/C Obligations as provided in that Section or subsection in a cash collateral account at Bank of America National Trust and Savings Association ("BofA").] or [B. In accordance with subsection 2.09(a)[(i)] [(ii)] and subsection 2.09(c) of the Amended and Restated Credit Agreement, the Company is required to prepay or Cash Collateralize [CD Rate Committed Loans] [and] [Offshore Rate Committed Loans] in an amount equal to $ _____________ in a cash collateral account at Bank of America National Trust and Savings Association ("BofA"). The Company has elected to Cash Collateralize such Committed Loans which cash collateral amount shall be applied to repay [CD Rate Committed Loans] [and] [Offshore Rate Committed Loans] at maturity thereof.] or 1 172 [B. In accordance with subsection 2.09(a)(iii) of the Amended and Restated Credit Agreement, the Company is required to Cash Collateralize Bid Loans in an amount equal to $ ___________ in a cash collateral account at Bank of America National Trust and Savings Association ("BofA"), which amount shall be applied to Bid Loans at maturity thereof.] NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the Company and Agent hereby agree as follows: 1. Cash Collateral Account. a. Cash Collateral Account. For purposes of [Section 3.07] [subsection 2.09(a)(ii)] [subsection 2.09(c)] [subsection 2.09(a)(iii)] of the Credit Agreement, the Company has established with BofA, for the benefit of Agent on behalf of itself [IF WITH RESPECT TO SUBSECTION 2.09(c): and the Banks] [IF WITH RESPECT TO SECTION 3.07 OR SUBSECTION 2.09(a)(ii): the Issuing Banks and the Banks] [IF WITH RESPECT TO SUBSECTION 2.09(a)(iii): and the Bid Loan Lenders], a special purpose restricted deposit account in the name of the Company, deposit account #__________ (together with any successor account(s) that may be established from time to time in replacement thereof, the "Cash Collateral Account"). Agent shall have exclusive control over the Cash Collateral Account and the sole right of withdrawal therefrom, except as expressly provided in Section 1(b) below. The Company agrees that the Cash Collateral Account shall be a blocked account, and upon the deposit of funds into the Cash Collateral Account by or at the direction of the Company, such deposit shall become (except as expressly provided in such Section 1(b) hereof) irrevocable and the Company shall have no right to withdraw amounts contained therein or interest accrued thereon except as provided in Section 1(b) hereof or upon the indefeasible payment in full of the Obligations; and until such indefeasible payment in full of the Obligations the Company waives (i) the right to make withdrawals from the Cash Collateral Account and (ii) the right to instruct BofA to honor drafts drawn against the Cash Collateral Account, except in each case as expressly provided in Section 1(b) hereof. [IF WITH RESPECT TO SECTION 3.07 AND SUBSECTION 2.09(a)(ii)] [(b Application to Letters of Credit. Subject to the prior application by Agent of amounts held hereunder pursuant to Section 2, on the Honor Date of a Letter of Credit, Agent shall promptly apply any amounts 2 173 remaining in the Cash Collateral Account to reimburse the Issuing Bank which issued such Letter of Credit for the drawing on such Letter of Credit, and the Company irrevocably directs Agent to apply such funds at such time to reimburse such Issuing Bank in accordance with subsection 3.03(c) of the Amended and Restated Credit Agreement. At any time that there are no outstanding L/C Obligations and so long as no Default or Event of Default shall then exist, Agent shall release and transfer to the Company any amounts remaining in the Cash Collateral Account.] [IF WITH RESPECT TO SUBSECTION 2.09(c)] [(b) Application to Committed Loans. Subject to the prior application by Agent of amounts held hereunder pursuant to Section 2, on the maturity date of any Interest Period with respect to [a CD Rate Committed Loan] [and] [an Offshore Rate Committed Loan], Agent shall apply any amounts remaining in the Cash Collateral Account to repay such [CD Rate Committed Loan] [or] [[Offshore Rate Committed Loan], and the Company irrevocably directs Agent to apply such funds at such time to repay [CD Rate Committed Loans] [or] [Offshore Rate Committed Loans]. [IF WITH RESPECT TO SUBSECTION 2.09(a)(iii)] [(b) Application to Bid Loans. Subject to the prior application by Agent of amounts held hereunder pursuant to Section 2, on the maturity date of any Interest Period with respect to a Bid Loan, Agent shall apply any amounts remaining in the Cash Collateral Account to repay such Bid Loan, and the Company irrevocably directs Agent to apply such funds at such time to repay Bid Loans.] 2. Lien. The Cash Collateral Account, all funds and investments contained therein, all interest accrued thereon, and all proceeds thereof shall be held by BofA for the benefit of Agent on behalf of itself [IF RESPECT TO SUBSECTION 2.09(c): and the Banks] [IF WITH RESPECT TO SECTION 3.07 OR SUBSECTION 2.09(a)(ii): the Issuing Banks and the Banks] [IF WITH RESPECT TO SUBSECTION 2.09(a)(iii): and the Bid Loan Lenders] as cash collateral to secure the Company's Obligations. As security for the payment and performance of all obligations of the Company hereunder and under the Amended and Restated Credit Agreement, the Company hereby grants to Agent on behalf of itself [IF WITH RESPECT TO SUBSECTION 2.09(c): and the Banks] [IF WITH RESPECT TO SECTION 3.07 OR SUBSECTION 2.09(a)(ii): the Issuing Banks and the Banks] [IF WITH RESPECT TO SUBSECTION 2.09(a)(iii): and the Bid Loan Lenders] a first priority perfected security interest in all of its rights, title and interest now existing or hereafter arising in and to the Cash 3 174 Collateral Account and any proceeds or products thereof. Agent and the Company hereby notify BofA of the foregoing lien, and BofA, by its signature below, acknowledges receipt of such notice. The Company shall be deemed in default under this Agreement upon the occurrence of an Event of Default, as that term is defined in the Amended and Restated Credit Agreement. Upon the occurrence of any such Event of Default, Agent may, at its option, and without notice to or demand on the Company and in addition to all rights and remedies available to Agent under the Amended and Restated Credit Agreement, do any one or more of the following: (a) foreclose or otherwise enforce Agent's security interest in any manner permitted by law, or provided for in this Agreement; (b) dispose of the Cash Collateral Account on such terms and in such manner as Agent may determine; and (c) recover from the Company all costs and expenses, including, without limitation, Attorneys Costs, incurred or paid by Agent in exercising any right, power or remedy provided by this Agreement, the Loan Documents, or by law. 3. Investments. Upon the Company's written instructions as provided in Section 4 below, if no Default or Event of Default exists, Agent shall invest the funds on deposit in the Cash Collateral Account in any of the permitted investments described in the Investment Policy attached as Schedule 1.01 to the Amended and Restated Credit Agreement; provided that with respect to any instruction to invest funds in any investment that does not constitute a "deposit account" (as defined in Division 9 of the California Uniform Commercial Code) maintained with BofA, Agent shall take no action to effect such instructions to invest funds unless and until the Company has duly executed and delivered such documents and instruments and caused to be delivered such opinions of counsel as the Majority Lenders may reasonably deem necessary or appropriate to perfect or to confirm the perfection and first priority status of Agent's security interest in such investments. 4. Investment Direction. With respect to the investment of funds on deposit in the Cash Collateral Account pursuant to Section 3 above, Agent shall be entitled to rely upon the written instructions of those individuals whose signatures appear in the spaces provided below, or 4 175 such other individuals as may hereafter be designated in writing by the Company: ----------------------------------- ----------------------------------- ----------------------------------- 5. Compensation. BofA shall be entitled to compensation from the Company for the maintenance of and investment of funds contained in the Cash Collateral Account in accordance with its standard fees for such services in effect from time to time. Such compensation shall be payable upon demand. 6. Notices, Etc. Any notice or other communication herein required or permitted to be given shall be in writing and may be delivered in person, with receipt acknowledged, or sent by telex, telecopy or by United States mail, registered or certified, return receipt requested, postage prepaid and addressed as set forth on the signature pages to this Agreement or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. All such notices and communications shall be effective upon receipt. Failure or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the persons designated above to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 7. Termination. This Agreement shall terminate when transfers of amounts in the Cash Collateral Account pursuant to Section 1 hereof shall have reduced the balance of the Cash Collateral Account to zero. 8. Successors and Assigns; Governing Law. This Agreement shall be binding upon and inure to the benefit of 5 176 the Company, Agent [and the Banks] [and the Bid Loan Lenders]1 and their respective successors and assigns, except that the Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of Agent [and each Bank] [and each Bid Loan Lender]. Except as otherwise expressly provided herein or in any of the other Loan Documents, in all respects, including all matters of construction, validity and performance, this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America. 9. Entire Agreement; Construction; Amendments and Waivers. a. Entire Agreement. This Agreement, the Amended and Restated Credit Agreement and the other Loan Documents, taken together, constitute and contain the entire agreement among the parties and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. b. Construction. This Agreement is the result of negotiations between and has been reviewed by each of the Company, Agent [and the Banks] [and the Bid Loan Lenders] and their respective counsel; accordingly, this Agreement shall be deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or against the Company, Agent [or the Banks] [or the Bid Loan Lenders]. The Company, Agent [and the Banks] [and the Bid Loan Lenders] agree that they intend the literal words of this Agreement and that no parol evidence shall be necessary or appropriate to establish the Company's, Agent's [or any Bank's] [or any Bid Loan Lender's] actual intentions. c. Interpretation. The terms of this Agreement shall be interpreted in accordance with the provisions of Article I of the Amended and Restated Credit Agreement, provided, however, that (a) any reference to a "Section" shall refer to the relevant Section to this Agreement, unless specifically indicated to the contrary and (b) the words "herein," "hereof" and "hereunder" and other ____________________ * Bracketed references to Bid Loan Lenders shall be employed only if the only Obligations secured hereby are Bid Loans. In other circumstances, references to Banks and Majority Banks should be employed. 6 177 words of similar import (including, without limitation, in Article I of the Amended and Restated Credit Agreement) shall refer to this Agreement as a whole, as the same may from time to time be amended, amended and restated, modified or supplemented, and not to any particular section, subsection or clause contained in this Agreement. d. Amendments; Waivers. No amendment, modification, discharge or waiver of, or consent to any departure by the Company from, any provision of this Agreement shall be effective unless the same shall be in writing and signed by the Agent with the written consent of [the Majority Banks] [the Bid Loan Lenders], and then such waiver shall be effective only in the specific instance and for the specific purpose for which given. 10. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be valid, legal and enforceable under the applicable law of any jurisdiction. Without limiting the generality of the foregoing sentence, in case any provision of this Agreement shall be invalid, illegal or unenforceable under the applicable law of any jurisdiction, the validity, legality and enforceability of the remaining provisions, or of such provision in any other jurisdiction, shall not in any way be affected or impaired thereby. 11. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 12. No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Company, Agent, [the Banks] [the Bid Loan Lenders], and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with this Agreement. Neither Agent [nor any Bank] [nor any Bid Loan Lender] shall have any obligation to any Person not a party to this Agreement. 13. Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. 7 178 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: ________________________________ Title: _____________________________ Notice to be sent to: Plum Creek Timber Company, L.P. 999 Third Avenue, Suite 2300 Seattle, WA 98104 Attn: Chief Financial Officer Tel: (206) 467-3600 Fax: (206) 467-3797 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: _________________________________________ Printed Name: Title: Notice to be sent to: Bank of America National Trust and Savings Association 1455 Market Street, 12th Floor San Francisco, CA 94103 Attn: Shannon Collins Agency Management Services #5596 Tel: (415) 622-1158 Fax: (415) 622-4894 8 179 Notice of security interest acknowledged: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as depository By: _____________________________ Printed Name: Title: Notice to be sent to: Bank of America National Trust and Savings Association 555 California Street, 41st Floor San Francisco, CA 94104 Attn: Michael J. Balok Tel: (415) 622-2018 Fax: (415) 622-4585 9 180 EXHIBIT F FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Agreement") dated as of ____________________, ____ is made between ____________ _________________ (the "Assignor") and ______________________________ (the "Assignee"). RECITALS WHEREAS, the Assignor is party to that certain Amended and Restated Credit Agreement dated as of November 15, 1994 among PLUM CREEK TIMBER COMPANY, L.P., a Delaware limited partnership (the "Company"), the several financial institutions from time to time party thereto (including the Assignor, the "Banks"), ABN AMRO BANK N.V., as Co-Agent and as a letter of credit issuing bank, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent and as a letter of credit issuing bank (as from time to time amended, amended and restated, modified, supplemented or renewed, the "Amended and Restated Credit Agreement"). Any terms defined in the Amended and Restated Credit Agreement and not defined in this Agreement are used herein as defined in the Amended and Restated Credit Agreement; WHEREAS, as provided under the Amended and Restated Credit Agreement, the Assignor has committed to making committed loans (the "Committed Loans") to the Company in an aggregate amount not to exceed $__________ (the "Commitment") and has agreed to provide the Company with Bid Loans from time to time in the Assignor's sole discretion; WHEREAS, [the Assignor has made Committed Loans in the aggregate principal amount of $__________[, and Bid Loans in the aggregate principal amount of $_________] to the Company] [no Committed Loans are outstanding under the Amended and Restated Credit Agreement] [no Bid Loans are outstanding under the Amended and Restated Credit Agreement]; and WHEREAS, [the Assignor has acquired a participation in an Issuing Bank's liability under Letters of Credit in an aggregate principal amount of $_________ (the "L/C Obligations")] [No Letters of Credit are outstanding under the Amended and Restated Credit Agreement]; and WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of the 1 181 Assignor under the Amended and Restated Credit Agreement in respect of (i) its Commitment, [together with a corresponding portion of each of its outstanding Committed Loans and L/C Obligations,] in an amount equal to $__________ (the "Assigned Amount") and (ii) its outstanding Bid Loans in an amount equal to $ ________, in each case on the terms and subject to the conditions set forth herein and the Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such conditions; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: 1. Assignment and Acceptance. (a) Subject to the terms and conditions of this Agreement, (i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from the Assignor, without recourse and without representation or warranty (except as provided in this Agreement) (A) __% (the Assignee's Percentage Share") of the Commitment [and the Committed Loans and the L/C Obligations] of the Assignor, (B) [$ ____________ in principal amount of outstanding Bid Loans, and (C)] all related rights, benefits, obligations, liabilities and indemnities of the Assignor under and in connection with the Amended and Restated Credit Agreement and the Loan Documents. [If appropriate, add paragraph specifying payment to Assignor by Assignee of outstanding principal of, accrued interest on, and fees with respect to, Committed Loans, Bid Loans and L/C Obligations assigned.] (b) With effect on and after the Effective Date (as defined herein), the Assignee shall be a party to the Amended and Restated Credit Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Bank under the Amended and Restated Credit Agreement, including the requirements concerning confidentiality, with a Commitment in an amount equal to the Assigned Amount. The Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Amended and Restated Credit Agreement are required to be performed by it as a Bank. It is the intent of the parties hereto that the Commitment of the Assignor shall, as of the Effective Date, be reduced by an amount equal to the Assigned Amount and the Assignor shall relinquish its 2 182 rights and be released from its obligations under the Amended and Restated Credit Agreement to the extent such obligations have been assumed by the Assignee. (c) After giving effect to the assignment and assumption, on the Effective Date the Assignee's Commitment will be $__________. (d) After giving effect to the assignment and assumption, on the Effective Date the Assignor's Commitment will be $_________. 2. Payments. (a) As consideration for the sale, assignment and transfer contemplated in Section 1, the Assignee shall pay to the Assignor on the Effective Date in immediately available funds an amount equal to $__________, representing the Assignee's Percentage Share of the principal amount of all Committed Loans and $___________ of the principal amount of Bid Loans previously made, and currently owed, by the Company to the Assignor under the Amended and Restated Credit Agreement and outstanding on the Effective Date. (b) The [Assignor] [Assignee] further agrees to pay to the Agent a processing fee in the amount specified in Section 11.08(a) of the Amended and Restated Credit Agreement. 3. Reallocation of Payments. Any interest, fees and other payments accrued to the Effective Date with respect to the Committed Loans, [Bid Loans,] and L/C Obligations and the Commitment shall be for the account of the Assignor. Any interest, fees and other payments accrued on and after the Effective Date with respect to the Assigned Amount and Bid Loans assigned hereunder shall be for the account of the Assignee. Each of the Assignor and the Assignee agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt. 4. Independent Credit Decision. The Assignee (a) acknowledges that it has received a copy of the Amended and Restated Credit Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements referred to in Section 7.01 3 183 of the Amended and Restated Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Agreement; and (b) agrees that it will, independently and without reliance upon the Assignor, the Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Amended and Restated Credit Agreement. 5. Effective Date; Notices. (a) As between the Assignor and the Assignee, the effective date for this Agreement shall be ______________ _____, (the "Effective Date"); provided that the following conditions precedent have been satisfied on or before the Effective Date: (i) this Agreement shall be executed and delivered by the Assignor and the Assignee; (ii) the consent of the Company and the Agent required for an effective assignment of the Assigned Amount and the Bid Loans assigned hereunder by the Assignor to the Assignee under Section 11.08(a) of the Amended and Restated Credit Agreement shall have been duly obtained and shall be in full force and effect as of the Effective Date; (iii) the Assignee shall pay to the Assignor all amounts due to the Assignor under this Agreement; (iv) the Assignee shall have complied with Section 4.01(f) of the Amended and Restated Credit Agreement (if applicable); (v) the processing fee referred to in Section 2(b) hereof and in Section 11.08(a) of the Amended and Restated Credit Agreement shall have been paid to the Agent; and (vi) the Assignor shall have assigned and the Assignee shall have assumed a percentage equal to Assignee's Percentage Share of the rights and obligations of the Assignor under, and of the Assignor's Committed Loans and L/C Obligations under and as defined in, the Facility B Credit Agreement. 4 184 (b) Promptly following the execution of this Agreement, the Assignor shall deliver to the Company and the Agent for acknowledgement by the Agent, a Notice of Assignment in the form attached hereto as Schedule 1. [6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT] (a) The Assignee hereby appoints and authorizes the Assignor to take such action as agent on its behalf and to exercise such powers under the Amended and Restated Credit Agreement as are delegated to the Agent by the Banks pursuant to the terms of the Amended and Restated Credit Agreement. (b) The Assignee shall assume no duties or obligations held by the Assignor in its capacity as Agent under the Amended and Restated Agreement.] 7. Withholding Tax. The Assignee agrees to comply with Section 4.01(f) of the Amended and Restated Agreement (if applicable). 8. Representations and Warranties. (a) The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any lien, security interest or other adverse claim; (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Agreement and any other documents required or permitted to be executed or delivered by it in connection with this Agreement and to fulfill its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of, any person are required (other than any already given or obtained) for its due execution, delivery and performance of this Agreement, and apart from any agreements or undertakings or filings required by the Amended and Restated Agreement, no further action by, or notice to, or filing with, any person is required of it for such execution, delivery or performance; and (iv) this Agreement has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles. 5 185 (b) The Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Amended and Restated Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Amended and Restated Credit Agreement or any other instrument or document furnished pursuant thereto. The Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements of the Company, or the performance or observance by the Company, of any of its respective obligations under the Amended and Restated Credit Agreement or any other instrument or document furnished in connection therewith. (c) The Assignee represents and warrants that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Agreement and any other documents required or permitted to be executed or delivered by it in connection with this Agreement, and to fulfill its obligations hereunder; (ii) no notices to, or consents, authorizations or approvals of, any person are required (other than any already given or obtained) for its due execution, delivery and performance of this Agreement; and apart from any agreements or undertakings or filings required by the Amended and Restated Credit Agreement, no further action by, or notice to, or filing with, any person is required of it for such execution, delivery or performance; (iii) this Agreement has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignee, enforceable against the Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles; and (iv) it is an Eligible Assignee. 9. Further Assurances. The Assignor and the Assignee each hereby agrees to execute and deliver such other instruments, and take such other action, as either party may reasonably request in connection with the transactions contemplated by this Agreement, including the delivery of any notices or other documents or instruments to the Company or the Agent, which may be required in connection with the assignment and assumption contemplated hereby. 6 186 10. Miscellaneous. (a) Any amendment or waiver of any provision of this Agreement shall be in writing and signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Agreement shall be without prejudice to any rights with respect to any other or further breach thereof. (b) All payments made hereunder shall be made without any set-off or counterclaim. (c) The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement. (d) This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. (e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. The Assignor and the Assignee each irrevocably submits to the non-exclusive jurisdiction of any State or Federal court sitting in California over any suit, action or proceeding arising out of or relating to this Agreement and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such California State or Federal court. Each party to this Agreement hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. (f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE AMENDED AND RESTATED CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN). [Other provisions to be added as may be negotiated between the Assignor and the Assignee, provided that such provisions are not inconsistent with the Amended and Restated Credit Agreement.] 7 187 IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance Agreement to be executed and delivered by their duly authorized officers as of the date first above written. _____________________________________ Assignor By: _________________________________ Title: ______________________________ Address: ____________________________ _____________________________________ Assignee By: _________________________________ Title: ______________________________ Address: ____________________________ 8 188 SCHEDULE 1 NOTICE OF ASSIGNMENT AND ACCEPTANCE _______________, 19__ Bank of America National Trust and Savings Association, as Agent 1455 Market Street, 12th Floor San Francisco, CA 94103 Attn: Agency Management Services #5596 Plum Creek Timber Company, L.P. 999 Third Avenue, Suite 2300 Seattle, WA 98104 Attn: Chief Financial Officer Ladies and Gentlemen: We refer to the Amended and Restated Credit Agreement dated as of November 15, 1994 (the "Amended and Restated Credit Agreement") among Plum Creek Timber Company, L.P. (the "Company"), the Banks referred to therein, ABN AMRO Bank N.V., as Co-Agent and as a letter of credit issuing bank, and Bank of America National Trust and Savings Association, as Agent and as a letter of credit issuing bank. Terms defined in the Amended and Restated Credit Agreement are used herein as therein defined. 1. We hereby give you notice of, and request the consent of the Company to, the assignment by __________________ (the "Assignor") to _______________ (the "Assignee") of _____% of the right, title and interest of the Assignor in and to the Amended and Restated Credit Agreement (including, without limitation, the right, title and interest of the Assignor in and to the Commitments of the Assignor and all outstanding Committed Loans made by the Assignor and the Assignor's participation in Letters of Credit) and $__________ of outstanding Bid Loans made by the Assignor thereunder. Before giving effect to such assignment the Assignor's Commitment is $ ___________, and the aggregate amount of its outstanding Committed Loans is $_____________ and Bid Loans is $ _____________, and its participation in L/C Obligations is $_________. 2. The Assignee agrees that, upon receiving the consent of the Company and the Agent to such assignment, the Assignee will be bound by the terms of the Amended and -9- 189 Restated Credit Agreement as fully and to the same extent as if the Assignee were the Bank originally holding such interest in the Amended and Restated Credit Agreement. 3. The following administrative details apply to the Assignee: (a) Notice Address:____________________________________ Assignee name:_____________________________________ Address:___________________________________________ ___________________________________________ ___________________________________________ Attention:_________________________________________ Telephone: (____)_________________________________ Telecopier: (____)_________________________________ Telex (answerback):________________________________ (b) Payment Instructions: Account No.:_______________________________________ At:______________________________________________ ______________________________________________ ______________________________________________ Reference:_________________________________________ Attention:_________________________________________ (c) Domestic and Offshore Lending Office: [same as notice address] [or] Address:__________________________________________ __________________________________________ __________________________________________ Attention:________________________________________ Telephone: (____)_______________________________ Telecopier: (____)_______________________________ Telex (answerback):_______________________________ IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment Notice and Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first above mentioned. Very truly yours, [Name of Assignor] By:___________________________ Title: -10- 190 [Name of Assignee] By:_______________________ Title: ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO: PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P. By:_________________________________ Its:________________________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By:__________________________________________ Vice President -11- 191 EXHIBIT G COMPETITIVE BID REQUEST Date: _______________ VIA FACSIMILE To: Bank of America National Trust and Savings Association, as Agent for the Banks parties to the Amended and Restated Credit Agreement, dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Amended and Restated Credit Agreement"), among Plum Creek Timber Company, L.P., certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Ladies and Gentlemen: The undersigned, Plum Creek Timber Company, L.P. (the "Company"), refers to the Amended and Restated Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice that this is a Competitive Bid Request for Bid Loans pursuant to Section 2.06 of the Amended and Restated Credit Agreement as follows: 1. The Business Day of the proposed Bid Borrowing is ____________________, 199_. 2. The aggregate amount of the proposed Bid Borrowing is $______________. 3. The proposed Bid Borrowing to be made pursuant to Section 2.06 shall be comprised of [LIBOR] [Absolute Rate] Bid Loans. 4. The duration of the Interest Period[s] for the Bid Loans comprised in the Borrowing shall be ____________________, [____________________] and [____________________]. 5. [If applicable] The Interest Payment Dates for the Bid Loans comprised in the Borrowing shall be ____________________, [____________________] and [____________________]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on 1 192 the date of the proposed Bid Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom: (a) the representations and warranties of the Company contained in Article VI of the Amended and Restated Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct as of such earlier date); (b) no Default or Event of Default exists; and (c) the proposed Borrowing will not cause the Effective Amount of all outstanding Committed Loans and Bid Loans, plus the Effective Amount of all L/C Obligations, to exceed the Aggregate Commitment. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: ____________________________________________ Title: _________________________________________ 2 193 EXHIBIT H INVITATION FOR COMPETITIVE BIDS Date: _______________ VIA FACSIMILE To: The Banks party to the Amended and Restated Credit Agreement referred to below Ladies and Gentlemen: Reference is made to the Amended and Restated Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Amended and Restated Credit Agreement") among Plum Creek Timber Company, L.P. (the "Company"), certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank, and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Capitalized terms used herein have the meanings specified in the Amended and Restated Credit Agreement. Pursuant to subsection 2.06(b) of the Amended and Restated Credit Agreement, you are hereby invited to submit offers to make Bid Loans to the Company based on the following specifications: 1. The Business Day of the proposed Bid Borrowing is ____________________,199_. 2. The aggregate amount of the proposed Bid Borrowing is $______________. 3. The proposed Bid Borrowing to be made pursuant to Section 2.06 shall be comprised of [LIBOR] [Absolute Rate] Bid Loans. 4. The duration of the Interest Period[s] for the Bid Loans comprised in the Borrowing shall be ____________________, [____________________] and [____________________]. 5. [If applicable] The Interest Payment Dates for the Bid Loans comprised in the Borrowing shall be ____________________, [____________________] and [____________________]. 1 194 All Competitive Bids must be in the form of Exhibit I to the Amended and Restated Credit Agreement and must be received by the Agent no later than 6:30 a.m. (or, in the case of a Competitive Bid by the Agent or an Affiliate of the Agent in the capacity of a Bank, 6:15 a.m.) (San Francisco time) on ____________________, 199_. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: ________________________________ Title: _____________________________ 2 195 EXHIBIT I COMPETITIVE BID Date: _______________ VIA FACSIMILE Bank of America National Trust and Savings Association, as Agent 1455 Market Street, 12th Floor San Francisco, CA 94103 Attention: Shannon Collins Agency Management Services #5596 Facsimile: (415) 622-4894 Ladies and Gentlemen: Reference is made to the Amended and Restated Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Amended and Restated Credit Agreement"), among Plum Creek Timber Company, L.P. (the "Company"), certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Capitalized terms used herein have the meanings specified in the Amended and Restated Credit Agreement. In response to the Competitive Bid Request of the Company, dated ______________, 199_, and in accordance with subsection 2.06(c)(ii) of the Amended and Restated Credit Agreement, the undersigned Bank offers to make [a] Bid Loan[s] to the Company thereunder in the following principal amount[s] at the following interest rates for the following Interest Period[s] [with the following Interest Payment Dates]: Date of Borrowing: ______________, 199_ Aggregate Maximum Bid Amount: $______________ 1 196 Principal Principal Principal Amount (a) $____________________ Amount (a) $____________________ Amount (a) $___________________ (b) $____________________ (b) $____________________ (b) $___________________ (c) $____________________ (c) $____________________ (c) $___________________ Interest: Interest: Interest: [Absolute [Absolute [Absolute Rate (a) ____% Rate (a) ____% Rate (a) ____% (b) ____% (b) ____% (b) ____% (c) ____%] (c) ____%] (c) ____%] [or] [LIBOR Bid [LIBOR Bid [LIBOR Bid Margin (a) +/- __% Margin (a) +/- __% Margin (a) +/- __% (b) +/- __% (b) +/- __% (b) +/- __% (c) +/- __%] (c) +/- __%] (c) +/- __%] Interest Interest Interest Period _________________________ Period _________________________ Period ________________________ [Interest Payment [Interest Payment [Interest Payment Date _________________________] Date __________________________] Date _________________________]
[NAME OF BANK] By: ________________________________ Title: _____________________________ 2 197 EXHIBIT J CONSENT TO AMENDMENT AND RESTATEMENT Date: _______________ Bank of America National Trust and Savings Association, as Agent 1455 Market Street, 12th Floor San Francisco, CA 94103 Attention: Shannon Collins Agency Management Services #5596 Facsimile: (415) 622-4894 Plum Creek Timber Company, L.P. 999 Third Avenue, Suite 2300 Seattle, WA 98104 Attention: Chief Financial Officer Facsimile: (206) 467-3797 Ladies and Gentlemen: Reference is made to the Credit Agreement dated as of October 28, 1993 (the "Credit Agreement"), among Plum Creek Timber Company, L.P. (the "Company"), the Banks signatories thereto and Bank of America National Trust and Savings Association, as Agent. Capitalized terms used herein have the meanings specified in the Credit Agreement. The undersigned (the "Departing Bank") is a Bank under the Credit Agreement. The Departing Bank hereby acknowledges notice of the proposed amendment and restatement of the Credit Agreement in such form as may be agreed among the parties thereto (the "Amended and Restated Credit Agreement"). The Departing Bank hereby consents to, and agrees that the Departing Bank shall not be a party to, the Amended and Restated Credit Agreement subject to payment in full of all outstanding Loans, interest accrued thereon, and fees owed to the Departing Bank on and as of the effective date of the Amended and Restated Credit Agreement. In consideration of the Departing Bank's consent to the Amended and Restated Credit Agreement, the Company acknowledges and agrees that the representations and warranties (as of the dates made and deemed made) and the indemnities of the Company set forth in the Credit Agreement 1 198 and the Loan Documents to or for the benefit of the Departing Bank shall, in each case, survive the execution and delivery of the Amended and Restated Credit Agreement and that the Departing Bank shall have no obligations under or with respect to the Amended and Restated Credit Agreement. [NAME OF BANK] By: ________________________________ Title: _____________________________ Accepted and Agreed: PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: __________________________________ Title: _______________________________ 2 EX-10.A.2 6 EXHIBIT 10.A.2 1 EXHIBIT 10.A.2 ================================================================================ CREDIT AGREEMENT Dated as of November 15, 1994 among PLUM CREEK TIMBER COMPANY, L.P. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent ABN AMRO BANK, N.V., as Co-Agent and THE OTHER FINANCIAL INSTITUTIONS PARTY THERETO ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.01 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.02 Other Interpretive Provisions . . . . . . . . . . . . . . . . . . . . . . . 38 1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 ARTICLE II THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 2.01 Amounts and Terms of Commitments . . . . . . . . . . . . . . . . . . . . . 40 2.02 Loan Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 2.03 Procedure for Committed Borrowing . . . . . . . . . . . . . . . . . . . . . 40 2.04 Conversion and Continuation Elections for Committed Borrowings . . . . . . 42 2.05 Bid Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 2.06 Procedure for Bid Borrowings . . . . . . . . . . . . . . . . . . . . . . . 45 2.07 Voluntary Termination or Reduction of Commitments . . . . . . . . . . . . . 49 2.08 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 2.09 Mandatory Prepayments of Loans; Mandatory Commitment Reductions . . . . . . 50 2.10 Extension of Revolving Termination Date; Repayment . . . . . . . . . . . . 53 2.11 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 2.12 Swingline Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 2.13 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 2.14 Computation of Fees and Interest . . . . . . . . . . . . . . . . . . . . . 60 2.15 Payments by the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 61 2.16 Payments by the Banks to the Agent . . . . . . . . . . . . . . . . . . . . 62 2.17 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 62 2.18 Loan Traches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 2.19 Effect of Limitations in Facility A Credit Agreement . . . . . . . . . . . . 64 ARTICLE III THE LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 3.01 The Letter of Credit Facility . . . . . . . . . . . . . . . . . . . . . . . 65 3.02 Issuance, Amendment and Renewal of Letters of Credit . . . . . . . . . . . 67 3.03 Risk Participations, Drawings and Reimbursements . . . . . . . . . . . . . 70 3.04 Repayment of Participations . . . . . . . . . . . . . . . . . . . . . . . . 72 3.05 Role of the Issuing Bank . . . . . . . . . . . . . . . . . . . . . . . . . 73 3.06 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 3.07 Cash Collateral Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . 75 3.08 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 3.09 Uniform Customs and Practice . . . . . . . . . . . . . . . . . . . . . . . 76
i 3 ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . . . . . . . . 76 4.01 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 4.02 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80 4.03 Increased Costs and Reduction of Return . . . . . . . . . . . . . . . . . . 80 4.04 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81 4.05 Inability to Determine Rates . . . . . . . . . . . . . . . . . . . . . . . 82 4.06 Certificate of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 4.07 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 ARTICLE V CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 5.01 Conditions of Initial Credit Extensions . . . . . . . . . . . . . . . . . . 83 5.02 Conditions to All Credit Extensions . . . . . . . . . . . . . . . . . . . . 86 ARTICLE VI REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . 87 6.01 Corporate Existence and Power . . . . . . . . . . . . . . . . . . . . . . . 87 6.02 Authorization; No Contravention . . . . . . . . . . . . . . . . . . . . . . 87 6.03 Governmental Authorization . . . . . . . . . . . . . . . . . . . . . . . . 88 6.04 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 6.05 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 6.06 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 6.07 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 6.08 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . . . . . 91 6.09 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 6.11 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 6.12 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 6.13 Regulated Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 6.14 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . . . . 93 6.15 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 6.16 Labor Relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93 6.17 Copyrights, Patents, Trademarks and Licenses, Etc. . . . . . . . . . . . . . 94 6.18 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 6.19 Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 6.20 Broker's, Transaction Fees . . . . . . . . . . . . . . . . . . . . . . . . 94 6.21 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 6.22 Timber Harvest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 6.23 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 ARTICLE VII AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 7.01 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 7.02 Certificates; Other Information . . . . . . . . . . . . . . . . . . . . . . 97 7.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 7.04 Preservation of Corporate Existence, Etc. . . . . . . . . . . . . . . . . 99 7.05 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . . . . . 100
ii 4 7.06 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 7.07 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . 100 7.08 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 7.09 Inspection of Property and Books and Records . . . . . . . . . . . . . . . . 101 7.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 7.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 7.12 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 ARTICLE VIII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 8.01 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 8.02 Merger; Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . 104 8.03 Harvesting Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . 107 8.04 Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 8.05 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 109 8.06 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . 112 8.07 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112 8.08 Sale of Stock and Indebtedness of Subsidiaries . . . . . . . . . . . . . . . 113 8.09 Certain Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 8.10 Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 8.11 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 8.12 Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 8.13 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 8.14 Change in Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 8.15 Issuance of Stock by Subsidiaries . . . . . . . . . . . . . . . . . . . . . 117 8.16 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 8.17 Available Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 ARTICLE IX EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 9.01 Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 9.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 9.03 Rights Not Exclusive . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 ARTICLE X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 10.01 Appointment and Authorization . . . . . . . . . . . . . . . . . . . . . . . 123 10.02 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 10.03 Liability of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 10.04 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124 10.05 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 10.06 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 10.07 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126 10.08 Agent in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . 127 10.09 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 10.10 Co-Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
iii 5 ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128 11.01 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . 128 11.02 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130 11.03 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . 131 11.04 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 11.05 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132 11.06 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . . . . . 132 11.07 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . 132 11.08 Assignments, Participations, Etc. . . . . . . . . . . . . . . . . . . . . . 133 11.09 Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 136 11.10 Automatic Debits of Fees . . . . . . . . . . . . . . . . . . . . . . . . . 136 11.11 Notification of Addresses, Lending Offices, Etc. . . . . . . . . . . . . . . 137 11.12 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 11.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 11.14 No Third Parties Benefited . . . . . . . . . . . . . . . . . . . . . . . . 137 11.15 Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137 11.16 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . 137 11.17 Arbitration; Reference . . . . . . . . . . . . . . . . . . . . . . . . . . 138 11.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139 SCHEDULES Schedule 1.01 Corporate Investment Policy Schedule 2.01 Commitments Schedule 6.05 Litigation Schedule 6.07 ERISA Schedule 6.12 Environmental Matters Schedule 6.18 Subsidiaries and Equity Investments Schedule 8.01 Permitted Liens Schedule 8.04 Permitted Investments EXHIBITS Exhibit A Notice of Borrowing Exhibit B Notice of Conversion/Continuation Exhibit C-1 Legal Opinion of Counsel for the Company Exhibit C-2 Legal Opinion of Perkins Coie Exhibit D Compliance Certificate Exhibit E Form of Cash Collateral Account Agreement Exhibit F Form of Assignment and Acceptance Exhibit G Competitive Bid Request Exhibit H Invitation for Competitive Bids Exhibit I Competitive Bid Exhibit J Revolving Extension Request Exhibit K Installment Repayment Election
iv 6 CREDIT AGREEMENT This CREDIT AGREEMENT is entered into as of November 15, 1994, among Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Company"), the several financial institutions from time to time party to this Agreement (collectively, the "Banks"; individually, a "Bank"), ABN AMRO Bank N.V., as a letter of credit issuing bank and as co-agent for the Banks, and Bank of America National Trust and Savings Association, as a letter of credit issuing bank and as agent for the Banks. WHEREAS, the Banks have agreed to make available to the Company a revolving credit facility with a letter of credit subfacility upon the terms and conditions set forth in this Agreement; NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained herein, the parties agree as follows: ARTICLE I DEFINITIONS 1.01 Defined Terms. In addition to the terms defined elsewhere in this Agreement, the following terms have the following meanings: "ABN" means ABN AMRO Bank N.V., a bank organized under the laws of The Netherlands. "Absolute Rate" has the meaning specified in subsection 2.06(c). "Absolute Rate Auction" means a solicitation of Competitive Bids setting forth Absolute Rates pursuant to Section 2.06. "Absolute Rate Bid Loan" means a Bid Loan that bears interest at a rate determined with reference to the Absolute Rate. "Affiliate" means, as to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. A Person shall be deemed to control another Person if the controlling Person possesses, directly or 1 7 indirectly, the power to direct or cause the direction of the management and policies of the other Person, whether through the ownership of voting securities, by contract or otherwise. Without limitation, any director, executive officer or beneficial owner of 5% or more of the equity of a Person shall for the purposes of this Agreement, be deemed to control the other Person. Notwithstanding the foregoing, no Bank shall be deemed an "Affiliate" of the Company or of any Subsidiary of the Company. "Agent" means BofA in its capacity as agent for the Banks hereunder, and any successor agent. "Agent's Payment Office" means the address for payments set forth on the signature page hereto in relation to the Agent or such other address as the Agent may from time to time specify in accordance with Section 11.02. "Agent-Related Persons" means BofA, the Arranger, and any successor agent arising under Section 10.09 and any successor to BofA as letter of credit issuing bank or Swingline Bank hereunder, together with their respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Aggregate Commitment" means the combined Commitments of the Banks, in the initial amount of thirty-five million dollars ($35,000,000), as such amount may be reduced from time to time pursuant to this Agreement. "Agreement" means this Agreement, as amended from time to time in accordance with the terms hereof. "Applicable Margin" means, in respect of all Committed Loans outstanding on any date (A) for the period from the Closing Date through December 31, 1994, 0.5000% for Offshore Rate Committed Loans, 0.6250% for CD Rate Committed Loans and 0.0000% for Base Rate Committed Loans, and (B) from January 1, 1995, the percentage specified below opposite the Fixed Charge Coverage Ratio (which ratio shall be calculated for the relevant four fiscal quarter period) calculated for the periods described below. 2 8
Fixed Charge Coverage Ratio at End of Fiscal Quarter Applicable Margin - --------------------------- ----------------- Offshore CD Base Rate Rate Rate ---- ---- ---- Greater than or equal to 3:25 to 1:00 0.4375% 0.5625% 0.0000% Less than 3:25 to 1:00 but greater than or equal to 2:75 to 1:00 0.5000% 0.6250% 0.0000% Less than 2:75 to 1:00 but greater than or equal to 2:00 to 1:00 0.6250% 0.7500% 0.0000% Less than 2:00 to 1:00 0.8750% 1.0000% 0.0000%
The Applicable Margin for each fiscal quarter commencing on and after January 1, 1995 shall be calculated in reliance on the financial reports delivered pursuant to subsection 7.01(c) and the certificate delivered pursuant to subsection 7.02(b) with respect to the fiscal quarter ending one fiscal quarter before the fiscal quarter in question (e.g., June 30 financials determine the Applicable Margin for the fiscal quarter beginning October 1). If the Company fails to deliver such financial reports and certificate to the Agent for any fiscal quarter by the beginning of the next succeeding fiscal quarter (e.g., by October 1 for the fiscal quarter ending June 30), then the Applicable Margin for the following fiscal quarter (e.g., October 1 through December 31) shall equal the next higher Applicable Margin as set forth in the chart above immediately below the previously effective Applicable Margin; thus if the Applicable Margin had previously been 0.5000% for Offshore Rate Committed Loans, 0.6250% for CD Rate Committed Loans and 0.0000% for Base Rate Committed Loans, a failure to deliver quarterly financials by the first day of the next fiscal quarter would cause the Applicable Margin to be 0.6250%, 0.7500% and 0.0000%, respectively, for the duration of that quarter. In addition, if such financial reports and certificate when delivered indicate that the Applicable Margin for such period should have been higher than the Applicable Margin provided for in the previous sentence, then the Company shall pay on the date of delivery of such financial reports and certificate an amount equal to the positive difference, if any, between the interest that the Company should have paid hereunder had the 3 9 financial reports and certificate been delivered on a timely basis over what the Company actually paid. The Applicable Margin shall be adjusted automatically as to all Committed Loans then outstanding (without regard to the timing of Interest Periods) as of the effective date of any change in the Applicable Margin. "Arranger" means BA Securities, Inc., a Delaware corporation. "Assignee" has the meaning specified in subsection 11.08(a). "Assignment and Acceptance" has the meaning specified in subsection 11.08(a). "Attorney Costs" means and includes all fees and disbursements of any law firm or other external counsel, the allocated cost of internal legal services and all disbursements of internal counsel. "Available Cash" means, with respect to any calendar quarter, (i) the sum of: (a) the Company's net income (or net loss) (excluding gain on the sale of any Capital Asset) for such quarter, (b) the amount of depletion, depreciation, amortization and other noncash charges utilized in determining net income of the Company for such quarter, (c) the amount of any reduction in reserves of the Company of the types referred to in clause (ii)(d) below, (d) proceeds received by the Company from the sale of Designated Acres, and (e) any Cash from Capital Transactions received by the Company during such quarter in specific contemplation that such Cash from Capital Transactions will be used to refund or refinance any payment of Indebtedness of the type specified in clause (ii)(a) below which was made in either of the two immediately preceding quarters, less (ii) the sum of: (a) all payments of principal on Indebtedness made by the Company in such quarter (excluding any payments 4 10 of principal on Indebtedness made with Cash from Capital Transactions received by the Company during such quarter or, to the extent such Cash from Capital Transactions remains available, received by the Company during the four immediately preceding quarters), (b) capital expenditures made by the Company during such quarter (excluding any capital expenditures for such quarter made with Cash from Capital Transactions received by the Company during such quarter or, to the extent such Cash from Capital Transactions remains available, received by the Company during the four immediately preceding quarters, and capital expenditures which the General Partner reasonably anticipates will be financed with Cash from Capital Transactions within 90 days from the end of such quarter), (c) the amount of any capital expenditures made by the Company in a prior quarter which was anticipated would be financed from Cash from Capital Transactions but which have not been financed from such source within 90 days from the end of such quarter, (d) the amount of any reserves of the Company established during such quarter which are necessary or appropriate (1) to provide funds for the future payment of items of the types specified in clauses (ii)(a) and (ii)(b) above, (2) to provide additional working capital, (3) to provide funds for cash distributions with respect to any one or more of the next four quarters, or (4) to provide funds for the future payment of interest in an amount equal to the interest to be accrued in the next quarter, (e) the amount of any noncash items of income utilized in determining net income of the Company for such quarter, (f) the amount of any Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) made by the Company during such quarter pursuant to subsections 8.04(a), (h) or (i) (or in the case of any Subsidiary, Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) of similar type) to the extent not included in capital expenditures or payments on principal on Indebtedness made by the 5 11 Company during such quarter (excluding any such Investments for such quarter made with Cash from Capital Transactions received by the Company during such quarter or, to the extent such Cash from Capital Transactions remains available, received by the Company during the four immediately preceding quarters, and Investments which the General Partner reasonably anticipates will be financed with Cash from Capital Transactions within 90 days from the end of such quarter), and (g) the amount of any Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) made by the Company in a prior quarter pursuant to subsections 8.04(a), (h) or (i) (or in the case of any Subsidiary, Investments (other than guarantees, contingent liabilities or endorsements, except to the extent payments are actually made under such guarantees, contingent liabilities or endorsements) of similar type) to the extent not included in capital expenditures made by the Company during such quarter which was anticipated would be financed from Cash from Capital Transactions but which have not been financed from such source within 90 days from the end of such quarter. Notwithstanding the foregoing, "Available Cash" shall not take into account any reductions in reserves or disbursements made or reserves established after commencement of the dissolution and liquidation of the Company. In determining "Available Cash", (i) all items under clauses (i)(a), (b), (c), (d) and (e) above and all items under clauses (ii)(a), (b), (c), (d), (e), (f) and (g) above shall be calculated on a combined basis with any Subsidiary of the Company whose income is accounted for on a consolidated or combined basis with the Company and, in accordance therewith, "Available Cash" shall include a percentage of each such item of each such Subsidiary equal to the Company's percentage ownership interest in such Subsidiary, provided, however, that the items under clauses (i)(a), (b), (c), (d) and (e) above shall only be included in Available Cash to the extent that the General Partner determines such amount to be legally available for dividends or distributions to the Company by such Subsidiary; (ii) the amount of net income and the amount of depletion, depreciation, amortization and other noncash charges utilized in determining net income shall be determined, with respect to the Company, by the General Partner in accordance with generally accepted accounting principals and, with respect to any Subsidiary, by its 6 12 Board of Directors (or by such other body or person which has the ultimate management authority of such Subsidiary) in accordance with generally accepted accounting principles; (iii) the net income of any Subsidiary shall be determined on an after-tax basis; (iv) the amount of any reductions in, or additions to, reserves for purposes of clauses (i)(c) and (ii)(d) above shall be determined, with respect to the Company, by the General Partner in its reasonable good faith judgment and, with respect to any Subsidiary, by its Board of Directors (or by such other body or person which has the ultimate management authority of such Subsidiary) in its reasonable good faith judgment; and (v) any determination of whether any capital expenditures or Investments are financed, or anticipated to be financed, with Cash from Capital Transactions for purposes of clause (ii)(b) or (ii)(f) above shall be made, with respect to the Company, by the General Partner in its reasonable good faith judgment and, with respect to any Subsidiary, by its Board of Directors (or by such other body or person which has the ultimate management authority of such Subsidiary) in its reasonable good faith judgment. "Bank" has the meaning specified in the introductory clause hereto. References to the "Banks" shall include BofA in its capacity as a Swingline Bank and an Issuing Bank, and ABN in its capacity as an Issuing Bank; for purposes of clarification only, to the extent that BofA may have any rights or obligations in addition to those of the Banks due to its status as a Swingline Bank or an Issuing Bank, or ABN may have rights or obligations in addition to those of the Banks due to its status as an Issuing Bank, its status as such will be specifically referenced. "Bankruptcy Code" means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. Section 101, et seq.). "Base Rate" means, for any day, the higher of: (a) the rate of interest in effect for such day as publicly announced from time to time by BofA in San Francisco, California, as its "reference rate." It is a rate set by BofA based upon various factors including BofA's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate; and 7 13 (b) 0.50% per annum above the latest Federal Funds Rate. Any change in the reference rate announced by BofA shall take effect at the opening of business on the day specified in the public announcement of such change. "Base Rate Committed Loan" means a Committed Loan or an L/C Advance that bears interest based on the Base Rate. "Bid Borrowing" means a Borrowing hereunder consisting of one or more Bid Loans made to the Company on the same day by one or more Banks. "Bid Loan" means a Loan by a Bank to the Company under Section 2.05, which may be a LIBOR Bid Loan or an Absolute Rate Bid Loan. "Bid Loan Lender" means, in respect of any Bid Loan, the Bank making such Bid Loan to the Company. "BofA" means Bank of America National Trust and Savings Association, a national banking association. "Board Foot" means a unit of measurement one foot square and one inch thick. "Borrowing" means a borrowing hereunder consisting of Loans of the same Type made to the Company on the same day by the Banks, or a Swingline Loan or Loans made to the Company on the same day by the Swingline Bank, in each case pursuant to Article II, and may be a Committed Borrowing, a Swingline Borrowing, or a Bid Borrowing and, other than in the case of Base Rate Committed Loans and Swingline Loans, having the same Interest Period. "Business Day" means any day other than a Saturday, Sunday or other day on which commercial banks in New York City or San Francisco are authorized or required by law to close and, if the applicable Business Day relates to any Offshore Rate Loan, means such a day on which dealings are carried on in the applicable offshore dollar interbank market. "Capital Adequacy Regulation" means any guideline, request or directive of any central bank or other Governmental Authority, or any other law, rule or regulation, whether or not having the force of law, in each case, regarding capital adequacy of any bank or of any corporation controlling a bank. 8 14 "Capital Asset" means any asset on the Company's or any Subsidiary's balance sheet, as the case may be, other than inventory, accounts receivable or any other current asset and assets disposed of in connection with normal retirements or replacements. "Capital Expenditure Tranche" has the meaning specified in Section 2.18. "Capital Expenditure Tranche Loan" means a Loan allocated by the Company to the Capital Expenditure Tranche as provided in Section 2.18. "Capital Lease" has the meaning specified in the definition of "Capital Lease Obligations." "Capital Lease Obligations" means all monetary obligations of the Company or any of its Subsidiaries under any leasing or similar arrangement which, in accordance with GAAP, is classified as a capital lease ("Capital Lease"). "Capital Transaction" means (i) borrowings and sales of debt securities (other than for working capital purposes and other than for items purchased on open account in the ordinary course of business) by the Company, (ii) sales of equity interests by the Company and (iii) sales or other voluntary or involuntary dispositions of any assets of the Company (other than (x) sales or other dispositions of inventory in the ordinary course of business, (y) sales or other dispositions of other current assets including receivables and accounts and (z) sales or other dispositions of assets as a part of normal retirements or replacements), in each case prior to the commencement of the dissolution and liquidation of the Company provided, that in determining Cash from Capital Transactions, items (i), (ii) and (iii) above shall include, with respect to each Subsidiary of the Company whose income is accounted for on a consolidated or combined basis with the Company, a percentage of each such item of such Subsidiary equal to the Company's percentage ownership interest in such Subsidiary. "Cash Collateral Account Agreement" means an agreement or agreements entered into between the Company and the Agent substantially in the form of Exhibit E. "Cash Collateralize" means to pledge and deposit with or deliver to the Agent, for the benefit of (i) in the case of L/C Obligations, the Agent, the Issuing 9 15 Banks and the Banks, (ii) in the case of CD Rate Committed Loans and Offshore Rate Committed Loans, the Agent and the Banks, (iii) in the case of Swingline Loans, the Agent, the Swingline Bank and the Banks, and (iv) in the case of Bid Loans, the Agent and the Bid Loan Lenders, in each case as collateral for the L/C Obligations, the Committed Loans, the Swingline Loans or the Bid Loans, as the case may be, cash or deposit account balances pursuant to a Cash Collateral Account Agreement. Derivatives of such term shall have corresponding meaning. "Cash from Capital Transactions" means at any date, such amounts of cash as are determined by the General Partner to be cash made available to the Company from or by reason of a Capital Transaction. "CD Rate" means, for each Interest Period in respect of CD Rate Committed Loans comprising a part of the same Borrowing, the rate of interest (rounded upward to the nearest 1/100th of 1%) determined pursuant to the following formula: CD Rate = Certificate of Deposit Rate + Assessment 1.00 - Reserve Percentage Rate Where: "Assessment Rate" means for any day of any Interest Period for CD Rate Committed Loans, the rate determined by the Agent as equal to the annual assessment rate in effect on such day that is payable to the FDIC by a member of the Bank Insurance Fund that is classified as adequately capitalized and within supervisory subgroup "A" (or a comparable successor assessment risk classification within the meaning of 12 C.F.R. Section 327.3) for insuring time deposits at offices of such member in the United States, or, in the event that the FDIC shall at any time hereafter cease to assess time deposits based upon such classifications or successor classifications, equal to the maximum annual assessment rate in effect on such day that is payable to the FDIC by commercial banks for insuring time deposits at offices of such banks in the United States. "Certificate of Deposit Rate" means for any Interest Period for CD Rate Committed Loans the rate of interest per annum determined by the Agent to be the arithmetic mean (rounded upward to the 10 16 nearest 1/100th of 1%) of the rates notified to the Agent as the rates of interest bid by two or more certificate of deposit dealers of recognized standing selected by the Agent for the purchase at face value of dollar certificates of deposit issued by major United States banks, for a maturity comparable to such Interest Period and in the approximate amount of the CD Rate Committed Loans to be made, at the time selected by the Agent on the first day of such Interest Period. "Reserve Percentage" means for any day for any Interest Period for CD Rate Committed Loans the reserve percentage (expressed as a decimal, rounded upward to the nearest 1/100th of 1%), as determined by the Agent, in effect on such day (including any ordinary, marginal, emergency, supplemental, special and other reserve percentages) prescribed by the Federal Reserve Board for determining the reserves to be maintained by member banks of the Federal Reserve System with deposits exceeding $1,000,000,000 for new non-personal time deposits for a period comparable to such Interest Period and in an amount of $100,000 or more. The CD Rate shall be adjusted automatically as of the effective date of any change in the Reserve Percentage. "CD Rate Committed Loan" means a Committed Loan that bears interest based on the CD Rate. "CERCLA" has the meaning specified in the definition of "Environmental Laws." "Closing Date" means the date on which all conditions precedent set forth in Section 5.01 are satisfied or waived by all Banks. "Co-Agent" means ABN in its capacity as co-agent for the Banks hereunder. "Code" means the Internal Revenue Code of 1986, and regulations promulgated thereunder. "Columbia River Unit" means those certain approximately 63,000 acres located in southwest Washington and generally referred to on the date hereof as the Company's "Columbia River Unit." "Commitment", with respect to each Bank, has the meaning specified in Section 2.01. 11 17 "Commitment Fee Percentage" means (A) for the period from the Closing Date through December 31, 1994, 0.1250%, and (B) from January 1, 1995, the percentage specified below opposite the Fixed Charge Coverage Ratio (which ratio shall be calculated for the relevant four fiscal quarter period) calculated for the periods described below.
Fixed Charge Coverage Ratio at End of Fiscal Quarter Commitment Fee - --------------------------- -------------- Greater than or equal to 2:00 to 1:00 .1250% Less than 2:00 to 1:00 .1750%
The Commitment Fee Percentage for each fiscal quarter commencing on and after January 1, 1995, shall be calculated in reliance on the financial reports delivered pursuant to subsection 7.01(c) and the certificate delivered pursuant to subsection 7.02(b) with respect to the fiscal quarter before the fiscal quarter in question (e.g., June 30 financials determine the Commitment Fee Percentage for the fiscal quarter beginning October 1). If the Company fails to deliver such financial reports and certificate to the Agent for any fiscal quarter by the beginning of the next succeeding fiscal quarter (e.g., by October 1 for the fiscal quarter ending June 30), then the Commitment Fee Percentage for the following fiscal quarter (e.g., October 1 through December 31) shall equal 0.1750% for the duration of that quarter. "Commitment Percentage" means, as to any Bank, the percentage equivalent of such Bank's Commitment divided by the Aggregate Commitment. "Committed Borrowing" means a Borrowing hereunder consisting of Committed Loans made on the same day by the Banks ratably according to their respective Commitment Percentages and, in the case of CD Rate Committed Loans and Offshore Rate Committed Loans, having the same Interest Periods. "Committed Loan" has the meaning specified in Section 2.01, and may be a CD Rate Committed Loan, an Offshore Rate Committed Loan or a Base Rate Committed Loan (each, a "Type" of Committed Loan). "Company's Knowledge" or "Knowledge of the Company" shall mean the actual knowledge of (i) Rick R. Holley, President and Chief Executive Officer, Charles P. 12 18 Grenier, Executive Vice President, Robert E. Manne, Executive Vice President, Diane M. Irvine, Vice President and Chief Financial Officer, James A. Kraft, Vice President Law, Susanna N. Duke, Director, Law and Secretary, and Mitchell Leu, Environmental Engineer, and any successor to the offices and officers, such persons being the principal persons employed by the Company ultimately responsible for environmental operations and compliance, ERISA and legal matters relating to the Company and (ii) the Treasurer or any other person having the primary responsibility for the day-to-day administration of, and dealings with the Agent and the Banks in connection with, this Agreement. "Competitive Bid" means an offer by a Bank to make a Bid Loan in accordance with subsection 2.06(b). "Competitive Bid Request" has the meaning specified in subsection 2.06(a). "Contractual Obligations" means, as to any Person, any provision of any security issued by such Person or of any agreement, undertaking, contract, indenture, mortgage, deed of trust or other instrument, document or agreement to which such Person is a party or by which it or any of its property is bound. "Controlled Group" means the Company and all Persons (whether or not incorporated) under common control or treated as a single employer with the Company pursuant to Section 414(b), (c), (m) or (o) of the Code. "Conversion/Continuation Date" means any date on which, under Section 2.04, the Company (a) converts Committed Loans of one Type to another Type, or (b) continues as Committed Loans of the same Type, but with a new Interest Period, Committed Loans having Interest Periods expiring on such date. "Credit Extension" means and includes (a) the making of any Committed Loans, Swingline Loans or Bid Loans hereunder, including any conversion or continuation thereof, and (b) the Issuance of any Letter of Credit hereunder. "Default" means any event or circumstance which, with the giving of notice, the lapse of time, or both, would (if not cured or otherwise remedied during such time) constitute an Event of Default. 13 19 "Designated Acres" means up to an aggregate of 200,000 acres owned by the Company which (based on the good faith determination of the Responsible Representatives that such acres have at the time such determination is made a higher value as recreational, residential, grazing or agricultural property than for timber production) may be reasonably designated by the General Partner at the time of the sale thereof as constituting Designated Acres (such aggregate number of acres to be determined over the term of existence of the Note Agreements). "Designated Immaterial Subsidiary" means any entity which would otherwise be a Restricted Subsidiary and which at any time is designated by the Company as a Designated Immaterial Subsidiary, provided that no such designation of any entity as a Designated Immaterial Subsidiary shall be effective unless (i) at the time of such designation, such entity does not own any shares of stock or Indebtedness of any Restricted Subsidiary which is not simultaneously being designated as a Designated Immaterial Subsidiary, (ii) immediately after giving effect to such designation, (a) the Company could incur at least $1 of additional Funded Debt pursuant to subsection 8.05(i), and (b) no condition or event shall exist which constitutes an Event of Default or Material Default, (iii) the Company is permitted to make the Investment in such entity resulting from such designation pursuant to, and within the limitations specified in, subsection 8.04(i), treating the aggregate book value (including equity in retained earnings) of the Investments of the Company and its Subsidiaries in such entity immediately prior to such designation as the cost of such Investment, and provided, further, that if at any time all Designated Immaterial Subsidiaries on a combined basis would be a "significant subsidiary" (assuming the Company is the registrant) within the meaning of Regulation S-X (17 C.F.R. Part 210) the Company shall designate one or more Designated Immaterial Subsidiaries which are directly owned by the Company and its Restricted Subsidiaries as Restricted Subsidiaries such that the condition in this proviso is no longer applicable and the entities so designated shall no longer be Designated Immaterial Subsidiaries. Any entity which has been designated a Designated Immaterial Subsidiary shall not thereafter become a Restricted Subsidiary except pursuant to a designation required by the last proviso in the preceding sentence, and any Designated Immaterial Subsidiary which has been designated a Restricted Subsidiary pursuant to the last 14 20 proviso of the preceding sentence shall not thereafter be redesignated as a Designated Immaterial Subsidiary. "Designated Repurchases" means and includes purchases, redemptions or other acquisitions, in each case at a price not to exceed fair market value, of the publicly traded limited partnership interests in the Company, which are retired by the Company within six months of such purchase, redemption or other acquisition. "Dollars", "dollars" and "$" each mean lawful money of the United States. "Domestic Lending Office" means, with respect to each Bank and the Swingline Bank, the office of that Bank and the Swingline Bank designated as such in the signature pages hereto or such other office of the Bank and the Swingline Bank as it may from time to time specify to the Company and the Agent. "EBITDA" means, for any period, for the Company and its Subsidiaries on a combined basis, determined in accordance with GAAP, the sum of (a) the net income (or net loss) for such period, plus (b) all amounts treated as expenses for depreciation, depletion and interest and the amortization of intangibles of any kind to the extent included in the determination of such net income (or loss), plus (c) all adjustments arising by virtue of the conversion from average cost accounting to a LIFO basis with respect to inventory to the extent included in the determination of such net income, plus (d) all accrued taxes on or measured by income to the extent included in the determination of such net income (or loss); provided, however, that net income (or loss) shall be computed for these purposes without giving effect to extraordinary losses or extraordinary gains. "Effective Amount" means (i) with respect to any Committed Loans, Swingline Loans or Bid Loans, as the case may be, on any date, the aggregate outstanding principal amount thereof after giving effect to any Borrowings and prepayments or repayments thereof occurring on such date; and (ii) with respect to any outstanding L/C Obligations on any date, the amount of such L/C Obligations on such date after giving effect to any Issuances of Letters of Credit occurring on such date and any other changes in the aggregate amount of the L/C Obligations as of such date, including as a result of any reimbursements of outstanding unpaid drawings under any Letters of Credit or any reductions 15 21 in the maximum amount available for drawing under Letters of Credit taking effect on such date. "Eligible Assignee" means (i) a commercial bank organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $250,000,000; (ii) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having a combined capital and surplus of at least $250,000,000, provided that such bank is acting through a branch or agency located in the United States; and (iii) a Person that is primarily engaged in the business of commercial banking and that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a Person of which a Bank is a Subsidiary, or (C) a Person of which a Bank is a Subsidiary. "Environmental Claims" means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for release or injury to the environment or threat to public health, personal injury (including sickness, disease or death), property damage, natural resources damage, or otherwise alleging liability or responsibility for damages (punitive or otherwise), cleanup, removal, remedial or response costs, restitution, civil or criminal penalties, injunctive relief, or other type of relief, resulting from or based upon (a) the presence, placement, discharge, emission or release (including intentional and unintentional, negligent and non-negligent, sudden or non-sudden, accidental or non-accidental placement, spills, leaks, discharges, emissions or releases) of any Hazardous Material at, in, or from Property, whether or not owned by such person, or (b) any other circumstances forming the basis of any violation, or alleged violation, of any Environmental Law. "Environmental Laws" means all federal, state or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authorities, in each case relating to environmental, health, safety, land use, conservation, and timber harvesting matters; including, but not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980 16 22 ("CERCLA"), the Clean Air Act, the Federal Water Pollution Control Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and Recovery Act, the Toxic Substances Control Act, the Emergency Planning and Community Right-to-Know Act. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, and regulations promulgated thereunder. "ERISA Affiliate" means any trade or business (whether or not incorporated) under common control with the Company within the meaning of Section 414(b) or 414(c) of the Code. "ERISA Event" means (a) a Reportable Event with respect to a Qualified Plan or a Multiemployer Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA); (c) a complete or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan; (d) the filing of a notice of intent to terminate, the treatment of a plan amendment as a termination under Section 4041 or 4041A of ERISA or the commencement of proceedings by the PBGC to terminate a Qualified Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure by the Company or any ERISA Affiliate to make required contributions to a Qualified Plan or Multiemployer Plan; (f) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Qualified Plan or Multiemployer Plan; (g) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Company or any ERISA Affiliate; (h) an application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code with respect to any Plan; (i) a non-exempt prohibited transaction occurs with respect to any Plan for which the Company may be directly or indirectly liable; or (j) a violation of the applicable requirements of Section 404 or 405 of ERISA or the exclusive benefit rule under Section 401(a) of the Code by any fiduciary or disqualified person with respect to any Plan for which the Company may be directly or indirectly liable. 17 23 "Eurodollar Reserve Percentage" has the meaning specified in the definition of "Offshore Rate". "Event of Default" means any of the events or circumstances specified in Section 9.01. "Exchange Act" means the Securities and Exchange Act of 1934, as amended, and regulations promulgated thereunder. "Facilities Subsidiary" means, collectively, Plum Creek Manufacturing, L.P., a Delaware limited partnership, and Plum Creek Marketing, Inc., a Delaware corporation, "Facilities Subsidiary's Facility" means any facility pursuant to which the Facilities Subsidiary may incur Indebtedness for purposes of making capital improvements, additions to, or expansions of, property, plant and equipment of the Facilities Subsidiary or its Subsidiaries. "Facilities Subsidiary's Revolving Credit Facility" means any facility pursuant to which the Facilities Subsidiary may obtain revolving credit, take-down credit, the issuance of standby and payment letters of credit and backup for the issuance of commercial paper. "Facility A Credit Agreement" means the $100,000,000 Amended and Restated Credit Agreement dated as of the date hereof between the Company, the Banks, the Co-Agent and the Agent. "FDIC" means the Federal Deposit Insurance Corporation, or any entity succeeding to any of its principal functions. "Federal Funds Rate" means, for any period, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such day opposite the caption "Federal Funds (Effective)". If on any relevant day such rate is not yet published in H.15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. Quotation") for such day under the caption "Federal Funds Effective Rate". If on any 18 24 relevant day the appropriate rate for such previous day is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined by the Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Agent. "Federal Reserve Board" means the Board of Governors of the Federal Reserve System, or any entity succeeding to any of its principal functions. "Fixed Charge Coverage Ratio" means, as measured quarterly on the last day of each fiscal quarter for, except as set forth below, the four fiscal quarter period then ending, the ratio of (i) EBITDA; to (ii) an amount equal to the sum of (A) the combined interest expense (including capitalized interest) of the Company and its Subsidiaries for the four fiscal quarter period then ending calculated in accordance with GAAP, plus (B) the aggregate amount of scheduled principal repayment on the Indebtedness of the Company and its Subsidiaries for such period; provided that the aggregate amount of scheduled principal repayment on the Indebtedness (x) shall not include the amount of any prepayment of Indebtedness except to the extent such prepayment includes any amounts that would have been scheduled principal repayments during such period, (y) shall not include the amount of any scheduled principal repayment to the extent the Company refinanced such scheduled repayments and the scheduled principal repayments under the refinancing have been or will be included in the calculation of the aggregate amount of scheduled principal repayments, and (z) with respect to this Agreement, shall only include (1) the scheduled installments to be made by the Company pursuant to subsection 2.10(c) hereof during such period, and (2) the amount of any repayment made by the Company hereunder pursuant to subsection 2.10(b) hereof. 19 25 "Form 1001" has the meaning specified in subsection 4.01(f). "Form 4224" has the meaning specified in subsection 4.01(f). "Funded Debt" means, without duplication, any Indebtedness payable more than one year from the date of the creation thereof; provided that any Indebtedness shall be treated as Funded Debt, regardless of its term, if such Indebtedness is renewable at the option of the Company pursuant to the terms thereof or of a revolving credit or similar agreement effective for more than one year after the date of the creation of such Indebtedness, or may be payable out of the proceeds of similar Indebtedness pursuant to the terms of such Indebtedness or any such agreement. "GAAP" means generally accepted accounting principles set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the accounting profession), or in such other statements by such other entity as may be in general use by significant segments of the U.S. accounting profession, which are applicable to the circumstances as of the date of determination. "General Partner" means Plum Creek Management Company, L.P., a Delaware limited partnership, the managing general partner of the Company, and any successor managing general partner of the Company. "Governmental Authority" means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing. "Guarantee" means the guarantee in paragraph 7 of the Mortgage Note Agreements. "Hazardous Materials" means all those substances which are regulated by, or which may form the basis of 20 26 liability under, any Environmental Law, including all substances identified under any Environmental Law as a pollutant, contaminant, hazardous waste, hazardous constituent, special waste, hazardous substance, hazardous material, or toxic substance, or petroleum or petroleum derived substance or waste. "Honor Date" has the meaning specified in subsection 3.03(b). "Indebtedness" of any Person means, as of any date of determination, without duplication, (a) all indebtedness of such Person for borrowed money or for the deferred purchase price of property or services, (b) all amounts owed by such Person to banks or other Persons in respect of reimbursement obligations under letters of credit, surety bonds, banker's acceptances and other similar instruments guaranteeing payment or other performance of obligations by such Person, (c) all indebtedness for borrowed money or for the deferred purchase price of property or services secured by any Lien on any property owned by such Person, to the extent attributable to such Person's interest in such property, even though such Person has not assumed or become liable for the payment thereof, (d) lease obligations of such Person which, in accordance with GAAP, should be capitalized, (e) lease obligations of such Person under leases which have a term (including any option to renew exercisable at the discretion of the lessee thereunder) longer than 10 years or under leases under which the lessor, pursuant to an agreement with such Person, has acquired the property specifically for the purpose of leasing it to such Person, (f) obligations payable out of the proceeds of production from property of such Person, even though such Person has not assumed or become liable for the payment thereof, (g) all net obligations with respect to Rate Contracts, and (h) any obligations of any other Person of the type described in the above clauses (a) through (g), inclusive, which are guaranteed or in effect guaranteed by such Person through any agreement (contingent or otherwise) to purchase, repurchase or otherwise acquire such obligation or any security therefor, or to provide funds for the payment or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain the solvency or any balance sheet or other financial condition of the obligor of such obligation, or to make payment for any property, securities, products, materials or supplies or for any transportation or services regardless of the non-delivery or nonfurnishing thereof, in any such case 21 27 if the purpose or intent of such agreement is to provide assurance that such obligation will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such obligation will be protected against loss in respect thereof or to otherwise assure or hold harmless the holder of any primary obligation against loss in respect thereof. The amount of any obligations of the type described in clause (h) of this definition shall be deemed equal to the stated or determinable amount of the primary obligation in respect of which such obligation is made or, if not stated or if not determinable, the maximum reasonably anticipated liability in respect thereof. The amount of any obligations of the type described in clause (g) of this definition shall be marked to market on a current basis in accordance with GAAP. "Indemnified Person" has the meaning specified in subsection 11.05. "Indemnified Liabilities" has the meaning specified in subsection 11.05. "Independent Auditor" has the meaning specified in subsection 7.01(a). "Insolvency Proceeding" means (a) any case, action or proceeding before any court or other Governmental Authority relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution, winding-up or relief of debtors, or (b) any general assignment for the benefit of creditors, composition, marshalling of assets for creditors, or other, similar arrangement in respect of its creditors generally or any substantial portion of its creditors; in each case (a) and (b) undertaken under U.S. Federal, State or foreign law, including the Bankruptcy Code. "Interest Payment Date" means, (a) with respect to any CD Rate Committed Loan or Offshore Rate Loan, the last day of each Interest Period applicable to such Loan, (b) with respect to any Base Rate Committed Loan, the last Business Day of each calendar quarter and each date a Base Rate Committed Loan is converted into another Type of Committed Loan, and (c) with respect to any Swingline Loan, the Business Day agreed upon by the Company and the Swingline Bank, which will not be later than the fourteenth Business Day following the Borrowing date thereof or, if sooner, the Revolving Termination Date; provided, however, that (i) if any Interest Period for a CD Rate Committed Loan or Offshore Rate Committed 22 28 Loan exceeds 90 days or three months, respectively, the date which falls 90 days or three months (as the case may be) after the beginning of such Interest Period and after each Interest Payment Date thereafter shall also be an Interest Payment Date, and (ii) as to any Bid Loan, such intervening dates prior to the maturity thereof as may be specified by the Company and agreed to by the applicable Bid Loan Lender in the applicable Competitive Bid shall also be Interest Payment Dates. "Interest Period" means, (a) with respect to any Offshore Rate Committed Loan, the period commencing on the Business Day the Loan is disbursed or on the Conversion/Continuation Date on which the Loan is converted into or continued as an Offshore Rate Committed Loan, and ending on the date that is one week or one, two, three or six months thereafter, as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation, as the case may be; (b) with respect to any CD Rate Committed Loan, the period commencing on the Business Day the CD Rate Committed Loan is disbursed or on the Conversion/Continuation Date on which the Loan is converted into or continued as a CD Rate Committed Loan and ending 30, 60, 90 or 180 days thereafter, as selected by the Company in its Notice of Borrowing or Notice of Conversion/Continuation; (c) with respect to any LIBOR Bid Loan, the period commencing on the Business Day the Loan is disbursed and ending on the date one, two, three, six, or twelve months thereafter, as selected by the Company in the applicable Competitive Bid Request; and (d) with respect to any Absolute Rate Bid Loan, a period not less than 7 days and not more than 365/366 days, as applicable, as selected by the Company in the applicable Competitive Bid Request; provided that: (i) if any Interest Period would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless, in the case of an Offshore Rate Loan, the result of such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the immediately preceding Business Day; (ii) any Interest Period pertaining to an Offshore Rate Loan that begins on the last Business Day of a calendar month (or on a day for which 23 29 there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; (iii) no Interest Period for any Bid Loan shall extend beyond the Revolving Termination Date; (iv) no Interest Period for any Committed Loan shall extend beyond the Revolving Termination Date unless and until the Company duly exercises its election to repay the Loans in installments in accordance with subsection 2.10(c), after which Interest Periods may extend beyond the Revolving Termination Date so long as no Interest Period extends beyond the Maturity Date; and (v) no Interest Period applicable to a Committed Loan after the Revolving Termination Date shall extend beyond any date upon which is due any scheduled principal payment in respect of the Committed Loans pursuant to subsection 2.10(c) unless the aggregate principal amount of Committed Loans represented by Base Rate Committed Loans, or by CD Rate Committed Loans or Offshore Rate Committed Loans having Interest Periods that will expire on or before such date, equals or exceeds the amount of such principal payment. "Invitation for Competitive Bids" means a solicitation for Competitive Bids, substantially in the form of Exhibit H. "Investment Policy" means the Corporate Investment Policy of the Company, as it existed on April 5, 1993 and as attached hereto as Schedule 1.01 (without giving effect to any later amendments thereto). "Investments" has the meaning specified in Section 8.04. "Issuance Date" has the meaning specified in subsection 3.01(a)." "Issue" means, with respect to any Letter of Credit, to issue or to extend the expiry of, or to renew or increase the amount of, such Letter of Credit; and the terms "Issued," "Issuing" and "Issuance" have corresponding meanings. 24 30 "Issuing Bank" means each of BofA and ABN in its capacity as issuer of one or more Letters of Credit hereunder, together with any replacement letter of credit issuer arising under subsection 10.01(b) or Section 10.09. "Joint Venture" means a partnership, joint venture or other similar legal arrangement (whether created pursuant to contract or conducted through a separate legal entity) now or hereafter formed by the Company or any of its Restricted Subsidiaries with another Person in order to conduct a common venture or enterprise with such Person. "L/C Advance" means each Bank's participation in any L/C Borrowing in accordance with its Commitment Percentage. "L/C Amendment Application" means an application form for amendment of outstanding standby letters of credit as shall at any time be in use at an Issuing Bank, as such Issuing Bank shall request. "L/C Application" means an application form for issuances of standby letters of credit as shall at any time be in use at an Issuing Bank, as such Issuing Bank shall request. "L/C Borrowing" means an extension of credit resulting from a drawing under any Letter of Credit which shall not have been reimbursed on the date when made nor converted into a Borrowing of Committed Loans under subsection 3.03(c). "L/C Commitment" means the commitment of the Issuing Banks to Issue, and the commitment of the Banks severally to participate in, Letters of Credit from time to time Issued or outstanding under Article III, in an aggregate amount not to exceed on any date five million dollars $5,000,000, minus the L/C Obligations under and as defined in the Facility A Credit Agreement, as the same shall be reduced as a result of a reduction in the L/C Commitment pursuant to Section 2.07; provided that the L/C Commitment is a part of the Aggregate Commitment, rather than a separate, independent commitment. "L/C Obligations" means at any time the sum of (a) the aggregate undrawn amount of all Letters of Credit then outstanding, plus (b) the amount of all 25 31 unreimbursed drawings under all Letters of Credit, including all outstanding L/C Borrowings. "L/C-Related Documents" means the Letters of Credit, the L/C Applications, the L/C Amendment Applications and any other document relating to any Letter of Credit, including any Issuing Bank's standard form documents for letter of credit issuances. "Lending Office" means, with respect to any Bank and the Swingline Bank, the office or offices of the Bank and the Swingline Bank specified as its "Lending Office" or "Domestic Lending Office" or "Offshore Lending Office", as the case may be, opposite its name on the applicable signature page hereto, or such other office or offices of the Bank and the Swingline Bank as it may from time to time notify the Company and the Agent. "Letters of Credit" means any standby letters of credit Issued by the Issuing Bank pursuant to Article III. "Letter of Credit Rate" means, for any period, a rate per annum equal to the Applicable Margin with respect to Offshore Rate Committed Loans in effect for such period. The Letter of Credit Rate shall be adjusted automatically as to all Letters of Credit then outstanding as of the effective date of any change in the Letter of Credit Rate. "LIBO Rate" means, for any Interest Period with respect to a LIBOR Bid Loan, the rate of interest per annum determined by the Agent to be the arithmetic mean (rounded upward to the nearest 1/16th of 1%) of the rates of interest per annum notified to the Agent by BofA as the rate of interest at which dollar deposits in the approximate amount of the LIBOR Bid Loans to be borrowed in such Bid Loan Borrowing, and having a maturity comparable to such Interest Period, would be offered to major banks in the London interbank market at their request at approximately 11:00 a.m. (London Time) two Business Days prior to the commencement of such Interest Period. "LIBOR Auction" means a solicitation of Competitive Bids setting forth a LIBOR Bid Margin pursuant to Section 2.06. "LIBOR Bid Loan" means any Bid Loan that bears interest at a rate based upon the LIBO Rate. 26 32 "LIBOR Bid Margin" has the meaning specified in subsection 2.06(c)(ii)(C). "Lien" means any mortgage, pledge, security interest, encumbrance, lien, preference or priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction). "Loan" means an extension of credit by a Bank or the Swingline Bank, as the case may be, to the Company under Article II or Article III, and may be a Committed Loan, a Bid Loan, a Swingline Loan or an L/C Advance. "Loan Documents" means this Agreement, the L/C-Related Documents, and all documents delivered to the Agent in connection herewith and therewith. "Majority Banks" means (a) at any time prior to the Revolving Termination Date, or after the Revolving Termination Date if no Committed Loans are then outstanding, Banks then holding at least 66-2/3% of the Commitments, and (b) otherwise, Banks then holding at least 66-2/3% of the then aggregate unpaid principal amount of the Loans. "Margin Stock" means "margin stock" as such term is defined in Regulation G, T, U or X of the Federal Reserve Board. "Material Adverse Effect" means (a) a material adverse change in, or a material adverse effect upon, any of the operations, business, properties, condition (financial or otherwise) or prospects of the Company or the Company and its Subsidiaries taken as a whole or as to any Restricted Subsidiary; (b) a material impairment of the ability of the Company to perform under any Loan Document and avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability of any Loan Document. "Material Default" means any continuing Default as to which a written notice of such Default (which notice has not been rescinded) shall have been received by the Company or the General Partner from the Agent or any Bank, or any continuing Event of Default. 27 33 "Maturity Date" means, if the Company exercises its election to repay the Loans in installments as provided in subsection 2.10(a), the date that is the second anniversary of the Revolving Termination Date, otherwise, the Revolving Termination Date. "Maximum Pro Forma Annual Interest Charges" means, as of any date, the highest total amount payable during any period of four consecutive fiscal quarters, commencing with the fiscal quarter in which such date occurs and ending with the fiscal quarter in which the Maturity Date occurs, by the Company and its Restricted Subsidiaries on a combined basis, after eliminating all intercompany transactions, in respect of interest charges ((a) including amortization of debt discount and expense and imputed interest on Capital Lease Obligations and on other obligations included in Indebtedness which do not have stated interest, (b) assuming, in the case of fluctuating interest rates which cannot be determined in advance, that the rate in effect on such date will remain in effect throughout such period, and (c) treating the principal amount of all Indebtedness outstanding as of such date under a revolving credit or similar agreement as maturing and becoming due and payable on the scheduled maturity date thereof, without regard to any provision permitting such maturity date to be extended) on all Indebtedness of the Company and its Restricted Subsidiaries outstanding on such date (excluding the Guarantee and the guarantees of the Facilities Subsidiary's Facility and the Facilities Subsidiary's Revolving Credit Facility but including, to the extent not already included, all other Indebtedness outstanding on such date which is guaranteed or in effect guaranteed by the Company or any Restricted Subsidiaries), after giving effect to any Indebtedness proposed to be created on such date and to the concurrent retirement of any other Indebtedness. "MMBF" means one million Board Feet. "Mortgage Note Agreements" means the Note Agreements, dated as of May 31, 1989, providing for the issuance and sale by the Facilities Subsidiary of its 11-1/8% First Mortgage Notes to the purchasers listed in the schedule of purchasers attached thereto, as amended by (a) those certain Mortgage Note Agreement Amendment, Consent and Waivers dated as of January 1, 1991, (b) that certain letter agreement dated April 22, 1993, and (c) that certain Mortgage Note Agreement Amendment dated as of September 1, 1993. 28 34 "Mortgage Notes" means the 11-1/8% First Mortgage Notes of the Facilities Subsidiary issued and sold pursuant to the Mortgage Note Agreements. "Multiemployer Plan" means a "multiemployer plan" (within the meaning of Section 4001(a)(3) of ERISA) and to which any ERISA Affiliate makes, is making, or is obligated to make contributions or, during the preceding three calendar years, has made, or been obligated to make, contributions. "Net Proceeds" means proceeds in cash as and when received by the Person making a sale of Property, net of: (a) the direct costs relating to such sale excluding amounts payable to the Company or any Affiliate of the Company, (b) sale, use or other transaction taxes paid or payable as a result thereof, and (c) amounts required to be applied to repay principal, interest and prepayment premiums and penalties on Indebtedness secured by a Lien on the asset which is the subject of such disposition. "1994 Notes" means the 8.73% Senior Notes due August 1, 2009 in the aggregate principal amount of $150,000,000 issued and sold pursuant to the 1994 Senior Note Agreements. "1994 Senior Note Agreements" means those certain Senior Note Agreements dated as of August 1, 1994 providing for the issuance and sale by the Company of the 1994 Senior Notes to the purchasers listed in the schedule of purchasers attached thereto. "Notes" means those certain senior promissory notes in the aggregate principal amount of $165,000,000 issued and sold pursuant to the Note Agreements. "Note Agreements" means those certain Note Agreements dated as of May 31, 1989, providing for the issuance and sale by the Company of the Notes to the purchasers listed in the schedule of purchasers attached thereto, as amended by (a) those certain Senior Note Agreement Amendment, Consent and Waivers dated as of January 1, 1991, (b) that certain letter agreement dated April 22, 1993, (c) that certain Senior Note Agreement Amendment dated as of September 1, 1993 and (d) that certain Senior Note Agreement Amendment dated as of May 20, 1994. 29 35 "Notice of Borrowing" means a notice given by the Company to the Agent pursuant to Sections 2.03 or 2.12, as the case may be, in substantially the form of Exhibit A. "Notice of Conversion/Continuation" means a notice given by the Company to the Agent pursuant to Section 2.04, in substantially the form of Exhibit B. "Notice of Lien" means any "notice of lien" or similar document intended to be filed or recorded with any court, registry, recorder's office, central filing office or other Governmental Authority for the purpose of evidencing, creating, perfecting or preserving the priority of a Lien securing obligations owing to a Governmental Authority. "Obligations" means all Loans, and other Indebtedness, advances, debts, liabilities, obligations, covenants and duties owing by the Company to any Bank, the Agent, the Co-Agent, the Issuing Banks, the Swingline Bank, or any other Person required to be indemnified, that arises under any Loan Document, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however acquired. "Offshore Lending Office" means with respect to each Bank, the office of such Bank designated as such in the signature pages hereto or such other office of such Bank as such Bank may from time to time specify to the Company and the Agent. "Offshore Rate" means, for each Interest Period in respect of Offshore Rate Committed Loans comprising part of the same Borrowing, an interest rate per annum (rounded upward to the nearest 1/16th of 1%) determined pursuant to the following formula: IBOR Offshore Rate = ------------------------------------- 1.00 - Eurodollar Reserve Percentage Where, "Eurodollar Reserve Percentage" means for any day for any Interest Period the reserve percentage (expressed as a decimal, rounded upward to the nearest 1/100th of 1%) in effect for such day under 30 36 regulations issued from time to time by the Federal Reserve Board for determining the reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as "Eurocurrency liabilities") having a term comparable to such Interest Period; and "IBOR" means the rate of interest per annum determined by the Agent as the rate at which dollar deposits in the approximate amount of BofA's Offshore Rate Committed Loan and having a maturity comparable to such Interest Period would be offered by BofA's Grand Cayman Branch, Grand Cayman B.W.I. (or such other office as may be designated for such purpose by BofA), to major banks in the offshore dollar interbank market upon request of such banks at approximately 11:00 a.m. (New York City time) two Business Days prior to the commencement of such Interest Period. The Offshore Rate shall be adjusted automatically as to all Offshore Rate Committed Loans then outstanding as of the effective date of any change in the Eurodollar Reserve Percentage. "Offshore Rate Committed Loan" means any Committed Loan that bears interest based on the Offshore Rate. "Offshore Rate Loan" means any LIBOR Bid Loan or any Offshore Rate Committed Loan. "Operating Lease" means, as applied to any Person, any lease of Property which is not a Capital Lease. "Ordinary Course of Business" means, in respect of any transaction involving the Company or any Subsidiary of the Company, the ordinary course of such Person's business, as conducted by any such Person in accordance with past practice and undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Loan Document. "Organization Documents" means, for any corporation, the certificate or articles of incorporation, the bylaws, any certificate of determination or instrument relating to the rights of preferred shareholders of such corporation, any shareholder rights agreement, and all applicable resolutions of the board of directors (or any committee thereof) of such corporation; and, for any limited 31 37 partnership, the certificate of limited partnership, the limited partnership agreement, and all applicable partnership resolutions. "Other Taxes" has the meaning specified in subsection 4.01(b). "Participant" has the meaning specified in subsection 11.08(d). "Partnership Agreement" means the Amended and Restated Agreement of Limited Partnership of the Company, as in effect on the Closing Date, and as the same may, from time to time, be amended, modified or supplemented in accordance with the terms thereof. "Partner Entities" means the General Partner, the PCMC General Partner and the PC Advisory General Partner. "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any of its principal functions under ERISA. "PC Advisory General Partner" means PC Advisory Corp. I, a Delaware corporation, the managing general partner of the PCMC General Partner, and any successor managing general partner of the PCMC General Partner. "PCMC General Partner" means PC Advisory Partners I, L.P., a Delaware limited partnership, the managing general partner of the General Partner, and any successor managing general partner of the General Partner. "Permitted Business" means any business engaged in by the Company or the Facilities Subsidiary on the Closing Date, and any business substantially similar or related to any such business, which shall not include pulp or paper manufacturing. "Permitted Liens" has the meaning specified in Section 8.01. "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture or Governmental Authority. 32 38 "Plan" means an employee benefit plan (as defined in Section 3(3) of ERISA) which the Company or any ERISA Affiliate sponsors or maintains or to which the Company or any ERISA Affiliate makes, is making or is obligated to make contributions, and includes any Multiemployer Plan or Qualified Plan. "Pro Forma Free Cash Flow" as of any date means (i) net income of the Company and its Restricted Subsidiaries on a pro forma combined basis (excluding (a) gain on the sale of any Capital Asset, (b) non-cash items of income, and (c) any distributions or other income received from, or equity of the Company or any Restricted Subsidiary in the earnings of, any entity which is not a Restricted Subsidiary) for the period of four consecutive fiscal quarters immediately prior to such date determined in accordance with GAAP plus depreciation, depletion, amortization and other noncash charges, interest expense on Indebtedness and provision for income taxes, minus (ii) capital expenditures made by the Company and its Restricted Subsidiaries during such period of four consecutive fiscal quarters to maintain their respective operations. "Property" means any estate or interest in any kind of property or asset, whether real, personal or mixed, and whether tangible or intangible. "Qualified Debt" means, as to the Company, as of any date of determination, without duplication, all outstanding indebtedness of the Company for borrowed money, including Indebtedness represented by the Notes, the 1994 Senior Notes and this Agreement (including L/C Borrowings and Loans used to repay L/C Borrowings, but excluding L/C Obligations with respect to undrawn Letters of Credit). "Qualified Plan" means a pension plan (as defined in Section 3(2) of ERISA) intended to be tax-qualified under Section 401(a) of the Code and which any ERISA Affiliate sponsors, maintains, or to which it makes, is making or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding period covering at least five (5) plan years, but excluding any Multiemployer Plan. "Rate Contracts" means swap agreements (as such term is defined in Section 101 of the Bankruptcy Code) and any other agreements or arrangements designed to 33 39 provide protection against fluctuations in interest or currency exchange rates. "Reportable Event" means, as to any Plan, (a) any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC, (b) a withdrawal from a Plan described in Section 4063 of ERISA, or (c) a cessation of operations described in Section 4062(e) of ERISA. "Requirement of Law" means, as to any Person, any law (statutory or common), treaty, rule or regulation or determination of an arbitrator or of a Governmental Authority, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. "Responsible Officer" means the chief executive officer, the president or any vice president of the General Partner, or any other officer having substantially the same authority and responsibility; or, with respect to compliance with financial covenants, the chief financial officer or the treasurer of the General Partner, or any other officer having substantially the same authority and responsibility. "Responsible Representatives" means (a) in the case of any transaction in which the value of any assets disposed of or received have a value of less than $5,000,000 or in which payments made are less than $5,000,000, the chief executive officer, chief financial officer or chief operating officer of the Company, and (b) in the case of any other transaction, the Board of Directors of the PC Advisory General Partner. "Restricted Payment" means (a) any payment or other distribution, direct or indirect, in respect of any partnership interest in the Company, except a distribution payable solely in additional partnership interests in the Company, and (b) any payment, direct or indirect, on account of the redemption, retirement, purchase or other acquisition of any partnership interest in the Company including, without limitation, any Designated Repurchases; or, if the Company is at any time reorganized as or changed (by merger, sale of assets or otherwise) into a corporation, (i) any dividend or other distribution, direct or indirect, on account of any shares of any class of stock of the Company now or hereafter outstanding, except a dividend 34 40 payable solely in shares of stock of the Company, and (ii) any redemption, retirement, purchase or other acquisition, direct or indirect, of any shares of any class of stock of the Company, now or hereafter outstanding, or of any warrants, rights or options to acquire any such shares, except to the extent that the consideration therefor consists of shares of stock of the Company. "Restricted Subsidiary" means any Wholly-Owned Subsidiary other than (a) any Designated Immaterial Subsidiary and (b) the Facilities Subsidiary or any Subsidiary directly or indirectly owned by the Facilities Subsidiary, provided that after the Mortgage Notes shall have been paid in full and retired, the Facilities Subsidiary and its Subsidiaries shall become and be Restricted Subsidiaries. "Revolving Credit Facility" means any facility pursuant to which the Company may obtain revolving credit, take-down credit, the issuance of standby and payment letters of credit and back-up for the issuance of commercial paper, other than that established pursuant to the Facility A Credit Agreement. "Revolving Extension Request" has the meaning specified in subsection 2.10(a). "Revolving Facility Tranche" has the meaning specified in Section 2.18. "Revolving Facility Tranche Loan" means a Loan allocated by the Company to the Revolving Facility Tranche as provided in Section 2.18. "Revolving Termination Date" means the earlier to occur of: (a) October 30, 1995, as such date may be extended in full compliance with subsection 2.10(a); and (b) the date on which the Aggregate Commitment shall terminate in accordance with the provisions of this Agreement. "SEC" means the Securities and Exchange Commission, or any entity succeeding to any of its principal functions. 35 41 "Solvent" means, as to any Person at any time, that (a) (i) in the case of a Person that is not a partnership, the fair value of the Property of such Person is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities), and (ii) in the case of a Person that is a partnership, the sum of (A) the fair value of the Property of such Person plus (B) the sum of the excess of the fair value of each general partner's non-partnership Property over such partner's non-partnership debts (together, the "Applicable Property") is greater than the amount of such Person's liabilities (including disputed, contingent and unliquidated liabilities), as such value for purposes of both clauses (i) and (ii) is established and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the Property of such Person (or, in the case of a partnership, the Applicable Property for such Person) is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (c) such Person is able to realize upon its Property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature; and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's Property would constitute unreasonably small capital. "Subsidiary" of a Person means any corporation, partnership or other entity a majority of (i) the total combined voting power of all classes of Voting Stock of which or (ii) the outstanding equity interests of which shall, at the time of which any determination is being made, be owned by the Company either directly or through Subsidiaries. "Swingline Bank" means BofA. "Swingline Borrowing" means a Borrowing hereunder consisting of one or more Swingline Loans made to the Company on the same day by the Swingline Bank. "Swingline Clean-Up Day" has the meaning specified in subsection 2.09(a)(iv). 36 42 "Swingline Commitment" has the meaning specified in Section 2.12. "Swingline Loan" has the meaning specified in Section 2.12. "Taxes" has the meaning specified in subsection 4.01(a). "Timber" means standing trees not yet harvested. "Timberlands" means the timberlands owned by the Company as of the Closing Date and any timberlands acquired by the Company or any Subsidiary after the Closing Date. "Transferee" has the meaning specified in subsection 11.08(e). "Type" has the meaning specified in the definition of "Committed Loan." "UCC" means the Uniform Commercial Code as in effect in the State of California. "UCP" has the meaning specified in Section 3.09. "Unfunded Pension Liabilities" means the excess of a Plan's benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan's assets, determined in accordance with the assumptions used by the Plan's actuaries for funding the Plan pursuant to section 412 for the applicable plan year. "United States" and "U.S." each means the United States of America. "Voting Stock" means, with respect to any corporation or other entity, any shares of stock or other ownership interests of such corporation or entity whose holders are entitled under ordinary circumstances to vote for the election of directors of such corporation or to manage any such other entity (irrespective of whether at the time stock or ownership interests of any other class or classes shall have or might have voting power by reason of the happening of any contingency). "Wholly-Owned Subsidiary" means any Subsidiary organized under the laws of any state of the United States which conducts the major portion of its business 37 43 in the United States, and all of the stock or other ownership interests of every class of which, except director's qualifying shares, and except in the case of the Facilities Subsidiary not more than 5% of the outstanding Voting Stock shall, at the time as of which any determination is being made, be owned by the Company either directly or through Wholly-Owned Subsidiaries. "Withdrawal Liabilities" means, as of any determination date, the aggregate amount of the liabilities, if any, pursuant to Section 4201 of ERISA if the Controlled Group made a complete withdrawal from all Multiemployer Plans and any increase in contributions pursuant to Section 4243 of ERISA. 1.02 Other Interpretive Provisions. (a) Defined Terms. Unless otherwise specified herein or therein, all terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto. The meaning of defined terms shall be equally applicable to the singular and plural forms of the defined terms. Terms (including uncapitalized terms) not otherwise defined herein and that are defined in the UCC shall have the meanings therein described. (b) The Agreement. The words "hereof", "herein", "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and subsection, section, schedule and exhibit references are to this Agreement unless otherwise specified. (c) Certain Common Terms. (i) The term "documents" includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced. (ii) The term "including" is not limiting and means "including without limitation." (d) Performance; Time. Whenever any performance obligation hereunder (other than a payment obligation) shall be stated to be due or required to be satisfied on a day other than a Business Day, such performance shall be made or satisfied on the next succeeding Business Day. In the computation of periods of time from a specified date to a later specified date, the word "from" means "from and 38 44 including"; the words "to" and "until" each mean "to but excluding", and the word "through" means "to and including". If any provision of this Agreement refers to any action taken or to be taken by any Person, or which such Person is prohibited from taking, such provision shall be interpreted to encompass any and all means, direct or indirect, of taking, or not taking, such action. (e) Contracts. Unless otherwise expressly provided herein, references to agreements and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document. (f) Laws. References to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation. (g) Captions. The captions and headings of this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement. (h) Independence of Provisions. The parties acknowledge that this Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters, and that such limitations, tests and measurements are cumulative and must each be performed, except as expressly stated to the contrary in this Agreement. (i) Interpretation. This Agreement is the result of negotiations among and has been reviewed by counsel to the Agent, the Company and other parties, and is the product of all parties hereto. Accordingly, this Agreement and the other Loan Documents shall not be construed against the Banks, the Co-Agent or the Agent merely because of the Agent's, the Co-Agent's or Banks' involvement in the preparation of such documents and agreements. 1.03 Accounting Principles. (a) Unless the context otherwise clearly requires, all accounting terms not expressly defined herein shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP, consistently applied. (b) References herein to "fiscal year" and "fiscal quarter" refer to such fiscal periods of the Company. 39 45 ARTICLE II THE CREDITS 2.01 Amounts and Terms of Commitments. Each Bank severally agrees, on the terms and conditions hereinafter set forth, to make loans to the Company (each such loan, a "Committed Loan") from time to time on any Business Day during the period from the Closing Date to the Revolving Termination Date, in an aggregate amount not to exceed at any time outstanding the amount set forth opposite the Bank's name in Schedule 2.01 under the heading "Commitment" (such amount as the same may be reduced pursuant to Section 2.07 or Section 2.09, or as a result of one or more assignments pursuant to Section 11.08, the Bank's "Commitment"); provided, however, that, after giving effect to any Committed Borrowings, the Effective Amount of all Committed Loans, Swingline Loans and Bid Loans and the Effective Amount of all L/C Obligations shall not at any time exceed the Aggregate Commitment; and provided, further, that the Effective Amount of the Committed Loans of any Bank plus such Bank's participation in the Effective Amount of all Swingline Loans, if any, plus such Bank's Commitment Percentage of the Effective Amount of all L/C Obligations shall not at any time exceed such Bank's Commitment. Within the limits of each Bank's Commitment, and subject to the other terms and conditions hereof, until the Revolving Termination Date, the Company may borrow under this Section 2.01, prepay pursuant to Section 2.08 and reborrow pursuant to this Section 2.01. 2.02 Loan Accounts. The Loans made by each Bank (including the Swingline Bank) and the Letters of Credit Issued by an Issuing Bank shall be evidenced by one or more loan accounts maintained by such Bank or Issuing Bank, as the case may be, in the ordinary course of business. The loan accounts or records maintained by the Agent, the Co-Agent, the Swingline Bank, each Issuing Bank and each such Bank shall be conclusive absent manifest error of the amount of the Loans made by the Banks to the Company and the Letters of Credit issued for the account of the Company, and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Company hereunder to pay any amount owing with respect to the Loans or any Letter of Credit. 2.03 Procedure for Committed Borrowing. (a) Each Committed Borrowing shall be made upon the Company's irrevocable written notice delivered to the 40 46 Agent in accordance with Section 11.02 in the form of a Notice of Borrowing (which notice must be received by the Agent prior to 9:00 a.m. (San Francisco time)) (i) three Business Days prior to the requested Borrowing date, in the case of Offshore Rate Committed Loans; (ii) three Business Days prior to the requested Borrowing date, in the case of CD Rate Committed Loans, and (iii) on the requested Borrowing date, in the case of Base Rate Committed Loans, specifying: (A) the amount of the Committed Borrowing, which shall be in an aggregate minimum principal amount of three million dollars ($3,000,000) except in the case of Offshore Rate Committed Loans with a proposed Interest Period of one week, in which case the aggregate minimum principal amount shall be twelve million dollars ($12,000,000) or, in either case, any multiple of five hundred thousand dollars ($500,000) in excess thereof; (B) the requested Committed Borrowing date, which shall be a Business Day; (C) whether the Committed Borrowing is to be comprised of Offshore Rate Committed Loans, CD Rate Committed Loans or Base Rate Committed Loans; (D) the duration of the Interest Period applicable to such Committed Loans included in such notice. If the Notice of Borrowing shall fail to specify the duration of the Interest Period for any Committed Borrowing comprised of CD Rate Committed Loans or Offshore Rate Committed Loans, such Interest Period shall be 90 days or three months, respectively; and (E) with respect to any Committed Borrowing after the date the Company gives the notice regarding allocation of Loans pursuant to Section 2.18, whether the Committed Borrowing shall be allocated to the Revolving Facility Tranche or the Capital Expenditure Tranche. (b) Upon receipt of the Notice of Borrowing, the Agent will promptly notify each Bank thereof and of the amount of such Bank's Commitment Percentage of the Committed Borrowing. 41 47 (c) Each Bank will make the amount of its Commitment Percentage of the Committed Borrowing available to the Agent for the account of the Company at the Agent's Payment Office by 12:00 noon (San Francisco time) on the Committed Borrowing date requested by the Company in funds immediately available to the Agent. The proceeds of all such Committed Loans will then be made available to the Company by the Agent at such office by crediting the account of the Company on the books of BofA with the aggregate of the amounts made available to the Agent by the Banks and in like funds as received by the Agent, unless on the date of the Borrowing all or any portion of the proceeds thereof shall then be required to be applied to the repayment of any outstanding Swingline Loans pursuant to Section 2.12 or the reimbursement of any outstanding drawings under Letters of Credit pursuant to Section 3.03, in which case such proceeds or portion thereof shall be applied to the repayment of such Swingline Loans or the reimbursement of such Letter of Credit drawings, as the case may be. (d) Unless the Majority Banks shall otherwise agree, during the existence of a Default or Event of Default, the Company may not elect to have a Committed Loan be made as, or converted into or continued as, an Offshore Rate Committed Loan or a CD Rate Committed Loan. (e) After giving effect to any Committed Borrowing, there shall not be more than six different Interest Periods in effect in respect of all Committed Loans and Bid Loans together then outstanding. 2.04 Conversion and Continuation Elections for Committed Borrowings. (a) The Company may upon irrevocable written notice to the Agent in accordance with subsection 2.04(b): (i) elect to convert on any Business Day, any Base Rate Committed Loans (or any part thereof in an amount not less than $3,000,000 except in the case of a conversion into an Offshore Rate Committed Loan for an Interest Period of one week which shall be in an amount not less than $12,000,000, or that is in an integral multiple of $500,000 in excess thereof) into Offshore Rate Committed Loans or CD Rate Committed Loans; (ii) elect to convert on the last day of the applicable Interest Period any Offshore Rate Committed Loans having Interest Periods maturing on such day (or any part thereof in an amount not less than $3,000,000, or that is in an integral multiple of $500,000 in excess 42 48 thereof) into CD Rate Committed Loans or Base Rate Committed Loans; (iii) elect to convert on the last day of the applicable Interest Period any CD Rate Committed Loans having Interest Periods maturing on such day (or any part thereof in an amount not less than $3,000,000 except in the case of a conversion into an Offshore Rate Committed Loan for an Interest Period of one week which shall be in an amount not less than $12,000,000, or that is in an integral multiple of $500,000 in excess thereof) into Offshore Rate Committed Loans or Base Rate Committed Loans; or (iv) elect to continue on the last day of the applicable Interest Period any Offshore Rate Committed Loans or CD Rate Committed Loans having Interest Periods maturing on such day (or any part thereof in an amount not less than $3,000,000 except in the case of a continuation of an Offshore Rate Committed Loan for an Interest Period of one week which shall be in an amount not less than $12,000,000, or that is in an integral multiple of $500,000 in excess thereof); provided, that if the aggregate amount of CD Rate Committed Loans or Offshore Rate Committed Loans in respect of any Committed Borrowing shall have been reduced, by payment, prepayment, or conversion of part thereof to be less than $500,000, such CD Rate Committed Loans or Offshore Rate Committed Loans shall automatically convert into Base Rate Committed Loans, and on and after such date the right of the Company to continue such Committed Loans as, and convert such Committed Loans into, Offshore Rate Committed Loans or CD Rate Committed Loans, as the case may be, shall terminate. (b) The Company shall deliver a Notice of Conversion/ Continuation in accordance with Section 11.02 to be received by the Agent not later than 9:00 a.m. (San Francisco time) (i) at least three Business Days in advance of the Conversion/Continuation Date, if the Committed Loans are to be converted into or continued as Offshore Rate Committed Loans; (ii) at least three Business Days in advance of the Conversion/Continuation Date, if the Committed Loans are to be converted into or continued as CD Rate Committed Loans; and (iii) on the Conversion/Continuation Date, if the Committed Loans are to be converted into Base Rate Committed Loans, specifying: (A) the proposed Conversion/Continuation Date; 43 49 (B) the aggregate amount of Committed Loans to be converted or continued; (C) the nature of the proposed conversion or continuation; and (D) other than in the case of Base Rate Committed Loans, the duration of the requested Interest Period. (c) If upon the expiration of any Interest Period applicable to CD Rate Committed Loans or Offshore Rate Committed Loans, the Company has failed to select timely a new Interest Period to be applicable to such CD Rate Committed Loans or Offshore Rate Committed Loans, as the case may be, or if any Default or Event of Default shall then exist, the Company shall be deemed to have elected to convert such CD Rate Committed Loans or Offshore Rate Committed Loans into Base Rate Committed Loans effective as of the expiration date of such current Interest Period. (d) Upon receipt of a Notice of Conversion/ Continuation, the Agent will promptly notify each Bank thereof, or, if no timely notice is provided by the Company, the Agent will promptly notify each Bank of the details of any automatic conversion. All conversions and continuations shall be made pro rata according to the respective outstanding principal amounts of the Committed Loans with respect to which the notice was given held by each Bank. (e) Unless the Majority Banks shall otherwise agree, during the existence of a Default or Event of Default, the Company may not elect to have a Committed Loan converted into or continued as an Offshore Rate Committed Loan or a CD Rate Committed Loan. (f) Notwithstanding any other provision contained in this Agreement, after giving effect to any conversion or continuation of any Committed Loans there shall not be more than six different Interest Periods in effect in respect of all Committed Loans and Bid Loans, together then outstanding. 2.05 Bid Borrowings. In addition to Committed Borrowings pursuant to Section 2.03, each Bank severally agrees that the Company may, as set forth in Section 2.06, from time to time request the Banks prior to the Revolving Termination Date to submit offers to make Bid Loans to the Company; provided, however, that the Banks may, but shall have no obligation to, submit such offers and the Company may, but shall have no obligation to, accept any such 44 50 offers; and provided, further, that at no time shall (a) the Effective Amount of all Committed Loans, Swingline Loans, Bid Loans and L/C Obligations exceed the Aggregate Commitment; or (b) the number of Interest Periods for Bid Loans then outstanding plus the number of Interest Periods for Committed Loans then outstanding exceed six different Interest Periods. 2.06 Procedure for Bid Borrowings. (a) When the Company wishes to request the Banks to submit offers to make Bid Loans hereunder, it shall transmit to the Agent by telephone call followed promptly by facsimile transmission, delivered in accordance with Section 11.02, a notice in substantially the form of Exhibit G (a "Competitive Bid Request") so as to be received no later than 7:00 a.m. (San Francisco time) (x) four Business Days prior to the date of a proposed Bid Borrowing in the case of a LIBOR Auction, or (y) two Business Days prior to the date of a proposed Bid Borrowing in the case of an Absolute Rate Auction, specifying: (i) the date of such proposed Bid Borrowing, which shall be a Business Day; (ii) the aggregate amount of such proposed Bid Borrowing, which shall be in an aggregate minimum principal amount of $5,000,000 or any multiple of $1,000,000 in excess thereof; (iii) whether the Competitive Bids requested are to be for LIBOR Bid Loans or Absolute Rate Bid Loans or both; (iv) the duration of the Interest Period applicable thereto, subject to the provisions of the definition of "Interest Period" herein; and (v) with respect to any proposed Bid Borrowing after the date the Company gives the notice regarding allocation of Loans pursuant to Section 2.18, whether the Bid Borrowing shall be allocated to the Revolving Facility Tranche or to the Capital Expenditure Tranche. Subject to subsection 2.06(c), the Company may not request Competitive Bids for more than three Interest Periods in a single Competitive Bid Request and may not request Competitive Bids more than once in any period of five consecutive Business Days. 45 51 (b) Upon receipt of a Competitive Bid Request, the Agent will promptly send to the Banks by facsimile transmission an Invitation for Competitive Bids, which shall constitute an invitation by the Company to each Bank to submit Competitive Bids offering to make the Bid Loans to which such Competitive Bid Request relates in accordance with this Section 2.06. (c) (i) Each Bank may at its discretion submit a Competitive Bid containing an offer or offers to make Bid Loans in response to any Invitation for Competitive Bids. Each Competitive Bid must comply with the requirements of this subsection 2.06(c) and must be submitted to the Agent by facsimile transmission at the Agent's office for notices set forth on the signature pages hereto not later than (A) 6:30 a.m. (San Francisco time) three Business Days prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or (B) 6:30 a.m. (San Francisco time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction; provided that Competitive Bids submitted by the Agent (or any Affiliate of the Agent) in the capacity of a Bank may be submitted, and may only be submitted, if the Agent or such Affiliate notifies the Company of the terms of the offer or offers contained therein not later than (A) 6:15 a.m. (San Francisco time) three Business Days prior to the proposed date of Borrowing, in the case of a LIBOR Auction or (B) 6:15 a.m. (San Francisco time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction. (ii) Each Competitive Bid shall be in substantially the form of Exhibit I, specifying therein: (A) the proposed date of Borrowing; (B) the principal amount of each Bid Loan for which such Competitive Bid is being made, which principal amount (x) may be equal to, greater than or less than the Commitment of the quoting Bank, (y) shall be in an aggregate minimum principal amount of $5,000,000 or any multiple of $1,000,000 in excess thereof, and (z) may not exceed the principal amount of Bid Loans for which Competitive Bids were requested; (C) in case the Company elects a LIBOR Auction, the margin above or below LIBOR (the "LIBOR Bid Margin") offered for each such Bid Loan, expressed as a percentage (rounded to the nearest 1/16th of 1%) to be added to or subtracted from the 46 52 applicable LIBOR and the Interest Period applicable thereto; (D) in case the Company elects an Absolute Rate Auction, the rate of interest per annum (rounded upward to the nearest 1/100th of 1%) (the "Absolute Rate") offered for each such Bid Loan; and (E) the identity of the quoting Bank. A Competitive Bid may contain up to three separate offers by the quoting Bank with respect to each Interest Period specified in the related Invitation for Competitive Bids. (iii) Any Competitive Bid shall be disregarded if it: (A) is not substantially in conformity with Exhibit I or does not specify all of the information required by subsection (c)(ii) of this Section; (B) contains qualifying, conditional or similar language; (C) proposes terms other than or in addition to those set forth in the applicable Invitation for Competitive Bids; or (D) arrives after the time set forth in subsection (c)(i). (d) Promptly on receipt and not later than 7:00 a.m. (San Francisco time) three Business Days prior to the proposed date of Borrowing in the case of a LIBOR Auction, or 7:00 a.m. (San Francisco time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction, the Agent will notify the Company of the terms (i) of any Competitive Bid submitted by a Bank that is in accordance with subsection 2.06(c), and (ii) of any Competitive Bid that amends, modifies or is otherwise inconsistent with a previous Competitive Bid submitted by such Bank with respect to the same Competitive Bid Request. Any such subsequent Competitive Bid shall be disregarded by the Agent unless such subsequent Competitive Bid is submitted solely to correct a manifest error in such former Competitive Bid and only if received within the times set forth in subsection 2.06(c). The Agent's notice to the Company shall specify (1) the aggregate principal amount of Bid Loans for which offers have been received for each Interest Period 47 53 specified in the related Competitive Bid Request; and (2) the respective principal amounts and LIBOR Bid Margins or Absolute Rates, as the case may be, so offered. Subject only to the provisions of Sections 4.02, 4.05 and 5.02 hereof and the provisions of this subsection (d), any Competitive Bid shall be irrevocable except with the written consent of the Agent given on the written instructions of the Company. (e) Not later than 7:30 a.m. (San Francisco time) three Business Days prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or 7:30 a.m. (San Francisco time) on the proposed date of Borrowing, in the case of an Absolute Rate Auction, the Company shall notify the Agent of its acceptance or non-acceptance of the offers so notified to it pursuant to subsection 2.06(d). The Company shall be under no obligation to accept any offer and may choose to reject all offers. In the case of acceptance, such notice shall specify the aggregate principal amount of offers for each Interest Period that is accepted. The Company may accept any Competitive Bid in whole or in part; provided that: (i) the aggregate principal amount of each Bid Borrowing may not exceed the applicable amount set forth in the related Competitive Bid Request; (ii) the principal amount of each Bid Borrowing must be an amount not less than $5,000,000 or any multiple of $1,000,000 in excess thereof and the principal amount of each Bid Loan shall be an integral multiple of $1,000,000; (iii) acceptance of offers may only be made on the basis of ascending LIBOR Bid Margins or Absolute Rates within each Interest Period, as the case may be; and (iv) the Company may not accept any offer that is described in subsection 2.06(c)(iii) or that otherwise fails to comply with the requirements of this Agreement. (f) If offers are made by two or more Banks with the same LIBOR Bid Margins or Absolute Rates, as the case may be, for a greater aggregate principal amount than the amount in respect of which such offers are accepted for the related Interest Period, the principal amount of Bid Loans in respect of which such offers are accepted shall be allocated by the Agent among such Banks as nearly as possible (in such integral multiples of $1,000,000 as the 48 54 Agent may deem appropriate) in proportion to the aggregate principal amounts of such offers. Determination by the Agent of the amounts of Bid Loans shall be conclusive in the absence of manifest error. (g) (i) The Agent will promptly notify each Bank having submitted a Competitive Bid if its offer has been accepted and, if its offer has been accepted, of the amount of the Bid Loan or Bid Loans to be made by it on the date of the Bid Borrowing. (ii) If, on or before the proposed date of Bid Borrowing, the Commitments have not been terminated and if, on such proposed date of Borrowing all applicable conditions to funding referenced in Sections 4.02, 4.05 and 5.02 hereof are satisfied, each Bank that has received notice pursuant to subsection 2.06(g)(i) that its Competitive Bid has been accepted shall make the amounts of such Bid Loans available to the Agent for the account of the Company at the Agent's Payment Office in immediately available funds by 11:00 a.m. (San Francisco time) on such date of Bid Borrowing. (iii) Promptly following each Bid Borrowing, the Agent shall notify each Bank of the ranges of bids submitted and the highest and lowest Bids accepted for each Interest Period requested by the Company and the aggregate amount borrowed pursuant to such Bid Borrowing. (iv) From time to time, the Company and the Banks shall furnish such information to the Agent as the Agent may request relating to the making of Bid Loans, including the amounts, interest rates, dates of borrowings and maturities thereof, for purposes of the allocation of amounts received from the Company for payment of all amounts owing hereunder. 2.07 Voluntary Termination or Reduction of Commitments. The Company may, upon not less than five Business Days prior notice to the Agent, terminate the Aggregate Commitment or permanently reduce the Aggregate Commitment by an aggregate minimum amount of $5,000,000 or any multiple of $5,000,000 in excess thereof; provided that no such reduction or termination shall be permitted if, after giving effect thereto and to any prepayments of the Committed Loans made on the effective date thereof, the Effective Amount of Committed Loans, Swingline Loans, Bid Loans and L/C Obligations would exceed the amount of the Aggregate Commitment then in effect. Once reduced in accordance with this Section 2.07, the Aggregate Commitment may not be increased. Any reduction of the Aggregate Commitment shall be applied to each Bank's Commitment in accordance with such 49 55 Bank's Commitment Percentage. All accrued commitment fees to the effective date of any reduction or termination of Commitments shall be paid on the effective date of such reduction or termination. 2.08 Optional Prepayments. (a) Subject to Section 4.04, the Company may, at any time or from time to time, by written notice delivered to the Agent at least three Business Days prior to the proposed prepayment date in the case of Offshore Rate Committed Loans, CD Rate Committed Loans and Swingline Loans bearing interest at other than the Base Rate, and on the proposed prepayment date (which notice must be received by the Agent not later than 9:00 a.m. (San Francisco time)) in the case of Base Rate Committed Loans and Swingline Loans bearing interest at the Base Rate, (i) ratably prepay Committed Loans in whole or in part, in minimum principal amounts of $3,000,000 or any multiple of $1,000,000 in excess thereof, and (ii) prepay in whole or in part Swingline Loans in minimum principal amounts of $250,000 or any multiple of $100,000 in excess thereof, or in such other amounts with the consent of the Swingline Bank. Such notice of prepayment shall specify (i) the date and amount of such prepayment, (ii) whether such prepayment is of Base Rate Committed Loans, CD Rate Committed Loans, Offshore Rate Committed Loans, or Swingline Loans, or any combination thereof, and (iii) if applicable, whether such prepayment is of a Revolving Facility Tranche Loan or a Capital Expenditure Tranche Loan, or both. Such notice shall not thereafter be revocable by the Company and the Agent will promptly notify (i) in the case of Committed Loans, each Bank thereof and of such Bank's Commitment Percentage of such prepayment, and (ii) in the case of Swingline Loans, the Swingline Bank thereof and of the amount of such prepayment. If such notice is given by the Company, the Company shall make such prepayment and the payment amount specified in such notice shall be due and payable on the date specified therein, together with accrued interest to each such date on the amount prepaid and any amounts required pursuant to Section 4.04. (b) Bid Loans may not be voluntarily prepaid. 2.09 Mandatory Prepayments of Loans; Mandatory Commitment Reductions. (a) Mandatory Prepayments. (i) Asset Dispositions. If the Company or any of its Restricted Subsidiaries shall at any time or from 50 56 time to time make or agree to make a sale of Properties permitted by subsection 8.02(i), or harvest excess Timber permitted by Section 8.03, then (A) the Net Proceeds of such sale shall either be paid pro-rata by the Company as a prepayment of Loans or reinvested in accordance with the provisions of subsection 8.02(i), or (B) the Net Proceeds from such excess harvest shall either be paid pro-rata by the Company as a prepayment of Loans or reinvested in accordance with the provisions of Section 8.03, each as applicable. (ii) L/C Obligations. If on any date the Effective Amount of L/C Obligations exceeds the L/C Commitment, the Company shall Cash Collateralize on such date the outstanding Letters of Credit in an amount equal to the excess of the maximum amount then available to be drawn under the Letters of Credit over the aggregate L/C Commitment. The Company hereby grants to the Agent, for the benefit of the Agent, the Issuing Banks and the Banks, a security interest in all such cash and deposit account balances used to Cash Collateralize such L/C Obligations. Subject to Section 4.04, if on any date after giving effect to any Cash Collateralization made on such date pursuant to the preceding sentence, the Effective Amount of all Loans then outstanding plus the Effective Amount of all L/C Obligations exceeds the Aggregate Commitments, the Company shall immediately, and without notice or demand, prepay the outstanding principal amount of the Loans and L/C Advances by an amount equal to the applicable excess. (iii) Bid Loans. If any mandatory prepayments pursuant to subsections 2.09(a)(i) or (ii) would otherwise require prepayment of Bid Loans in accordance with subsection 2.09(c), the Company shall Cash Collateralize the outstanding Bid Loans in an amount equal to the prepayment amount applicable to Bid Loans, which amount shall be applied by the Agent to Bid Loans when such Loans mature. The Company hereby grants to the Agent, for the benefit of the Agent and the Bid Loan Lenders, a security interest in all such cash and deposit account balances used to Cash Collateralize such prepayment of Bid Loans. (iv) Swingline Loans. The Company shall be required to prepay Swingline Loans (A) if following any reduction of the Swingline Commitment pursuant to subsection 2.09(b) the aggregate outstanding principal amount of Swingline Loans would exceed the Swingline Commitment as reduced, the Company shall prepay on the reduction date the outstanding principal amount of the Swingline Loans in an amount equal to the excess of the Swingline Loans over the Swingline Commitment, and (B) so 51 57 that for one Business Day during each successive two calendar week period the aggregate principal amount of Swingline Loans shall be $0 (a "Swingline Clean-Up Day"), the Company shall prepay on the Swingline Clean-Up Day the outstanding principal amount of the Swingline Loans (which Swingline Loans may not be reborrowed until such Swingline Clean-Up Day has ended). (v) Revolving Facility Tranche Loans. If the Company has given a notice pursuant to Section 2.18 allocating all or a portion of the Loans to the Revolving Facility Tranche, the Company shall cause, for a period of at least 45 consecutive days during the 12 calendar month period after the effective date of such notice and during each successive 12 calendar month period prior to the Revolving Termination Date, no L/C Obligations to be outstanding and the aggregate principal amount of Revolving Facility Tranche Loans to be $0. (b) Mandatory Commitment Reductions. (i) The Aggregate Commitment shall be reduced from time to time by the amount of any mandatory prepayment required by subsection 2.09(a)(i). (ii) No reduction in the Aggregate Commitment pursuant to Section 2.07 or subsection 2.09(b)(i) shall reduce the L/C Commitment unless and until the combined Commitment has been reduced to $5,000,000; thereafter, any reduction in the combined Commitment pursuant to Section 2.07 shall equally reduce the L/C Commitment. (iii) (A) At no time shall the Swingline Commitment exceed the Aggregate Commitment, and any reduction of the Aggregate Commitment which reduces the Aggregate Commitment below the then current amount of the Swingline Commitment shall result in an automatic corresponding reduction of the Swingline Commitment to the amount of the Aggregate Commitment, as so reduced, without any action on the part of the Swingline Bank. (B) At no time shall the Swingline Commitment exceed the Commitment of the Swingline Bank, and any reduction of the Aggregate Commitment which reduces the Commitment of the Swingline Bank below the then current amount of the Swingline Commitment shall result in an automatic corresponding reduction of the Swingline Commitment to the amount of the Commitment of the Swingline Bank, as so reduced, without any action on the part of the Swingline Bank. 52 58 (c) General. Any prepayments pursuant to subsection 2.09(a)(i) or (ii) shall be applied first to any Base Rate Committed Loans then outstanding, second to Cash Collateralize or to prepay Swingline Loans as directed by the Swingline Bank in its sole discretion, third, at the Company's option, to Cash Collateralize or to prepay in the inverse order of their stated maturity CD Rate Committed Loans and Offshore Rate Committed Loans, fourth to Bid Loans as provided in Section 2.09(a)(iii). The Company hereby grants to the Agent (i) for the benefit of the Agent and the Banks in the case of CD Rate Committed Loans and Offshore Rate Committed Loans and (ii) for the benefit of the Agent, the Swingline Bank and the Banks in the case of Swingline Loans, a security interest on all such cash and deposit account balances used to Cash Collateralize Loans to be prepaid pursuant to this subsection 2.09(c). Subject to the foregoing and so long as no default or Event of Default shall then exist, if applicable, any such prepayments shall be applied to Revolving Facility Tranche Loans and Capital Expenditure Tranche Loans as directed by the Company. After the Revolving Termination Date, all prepayments shall be applied in the inverse order of maturity to the principal payments required under subsection 2.10(c). The Company shall pay, together with each prepayment under this Section 2.09, accrued interest on the amount prepaid and any amounts required pursuant to Section 4.04. (d) Reduction of Commitment. Upon the making of any mandatory prepayment under subsection 2.09(a)(i), the Commitment of each Bank shall automatically be reduced by an amount equal to such Bank's ratable share of the aggregate of principal repaid, effective as of the earlier of the date that such prepayment is made or the date by which such prepayment is due and payable hereunder. All accrued commitment fees to, but not including the effective date of any reduction or termination of Commitments, shall be paid on the effective date of such reduction or termination. 2.10 Extension of Revolving Termination Date; Repayment. (a) So long as no Default or Event of Default shall then exist and so long as the Company may incur at least $1 of additional Funded Debt pursuant to subsection 8.05(i), in each case on the date of such request and on the Revolving Termination Date then in effect, at least 55 days but no more than 60 days before the Revolving Termination Date then in effect, the Company may request the Banks to extend the Revolving Termination Date then in effect for an additional 364 days unless the Company has exercised its election to repay the Obligations in 53 59 installments as provided in subsection 2.10(c). The Company shall request such extension by delivering to the Agent an irrevocable written request in substantially the form of Exhibit J (each a "Revolving Extension Request"). The Company understands that this subsection 2.10(a) is included in this Agreement for the Company's convenience in requesting extensions and acknowledges that neither the Agent nor any Bank has promised (either expressly or by implication), and neither the Agent nor any Bank has any obligation or commitment, to extend the Revolving Termination Date at any time. The Agent shall promptly deliver to each Bank three (3) copies of each Revolving Extension Request received by the Agent. If a Bank, in its sole discretion, consents to any Revolving Extension Request, such Bank shall evidence such consent by executing and returning two (2) copies of the Revolving Extension Request to the Agent not later than the last Business Day which is 35 days before the Revolving Termination Date then in effect. Any failure by any Bank so to execute and return a Revolving Termination Request shall be deemed a denial thereof. If the Company shall deliver a Revolving Extension Request to the Agent pursuant to the first sentence of this subsection 2.10(a), then not later than the last Business Day which is 30 days before the Revolving Termination Date then in effect, the Agent shall notify the Company in writing whether (i) the Agent has received a copy of the Revolving Extension Request executed by each Bank, in which case the definition of "Revolving Termination Date" shall be deemed amended as provided in the Revolving Extension Request as of the date of such written notice from the Agent to the Company, or (ii) the Agent has not received a copy of the Revolving Extension Request executed by each Bank, in which case such Revolving Extension Request shall be deemed denied. The Agent shall deliver to the Company, with each written notice under clause (i) of the preceding sentence which notifies the Company that the Agent has received a Revolving Extension Request executed by each Bank, a copy of the Revolving Extension Request so executed by each Bank. (b) Unless the Company shall have exercised its election to repay the Committed Loans outstanding on the Revolving Termination Date in installments pursuant to and in strict compliance with subsection 2.10(c), the Company shall repay to the Banks in full on the Revolving Termination Date the aggregate principal amount of any Committed Loans outstanding on the Revolving Termination Date. (c) So long as no Default or Event of Default shall then exist and so long as the Company may incur at least $1 of additional Funded Debt pursuant to 54 60 subsection 8.05(i), in each case on the date of such election and the Revolving Termination Date, at least 25 days before the Revolving Termination Date the Company may, in lieu of requesting an extension of the Revolving Termination Date under subsection 2.10(a) or following a decline by the Banks of such request, elect to repay the aggregate principal amount of Committed Loans outstanding on the Revolving Termination Date in eight (8) consecutive quarterly equal installments, each in an amount equal to one-eighth of the Effective Amount of the Committed Loans on the Revolving Termination Date and payable on the last Business Day of each January, April, July and October through the Maturity Date. The Company shall request such repayment election by delivering to the Agent an irrevocable written request in substantially the form of Exhibit K. The Agent shall promptly deliver a copy of such notice to the Banks. (d) The Company shall repay each Bid Loan on the last day of the relevant Interest Period. (e) The Company shall repay to the Swingline Bank in full on the Revolving Termination Date the aggregate principal amount of the Swingline Loans outstanding on the Revolving Termination Date. 2.11 Interest. (a) Subject to subsection 2.11(c): (i) each Committed Loan shall bear interest on the outstanding principal amount thereof from the date when made until it becomes due at a rate per annum equal to the CD Rate, the Offshore Rate or the Base Rate, as the case may be, plus the Applicable Margin; (ii) each Bid Loan shall bear interest on the outstanding principal amount thereof from the date when made until it becomes due at a rate per annum equal to the LIBO Rate plus (or minus) the LIBOR Bid Margin, or at the Absolute Rate, as the case may be; and (iii) each Swingline Loan shall bear interest on the principal amount thereof from the date when made until it becomes due at a rate per annum equal to the Base Rate plus the Applicable Margin or any other rate agreed to by the Swingline Bank in its sole discretion. (b) Interest on each Loan shall be paid in arrears on each Interest Payment Date and in the case of a Swingline Loan bearing an interest rate other than the Base Rate, on the date agreed to by the Swingline Bank in its sole discretion. Interest shall also be paid on the date of any prepayment of Committed Loans pursuant to Section 2.08 and 2.09 for the portion of the Loans so prepaid and upon 55 61 payment (including prepayment) in full thereof and, during the existence of any Event of Default, interest shall be paid on demand of the Agent at the request or with the consent of the Majority Banks. (c) While any Event of Default exists or after acceleration, the Company shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on the principal amount of all Obligations due and unpaid, at a rate per annum that is determined, in the case of Loans other than Base Rate Committed Loans and Swingline Loans, by adding 2% per annum to the Applicable Margin then in effect for such Loans and, in the case of other Obligations, at a rate equal to the Base Rate plus 2%. (d) Anything herein to the contrary notwithstanding, the obligations of the Company hereunder shall be subject to the limitation that payments of interest shall not be required, for any period for which interest is computed hereunder, to the extent (but only to the extent) that contracting for or receiving such payment by the respective Bank would be contrary to the provisions of any law applicable to such Bank limiting the highest rate of interest which may be lawfully contracted for, charged or received by such Bank, and in such event the Company shall pay such Bank interest at the highest rate permitted by applicable law. 2.12 Swingline Loans. (a) Subject to the terms and conditions hereof, the Swingline Bank severally agrees to make a portion of the Aggregate Commitment available to the Company by making swingline loans (individually, a "Swingline Loan"; collectively, the "Swingline Loans") to the Company on any Business Day during the period from the Closing Date to the Revolving Termination Date in accordance with the procedures set forth in this Section in an aggregate principal amount at any one time outstanding not to exceed $15,000,000, notwithstanding the fact that such Swingline Loans, when aggregated with the Swingline Bank's outstanding Committed Loans, may exceed the Swingline Bank's Commitment (the amount of such commitment of the Swingline Bank to make Swingline Loans to the Company pursuant to this subsection 2.12(a), as the same shall be reduced pursuant to subsection 2.09(b) or as a result of any assignment pursuant to Section 11.08, the Swingline Bank's "Swingline Commitment"); provided, that at no time shall (i) the sum of the Effective Amount of all Swingline Loans plus the Effective Amount of all Committed Loans and Bid Loans plus the Effective Amount of all L/C Obligations exceed the 56 62 Aggregate Commitment, or (ii) the Effective Amount of all Swingline Loans exceed the Swingline Commitment. Additionally, no more than four Swingline Loans may be outstanding at any one time, and except as otherwise provided in Section 2.11(c), all Swingline Loans shall at all times bear interest at a rate per annum equal to the Base Rate, unless otherwise agreed to by the Swingline Bank in its sole discretion. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company may borrow under this subsection 2.12(a), prepay pursuant to subsection 2.08(a) and reborrow pursuant to this subsection 2.12(a). (b) The Company shall provide the Agent (with a copy to the Swingline Bank) irrevocable written notice (including notice via facsimile confirmed immediately by a telephone call) in the form of a Notice of Borrowing of any Swingline Loan requested hereunder (which notice must be received by the Swingline Bank and the Agent prior to 12:00 noon (San Francisco time) on the requested Borrowing date) specifying (i) the amount to be borrowed, (ii) the requested Borrowing date, which must be a Business Day, and (iii) with respect to any Swingline Borrowing after the date the Company gives the notice regarding allocation of Loans pursuant to Section 2.18, whether the Swingline Borrowing shall be allocated to the Revolving Facility Tranche or the Capital Expenditure Tranche. Upon receipt of the Notice of Borrowing, the Swingline Bank will immediately confirm with the Agent (by telephone or in writing) that the Agent has received a copy of the Notice of Borrowing from the Company and, if not, the Swingline Bank will provide the Agent with a copy thereof. Unless the Swingline Bank has received notice prior to 2:00 p.m. on such Borrowing date from the Agent (A) directing the Swingline Bank not to make the requested Swingline Loan as a result of the limitations set forth in the proviso set forth in the first sentence of subsection 2.12(a); or (B) that one or more conditions specified in Article V are not then satisfied; then, subject to the terms and conditions hereof, the Swingline Bank will, not later than 3:00 p.m. (San Francisco time) on the Borrowing date specified in such Notice, make the amount of its Swingline Loan available to the Agent for the account of the Company at the Agent's Payment Office in funds immediately available to the Agent. The proceeds of such Swingline Loan will then promptly be made available to the Company by the Agent crediting the account of the Company on the books of BofA with the aggregate of the amounts made available to the Agent by the Swingline Bank and in like funds as received by the Agent. Each Borrowing pursuant to 57 63 this Section shall be in an aggregate principal amount equal to two hundred fifty thousand dollars ($250,000) or an integral multiple of one hundred thousand dollars ($100,000) in excess thereof, unless otherwise agreed by the Swingline Bank. (c) If (i) any Swingline Loans shall remain outstanding at 9:00 a.m. (San Francisco time) on the Business Day immediately prior to a Swingline Clean-Up Day and by such time on such Business Day the Agent shall have received neither (A) a Notice of Borrowing delivered pursuant to Section 2.03 requesting that Committed Loans be made pursuant to Section 2.01 or Bid Loans be made pursuant to Section 2.05 on the Swingline Clean-Up Day in an amount at least equal to the aggregate principal amount of such Swingline Loans, nor (B) any other notice indicating the Company's intent to repay such Swingline Loans with funds obtained from other sources, or (ii) any Swingline Loans shall remain outstanding during the existence of a Default or Event of Default and the Swingline Bank shall in its sole discretion notify the Agent that the Swingline Bank desires that such Swingline Loans be converted into Committed Loans, then the Agent shall be deemed to have received a Notice of Borrowing from the Company pursuant to Section 2.03 requesting that Base Rate Committed Loans be made pursuant to Section 2.01 on such Swingline Clean-Up Day (in the case of the circumstances described in clause (i) above) or on the first Business Day subsequent to the date of such notice from the Swingline Bank (in the case of the circumstances described in clause (ii) above) in an amount equal to the aggregate amount of such Swingline Loans, and the procedures set forth in subsections 2.03(b) and 2.03(c) shall be followed in making such Base Rate Committed Loans; provided, that such Base Rate Committed Loans shall be made notwithstanding the Company's failure to comply with subsections 5.02(b) and 5.02(c); and provided, further, that if a Borrowing of Committed Loans becomes legally impracticable and if so required by the Swingline Bank at the time such Committed Loans are required to be made by the Banks in accordance with this subsection 2.12(c), each Bank agrees that in lieu of making Committed Loans as described in this subsection 2.12(c), such Bank shall purchase a participation from the Swingline Bank in the applicable Swingline Loans in an amount equal to such Bank's Commitment Percentage of such Swingline Loans, and the procedures set forth in subsections 2.03(b) and 2.03(c) shall be followed in connection with the purchases of such participations. Upon such purchases of participations, the prepayment requirements of subsection 2.09(a)(iv) shall be deemed waived with respect to such Swingline Loans. The proceeds of such Base Rate Committed Loans, or participations 58 64 purchased, shall be applied to repay such Swingline Loans. A copy of each notice given by the Agent to the Banks pursuant to this subsection 2.12(c) with respect to the making of Committed Loans, or the purchases of participations, shall be promptly delivered by the Agent to the Company. Each Bank's obligation in accordance with this Agreement to make the Committed Loans, or purchase the participations, as contemplated by this subsection 2.12(c), shall be absolute and unconditional and shall not be affected by any circumstance, including (1) any set-off, counterclaim, recoupment, defense or other right which such Bank may have against the Swingline Bank, the Company or any other Person for any reason whatsoever; (2) the occurrence or continuance of a Default, an Event of Default or a Material Adverse Effect; or (3) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. 2.13 Fees. In addition to certain fees described in Section 3.08: (a) Agency and Participation Fees. The Company shall pay to BofA for BofA's own account fees in the amounts and at the times set forth in a letter agreement between the Company, BofA and the Arranger dated August 29, 1994 and the term sheet attached thereto. The Company shall pay to the Agent on the Closing Date for the account of each Bank a participation fee in an amount equal to the product of (i) 0.075% times (ii) such Bank's Commitment as set forth in Schedule 2.01 hereof. The foregoing fees shall be non-refundable. (b) Commitment Fees. The Company shall pay to the Agent for the account of each Bank a commitment fee on the average daily unused portion of such Bank's Commitment, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon the daily utilization for that quarter as calculated by the Agent, equal to the Commitment Fee Percentage. For purposes of calculating utilization under this subsection, (i) the Aggregate Commitment shall be deemed used to the extent of the Effective Amount of Committed Loans then outstanding, plus the Effective Amount of L/C Obligations then outstanding, and (ii) with respect to the Commitment of the Swingline Bank and each Bid Loan Lender, the making of any Bid Loan or Swingline Loan, as the case may be, shall not be considered a use of a portion of such Bid Loan Lender's or Swingline Bank's Commitment. Such commitment fee shall accrue from the Closing Date to the Revolving Termination Date and shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter, commencing 59 65 on the first such day after this Agreement is executed by the Company through the Revolving Termination Date, with the final payment to be made on the Revolving Termination Date; provided that, in connection with any reduction or termination of Commitments pursuant to Section 2.07 or Section 2.09, the accrued commitment fee calculated for the period ending on such date shall also be paid on the date of such reduction or termination, with the next succeeding quarterly payment being calculated on the basis of the period from the reduction or termination date to such quarterly payment date. The commitment fees provided in this subsection shall accrue at all times after the above-mentioned commencement date, including at any time during which one or more conditions in Article V are not met. (c) Bid Loan Fee. The Company shall pay to the Agent for its own account a Bid Loan fee for each Competitive Bid Request submitted by the Company in the amounts set forth in the letter agreement between the Company, BofA and the Arranger dated August 29, 1994 and the term sheet attached thereto. Such Bid Loan fee shall be due and payable on each date the Company submits a Competitive Bid Request. 2.14 Computation of Fees and Interest. (a) All computations of interest payable in respect of Base Rate Committed Loans and Swingline Loans at all times as the Base Rate is determined by BofA's "reference rate" shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest under this Agreement shall be made on the basis of a 360-day year and actual days elapsed, which results in more interest being paid than if computed on the basis of a 365-day year. Interest and fees shall accrue during each period during which interest or such fees are computed from the first day thereof to the last day thereof. (b) The Agent will, with reasonable promptness, notify the Company and the Banks of each determination of an Offshore Rate, LIBO Rate or of a CD Rate; provided that any failure to do so shall not relieve the Company of any liability hereunder or provide the basis for any claim against the Agent. Any change in the interest rate on a Committed Loan resulting from a change in the Applicable Margin, Reserve Percentage, Eurocurrency Reserve Percentage, or the Assessment Rate shall become effective as of the opening of business on the day on which such change in the Applicable Margin, Reserve Percentage, Eurocurrency Reserve Percentage, or the Assessment Rate becomes effective. The 60 66 Agent will with reasonable promptness notify the Company and the Banks of the effective date and the amount of each such change, provided that any failure to do so shall not relieve the Company of any liability hereunder or provide the basis for any claim against the Agent. (c) Each determination of an interest rate by the Agent pursuant hereto shall be conclusive and binding on the Company and the Banks in the absence of manifest error. 2.15 Payments by the Company. (a) All payments (including prepayments) to be made by the Company on account of principal, interest, fees and other amounts required hereunder shall be made without set-off, recoupment or counterclaim; shall, except as otherwise expressly provided herein, be made to the Agent for the ratable account of the Banks at the Agent's Payment Office, and shall be made in dollars and in immediately available funds, no later than 10:00 a.m. (San Francisco time) on the date specified herein. The Agent will promptly distribute to each Bank its Commitment Percentage (or other applicable share as expressly provided herein) of such principal, interest, fees or other amounts, in like funds as received. Any payment which is received by the Agent later than 10:00 a.m. (San Francisco time) shall be deemed to have been received on the immediately succeeding Business Day and any applicable interest or fee shall continue to accrue. (b) Whenever any payment hereunder shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be; subject to the provisions set forth in the definition of "Interest Period" herein. (c) Unless the Agent shall have received notice from the Company prior to the date on which any payment is due to the Banks hereunder that the Company will not make such payment in full as and when required hereunder, the Agent may assume that the Company has made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, cause to be distributed to each Bank on such due date an amount equal to the amount then due such Bank. If and to the extent the Company shall not have made such payment in full to the Agent, each Bank shall repay to the Agent on demand such amount distributed to such Bank, together with interest thereon for each day from the date such amount is distributed to such Bank until 61 67 the date such Bank repays such amount to the Agent, at the Federal Funds Rate as in effect for each such day. 2.16 Payments by the Banks to the Agent. (a) Unless the Agent shall have received notice from a Bank on the Closing Date or, with respect to each Borrowing after the Closing Date, at least one Business Day prior to the date of any proposed Committed Borrowing, that such Bank will not make available to the Agent as and when required hereunder for the account of the Company the amount of that Bank's Commitment Percentage of the Committed Borrowing, the Agent may assume that each Bank has made such amount available to the Agent in immediately available funds on the Committed Borrowing date and the Agent may (but shall not be so required), in reliance upon such assumption, make available to the Company on such date a corresponding amount. If and to the extent any Bank shall not have made its full amount available to the Agent in immediately available funds and the Agent in such circumstances has made available to the Company such amount, that Bank shall on the next Business Day following the date of such Committed Borrowing make such amount available to the Agent, together with interest at the Federal Funds Rate for and determined as of each day during such period. A notice of the Agent submitted to any Bank with respect to amounts owing under this subsection 2.16(a) shall be conclusive, absent manifest error. If such amount is so made available, such payment to the Agent shall constitute such Bank's Loan on the date of such Committed Borrowing for all purposes of this Agreement. If such amount is not made available to the Agent on the next Business Day following the date of such Committed Borrowing, the Agent shall notify the Company of such failure to fund and, upon demand by the Agent, the Company shall pay such amount to the Agent for the Agent's account, together with interest thereon for each day elapsed since the date of such Committed Borrowing, at a rate per annum equal to the interest rate applicable at the time to the Committed Loans comprising such Committed Borrowing. (b) The failure of any Bank to make any Committed Loan on any date of borrowing shall not relieve any other Bank of any obligation hereunder to make a Committed Loan on the date of such borrowing, but no Bank shall be responsible for the failure of any other Bank to make the Committed Loan to be made by such other Bank on the date of any borrowing. 2.17 Sharing of Payments, Etc. If, other than as expressly provided elsewhere herein, any Bank shall obtain on account of the Committed Loans made by it any payment (whether voluntary, involuntary, through the exercise of any 62 68 right of set-off, or otherwise) in excess of its Commitment Percentage of payments on account of the Committed Loans obtained by all the Banks, such Bank shall forthwith (a) notify the Agent of such fact, and (b) purchase from the other Banks such participations in the Committed Loans made by them as shall be necessary to cause such purchasing Bank to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from the purchasing Bank, such purchase shall to that extent be rescinded and each other Bank shall repay to the purchasing Bank the purchase price paid therefor, together with an amount equal to such paying Bank's proportionate share (according to the proportion of (i) the amount of such paying Bank's required repayment to (ii) the total amount so recovered from the purchasing Bank) of any interest or other amount paid or payable by the purchasing Bank in respect of the total amount so recovered. The Company agrees that any Bank so purchasing a participation from another Bank pursuant to this Section 2.17 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off, but subject to Section 11.09) with respect to such participation as fully as if such Bank were the direct creditor of the Company in the amount of such participation. The Agent will keep records (which shall be conclusive and binding in the absence of manifest error) of participations purchased pursuant to this Section 2.17 and will in each case notify the Banks following any such purchases or repayments. Any Bank or Swingline Bank having outstanding Committed Loans, Swingline Loans and Bid Loans at any time a right of set-off is exercised by such Bank or Swingline Bank shall apply the proceeds of such set-off first to such Bank's Committed Loans, until its Committed Loans are reduced to zero, then to its Swingline Loans, and thereafter to its Bid Loans. 2.18 Loan Tranches. The Company may, at any time and from time to time, upon at least five Business Days notice to the Agent, allocate all or a portion of Committed Borrowings, Bid Borrowings, Swingline Borrowings and L/C Obligations to a revolving credit facility tranche (the "Revolving Facility Tranche") or a capital expenditure tranche (the "Capital Expenditure Tranche"), or both; provided that (A) at no time shall the Effective Amount of all Committed Loans, Swingline Loans and Bid Loans allocated to the Revolving Facility Tranche plus the Effective Amount of all L/C Obligations exceed $15,000,000; 63 69 (B) at no time shall the Effective Amount of all Committed Loans, Swingline Loans and Bid Loans allocated to the Capital Expenditure Tranche exceed $20,000,000; (C) upon allocation to the Revolving Facility Tranche or the Capital Expenditure Tranche, as case may be, Loans shall remain so allocated notwithstanding any conversion or continuation of Loans pursuant to Section 2.04; (D) the Company and each of the Banks agree that the establishment of the Revolving Facility Tranche and the Capital Expenditure Tranche is intended to assist the Company in its compliance with Section 8.05 and the corresponding provisions of the Note Agreements, the 1994 Senior Note Agreements and the Mortgage Note Agreements. Accordingly, neither the failure by the Company to comply in any respect with this Section 2.18 nor the failure by the Agent or any Bank to identify or remedy such noncompliance shall give rise to any liability against the Agent or any Bank or any defense to compliance by the Company with Section 8.05; and (E) all Letters of Credit shall be deemed allocated to the Revolving Facility Tranche. Such notice of allocation shall specify (i) the effective date of such allocation which shall not be a date earlier than the date of such notice, (ii) the aggregate principal amount of Loans (identified by Type of Loan) and L/C Obligations to be allocated to the Revolving Facility Tranche, the Capital Expenditure Tranche, or both, as the case may be, and (iii) in the case of allocations to the Capital Expenditure Tranche, the Company shall represent and warrant that the proceeds of all Loans allocated thereto have been used solely to finance capital improvements, expansions and additions to the Company's property (including Timberlands), plant and equipment. The Agent will promptly notify the Banks of such notice of allocation of Loans and L/C Obligations. 2.19 Effect of Limitations in Facility A Credit Agreement. Unless otherwise stated herein to the contrary, the limitations imposed in Article II and III hereof on the minimum principal amount of each Credit Extension, the number of Interest Periods in effect and the frequency of Borrowings shall operate independently of any such limitations imposed on Credit Extensions as defined in and 64 70 pursuant to the Facility A Credit Agreement and shall not be affected by or combined with any such limitations therein. ARTICLE III THE LETTERS OF CREDIT 3.01 The Letter of Credit Facility. (a) On the terms and conditions set forth herein, (i) each Issuing Bank agrees, (A) from time to time on any Business Day during the period from the Closing Date until 30 days before the Revolving Termination Date to issue Letters of Credit for the account of the Company or the Facilities Subsidiary, and to amend or renew Letters of Credit previously issued by it, in accordance with subsections 3.02(c) and 3.02(d), and (B) to honor drafts under the Letters of Credit; and (ii) the Banks severally agree to participate in Letters of Credit Issued for the account of the Company or the Facilities Subsidiary; provided, that the Issuing Banks shall not be obligated to Issue, and no Bank shall be obligated to participate in, any Letter of Credit if as of the date of Issuance of such Letter of Credit (the "Issuance Date") (1) the Effective Amount of all L/C Obligations plus the Effective Amount of all Committed Loans, Swingline Loans and Bid Loans exceeds the Aggregate Commitment, (2) the participation of any Bank in the Effective Amount of all L/C Obligations plus the Effective Amount of the Committed Loans of such Bank plus the participation of such Bank, if any, in the Effective Amount of all Swingline Loans exceeds such Bank's Commitment, or (3) the Effective Amount of L/C Obligations exceeds the L/C Commitment. Within the foregoing limits, and subject to the other terms and conditions hereof, the Company's ability to obtain Letters of Credit shall be fully revolving, and, accordingly, the Company may, during the foregoing period, obtain Letters of Credit to replace Letters of Credit which have expired or which have been drawn upon and reimbursed. The Company shall be primarily liable for all obligations hereunder and under the L/C-Related Documents with respect to any Letter of Credit Issued for the account of the Facilities Subsidiary. Notwithstanding the foregoing, the Company shall cause, for a period of at least 45 consecutive days during the 364 days after the Closing Date and during each successive 364 day period that the Revolving Termination Date has been extended pursuant to subsection 2.10(a), no L/C Obligations to be outstanding in accordance with subsection 2.09(a)(v). (b) Each of the Issuing Banks is under no obligation to Issue any Letter of Credit if: 65 71 (i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from Issuing such Letter of Credit, or any Requirement of Law applicable to such Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over such Issuing Bank shall prohibit, or request that such Issuing Bank refrain from, the Issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which such Issuing Bank in good faith deems material to it; (ii) such Issuing Bank has received written notice from any Bank, the Agent or the Company, on or prior to the Business Day prior to the requested date of Issuance of such Letter of Credit, that one or more of the applicable conditions contained in Article V is not then satisfied; (iii) the expiry date of any requested Letter of Credit is (A) more than 364 days after the date of Issuance, unless the Majority Banks have approved such expiry date in writing, or (B) less than 30 days prior to the Revolving Termination Date, unless all of the Banks have approved such expiry date in writing; (iv) the expiry date of any requested Letter of Credit is prior to the maturity date of any financial obligation to be supported by the requested Letter of Credit, unless such Letter of Credit is issued in connection with worker's compensation or to secure self-insurance deductibles or certain payments required in connection with export log yards, or all of the Banks have approved such expiry date in writing; (v) any requested Letter of Credit does not provide for drafts, or is not otherwise in form and substance reasonably acceptable to such Issuing Bank, or the Issuance of a Letter of Credit may violate any policies of such Issuing Bank applicable to customers and credits of a type similar to the Company and the transactions contemplated in this Agreement; (vi) any standby Letter of Credit is for the purpose of supporting the issuance of any letter of credit by any other Person; 66 72 (vii) such Letter of Credit is in a face amount less than $100,000 or to be denominated in a currency other than Dollars; or (viii) the requested Letter of Credit provides for payment thereunder sooner than the Business Day following the presentation to such Issuing Bank of the documentation required thereunder. 3.02 Issuance, Amendment and Renewal of Letters of Credit. (a) Each Letter of Credit shall be issued upon the irrevocable written request of the Company (or, if such Letter of Credit is to be for the account of the Facilities Subsidiary, the joint and several irrevocable written request of the Company and the applicable Facilities Subsidiary) received by an Issuing Bank (with a copy sent by the Company to the Agent) at least five days (or such shorter time as such Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of issuance. Each such request for issuance of a Letter of Credit shall be made by an original writing or by facsimile, confirmed immediately in an original writing, in the form of an L/C Application, and shall specify in form and detail satisfactory to such Issuing Bank: (i) the proposed date of issuance of the Letter of Credit (which shall be a Business Day); (ii) the face amount of the Letter of Credit; (iii) the expiry date of the Letter of Credit; (iv) the name and address of the beneficiary thereof; (v) the documents to be presented by the beneficiary of the Letter of Credit in case of any drawing thereunder; (vi) the full text of any certificate to be presented by the beneficiary in case of any drawing thereunder; and (vii) such other usual and customary matters as the Issuing Bank may require. (b) At least three Business Days prior to the Issuance of any Letter of Credit or any amendment or renewal 67 73 of a Letter of Credit, the Issuing Bank issuing such Letter of Credit will confirm with the Agent (by telephone or in writing) that the Agent has received a copy of the L/C Application or L/C Amendment Application from the Company and, if not, such Issuing Bank will provide the Agent with a copy thereof. Unless such Issuing Bank has received notice on or before the Business Day immediately preceding the date such Issuing Bank is to issue, amend or renew a requested Letter of Credit from the Agent (A) directing such Issuing Bank not to issue, amend or renew such Letter of Credit because such issuance amendment or renewal is not then permitted under subsection 3.01(a) as a result of the limitations set forth in clauses (1) through (3) thereof or subsection 3.01(b)(ii); or (B) that one or more conditions specified in Article V are not then satisfied; then, subject to the terms and conditions hereof, such Issuing Bank shall, on the requested date, issue a Letter of Credit for the account of the Company or amend or renew a Letter of Credit, as the case may be, in accordance with such Issuing Bank's usual and customary business practices. (c) From time to time while a Letter of Credit is outstanding and prior to the Revolving Termination Date, an Issuing Bank will, upon the written request of the Company received by such Issuing Bank (with a copy sent by the Company to the Agent) at least five days (or such shorter time as such Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of amendment, amend any Letter of Credit issued by it. Each such request for amendment of a Letter of Credit shall be made by an original writing or by facsimile, confirmed immediately in an original writing, made in the form of an L/C Amendment Application and shall specify in form and detail satisfactory to such Issuing Bank: (i) the Letter of Credit to be amended; (ii) the proposed date of amendment of the Letter of Credit (which shall be a Business Day); (iii) the nature of the proposed amendment; and (iv) such other usual and customary matters as such Issuing Bank may require. Such Issuing Bank shall be under no obligation to amend any Letter of Credit if: (A) such Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms of this Agreement; or (B) the beneficiary of any such letter of Credit does not accept the proposed amendment to the Letter of Credit. The 68 74 Agent will promptly notify the Banks of the receipt by it of any L/C Application or L/C Amendment Application. (d) Each Issuing Bank and the Banks agree that, while a Letter of Credit is outstanding and prior to the Revolving Termination Date, at the option of the Company and upon the written request of the Company received by an Issuing Bank (with a copy sent by the Company to the Agent) at least five days (or such shorter time as such Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of notification of renewal, such Issuing Bank shall be entitled to authorize the automatic renewal of any Letter of Credit issued by it. Each such request for renewal of a Letter of Credit shall be made by an original writing or by facsimile, confirmed immediately in an original writing, in the form of an L/C Amendment Application, and shall specify in form and detail satisfactory to such Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of notification of renewal of the Letter of Credit (which shall be a Business Day); (iii) the revised expiry date of the Letter of Credit; and (iv) such other usual and customary matters as the Issuing Bank may require. Such Issuing Bank shall be under no obligation so to renew any Letter of Credit if: (A) such Issuing Bank would have no obligation at such time to issue or amend such Letter of Credit in its renewed form under the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit does not accept the proposed renewal of the Letter of Credit. If any outstanding Letter of Credit shall provide that it shall be automatically renewed unless the beneficiary thereof receives notice from such Issuing Bank that such Letter of Credit shall not be renewed, and if at the time of renewal such Issuing Bank would be entitled to authorize the automatic renewal of such Letter of Credit in accordance with this subsection 3.02(d) upon the request of the Company but such Issuing Bank shall not have received any L/C Amendment Application from the Company with respect to such renewal or other written direction by the Company with respect thereto, such Issuing Bank shall nonetheless be permitted to allow such Letter of Credit to renew, and the Company and the Banks hereby authorize such renewal, and, accordingly, such Issuing Bank shall be deemed to have 69 75 received an L/C Amendment Application from the Company requesting such renewal. (e) In connection with Letters of Credit that automatically renew or extend their expiry date, each Issuing Bank may, at its election (or as required by the Agent at the direction of the Majority Banks), deliver any notices of termination or other communications to any Letter of Credit beneficiary or transferee, and take any other action as necessary or appropriate, at any time and from time to time, in order to cause the expiry date of such Letter of Credit to be a date not later than the Revolving Termination Date. (f) This Agreement shall control in the event of any conflict with any L/C-Related Document (other than any Letter of Credit). (g) Each Issuing Bank will also deliver to the Agent, concurrently or promptly following its delivery of a Letter of Credit, or amendment to or renewal of a Letter of Credit, to an advising bank or a beneficiary, a true and complete copy of each such Letter of Credit or amendment to or renewal of a Letter of Credit. (h) Each Issuing Bank shall deliver to the Agent such reports with respect to the Letters of Credit as the Agent may reasonably request from time to time. 3.03 Risk Participations, Drawings and Reimbursements. (a) Immediately upon the Issuance of each Letter of Credit, each Bank shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank issuing such Letter of Credit a participation in such Letter of Credit and each drawing thereunder in an amount equal to the product of (i) the Commitment Percentage of such Bank, times (ii) the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. For purposes of Section 2.01, each Issuance of a Letter of Credit shall be deemed to utilize the Commitment of each Bank by an amount equal to the amount of such participation. (b) In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Issuing Bank which issued such Letter of Credit will promptly notify the Company. The Company shall reimburse such Issuing Bank, directly or with the proceeds of a Loan, prior to 10:00 a.m. (San Francisco time), on each date that any amount is paid by such Issuing Bank under any 70 76 Letter of Credit (each such date, an "Honor Date"), in an amount equal to the amount so paid by such Issuing Bank. If the Company fails to reimburse such Issuing Bank for the full amount of any drawing under any Letter of Credit by 10:00 a.m. (San Francisco time) on the Honor Date, such Issuing Bank will promptly notify the Agent and the Agent will promptly notify each Bank thereof, and the Company shall be deemed to have requested that Base Rate Committed Loans be made by the Banks to be disbursed on the Honor Date under such Letter of Credit, subject to the amount of the unutilized portion of the Commitment and subject to the conditions set forth in Section 5.02. Any notice given by such Issuing Bank or the Agent pursuant to this subsection 3.03(b) may be oral if immediately confirmed in writing (including by facsimile); provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. (c) Each Bank shall upon any notice pursuant to subsection 3.03(b) make available to the Agent for the account of the relevant Issuing Bank an amount in Dollars and in immediately available funds equal to its Commitment Percentage of the amount of the drawing, whereupon the participating Banks shall (subject to subsection 3.03(d)) each be deemed to have made a Loan consisting of a Base Rate Committed Loan to the Company in that amount. If any Bank so notified fails to make available to the Agent for the account of such Issuing Bank the amount of such Bank's Commitment Percentage of the amount of the drawing by no later than 12:00 noon (San Francisco time) on the Honor Date, then interest shall accrue on such Bank's obligation to make such payment, from the Honor Date to the date such Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in effect from time to time during such period. The Agent will promptly give notice of the occurrence of the Honor Date, but failure of the Agent to give any such notice on the Honor Date or in sufficient time to enable any Bank to effect such payment on such date shall not relieve such Bank from its obligations under this Section 3.03. (d) With respect to any unreimbursed drawing that is not converted into Loans consisting of Base Rate Committed Loans to the Company in whole or in part, because of the Company's failure to satisfy the conditions set forth in Section 5.02 or for any other reason, the Company shall be deemed to have incurred from the relevant Issuing Bank an L/C Borrowing in the amount of such drawing, which L/C Borrowing shall be due and payable on demand (together with interest) and shall bear interest at a rate per annum equal to the Base Rate plus 2% per annum, and each Bank's payment to such Issuing Bank pursuant to subsection 3.03(c) shall be 71 77 deemed payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Bank in satisfaction of its participation obligation under this Section 3.03. (e) Each Bank's obligation in accordance with this Agreement to make the Loans or L/C Advances, as contemplated by this Section 3.03, as a result of a drawing under a Letter of Credit, shall be absolute and unconditional and without recourse to the relevant Issuing Bank and shall not be affected by any circumstance, including (i) any set-off, counterclaim, recoupment, defense or other right which such Bank may have against such Issuing Bank, the Company or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default, an Event of Default or a Material Adverse Effect; or (iii) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing; provided, however, that each Bank's obligation to make Committed Loans under this Section 3.03 is subject to the conditions set forth in Section 5.02. 3.04 Repayment of Participations. (a) Upon (and only upon) receipt by the Agent for the account of an Issuing Bank of immediately available funds from the Company (i) in reimbursement of any payment made by such Issuing Bank under the Letter of Credit with respect to which any Bank has paid the Agent for the account of such Issuing Bank for such Bank's participation in the Letter of Credit pursuant to Section 3.03 or (ii) in payment of interest thereon, the Agent will pay to each Bank, in the same funds as those received by the Agent for the account of such Issuing Bank, the amount of such Bank's Commitment Percentage of such funds, and such Issuing Bank shall receive the amount of the Commitment Percentage of such funds of any Bank that did not so pay the Agent for the account of such Issuing Bank. (b) If the Agent or an Issuing Bank is required at any time to return to the Company, or to a trustee, receiver, liquidator, custodian, or any official in any Insolvency Proceeding, any portion of the payments made by the Company to the Agent for the account of such Issuing Bank pursuant to subsection 3.04(a) in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Bank shall, on demand of the Agent, forthwith return to the Agent or such Issuing Bank the amount of its Commitment Percentage of any amounts so returned by the Agent or such Issuing Bank plus interest thereon from the date such demand is made to the date such amounts are returned by such Bank to the Agent or such Issuing Bank, at 72 78 a rate per annum equal to the Federal Funds Rate in effect from time to time. 3.05 Role of the Issuing Bank. (a) Each Bank and the Company agree that, in paying any drawing under a Letter of Credit, each of the Issuing Banks shall not have any responsibility to obtain any document (other than any sight draft and certificates expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering any such document. (b) No Agent-Related Person, ABN, nor any of the respective correspondents, participants or assignees of the Issuing Banks shall be liable to any Bank for: (i) any action taken or omitted in connection herewith at the request or with the approval of the Banks (including the Majority Banks, as applicable); (ii) any action taken or omitted in the absence of gross negligence or willful misconduct; or (iii) the due execution, effectiveness, validity or enforceability of any L/C-Related Document. (c) The Company hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided, however, that this assumption is not intended to, and shall not, preclude the Company's pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. No Agent-Related Person, ABN, nor any of the respective correspondents, participants or assignees of an Issuing Bank, shall be liable or responsible for any of the matters described in clauses (i) through (vii) of Section 3.06; provided, however, anything in such clauses to the contrary notwithstanding, that the Company may have a claim against an Issuing Bank, and such Issuing Bank may be liable to the Company, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Company which the Company proves were caused by such Issuing Bank's willful misconduct or gross negligence or such Issuing Bank's willful or grossly negligent failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing: (i) each Issuing Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary; and (ii) such 73 79 Issuing Bank shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason. 3.06 Obligations Absolute. The obligations of the Company under this Agreement and any L/C-Related Document to reimburse each Issuing Bank for a drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing under a Letter of Credit converted into Loans shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and each such other L/C-Related Document under all circumstances, including the following: (i) any lack of validity or enforceability of this Agreement or any L/C-Related Document; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Company in respect of any Letter of Credit or any other amendment or waiver of or any consent to departure from all or any of the L/C-Related Documents; (iii) the existence of any claim, set-off, defense or other right that the Company may have at any time against any beneficiary or any transferee of any Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Issuing Banks or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the L/C-Related Documents or any unrelated transaction; (iv) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit; (v) any payment by an Issuing Bank under any Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of any Letter of Credit; or any payment made by such Issuing Bank under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any 74 80 transferee of any Letter of Credit, including any arising in connection with any Insolvency Proceeding; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guarantee, for all or any of the obligations of the Company in respect of any Letter of Credit; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Company or a guarantor. 3.07 Cash Collateral Pledge. Upon (i) the request of the Agent, (A) if an Issuing Bank has honored any full or partial drawing request on any Letter of Credit and such drawing has resulted in an L/C Borrowing hereunder, or (B) if, as of the Revolving Termination Date, any Letters of Credit may for any reason remain outstanding and partially or wholly undrawn, or (ii) the occurrence of the circumstances described in subsection 2.09 requiring the Company to Cash Collateralize Letters of Credit, then, the Company shall immediately Cash Collateralize the L/C Obligations in an amount equal to the L/C Obligations. The Company hereby grants to the Agent, for the benefit of the Agent, the Issuing Banks and the Banks, a security interest in all such cash and deposit account balances used to Cash Collateralize the Company's obligations hereunder. 3.08 Letter of Credit Fees. (a) The Company shall pay to the Agent for the account of each of the Banks a letter of credit fee with respect to the Letters of Credit on the average daily maximum amount available to be drawn of the outstanding Letters of Credit, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon Letters of Credit outstanding for that quarter as calculated by the Agent, equal to the Letter of Credit Rate. Such letter of credit fees shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter during which Letters of Credit are outstanding, commencing on the first such quarterly date to occur after the Closing Date, through the Revolving Termination Date (or such later date upon which the outstanding Letters of Credit shall expire), with the final payment to be made on the Revolving Termination Date (or such later expiration date). 75 81 (b) The Company shall pay to the Agent for the account of each Issuing Bank a letter of credit fronting fee per annum with respect to the outstanding Letters of Credit issued by such Issuing Bank equal to 0.125% per annum of the average daily maximum amount available to be drawn under such outstanding Letters of Credit, computed on a quarterly basis in arrears on the last Business Day of each calendar quarter based upon Letters of Credit issued by such Issuing Bank outstanding for that quarter as calculated by the Agent. Such fronting fees shall be due and payable quarterly in arrears on the last Business Day of each calendar quarter during which Letters of Credit are outstanding, commencing on the first such quarterly date to occur after the Closing Date, through the Revolving Termination Date (or such later date upon which the outstanding Letters of Credit shall expire), with the final payment to be made on the Revolving Termination Date (or such later expiration date). (c) The Company shall pay to each Issuing Bank from time to time on demand the normal issuance, presentation, amendment and other processing fees, and other standard costs and charges, of such Issuing Bank relating to letters of credit as from time to time in effect. 3.09 Uniform Customs and Practice. The Uniform Customs and Practice for Documentary Credits as published by the International Chamber of Commerce ("UCP") most recently at the time of issuance of any Letter of Credit shall (unless otherwise expressly provided in the Letters of Credit) apply to the Letters of Credit. ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY 4.01 Taxes. (a) Subject to subsection 4.01(g), any and all payments by the Company to each Bank or the Agent under this Agreement shall be made free and clear of, and without deduction or withholding for, any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding, in the case of each Bank and the Agent, such taxes (including income taxes or franchise taxes) as are imposed on or measured by each Bank's net income by the jurisdiction under the laws of which such Bank or the Agent, as the case may be, is organized or maintains a Lending Office or any political subdivision thereof (all such non-excluded taxes, 76 82 levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). (b) In addition, the Company shall pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies which arise from any payment made hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents (hereinafter referred to as "Other Taxes"). (c) Subject to subsection 4.01(g), the Company shall indemnify and hold harmless each Bank and the Agent for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 4.01) paid by the Bank or the Agent and any liability (including penalties, interest, additions to tax and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. Payment under this indemnification shall be made within 30 days from the date the Bank or the Agent makes written demand therefor. (d) If the Company shall be required by law to deduct or withhold any Taxes or Other Taxes from or in respect of any sum payable hereunder to any Bank or the Agent, then, subject to subsection 4.01(g): (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4.01) such Bank or the Agent, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made; (ii) the Company shall make such deductions; and (iii) the Company shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. (e) Within 30 days after the date of any payment by the Company of Taxes or Other Taxes, the Company shall furnish to the Agent the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Agent. (f) Each Bank which is a foreign person (i.e., a person other than a United States person for United States Federal income tax purposes) agrees that: 77 83 (i) it shall, no later than the Closing Date (or, in the case of a Bank which becomes a party hereto pursuant to Section 11.08 after the Closing Date, the date upon which the Bank becomes a party hereto) deliver to the Company through the Agent two accurate and complete signed originals of Internal Revenue Service Form 4224 or any successor thereto ("Form 4224"), or two accurate and complete signed originals of Internal Revenue Service Form 1001 or any successor thereto ("Form 1001"), as appropriate, in each case indicating that the Bank is on the date of delivery thereof entitled to receive payments of principal, interest and fees under this Agreement free from withholding of United States Federal income tax; (ii) if at any time the Bank makes any changes necessitating a new Form 4224 or Form 1001, it shall with reasonable promptness deliver to the Company through the Agent in replacement for, or in addition to, the forms previously delivered by it hereunder, two accurate and complete signed originals of Form 4224; or two accurate and complete signed originals of Form 1001, as appropriate, in each case indicating that the Bank is on the date of delivery thereof entitled to receive payments of principal, interest and fees under this Agreement free from withholding of United States Federal income tax; (iii) it shall, before or promptly after the occurrence of any event (including the passing of time but excluding any event mentioned in (ii) above) requiring a change in or renewal of the most recent Form 4224 or Form 1001 previously delivered by such Bank, deliver to the Company through the Agent two accurate and complete original signed copies of Form 4224 or Form 1001 in replacement for the forms previously delivered by the Bank; and (iv) it shall, promptly upon the Company's or the Agent's reasonable request to that effect, deliver to the Company or the Agent (as the case may be) such other forms or similar documentation as may be required from time to time by any applicable law, treaty, rule or regulation in order to establish such Bank's tax status for withholding purposes. (g) The Company will not be required to pay any additional amounts in respect of United States Federal income tax pursuant to subsection 4.01(d) to any Bank for the account of any Lending Office of such Bank: 78 84 (i) if the obligation to pay such additional amounts would not have arisen but for a failure by such Bank to comply with its obligations under subsection 4.01(f) in respect of such Lending Office; (ii) if such Bank shall have delivered to the Company a Form 4224 in respect of such Lending Office pursuant to subsection 4.01(f), and such Bank shall not at any time be entitled to exemption from deduction or withholding of United States Federal income tax in respect of payments by the Company hereunder for the account of such Lending Office for any reason other than a change in United States law or regulations or in the official interpretation of such law or regulations by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) after the date of delivery of such Form 4224; or (iii) if the Bank shall have delivered to the Company a Form 1001 in respect of such Lending Office pursuant to subsection 4.01(f), and such Bank shall not at any time be entitled to exemption from deduction or withholding of United States Federal income tax in respect of payments by the Company hereunder for the account of such Lending Office for any reason other than a change in United States law or regulations or any applicable tax treaty or regulations or in the official interpretation of any such law, treaty or regulations by any governmental authority charged with the interpretation or administration thereof (whether or not having the force of law) after the date of delivery of such Form 1001. (h) If, at any time, the Company requests any Bank to deliver any forms or other documentation pursuant to subsection 4.01(f)(iv), then the Company shall, on demand of such Bank through the Agent, reimburse such Bank for any costs and expenses (including Attorney Costs) reasonably incurred by such Bank in the preparation or delivery of such forms or other documentation. (i) If the Company is required to pay additional amounts to any Bank or the Agent pursuant to subsection 4.01(d), then such Bank shall use its reasonable best efforts (consistent with legal and regulatory restrictions) to change the jurisdiction of its Lending Office so as to eliminate any such additional payment by the Company which may thereafter accrue if such change in the judgment of such Bank is not otherwise disadvantageous to such Bank. 79 85 4.02 Illegality. (a) If any Bank shall determine that the introduction of any Requirement of Law, or any change in any Requirement of Law or in the interpretation or administration thereof, has made it unlawful, or that any central bank or other Governmental Authority has asserted that it is unlawful, for any Bank or its Lending Office to make Offshore Rate Loans, then, on notice thereof by the Bank to the Company through the Agent, the obligation of that Bank to make Offshore Rate Loans (including in respect of any LIBOR Bid Loan as to which the Company has accepted such Bank's Competitive Bid, but as to which the borrowing date thereof has not arrived) shall be suspended until the Bank shall have notified the Agent and the Company that the circumstances giving rise to such determination no longer exist. (b) If a Bank shall determine that it is unlawful to maintain any Offshore Rate Loan, the Company shall prepay in full all Offshore Rate Loans of that Bank then outstanding, together with interest accrued thereon, either on the last day of the Interest Period thereof if the Bank may lawfully continue to maintain such Offshore Rate Loans to such day, or immediately, if the Bank may not lawfully continue to maintain such Offshore Rate Loans, together with any amounts required to be paid in connection therewith pursuant to Section 4.04. If the Company is required to so prepay any Offshore Rate Committed Loan, then concurrently with such prepayment, the Company may borrow from the affected Bank, in the amount of such repayment, a Base Rate Committed Loan. (c) If the obligation of any Bank to make or maintain Offshore Rate Committed Loans has been so terminated or suspended, the Company may elect, by giving notice to the Bank through the Agent that all Loans which would otherwise be made by the Bank as Offshore Rate Committed Loans shall be instead Base Rate Committed Loans. (d) Before giving any notice to the Agent under this Section, the affected Bank shall designate a different Lending Office with respect to its Offshore Rate Loans if such designation will avoid the need for giving such notice or making such demand and will not, in the judgment of the Bank, be illegal or otherwise disadvantageous to the Bank. 4.03 Increased Costs and Reduction of Return. (a) If any Bank shall determine that, due to either (i) the introduction of or any change after the date 80 86 hereof (other than any change by way of imposition of or increase in reserve requirements included in the calculation of the CD Rate or the Offshore Rate or in respect of the assessment rate payable by any Bank to the FDIC for insuring U.S. deposits) in or in the interpretation of any law or regulation or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law), there shall be any increase in the cost to such Bank of agreeing to make or making, funding or maintaining any Offshore Rate Loans or CD Rate Committed Loans or participating in Letters of Credit, or, in the case of an Issuing Bank, any increase in the cost to such Issuing Bank of agreeing to issue, issuing or maintaining any Letter of Credit or of agreeing to make or making, funding or maintaining any unpaid drawing under any Letter of Credit, then the Company shall be liable for, and shall from time to time, upon demand therefor by such Bank (with a copy of such demand to the Agent), pay to the Agent for the account of such Bank, additional amounts as are sufficient to compensate such Bank for such increased costs. (b) If any Bank shall have determined that (i) the introduction of any Capital Adequacy Regulation after the date hereof, (ii) any change in any Capital Adequacy Regulation after the date hereof, (iii) any change in the interpretation or administration of any Capital Adequacy Regulation by any central bank or other Governmental Authority charged with the interpretation or administration thereof after the date hereof, or (iv) compliance by the Bank (or its Lending Office) or any corporation controlling the Bank, with any Capital Adequacy Regulation, affects or would affect the amount of capital required or expected to be maintained by the Bank or any corporation controlling the Bank and (taking into consideration such Bank's or such corporation's policies with respect to capital adequacy and such Bank's desired return on capital) determines that the amount of such capital is increased as a consequence of its Commitment, loans, credits or obligations under this Agreement, then, upon demand of such Bank (with a copy to the Agent), the Company shall upon demand pay to the Bank, from time to time as specified by the Bank, additional amounts sufficient to compensate the Bank for such increase. 4.04 Funding Losses. The Company agrees to reimburse each Bank and to hold each Bank harmless from any loss or expense which the Bank may sustain or incur as a consequence of: (a) the failure of the Company to make any payment or mandatory prepayment of principal of any Offshore Rate 81 87 Loan or CD Rate Committed Loan (including payments made after any acceleration thereof); (b) the failure of the Company to borrow, continue or convert a Loan after the Company has given (or is deemed to have given) a Notice of Borrowing or a Notice of Conversion/Continuation; (c) the failure of the Company to make any prepayment of any Committed Loan or Swingline Loan after the Company has given a notice in accordance with Section 2.08; (d) the prepayment (including pursuant to Section 2.08 or 2.09) of an Offshore Rate Loan, CD Rate Committed Loan or Absolute Rate Bid Loan on a day which is not the last day of the Interest Period with respect thereto; (e) the conversion pursuant to Section 2.04 of (i) any Offshore Rate Committed Loan to a CD Rate Committed Loan or a Base Rate Committed Loan, or (ii) any CD Rate Committed Loan to an Offshore Rate Committed Loan or Base Rate Committed Loan, on a day that is not the last day of the respective Interest Period; or (f) the failure of the Company to borrow any Bid Loan after having accepted a Competitive Bid therefor; including any such loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain its Offshore Rate Loans or CD Rate Committed Loans or Absolute Rate Bid Loan hereunder or from fees payable to terminate the deposits from which such funds were obtained. 4.05 Inability to Determine Rates. If the Majority Banks shall have determined that for any reason adequate and reasonable means do not exist for ascertaining the Offshore Rate, LIBO Rate or the CD Rate for any requested Interest Period with respect to a proposed Offshore Rate Loan or CD Rate Committed Loan or that the Offshore Rate, LIBO Rate or the CD Rate applicable pursuant to subsection 2.11(a) for any requested Interest Period with respect to a proposed Offshore Rate Loan or CD Rate Committed Loan does not adequately and fairly reflect the cost to such Banks of funding such Loan, the Agent will forthwith give notice of such determination to the Company and each Bank. Thereafter, the obligation of the Banks to make or maintain CD Rate Committed Loans or Offshore Rate Loans, as the case may be, hereunder shall be suspended until the Agent upon the instruction of the Majority Banks revokes such notice in writing. Upon receipt of such notice, the Company may 82 88 revoke any Notice of Borrowing or Notice of Conversion/Continuation then submitted by it. If the Company does not revoke such notice, the Banks shall make, convert or continue the Loans, as proposed by the Company, in the amount specified in the applicable notice submitted by the Company, but such Loans shall be made, converted or continued as Base Rate Committed Loans instead of CD Rate Committed Loans or Offshore Rate Committed Loans, as the case may be. 4.06 Certificate of Bank. Each Bank, if claiming reimbursement or compensation pursuant to this Article IV, shall deliver to the Company, a certificate setting forth in reasonable detail the amount payable to such Bank hereunder and such certificate shall be conclusive and binding on the Company in the absence of manifest error. 4.07 Survival. The covenants, agreements and obligations of the Company in this Article IV shall survive the payment of all other Obligations. ARTICLE V CONDITIONS PRECEDENT 5.01 Conditions of Initial Credit Extensions. The obligation of each Bank to make its initial Credit Extension hereunder is subject to the condition that the Agent shall have received on or before the Closing Date all of the following, in form and substance satisfactory to the Agent and, as to the items referenced in subsection 5.01(h) and (i), the Majority Banks, and in sufficient copies for each Bank: (a) Credit Agreement. This Agreement executed by the Company, the Agent, the Co-Agent and each of the Banks; (b) Resolutions; Incumbency. (i) Copies of the resolutions of the board of directors of the PC Advisory General Partner, as general partner of the PCMC General Partner, as general partner of the General Partner, as general partner of the Company, approving and authorizing the execution, delivery and performance by such entities on behalf of the Company of this Agreement and the other Loan Documents to be delivered hereunder, and authorizing the borrowing of the Loans, certified as of the Closing Date by the Secretary or an Assistant Secretary of the PC Advisory General Partner; and 83 89 (ii) A certificate of the Secretary or Assistant Secretary of the PC Advisory General Partner certifying the names and true signatures of the duly authorized officers of the General Partner, as general partner of the Company, authorized to execute, deliver and perform, as applicable, this Agreement on behalf of the Company, and all other Loan Documents to be delivered hereunder; (c) Articles of Incorporation; By-laws; Partnership Documents and Good Standing. Each of the following documents: (i) the partnership certificate of each of the Company, the General Partner, and the PCMC General Partner as in effect on the Closing Date, certified by the Secretary of State (or similar, applicable Governmental Authority) of the state of formation of such entities as of a recent date and by the Secretary or Assistant Secretary of the PC Advisory General Partner as of the Closing Date, and the partnership agreement of each of the Company, the General Partner, and the PCMC General Partner as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of the PC Advisory General Partner as of the Closing Date; (ii) the articles or certificate of incorporation of the PC Advisory General Partner as in effect on the Closing Date, certified by the Secretary of State (or similar, applicable Governmental Authority) of the state of incorporation of the PC Advisory General Partner as of a recent date and by the Secretary or Assistant Secretary of the PC Advisory General Partner as of the Closing Date, and the bylaws of the PC Advisory General Partner as in effect on the Closing Date, certified by the Secretary or Assistant Secretary of the PC Advisory General Partner as of the Closing Date; and (iii) a good standing certificate for each of the Company, the General Partner, the PCMC General Partner, and the PC Advisory General Partner from the Secretary of State (or similar, applicable Governmental Authority) of its state of incorporation or formation, as applicable and each state where the Company is qualified to do business as a foreign corporation or limited partnership, as applicable, as of a recent date, together with a bring down certificate by facsimile, dated the Closing Date, provided, however, that if the Company is unable to deliver on the Closing Date any 84 90 such bring down certificate (other than the bring down certificate from the state of incorporation or formation of such Person) because bring down certificates are not readily provided by the applicable Secretary of State, the Company shall not be required to deliver such bring down certificate on the Closing Date but instead shall deliver it to the Agent within five days of the Closing Date; (d) Legal Opinions. An opinion of (i) James A. Kraft, Vice President, Law and Corporate Affairs of the Company and (ii) Perkins Coie, counsel to the Company, each addressed to the Agent and the Banks and substantially in the form of Exhibits C-1 and C-2, respectively; (e) Payment of Fees. The Company shall have paid all accrued and unpaid fees, costs and expenses to the extent then due and payable on the Closing Date, together with Attorney Costs of BofA to the extent invoiced prior to or on the Closing Date, together with such additional amounts of Attorney Costs as shall constitute BofA's reasonable estimate of Attorney Costs incurred or to be incurred through the closing proceedings, provided that such estimate shall not thereafter preclude final settling of accounts between the Company and BofA; including any such costs, fees and expenses arising under or referenced in Sections 2.13, 4.01 and 11.04; (f) Certificate. A certificate signed by a Responsible Officer, dated as of the Closing Date, stating that: (i) the representations and warranties contained in Article VI are true and correct on and as of such date, as though made on and as of such date; (ii) no Default or Event of Default exists or would result from the initial Credit Extension; and (iii) there has occurred since December 31, 1993, no event or circumstance that has resulted or could reasonably be expected to result in a Material Adverse Effect; (g) Financial Statements. A copy certified by the chief financial officer of the Company of the financial statements of the Company and its Subsidiaries referred to in Section 6.11; (h) Credit Agreements. Copies certified by a Responsible Officer of the Note Agreements, as amended, the 85 91 Mortgage Note Agreements, as amended, and the 1994 Senior Note Agreements; (i) Other Documents. Such other approvals, opinions, documents or materials as the Agent or the Majority Banks may request; (j) Facility A Credit Agreement. All conditions precedent to the initial extension of credit under the Facility A Credit Agreement shall have occurred prior to or simultaneously with the Closing; and (k) Termination of Existing ABN Credit Facilities. On or before the Closing Date, the Company shall have terminated (i) that certain $15,000,000 Revolving Credit Agreement dated as of May 1, 1993 between the Company, ABN, as agent, and the banks party thereto, as amended, and (ii) that certain $20,000,000 Revolving Credit Agreement dated as of May 1, 1993 between the Facilities Subsidiary, ABN, as agent, and the banks party thereto, as amended. 5.02 Conditions to All Credit Extensions. The obligation of each Bank and the Swingline Bank to make any Loans to be made by it, or any Bid Loan as to which the Company has accepted the relevant Competitive Bid (including its initial Loan) or to continue or convert any Committed Loan pursuant to Section 2.04, and the obligation of each Issuing Bank to Issue any Letter of Credit (including the initial Letter of Credit) is subject to the satisfaction of the following conditions precedent on the relevant date of Borrowing, Conversion/Continuation Date or Issuance Date: (a) Notice, Application. As to any Committed Loan or Swingline Loan, the Agent shall have received (with, in the case of the initial Loan only, a copy for each Bank) a Notice of Borrowing or a Notice of Conversion/Continuation, as applicable, or in the case of any Issuance of any Letter of Credit, the relevant Issuing Bank and the Agent shall have received an L/C Application or L/C Amendment Application, as required under Section 3.02; (b) Continuation of Representations and Warranties. The representations and warranties made by the Company contained in Article VI shall be true and correct on and as of such date of Borrowing or Conversion/Continuation Date with the same effect as if made on and as of such date of Borrowing or Conversion/Continuation Date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they shall be true and correct as of such earlier date); and 86 92 (c) No Existing Default. No Default or Event of Default shall exist or shall result from such Credit Extension. Each Notice of Borrowing, Notice of Conversion/Continuation, Competitive Bid Request and L/C Application or L/C Amendment Application submitted by the Company hereunder shall constitute a representation and warranty by the Company hereunder, as of the date of each such notice, request or application and as of the date of each Borrowing, each Conversion/Continuation Date, or Issuance Date, as applicable, that the conditions in Section 5.02 are satisfied. ARTICLE VI REPRESENTATIONS AND WARRANTIES The Company represents and warrants to the Agent and each Bank that: 6.01 Corporate Existence and Power. (a) The Company, each of its Subsidiaries, and each of the Partner Entities: (i) is a limited partnership or corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; (ii) is duly qualified as a foreign partnership or corporation, as applicable, and licensed and in good standing, under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification or license; and (iii) is in compliance with all Requirements of Law except where failure to so comply would not reasonably be expected to have a Material Adverse Effect. (b) The Company and each of its Subsidiaries has the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets and carry on its business; and the Company and each of the Partner Entities has the power and authority and all governmental licenses, authorizations, consents and approvals to execute, deliver, and perform its obligations under, the Loan Documents. 6.02 Authorization; No Contravention. The execution, delivery and performance by the Company of this Agreement, 87 93 and any other Loan Document to which the Company is party, have been duly authorized by all necessary corporate and partnership action on behalf of the PC Advisory General Partner, as general partner of the PCMC General Partner, as general partner of the General Partner, as general partner of the Company, and by all necessary partnership action on behalf of the Company, and do not and will not: (a) contravene the terms of the Organization Documents of any of the Company or the Partner Entities; (b) conflict with or result in any breach or contravention of, or the creation of any Lien under, any document evidencing any Contractual Obligation to which such Person is a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its Property is subject; or (c) violate any Requirement of Law. 6.03 Governmental Authorization. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required in connection with the execution, delivery or performance by, or enforcement against, the Company, the Partner Entities or any of their Subsidiaries of the Agreement or any other Loan Document. 6.04 Binding Effect. This Agreement and each other Loan Document to which the Company is a party constitute the legal, valid and binding obligations of the Company and the Partner Entities, enforceable against the Company and the Partner Entities in accordance with their respective terms except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditor's rights generally or by equitable principles relating to enforceability. 6.05 Litigation. There are no actions, suits, proceedings, claims or disputes pending, or to the Company's Knowledge and the knowledge of the Partner Entities, threatened or contemplated, at law, in equity, in arbitration or before any Governmental Authority, against the Company, the Partner Entities or their Subsidiaries or any of their respective Properties which: (a) purport to affect or pertain to this Agreement or any other Loan Document, or any of the transactions contemplated hereby or thereby; or (b) have a reasonable probability of success on the merits and which, if determined adversely to the 88 94 Company, the Partner Entities or their Subsidiaries, would reasonably be expected to have a Material Adverse Effect. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any other Loan Document, or directing that the transactions provided for herein or therein not be consummated as herein or therein provided. 6.06 No Default. No Default or Event of Default exists or would result from the incurring of any Obligations by the Company. Neither the Company, the Partner Entities, nor any of their Subsidiaries is in default under or with respect to any Contractual Obligation in any respect which, individually or together with all such defaults, would reasonably be expected to have a Material Adverse Effect or that would, if such default had occurred after the Closing date, create an Event of Default under subsection 9.01(f). 6.07 ERISA Compliance. (a) Schedule 6.07 lists all Plans and separately identifies Plans intended to be Qualified Plans and Multiemployer Plans. All written descriptions thereof provided to the Agent are true and complete in all material respects. (b) Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other Federal or state law, including all requirements under the Code or ERISA for filing reports (which are true and correct in all material respects as of the date filed), and benefits have been paid in accordance with the provisions of the Plan. (c) Except as specifically disclosed in Schedule 6.07, each Qualified Plan has been determined by the IRS to qualify under Section 401 of the Code, and the trusts created thereunder have been determined to be exempt from tax under the provisions of Section 501 of the Code, and to the Company's Knowledge nothing has occurred which would cause the loss of such qualification or tax-exempt status. (d) Except as specifically disclosed in Schedule 6.07, there is no outstanding liability under Title IV of ERISA with respect to any Plan maintained or sponsored by the Company or any ERISA Affiliate, nor with respect to any Plan to which the Company or any ERISA Affiliate contributes or is obligated to contribute. 89 95 (e) Except as specifically disclosed in Schedule 6.07, no Plan subject to Title IV of ERISA has any Unfunded Pension Liability. (f) Except as specifically disclosed in Schedule 6.07, no member of the Controlled Group has ever represented, promised or contracted (whether in oral or written form) to any current or former employee (either individually or to employees as a group) that such current or former employee(s) would be provided, at any cost to any member of the Controlled Group, with life insurance or employee welfare plan benefits (within the meaning of section 3(1) of ERISA) following retirement or termination of employment. To the extent that any member of the Controlled Group has made any such representation, promise or contract, such member has expressly reserved the right to amend or terminate such life insurance or employee welfare plan benefits with respect to claims not yet incurred. (g) Members of the Controlled Group have complied in all material respects with the notice and continuation coverage requirements of Section 4980B of the Code. (h) Except as specifically disclosed in Schedule 6.07, no ERISA Event has occurred or, to the Company's Knowledge is reasonably expected to occur with respect to any Plan. (i) There are no pending or, to the Company's Knowledge, threatened claims, actions or lawsuits, other than routine claims for benefits in the usual and ordinary course, asserted or instituted against (i) any Plan maintained or sponsored by the Company or its assets, (ii) any member of the Controlled Group with respect to any Qualified Plan, or (iii) any fiduciary with respect to any Plan for which the Company may be directly or indirectly liable, through indemnification obligations or otherwise. This representation is not made with respect to any Multiemployer Plan. (j) Except as specifically disclosed in Schedule 6.07, neither the Company nor any ERISA Affiliate has incurred nor, to the Company's Knowledge, reasonably expects to incur (i) any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan or (ii) any liability under Title IV of ERISA (other than premiums due and not delinquent under Section 4007 of ERISA) with respect to a Plan. 90 96 (k) Except as specifically disclosed in Schedule 6.07, neither the Company nor any ERISA Affiliate has transferred any Unfunded Pension Liability to a Person other than the Company or an ERISA Affiliate or otherwise engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA. (l) The Company has not engaged, directly or indirectly, in a non-exempt prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) in connection with any Plan which would reasonably be expected to have a Material Adverse Effect. 6.08 Use of Proceeds; Margin Regulations. The proceeds of the Loans are intended to be and shall be used solely for the purposes set forth in and permitted by Section 7.11, and are intended to be and shall be used in compliance with Section 8.07. Neither the Company, the Partner Entities, nor any of their Subsidiaries is generally engaged in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock. 6.09 Title to Properties. The Company and each of its Subsidiaries have good record and marketable title in fee simple to, or valid leasehold interests in, all real Property necessary or used in the ordinary conduct of their respective businesses, except for such defects in title as would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. As of the Closing Date, the Property of the Company and its Subsidiaries is subject to no Liens, other than Permitted Liens. 6.10 Taxes. The Company, the Partner Entities and their Subsidiaries have filed all Federal and other material tax returns and reports required to be filed, and have paid all Federal and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their Properties, income or assets otherwise due and payable, except those which are being contested in good faith by appropriate proceedings and for which adequate reserves have been provided in accordance with GAAP and no Notice of Lien has been filed or recorded. There is no proposed tax assessment against the Company, the Partner Entities or any of their Subsidiaries which would, if the assessment were made, have a Material Adverse Effect. 6.11 Financial Condition. (a) The audited combined financial statements of financial condition of the Company and its Subsidiaries 91 97 dated December 31, 1993, and the related combined statements of income and combined statement of cash flows for the fiscal year ended on that date: (i) were prepared in accordance with GAAP consistently applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii) fairly present the financial condition of the Company and its Subsidiaries as of the date thereof and results of operations for the period covered thereby; and (iii) show all material Indebtedness and other liabilities, direct or contingent of the Company and its combined Subsidiaries as of the date thereof, including liabilities for taxes and material commitments. (b) Since December 31, 1993, there has been no Material Adverse Effect. 6.12 Environmental Matters. (a) Except as specifically disclosed in Schedule 6.12, the on-going operations of the Company, the Partner Entities and each of their Subsidiaries comply in all respects with all Environmental Laws, except such non-compliance which would not (if enforced in accordance with applicable law) result in liability in excess of $25,000,000 in the aggregate. (b) Except as specifically disclosed in Schedule 6.12, the Company, the Partner Entities and each of their Subsidiaries have obtained all licenses, permits, authorizations and registrations required under any Environmental Law ("Environmental Permits") and necessary for their respective ordinary course operations, all such Environmental Permits are in good standing, and the Company, the Partner Entities and each of their Subsidiaries are in compliance with all terms and conditions of such Environmental Permits except where the failure to obtain, maintain in good standing or comply with such Environmental Permits would not reasonably be expected to have a Material Adverse Effect. (c) Except as specifically disclosed in Schedule 6.12, none of the Company, the Partner Entities, any of their Subsidiaries or any of their respective present Property or operations, is subject to any outstanding written order from or agreement with any Governmental Authority, nor subject to any judicial or docketed administrative proceeding, respecting any Environmental Law, 92 98 Environmental Claim or Hazardous Material arising out of a violation or alleged violation of any Environmental Law. (d) Except as specifically disclosed in Schedule 6.12, there are no Hazardous Materials or other conditions or circumstances existing with respect to any Property, or arising from operations prior to the Closing Date, of the Company, the Partner Entities, or any of their Subsidiaries that would reasonably be expected to give rise to Environmental Claims with a potential liability of the Company and its Subsidiaries in excess of $25,000,000 in the aggregate for any such condition, circumstance or Property. In addition, (i) neither the Company, the Partner Entities nor any of their Subsidiaries has any underground storage tanks (x) that are not properly registered or permitted under applicable Environmental Laws, or (y) that are leaking or disposing of Hazardous Materials off-site, and (ii) the Company, the Partner Entities and their Subsidiaries have notified all of their employees of the existence, if any, of any health hazard arising from the conditions of their employment and have met all notification requirements under Title III of CERCLA and all other Environmental Laws. 6.13 Regulated Entities. None of the Company, the Partner Entities, any Person controlling the Company or the Partner Entities, or any Subsidiary of the Company or the Partner Entities, is (a) an "Investment Company" within the meaning of the Investment Company Act of 1940; or (b) subject to regulation under the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code, or any other Federal or state statute or regulation limiting its ability to incur Indebtedness. 6.14 No Burdensome Restrictions. Neither the Company nor any of its Subsidiaries is a party to or bound by any Contractual Obligation, or subject to any charter or corporate restriction, or any Requirement of Law, which would reasonably be expected to have a Material Adverse Effect. 6.15 Solvency. The Company, the General Partner, the Facilities Subsidiary, and the Restricted Subsidiaries are each Solvent. 6.16 Labor Relations. There are no material strikes, lockouts or other labor disputes against the Company or any of its Subsidiaries, or, to the Company's Knowledge, threatened against or affecting the Company or any of its Subsidiaries, and no significant unfair labor practice complaint is pending against the Company or any of its 93 99 Subsidiaries or, to the Company's Knowledge, threatened against any of them before any Governmental Authority. 6.17 Copyrights, Patents, Trademarks and Licenses, Etc. The Company or its Subsidiaries own or are licensed or otherwise have the right to use all of the patents, trademarks, service marks, trade names, copyrights, contractual franchises, authorizations and other rights that are reasonably necessary for the operation of their respective businesses, without conflict with the rights of any other Person. To the Company's Knowledge, no slogan or other advertising device, product, process, method, substance, part or other material now employed, or now contemplated to be employed, by the Company or any of its Subsidiaries infringes upon any rights held by any other Person; except as specifically disclosed in Schedule 6.05, no claim or litigation regarding any of the foregoing is pending or, to the Company's Knowledge, threatened, and no patent, invention, device, application, principle or any statute, law, rule, regulation, standard or code is pending or, to the Company's Knowledge, proposed, which, in either case, would reasonably be expected to have a Material Adverse Effect. 6.18 Subsidiaries. The Company has no Subsidiaries other than those specifically disclosed in part (a) of Schedule 6.18 hereto and has no equity investments in any other corporation or entity other than those specifically disclosed in part (b) of Schedule 6.18. Except as disclosed in part (a) of Schedule 6.18, the Company owns 100% of the ownership interests of its Subsidiaries. The Facilities Subsidiary has issued no rights, warrants or options to acquire or instruments convertible into or exchangeable for any equity interest in the Facilities Subsidiary. 6.19 Partnership Interests. The only general partner of the Company is the General Partner, which on the Closing Date will own a 2% interest in the Company. The only general partners of the General Partner are (i) the PCMC General Partner, which is the managing general partner of the General Partner, and (ii) Sub Advisory Corp. I, a Delaware corporation. The only general partner of the PCMC General Partner is the PC Advisory General Partner. 6.20 Broker's, Transaction Fees. Neither the Company nor any of its Subsidiaries has any obligation to any Person in respect of any finder's, broker's or investment banker's fee in connection with the transactions contemplated hereby. 6.21 Insurance. The Properties of the Company and its Subsidiaries are insured with financially sound and reputable insurance companies not Affiliates of the Company, 94 100 in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar Properties in localities where the Company or such Subsidiary operates. 6.22 Timber Harvest. The Company and its Restricted Subsidiaries harvested 1,663 MMBF of its fee Timber during the calendar years 1989 (including harvest by the Company's predecessor prior to closing under the Note Agreements) through 1991, 469 MMBF of its fee Timber during calendar year 1992 and 458 MMBF of its fee Timber during calendar year 1993. 6.23 Full Disclosure. None of the representations or warranties made by the Company, the General Partners, or any of their Subsidiaries in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in each exhibit, report, written statement or certificate furnished by or on behalf of the Company or any of its Subsidiaries in connection with the Loan Documents, contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered. ARTICLE VII AFFIRMATIVE COVENANTS The Company covenants and agrees that, so long as any Bank shall have any Commitment hereunder, or the Swingline Bank shall have any Swingline Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit remains outstanding, unless the Majority Banks waive compliance in writing: 7.01 Financial Statements. The Company shall deliver to the Agent in form and detail satisfactory to the Agent and the Majority Banks, with sufficient copies for each Bank: (a) as soon as available, but not later than 90 days after the end of each fiscal year, a copy of the audited combined balance sheet of the Company as at the end of such year and the related combined statements of income and statements of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of Coopers & Lybrand, or another nationally-recognized 95 101 independent public accounting firm ("Independent Auditor") which report shall state that such combined financial statements present fairly the financial position for the periods indicated in conformity with GAAP applied on a basis consistent with prior years. Such opinion shall not be qualified or limited because of a restricted or limited examination by Independent Auditor of any material portion of the Company's or any Subsidiary's records and shall be delivered to the Agent pursuant to a reliance agreement in favor of the Agent and Banks by such Independent Auditor in form and substance satisfactory to the Agent and the Majority Banks; (b) as soon as available, but not later than 120 days after the end of each fiscal year, a copy of an audited combining balance sheet of the Company and each of its Subsidiaries as at the end of such fiscal year and the related combining statements of income and statement of cash flows for such fiscal year, all in reasonable detail certified by an appropriate Responsible Officer as having been used in connection with the preparation of the financial statements referred to in subsection (a) of this Section 7.01; (c) as soon as available, but not later than 45 days after the end of each fiscal quarter of each year, a copy of the unaudited combined balance sheet of the Company and its combined Subsidiaries as of the end of such quarter and the related combined statements of income and statement of cash flows for the period commencing on the first day and ending on the last day of such quarter, and certified by an appropriate Responsible Officer as being complete and correct and fairly presenting, in accordance with GAAP, the financial position and the results of operations of the Company and the Subsidiaries; (d) as soon as available, but not later than 45 days after the end of each fiscal quarter of each year, a copy of the unaudited combining balance sheets of the Company and each of its Subsidiaries, and the related combining statements of income and statement of cash flows for such quarter, all certified by an appropriate Responsible Officer of the Company as having been used in connection with the preparation of the financial statements referred to in subsection (c) of this Section 7.01; (e) as soon as available, but not later than September 30 of each year, a business plan which shall include five years' pro-forma projections of the Company accompanied by appropriate assumptions on which such projections are based. 96 102 7.02 Certificates; Other Information. The Company shall furnish to the Agent, with sufficient copies for each Bank: (a) concurrently with the delivery of the financial statements referred to in subsection 7.01(a) above, a certificate of the Independent Auditor stating that in making the examination necessary therefor no knowledge was obtained of any Default or Event of Default, except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in subsections 7.01(a) through (d) above, a certificate of a Responsible Officer substantially in the form of Exhibit D (i) stating that, to the best of such officer's knowledge, the Company, during such period, has observed and performed all of its covenants and other agreements, and satisfied every condition contained in this Agreement to be observed, performed or satisfied by it, and that such officer has obtained no knowledge of any Default or Event of Default except as specified (by applicable subsection reference) in such certificate, (ii) stating the Applicable Margin to be in effect for the immediately following fiscal quarter, and (iii) showing in detail the calculations supporting such statement in respect of subsection 8.02(h), Section 8.03, subsection 8.04(i), Section 8.05 and Section 8.13, and supporting the computation of the Fixed Charge Coverage Ratio; (c) promptly after the same are sent, copies of all financial statements and reports which the Company sends to its limited partners (excluding the Form K-1s); and promptly after the same are filed, copies of all financial statements and regular, periodical or special reports which the Company may make to, or file with, the SEC or any successor or similar Governmental Authority; and (d) promptly, such additional business, financial, corporate affairs and other information as the Agent, at the request of any Bank, may from time to time reasonably request. 7.03 Notices. The Company shall promptly upon becoming aware thereof notify the Agent and each Bank: (a) (i) of the occurrence of any Default or Event of Default, (ii) of the occurrence or existence of any event or circumstance that foreseeably will become a Default or Event of Default, and (iii) of the occurrence or existence of any event or circumstance that would cause the condition to Credit Extension set forth in subsection 5.02(b) not to 97 103 be satisfied if a Credit Extension were requested on or after the date of such event or circumstance; (b) of (i) any breach or non-performance of, or any default under, any Contractual Obligation of the Company, the Partner Entities, or any of their Subsidiaries which could result in a Material Adverse Effect; and (ii) any dispute, litigation, investigation, proceeding or suspension which may exist at any time between the Company, the Partner Entities, or any of their Subsidiaries and any Governmental Authority which, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; (c) of the commencement of, or any material development in, any litigation or proceeding affecting the Company or any Subsidiary (i) which, if adversely determined, would reasonably be expected to have a Material Adverse Effect, or (ii) in which the relief sought is an injunction or other stay of the performance of this Agreement or any Loan Document; (d) upon, but in no event later than 10 days after, becoming aware of (i) any and all enforcement, cleanup, removal or other governmental or regulatory actions instituted, completed or threatened against the Company or any of its Subsidiaries or any of their respective Properties pursuant to any applicable Environmental Laws where, if adversely determined, the potential liability or expense relating thereto could exceed $25,000,000 or the potential remedy with respect thereto would otherwise reasonably be expected to have a Material Adverse Effect, (ii) all other Environmental Claims which allege liability in excess of $25,000,000 or have the possibility of remedies that would, if adversely determined, otherwise reasonably be expected to constitute a Material Adverse Effect, and (iii) any environmental or similar condition on any real property adjoining or in the vicinity of the property of the Company or any Subsidiary that would reasonably be anticipated to cause such property or any part thereof to be subject to any restrictions on the ownership, occupancy, transferability or use of such property under any Environmental Laws where the net book value of such property exceeds $25,000,000; (e) of any other litigation or proceeding affecting the Company or any of its Subsidiaries which the Company would be required to report to the SEC pursuant to the Exchange Act, within four days after reporting the same to the SEC; 98 104 (f) of any of the following ERISA events affecting the Company or any member of its Controlled Group (but in no event more than 10 days after such event), together with a copy of any notice with respect to such event that may be required to be filed with a Governmental Authority and any notice delivered by a Governmental Authority to the Company or any member or its Controlled Group with respect to such event: (i) an ERISA Event; (ii) the adoption of any new Plan that is subject to Title IV of ERISA or section 412 of the Code by any member of the Controlled Group; (iii) the adoption of any amendment to a Plan that is subject to Title IV of ERISA or section 412 of the Code, if such amendment results in a material increase in benefits or unfunded liabilities; or (iv) the commencement of contributions by any member of the Controlled Group to any Plan that is subject to Title IV of ERISA or section 412 of the Code; (g) any Material Adverse Effect subsequent to the date of the most recent audited financial statements of the Company delivered to the Banks pursuant to subsection 7.01(a) or 5.01(g); and (h) of any material labor controversy resulting in or threatening to result in any strike, work stoppage, boycott, shutdown or other labor disruption against or involving the Company or any of its Subsidiaries. Each notice pursuant to this Section shall be accompanied by a written statement by a Responsible Officer of the Company setting forth details of the occurrence referred to therein, and stating what action the Company proposes to take with respect thereto and at what time. Each notice under subsection 7.03(a) shall describe with particularity any and all clauses or provisions of this Agreement or other Loan Document that have been breached or violated. 7.04 Preservation of Corporate Existence, Etc. The Company shall, except as permitted by Section 8.02, and shall cause each of its Subsidiaries to: (a) preserve and maintain in full force and effect its partnership or corporate existence and good standing under the laws of its state or jurisdiction of formation or incorporation; 99 105 (b) preserve and maintain in full force and effect all rights, privileges, qualifications, permits, licenses and franchises necessary in the normal conduct of its business; (c) use its reasonable efforts, in the Ordinary Course of Business, to preserve its business organization and preserve the goodwill and business of the customers, suppliers and others having material business relations with it; and (d) preserve or renew all of its registered trademarks, trade names and service marks, the non-preservation of which would reasonably be expected to have a Material Adverse Effect. 7.05 Maintenance of Property. The Company shall maintain, and shall cause each of its Subsidiaries to maintain, and preserve all its Property which is used or useful in its business in good working order and condition, ordinary wear and tear excepted. 7.06 Insurance. The Company shall maintain, and shall cause each of its Subsidiaries to maintain, with financially sound and reputable independent insurers, insurance with respect to its Properties and business against loss or damage of the kinds customarily insured against by Persons engaged in the same or similar business, of such types and in such amounts as are customarily carried under similar circumstances by such other Persons. 7.07 Payment of Obligations. The Company shall, and shall cause its Subsidiaries to, pay and discharge as the same shall become due and payable, all their respective obligations and liabilities, including: (a) all tax liabilities, assessments and governmental charges or levies upon it or its properties or assets, unless the same are being contested in good faith by appropriate proceedings and adequate reserves in accordance with GAAP are being maintained by the Company or such Subsidiary; and (b) all Indebtedness, as and when due and payable, but subject to any subordination provisions contained in any instrument or agreement evidencing such Indebtedness. 7.08 Compliance with Laws. The Company shall comply, and shall cause each of its Subsidiaries to comply with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal 100 106 Fair Labor Standards Act) the non-compliance with which would reasonably be expected to have a Material Adverse Effect, except such as may be contested in good faith or as to which a bona fide dispute may exist. 7.09 Inspection of Property and Books and Records. The Company shall maintain and shall cause each of its Subsidiaries to maintain proper books of record and account, in which full, true and correct entries in conformity with GAAP consistently applied shall be made of all financial transactions and matters involving the assets and business of the Company and such Subsidiaries. The Company shall permit, and shall cause each of its Subsidiaries to permit, representatives and independent contractors of the Agent or any Bank to visit and inspect any of their respective Properties, to examine their respective corporate, financial and operating records, and make copies thereof or abstracts therefrom, and to discuss their respective affairs, finances and accounts with their respective directors, officers, and independent public accountants, all at the expense of the Company and at such reasonable times during normal business hours and as often as may be reasonably desired, upon reasonable advance notice to the Company; provided, however, when an Event of Default exists the Agent or any Bank may do any of the foregoing at the expense of the Company such Properties at any time during normal business hours and without advance notice. 7.10 Environmental Laws. (a) The Company shall, and shall cause each of its Subsidiaries to, conduct its operations and keep and maintain its Property in compliance with all Environmental Laws, the non-compliance with which would reasonably be expected to have a Material Adverse Effect. (b) Upon the written request of the Agent or any Bank, the Company shall submit and cause each of its Subsidiaries to submit, to the Agent and with sufficient copies for each Bank, at the Company's sole cost and expense, at reasonable intervals, a report providing an update of the status of any environmental, health or safety compliance, hazard or liability issue identified in any notice or report required pursuant to subsection 7.03(d), that could, individually or in the aggregate, result in liability in excess of $25,000,000. 7.11 Use of Proceeds. The Company shall use the proceeds of the Loans solely as follows: (a) to refinance existing Indebtedness, and (b) for working capital and other general corporate purposes not in contravention of any Requirement of Law or of any Loan Document. 101 107 7.12 Solvency. The Company shall at all times be, and shall cause each of its Restricted Subsidiaries to be, Solvent. ARTICLE VIII NEGATIVE COVENANTS The Company hereby covenants and agrees that, so long as any Bank shall have any Commitment hereunder, or the Swingline Bank shall have any Swingline Commitment hereunder, or any Loan or other Obligation shall remain unpaid or unsatisfied, or any Letter of Credit shall remain outstanding, unless the Majority Banks waive compliance in writing: 8.01 Limitation on Liens. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer to exist any Lien upon or with respect to any part of its Property, whether now owned or hereafter acquired, other than the following ("Permitted Liens"): (a) Liens for taxes, fees, assessments or other governmental charges which are not delinquent or remain payable without penalty, or to the extent that non-payment thereof is permitted by Section 7.07, provided that no Notice of Lien has been filed or recorded under the Code; (b) carriers', warehousemen's, mechanics', landlords', materialmen's, repairmen's or other similar Liens arising in the Ordinary Course of Business which are not delinquent or remain payable without penalty or unless such lien is being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and if such accrual or other appropriate provision, if any, as shall be required by GAAP shall have been made therefor; (c) Liens (other than any Lien imposed by ERISA) incurred or deposits made incidental to the conduct of its business or the ownership of its Property including (i) pledges or deposits in connection with worker's compensation, unemployment insurance and other social security legislation, (ii) deposits to secure insurance, the performance of bids, tenders, contracts, leases, licenses, franchises and statutory obligations, each in the Ordinary Course of Business, and (iii) other obligations which were not incurred or made in connection with the borrowing of money, the obtaining of advances or credit or the payment of 102 108 the deferred purchase price of property and which do not in the aggregate materially detract from the value of its Property or materially impair the use of such Property in the operation of its business; (d) any attachment or judgment Lien, unless the judgment it secures shall not, within 45 days after the entry thereof, have been discharged or execution thereof stayed pending appeal, or shall not have been discharged within 45 days after expiration of any such stay; (e) easements, rights-of-way, restrictions and other similar charges or encumbrances incurred in the Ordinary Course of Business which, in each case, and in the aggregate, do not materially interfere with the ordinary conduct of the business of the Company or any Restricted Subsidiary; (f) Liens on Property of any Restricted Subsidiary securing obligations of such Restricted Subsidiary owing to the Company or another Restricted Subsidiary; (g) any Lien existing prior to the time of acquisition upon any Property acquired by the Company or any Restricted Subsidiary after the Closing Date through purchase, merger or consolidation or otherwise, whether or not assumed by the Company or such Subsidiary, or placed upon Property at (or within 30 days after) the later of the time of acquisition or the completion of construction by the Company or any Restricted Subsidiary to secure all or a portion of (or to secure Indebtedness incurred to pay all or a portion of) the purchase price thereof, provided that (i) any such Lien does not encumber any other property of the Company or such Restricted Subsidiary, (ii) the Indebtedness secured by such Lien is not prohibited by the provisions of Section 8.05, (iii) the aggregate principal amount of the Indebtedness secured by such Lien at no time exceeds 80% of the cost to the Company and its Restricted Subsidiaries of the Property subject to such Lien, and (iv) the aggregate outstanding principal amount (without duplication) of the Indebtedness secured by all such Liens and the Indebtedness of all Restricted Subsidiaries at no time (a) from May 31, 1994 to May 31, 1999, exceeds $25,000,000, and (b) from May 31, 1999 to the Maturity Date, exceeds $50,000,000; (h) Liens on the accounts, rights to payment for goods sold or services rendered that are evidenced by chattel paper or instruments, and rights against persons who guarantee payment or collection of the foregoing, and on the Company's inventory and on the proceeds (as defined in the 103 109 UCC in any applicable jurisdiction) thereof securing the obligations of the Company under the Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof) permitted by subsection 8.05(d); (i) any Lien existing on the Property of the Company or its Restricted Subsidiaries on the Closing Date and set forth in Schedule 8.01 securing Indebtedness outstanding on such date; and (j) any Lien renewing, extending, refunding or refinancing any Lien permitted by subsection (i) of this Section, provided that the principal amount secured is not increased and the Lien is not extended to other Property and further provided, that the maturity of the Lien is not extended beyond the maturity date of the Indebtedness which, at the time the Lien was initially placed upon the Property secured thereby, Responsible Representatives declare would have been the maturity date of Indebtedness customary for the type of Property being financed. 8.02 Merger; Disposition of Assets. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, merge or consolidate with any Person or, directly or indirectly, sell, lease or transfer or otherwise dispose of (whether in one or a series of transactions) any Property (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except that: (a) any Restricted Subsidiary of the Company may merge with the Company (provided that the Company shall be the continuing or surviving corporation) or with any one or more other Restricted Subsidiaries; (b) any Restricted Subsidiary of the Company may sell, lease, transfer or otherwise dispose of any of its assets to the Company or a Restricted Subsidiary; (c) any Restricted Subsidiary may merge or consolidate with any other entity, provided that, immediately after giving effect to such merger or consolidation (i) the continuing or surviving entity of such merger or consolidation shall constitute a Restricted Subsidiary, (ii) no Event of Default or Material Default shall exist, and (iii) following the merger, the entity surviving the merger is not engaged in any business other than a Permitted Business; 104 110 (d) the Company may merge or consolidate with, or sell or dispose of all or substantially all of its assets to, any other entity, provided that (i) either (x) the Company shall be the continuing or surviving entity (in the case of such merger) or (y) the successor or acquiring entity shall be a solvent corporation or partnership organized under the laws of any state of the United States and shall expressly assume in writing all of the obligations of the Company under this Agreement, the Facility A Credit Agreement, the Note Agreements, the 1994 Senior Note Agreements and the Mortgage Note Agreements, including all covenants herein and therein contained, and such successor or acquiring corporation or partnership shall succeed to and be substituted for the Company with the same effect as if it had been named herein as a party hereto, provided, however, that no such sale shall release the Company from any of its obligations and liabilities under this Agreement, the Facility A Credit Agreement, the Note Agreements, the 1994 Senior Note Agreements and the Mortgage Note Agreements unless such sale is followed by the complete liquidation of the Company and substantially all the assets of the Company immediately following such sale are distributed in such liquidation, and (ii) immediately after such merger or consolidation or such sale or other disposition, (x) no Event of Default or Material Default shall exist, (y) the Company could incur at least $1 of additional Funded Debt pursuant to subsection 8.05(i), and (z) the entity surviving the merger or consolidation or to which such assets have been transferred is not engaged in any business other than a Permitted Business; (e) the Company or any Restricted Subsidiary may make dispositions of inventory in the Ordinary Course of Business; (f) the Company or any Restricted Subsidiary may sell Designated Acres (or notes receivable arising from the sale of Designated Acres) for the fair value thereof as reasonably determined in good faith by Responsible Representatives; (g) the Company and its Restricted Subsidiaries may exchange Timberlands with other Persons in the Ordinary Course of Business, provided that (i) the fair value of the Timberlands plus any Net Proceeds received in such exchange is, in the good faith judgment of the Responsible Representatives, not less than the fair value of Timberlands exchanged plus any other consideration paid, (ii) such exchange would not materially and adversely affect the business, Property, condition or results of operations of the Company and its Restricted Subsidiaries on a combined 105 111 basis or of the Facilities Subsidiary or impair the ability of the Company to perform its obligations hereunder and under the Facility A Credit Agreement, the Note Agreements, the 1994 Senior Note Agreements and the Mortgage Note Agreements, and (iii) any Properties shall be deemed sold to the extent of Net Proceeds received and such sales shall be allowed only to the extent otherwise permitted by this Section 8.02; (h) the Company and its Restricted Subsidiaries may sell Properties for cash for not less than the fair value thereof as determined in good faith by the Responsible Representatives, provided that the aggregate Net Proceeds of such sales in any calendar year do not exceed an amount (the "Permitted Amount") equal to (i) in calendar year 1994, $3,210,000 and (ii) in each calendar year thereafter, the sum of (x) the Permitted Amount for the preceding calendar year plus (y) an increase equal to the percentage increase, if any, in the consumer price index for goods and services in the United States, as published by the U.S. Bureau of Labor Statistics, or successor publication, for such preceding calendar year, times such permitted amount; and (i) the Company and its Restricted Subsidiaries may otherwise sell Properties for cash in an amount not less than the fair value thereof as determined in good faith by the Responsible Representatives, if and only if (i) immediately after giving effect to such proposed sale, no condition or event shall exist which constitutes an Event of Default or Material Default, (ii) the Net Proceeds of any such sale (x) are applied, within 180 days after such sale, pro rata (based on the then outstanding principal of all Qualified Debt) to the holders of all Qualified Debt, or (y) are applied, within 180 days after such sale, to the purchase of productive assets in the same line of business, provided, that the Company shall have notified the Agent promptly after its determination to so apply the Net Proceeds, (iii) if the Net Proceeds of (x) any such sale exceed $25,000,000, the entire amount of such Net Proceeds are placed immediately upon receipt thereof in an escrow or cash collateral account or accounts, pursuant to an agreement or agreements in form and substance reasonably satisfactory to holders of 66-2/3% of the outstanding principal balance of the Qualified Debt, for the purpose of application in accordance with clause (ii) above, and (y) all such sales which are not then held in escrow or cash collateral accounts pursuant to subclause (iii)(x) and which have not been applied to the purchase of productive assets in the same line of business or distributed to the holders of Qualified Debt for application to the repayment of such Qualified Debt exceed $50,000,000 in the aggregate at any 106 112 time, all such Net Proceeds in excess of $50,000,000 are placed immediately upon receipt thereof in an escrow or cash collateral account or accounts, pursuant to an agreement or agreements in form and substance reasonably satisfactory to holders of 66-2/3% of the outstanding principal balance of the Qualified Debt, for the purpose of application in accordance with clause (ii) above, and (iv) immediately after giving effect to such sale (giving effect on a pro forma basis to any proposed retirement of Qualified Debt out of proceeds thereof), the Company could incur $1 of additional Funded Debt pursuant to subsection 8.05(i); provided, however, that the Company and its Restricted Subsidiaries may not sell properties that constitute the Company's Columbia River Unit unless the Note Agreements shall have been amended so as (A) to delete paragraph 6B(5)(viii) thereof as set forth in that certain Senior Note Agreement Amendment dated as of September 1, 1993 and (B) to provide for the application of the Net Proceeds of the sale of the properties that constitute the Columbia River Unit substantially as provided in this subsection 8.02(i). 8.03 Harvesting Restrictions. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, in any calendar year, harvest Timber on the Timberlands then owned by the Company in excess of the amount set forth for such calendar year in the following table:
Maximum MMBF to be Calendar Year Harvested ------------- --------- 1994 (including 735 MMBF of prior years cumulative carryover harvest 1435 MMBF 1995 through 1996 700 MMBF 1997 through 2000 675 MMBF 2001 625 MMBF
plus, in each year, the amount, if any, by which the cumulative amount set forth in the table above for the preceding years exceeds the cumulative amount actually harvested in such years; unless (a) the Net Proceeds from such excess harvest are either (i) applied, within 180 days after any such excess harvest, pro rata (based on the then outstanding principal of all Qualified Debt) to the holders of all Qualified Debt, or (ii) applied, within 180 days after any such excess harvest, to purchase Timber (including Timber on Timberlands 107 113 purchased) having a fair value (in the good faith judgment of the Responsible Representatives) not less than the fair value of the Timber subject to such excess harvest, provided, that the Company shall have notified the Agent promptly after its determination to so apply the Net Proceeds. 8.04 Loans and Investments. The Company shall not suffer or permit any of its Restricted Subsidiaries to make or commit to make or permit to remain outstanding any loan or advance to, or guarantee, endorse or otherwise be or become contingently liable, directly or indirectly, in connection with the obligations, stock or dividends of, or own, purchase or acquire (or commit to own, purchase or acquire) any stock, obligations or securities of, or any other interest in (including, without limitation, the acquisition of all or substantially all of the assets of a Person, or of any business or division of a Person), or make or commit to make any capital contribution to, any Person (all of the foregoing (but excluding any Designated Repurchases permitted by Section 8.13 hereof) being referred to herein as "Investments"), except that the Company or any Restricted Subsidiary may: (a) make Investments in the Facilities Subsidiary, provided that the Company will not make or permit any Restricted Subsidiary to make any such Investment (including any guaranty of obligations of the Facilities Subsidiary otherwise permitted by this Section 8.04) unless (i) immediately after giving effect to such Investment, no Event of Default or Default, or "Default" or "Event of Default" as defined in the Mortgage Note Agreements, shall exist, (ii) immediately prior to giving effect to such Investment, no Default or Event of Default (other than an "Event of Default" as defined in the Mortgage Note Agreements) shall exist, and (iii) immediately after giving effect to such Investment, the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest Charges is not less than 2.5 to 1.0. (b) own, purchase or acquire real or personal property to be used in the Ordinary Course of Business; (c) own, purchase or acquire investments of the type specified in, and in accordance with the requirements and limitations of, the Investment Policy; (d) continue to own Investments owned on the Closing Date as set forth on Schedule 8.04; 108 114 (e) endorse negotiable instruments for collection in the Ordinary Course of Business; (f) become and be obligated under the Guarantee and under the guarantees permitted by subsections 8.05(f) and (h), and acquire and own subordinated subrogation rights upon performance of such guarantees; (g) make advances in the Ordinary Course of Business of the Company or any Restricted Subsidiary, including deposits permitted under subsection 8.01(c), advances to employees for travel, relocation and other employment related expenses, advances to contractors performing services for the Company or such Restricted Subsidiary, advances to owners of timber or timber properties to acquire rights to harvest timber and other similar advances; (h) make Investments in Restricted Subsidiaries, or any entity which immediately after such Investment will be a Restricted Subsidiary; and (i) make Investments not otherwise permitted by this Section 8.04 in entities engaged solely in a Permitted Business, provided that the cumulative aggregate amount of such Investments at original cost (including the principal amount of any obligations guaranteed to the extent such guarantees are not otherwise permitted by this Section 8.04) made pursuant to this subsection (i) between the closing date of the Note Agreements and any date thereafter shall not exceed the greater of $30,000,000 or 60% of the average annual Pro Forma Free Cash Flow for the two fiscal years preceding such date. 8.05 Limitation on Indebtedness. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, create, incur, assume, suffer to exist, or otherwise become or remain directly or indirectly liable with respect to, any Indebtedness, except: (a) Funded Debt represented by the Notes and the 1994 Notes and any refinancing thereof so long as such refinancing does not increase the principal amount thereof and is on terms no less favorable to the Company, and to the rights of the Agent and the Banks hereunder, than those contained on the Closing Date in the Notes and the 1994 Notes and the documentation relating thereto; (b) Funded Debt which is unsecured and is incurred by the Company to finance the making of capital improvements, expansions and additions to the Company's 109 115 property (including Timberlands), plant and equipment, provided that the aggregate outstanding principal amount of such Funded Debt shall at no time exceed $20,000,000; (c) Indebtedness of any Restricted Subsidiary owing to the Company or to a Restricted Subsidiary; (d) Indebtedness incurred by the Company pursuant to the Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof, including any refunding or refinancing in an amount in excess of the principal amount then outstanding under the Revolving Credit Facility), or any other Indebtedness pursuant to a bank credit facility which is unsecured or is secured by Liens permitted by subsection 8.01(h), not in excess of an aggregate principal amount of $15,000,000 at any time outstanding, provided that the Company shall not suffer to exist any Indebtedness permitted by this subsection (d) on any day unless there shall have been a period of at least 45 consecutive days within the 12 months immediately preceding such day during which the Company shall have been free from all Indebtedness permitted by this subsection (d); (e) Indebtedness represented by the Guarantee and any refinancing thereof so long as such refinancing does not increase the principal amount thereof and is on terms no less favorable to the Company, and to the rights of the Agent and the Banks hereunder, than those contained on the Closing Date in the Guarantee and the documentation relating thereto; (f) the Company's guarantee of obligations incurred by the Facilities Subsidiary pursuant to the Facilities Subsidiary's Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof permitted by clause (iv) of paragraph 6B(2) of the Mortgage Note Agreements), provided that the aggregate outstanding principal amount of such Indebtedness shall at no time exceed $20,000,000, and provided further that such guarantee shall be subordinated to the Notes by subordination provisions substantially the same as those contained in paragraph 7I of the Mortgage Note Agreements; (g) the Company's guarantee of Funded Debt (and related obligations not constituting Indebtedness) incurred by the Facilities Subsidiary to finance the making of capital improvements, expansions and additions to the Facilities Subsidiaries' Properties pursuant to the Facilities Subsidiary's Facility, provided that such guarantee shall be subordinated to the Notes by subordination provisions substantially the same as those 110 116 contained in paragraph 7I of the Mortgage Note Agreements, and provided, further, that the aggregate outstanding principal amount of such Funded Debt shall at no time exceed $20,000,000; (h) Funded Debt of the Company or any Restricted Subsidiary secured by a Lien permitted by subsection 8.01(g), provided that immediately after the acquisition of the Property subject to such Lien or upon which such Lien is placed (or, if later, the incurrence of the Indebtedness secured by such Lien), the Company could incur at least $1 of additional Funded Debt pursuant to subsection (i) below; (i) Funded Debt of the Company (other than Funded Debt owing to a Restricted Subsidiary) in addition to that otherwise permitted by the foregoing subsections of this Section 8.05, including guarantees of Indebtedness to the extent permitted by Section 8.04 and not otherwise permitted by the foregoing subsections of this Section 8.05, provided that, on the date the Company becomes liable with respect to any such additional Funded Debt and immediately after giving effect thereto and to the concurrent retirement of any other Funded Debt, the ratio of Pro Forma Free Cash Flow to Maximum Pro Forma Annual Interest Charges is not less than 2.25 to 1.00; and provided, further, that the aggregate outstanding principal amount of such additional Funded Debt (but not including Funded Debt incurred under this Agreement or the Facility A Credit Agreement) shall not exceed $400,000,000; (j) from and after the time that the Facilities Subsidiary becomes a Restricted Subsidiary, Indebtedness incurred by the Facilities Subsidiary pursuant to the Facilities Subsidiary's Revolving Credit Facility (and any extension, renewal, refunding or refinancing thereof, including any refunding or refinancing in an amount in excess of the principal amount then outstanding under the Facilities Subsidiary's Revolving Credit Facility) or any other Indebtedness incurred by the Facilities Subsidiary pursuant to a bank credit facility which is unsecured or is secured by Liens permitted by subsection 8.01(h), not in excess of an aggregate principal amount of $20,000,000 at any time outstanding, provided that to the extent that the Facilities Subsidiary is a Restricted Subsidiary, the Facilities Subsidiary shall not suffer to exist any Indebtedness permitted by this subsection (j) on any day unless there shall have been a period of at least 45 consecutive days within the 12 months immediately preceding such day during which the Facilities Subsidiary shall have been free from all Indebtedness permitted by this subsection (j); and 111 117 (k) from and after the time that the Facilities Subsidiary or any Designated Immaterial Subsidiary becomes a Restricted Subsidiary, Indebtedness of the Facilities Subsidiary or any such Designated Immaterial Subsidiary outstanding at the time the Facilities Subsidiary or such Designated Immaterial Subsidiary becomes a Restricted Subsidiary, provided that (i) immediately after the Facilities Subsidiary or any such Designated Immaterial Subsidiary becomes a Restricted Subsidiary, the Company could incur at least $1 of additional Funded Debt pursuant to subsection (i) above (the Facilities Subsidiary or any such Designated Immaterial Subsidiary shall be deemed to be a Restricted Subsidiary for the four consecutive fiscal quarters immediately prior to its becoming a Restricted Subsidiary for purposes of determining Pro Forma Free Cash Flow), and (ii) the aggregate amount (without duplication) of such Indebtedness and all other Indebtedness, in each case, secured by Liens permitted by subsection 8.01(g) does not violate subclause (iv) to the proviso to such subsection (g). 8.06 Transactions with Affiliates. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to directly or indirectly engage in any transaction (including, without limitation, the purchase, sale or exchange of assets or the rendering of any service), with any Affiliate of the Company or of any such Restricted Subsidiary, except in the Ordinary Course of Business and pursuant to the reasonable requirements of the business of the Company or such Restricted Subsidiary and upon fair and reasonable terms that are no less favorable to the Company or such Restricted Subsidiary, as the case may be, than those which might be obtained in an arm's-length transaction at the time from Persons not an Affiliate of the Company or such Restricted Subsidiary. 8.07 Use of Proceeds. (a) The Company shall not and shall not suffer or permit any of its Subsidiaries to use any portion of the proceeds of the Loans or other Credit Extension, directly or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance indebtedness of the Company or others incurred to purchase or carry Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying any Margin Stock, or (iv) to acquire any security in any transaction that is subject to Section 13 or 14 of the Exchange Act. 112 118 (b) The Company shall not and shall not suffer or permit any of its Subsidiaries to use any portion of the proceed of the Loans or other Credit Extension, directly or indirectly, (i) knowingly to purchase Ineligible Securities from a Section 20 Subsidiary during any period in which such Section 20 Subsidiary makes a market in such Ineligible Securities, (ii) knowingly to purchase during the underwriting or placement period Ineligible Securities being underwritten or privately placed by a Section 20 Subsidiary, or (iii) to make payments of principal or interest on Ineligible Securities underwritten or privately placed by a Section 20 Subsidiary and issued by or for the benefit of the Company or any Affiliate of the Company. As used in this Section, "Section 20 Subsidiary" means the Subsidiary of the bank holding company controlling any Bank, which Subsidiary has been granted authority by the Federal Reserve Board to underwrite and deal in certain Ineligible Securities; and "Ineligible Securities" means securities which may not be underwritten or dealt in by member banks of the Federal Reserve System under Section 16 of the Banking Act of 1933 (as U.S.C. Section 24, Seventh), as amended. (c) After the date the Company has notified the Agent that the Company intends to allocate Loans to the Capital Expenditure Tranche and to qualify such Capital Expenditure Tranche Loans as Indebtedness permitted under subsection 8.05(b), the Company shall not and shall not suffer any of its Subsidiaries to use the proceeds of Capital Expenditure Tranche Loans for purposes other than to finance capital improvements, expansions and additions to the Company's property (including Timberlands), plant and equipment. 8.08 Sale of Stock and Indebtedness of Subsidiaries. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, sell or otherwise dispose of, or part with control of, any shares of stock or Indebtedness of any Subsidiary, except to the Company or a Restricted Subsidiary, and except that all shares of stock and Indebtedness of any Subsidiary (other than the Facilities Subsidiary) at the time owned by or owed to the Company and its Restricted Subsidiaries may be sold as an entirety for a cash consideration which represents the fair value (as determined in good faith by the Responsible Representatives of the PC Advisory General Partner) at the time of sale of the shares of stock and Indebtedness so sold, provided that the assets of such Subsidiary do not include any assets which could not be disposed of pursuant to the provisions of Section 8.02 unless the conditions to the sale of such assets set forth in Section 8.02 are complied with, and further provided that, at the time of 113 119 such sale, such Subsidiary shall not own, directly or indirectly, any shares of stock or Indebtedness of any other Subsidiary (unless all of the shares of stock and Indebtedness of such other Subsidiary owned, directly or indirectly, by the Company and its Subsidiaries are simultaneously being sold as permitted by this Section 8.08). 8.09 Certain Contracts. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to enter into or be a party to: (a) any contract providing for the making of loans, advances or capital contributions to any Person, or for the purchase of any Property from any Person, in each case in order primarily to enable such Person to maintain working capital, net worth or any other balance sheet condition or to pay debts, dividends or expenses; or (b) any contract for the purchase of materials, supplies or other property or services if such contract (or any related document) requires that payment for such materials, supplies or other property or services shall be made regardless of whether or not delivery of such materials, supplies or other property or services is ever made or tendered, provided that nothing in this subsection (b) shall prevent the Company from (i) entering into take-or-pay contracts in the Ordinary Course of Business with the United States Forest Service, the Bureau of Land Management, the Bureau of Indian Affairs, the Washington Department of Natural Resources or similar state or federal governmental agencies, or (ii) making payments in satisfaction of contracts with such Persons which contracts are deemed by the Responsible Representatives to be disadvantageous to perform; or (c) any contract to rent or lease (as lessee) any real or personal property if such contract (or any related document) provides that the obligation to make payments thereunder is absolute and unconditional under conditions not customarily found in commercial leases then in general use or requires that the lessee purchase or otherwise acquire securities or obligations of the lessor; or (d) any contract for the sale or use of materials, supplies or other property, or the rendering of services, if such contract (or any related document) requires that payment for such materials, supplies or other property, or the use thereof, or payment for such services, shall be subordinated to any indebtedness (of the purchaser or user of such materials, supplies or other property or the Person 114 120 entitled to the benefit of such services) owed or to be owed to any Person; or (e) any other contract which in economic effect, is substantially equivalent to a guarantee, except as permitted by the provisions of subsection 8.04(a), (e), (f), (g), (h) or (i). 8.10 Joint Ventures. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to enter into any Joint Venture, other than in Permitted Businesses and so long as any such Joint Venture is not entered into for the purposes of evading any covenant or restriction in any Loan Documents. 8.11 Compliance with ERISA. The Company shall not, and shall not suffer or permit any of its Subsidiaries to, without the consent of the Majority Banks, (i) terminate any Plan subject to Title IV of ERISA so as to result in any material (in the opinion of the Majority Banks) liability to the Company or any ERISA Affiliate, (ii) permit to exist any ERISA Event or any other event or condition with respect to any Plan other than a Multiemployer Plan, which presents the risk of a material (in the opinion of the Majority Banks) liability to the Company, (iii) make a complete or partial withdrawal (within the meaning of ERISA Section 4201) from any Multiemployer Plan so as to result in any material (in the opinion of the Majority Banks) liability to the Company or any ERISA Affiliate, (iv) enter into any new Plan or modify any existing Plan so as to increase its obligations thereunder which could result in any material (in the opinion of the Majority Banks) liability to any member of the Controlled Group, or (v) permit the present value of all nonforfeitable accrued benefits under any Plan (using the actuarial assumptions utilized by the PBGC upon termination of a Plan) materially (in the opinion of the Majority Banks) to exceed the fair market value of Plan assets allocable to such benefits, all determined as of the most recent valuation date for each such Plan. 8.12 Sale and Leaseback. The Company shall not, and shall not suffer or permit any of its Restricted Subsidiaries to, enter into any arrangement with any lender or investor or to which such lender or investor is a party providing for the leasing by the Company or any Restricted Subsidiary of real or personal property which has been or is to be sold or transferred by the Company or any Restricted Subsidiary to such lender or investor or to any Person to whom funds have been or are to be advanced by such lender or investor on the security of such property or rental 115 121 obligations of the Company or any Restricted Subsidiary, provided that this Section 8.12 shall not apply to any property sold pursuant to subsection 8.02(h). 8.13 Restricted Payments. The Company shall not and shall not permit or suffer any Subsidiary to directly or indirectly pay, declare, order, make or set apart any sum for any Restricted Payment, except that the Company may make, pay or set apart during each calendar quarter one or more Restricted Payments if: (a) such Restricted Payments are in an aggregate amount not exceeding the amount by which Available Cash with respect to the immediately preceding calendar quarter exceeds any amount contributed to Available Cash with respect to such immediately preceding calendar quarter by any Subsidiary if and to the extent that the payment of such amount as a dividend or distribution to the Company has not been made and is not at the time permitted by the terms of such Subsidiary's charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to such Subsidiary, provided that in determining Available Cash with respect to such immediately preceding calendar quarter, the Company will include in the amount of reserves established during such quarter pursuant, to clause (ii)(d) of the definition of Available Cash an amount not less than (i) 50% of the aggregate amount of all interest in respect of the Notes and the 1994 Notes to be paid on the interest date immediately following such immediately preceding calendar quarter, (ii) 100% of the aggregate amount of all interest in respect of the Loans and the "Loans" as defined in the Facility A Credit Agreement to be paid on the respective Interest Payment Dates for such Loans and such "Loans" during the calendar quarter immediately following such immediately preceding calendar quarter, (iii) 25% of the aggregate amount of all principal in respect of the Notes and the 1994 Notes scheduled to be paid (determined in accordance with the proviso in clause (ii) of the definition of "Fixed Charge Coverage Ratio") during the 12 calendar months immediately following such immediately preceding calendar quarter, and (iv) 25% of the aggregate amount of payments required to be made on account of any scheduled reductions (determined in accordance with the proviso in clause (ii) of the definition of "Fixed Charge Coverage Ratio") in the Commitments and the "Commitments" as defined in the Facility A Credit Agreement during the 12 calendar months immediately following such immediately preceding calendar quarter, and the Company will not reduce the amount of the reserves so included, in determining Available Cash for any calendar quarter subsequent to such immediately preceding calendar quarter 116 122 pursuant to clause (i)(c) of the definition of Available Cash, unless and until (A) the amount of interest or principal in respect of which such amount has been reserved has in fact been paid and (B) in the case of clause (iv) of this subsection 8.13(a), the amount of the reserves so included exceeds fifty percent (50%) of the aggregate amount of payments required to be made on account of the Commitments and the "Commitments" as defined in the Facility A Credit Agreement during the 12 calendar months immediately following such immediately preceding calendar quarter; and (b) immediately after giving effect to any such proposed action no condition or event shall exist which constitutes an Event of Default or Material Default. The Company will not, in any event, directly or indirectly declare, order, pay or make any Restricted Payment except in cash. 8.14 Change in Business. The Company shall not, and shall not permit any of its Subsidiaries to, engage in any business other than a Permitted Business. 8.15 Issuance of Stock by Subsidiaries. The Company covenants that it will not permit any Subsidiary to (either directly, or indirectly by the issuance of rights or options for, or securities convertible into, such shares) issue, sell or otherwise dispose of any shares of any class of its stock or partnership or other ownership interests (other than directors' qualifying shares) except to the Company or a Restricted Subsidiary, and except to the extent that holders of minority interests may be entitled to purchase stock by reason of preemptive rights. 8.16 Amendments. The Company shall not, and shall not suffer or permit any of its Subsidiaries to amend, modify, supplement, waive or otherwise modify any provision of any agreement evidencing Funded Debt in excess of $35,000,000 which amendment, modification, supplement or waiver would reasonably be expected to affect the Agent's or the Banks' rights hereunder or the ability of the Company to perform its obligations under any Loan Document. 8.17 Available Cash. The Company shall not at any time permit Available Cash to be less than zero. For purposes of this Section 8.17, in determining Available Cash with respect to the immediately preceding calendar quarter, the Company will include in the amount of reserves established during such quarter pursuant to clause (ii)(d)(1) (with respect to principal on Indebtedness) and clause (ii)(d)(4) of the definition of "Available Cash" an amount not less 117 123 than (a) 50% of the aggregate amount of all interest in respect of the Notes and the 1994 Notes to be paid on the interest date immediately following such immediately preceding calendar quarter, (b) 100% of the aggregate amount of all interest in respect of the Loans and the "Loans" as defined in the Facility A Credit Agreement to be paid on the respective Interest Payment Dates for such Loans and such "Loans" during the calendar quarter immediately following such immediately preceding calendar quarter, (c) 25% of the aggregate amount of all principal in respect of the Notes and the 1994 Notes scheduled to be paid (determined in accordance with the proviso in clause (ii) of the definition of "Fixed Charge Coverage Ratio") during the 12 calendar months immediately following such immediately preceding calendar quarter, and (d) 25% of the aggregate amount of payments required to be made on account of any scheduled reductions (determined in accordance with the proviso in clause (ii) of the definition of "Fixed Charge Coverage Ratio") in the Commitments and the "Commitments" as defined in the Facility A Credit Agreement during the 12 calendar months immediately following such immediately preceding calendar quarter, and the Company will not reduce the amount of the reserves so included in determining Available Cash for any calendar quarter subsequent to such immediately preceding calendar quarter pursuant to clause (i)(c) of the definition of Available Cash, unless and until (i) the amount of interest or principal in respect of which such amount has been reserved has in fact been paid and (ii) in the case of clause (d) of this Section 8.17, the amount of the reserves so included exceeds fifty percent (50%) of the aggregate amount of payments required to be made on account of the Commitments and the "Commitments" as defined in the Facility A Credit Agreement during the 12 calendar months immediately following such immediately preceding calendar quarter. ARTICLE IX EVENTS OF DEFAULT 9.01 Event of Default. Any of the following shall constitute an "Event of Default": (a) Non-Payment. The Company fails to pay, (i) when and as required to be paid herein, any amount of principal of any Loan or of any L/C Obligation, or any amount of interest on any Bid Loan, or (ii) within 5 days after the same shall become due, any interest (other than interest on Bid Loans), fee or any other amount payable hereunder or pursuant to any other Loan Document; or 118 124 (b) Representation or Warranty. Any representation or warranty by the Company or any of its Subsidiaries made or deemed made herein, in any Loan Document, or which is contained in any certificate, document or financial or other statement by the Company, its Responsible Representatives, any of its Subsidiaries, or their respective Responsible Officers, furnished at any time under this Agreement, or in or under any Loan Document, shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) Specific Defaults. The Company fails to perform or observe any term, covenant or agreement contained in Sections 7.03 or 7.09 or Article VIII; or (d) Other Defaults. The Company fails to perform or observe any other term or covenant contained in this Agreement or any Loan Document, and such default shall continue unremedied for a period of 20 days after the earlier of (i) the date upon which a Responsible Officer or Responsible Representative of the Company knew or should have known of such failure or (ii) the date upon which written notice thereof is given to the Company by the Agent or any Bank; or (e) Facility A Credit Agreement Cross-Default. An Event of Default shall have occurred as that term is defined in the Facility A Credit Agreement; or (f) Cross-Default. The Company or any of its Subsidiaries (i) fails to make any payment in respect of any Indebtedness having an aggregate principal amount (including undrawn committed or available amounts and including amounts owing to all creditors under any combined or syndicated credit arrangement) of more than $5,000,000 when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise); or (ii) fails to perform or observe any other condition or covenant, or any other event shall occur or condition exist, under any agreement or instrument relating to any such Indebtedness, if the effect of such failure, event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to be declared to be due and payable prior to its stated maturity, or with respect to any contingent obligations, to become payable or cash collateral in respect thereof to be demanded; or 119 125 (g) Insolvency; Voluntary Proceedings. The Company, any of its Subsidiaries, or any Partner Entity (i) ceases or fails to be Solvent, or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any, whether at stated maturity or otherwise; (ii) voluntarily ceases to conduct its business in the ordinary course; (iii) commences any Insolvency Proceeding with respect to itself; or (iv) takes any action to effectuate or authorize any of the foregoing; or (h) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is commenced or filed against the Company, the Facilities Subsidiary, any Restricted Subsidiary of the Company, or any Partner Entity, or any writ, judgment, warrant of attachment, execution or similar process, is issued or levied against a substantial part of the Company's, any of its Restricted Subsidiaries', any Partner Entities' or the Facilities Subsidiaries' Properties, and any such proceeding or petition shall not be dismissed, or such writ, judgment, warrant of attachment, execution or similar process shall not be released, vacated or fully bonded within 60 days after commencement, filing or levy; (ii) the Company, any Partner Entity, the Facilities Subsidiary, or any of the Company's Restricted Subsidiaries admits the material allegations of a petition against it in any Insolvency Proceeding, or an order for relief (or similar order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company, any Partner Entity, any of the Company's Restricted Subsidiaries, or the Facilities Subsidiary acquiesces in the appointment of a receiver, trustee, custodian, conservator, liquidator, mortgagee in possession (or agent therefor), or other similar Person for itself or a substantial portion of its Property or business; or (i) ERISA. (i) A member of the Controlled Group shall fail to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under a Multiemployer Plan; (ii) the Company or an ERISA Affiliate shall fail to satisfy its contribution requirements under Section 412(c)(11) of the Code, whether or not it has sought a waiver under Section 412(d) of the Code; (iii) in the case of an ERISA Event involving the withdrawal from a Plan of a "substantial employer" (as defined in Section 4001(a)(2) or Section 4062(e) of ERISA), the withdrawing employer's proportionate share of that Plan's Unfunded Pension Liabilities is more than $10,000,000; (iv) in the case of an ERISA Event involving the complete or partial withdrawal from a Multiemployer Plan, the withdrawing employer has 120 126 incurred a withdrawal liability in an aggregate amount exceeding $10,000,000; (v) in the case of an ERISA Event not described in clause (iii) or (iv), the Unfunded Pension Liabilities of the relevant Plan or Plans exceed $10,000,000; (vi) a Plan that is intended to be qualified under Section 401(a) of the Code shall lose its qualification, and the loss can reasonably be expected to impose on members of the Controlled Group liability (for additional taxes, to Plan participants, or otherwise) in the aggregate amount of $10,000,000 or more; (vii) the commencement or increase of contributions to, or the adoption of or the amendment of a Plan by, a member of the Controlled Group shall result in a net increase in unfunded liabilities to the Controlled Group in excess of $10,000,000; (viii) any member of the Controlled Group engages in or otherwise becomes liable for a non-exempt prohibited transaction and the initial tax or additional tax under section 4975 of the Code relating thereto might reasonably be expected to exceed $10,000,000; (ix) a violation of section 404 or 405 of ERISA or the exclusive benefit rule under section 401(a) of the Code if such violation might reasonably be expected to expose a member or members of the Controlled Group to monetary liability in excess of $10,000,000; (x) any member of the Controlled Group is assessed a tax under section 4980B of the Code in excess of $10,000,000; or (xi) the occurrence of any combination of events listed in clauses (iii) through (x) that involves a potential liability, net increase in aggregate Unfunded Pension Liabilities, unfunded liabilities, or any combination thereof, in excess of $10,000,000; or (j) Monetary Judgments. One or more non-interlocutory judgments, orders or decrees shall be entered against the Company or any of its Subsidiaries involving in the aggregate a liability (not fully covered by independent third-party insurance) as to any single or related series of transactions, incidents or conditions, of $25,000,000 or more, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of 30 days after the entry thereof; or (k) Non-Monetary Judgments. Any non-monetary judgment, order or decree shall be rendered against the Company or any of its Subsidiaries which does or would reasonably be expected to have a Material Adverse Effect, and there shall be any period of 10 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; or 121 127 (l) Auditors. The Agent or any Bank shall receive notice from the Independent Auditor that the Agent and the Banks should no longer use or rely upon any audit report or other financial data provided by the Independent Auditor; or (m) Adverse Change. There shall occur (i) a material adverse change in, or a material adverse effect upon, any of the operations, business, properties, or condition (financial or otherwise) of the Company or the Company and its Subsidiaries taken as a whole or as to any Restricted Subsidiary which materially impairs the ability of the Company to perform under any Loan Document and avoid any Event of Default, or (ii) a material adverse effect upon the legality, validity, binding effect or enforceability of any Loan Document. 9.02 Remedies. If any Event of Default occurs, the Agent shall, at the request of, or may, with the consent of, the Majority Banks, (a) declare the Commitment of each Bank and the Swingline Commitment of the Swingline Bank to make Loans and any obligation of the Issuing Banks to issue Letters of Credit to be terminated, whereupon such Commitments and obligations shall forthwith be terminated; (b) declare an amount equal to the maximum aggregate amount that is or at any time thereafter may become available for drawing under any outstanding Letters of Credit (whether or not any beneficiary shall have presented, or shall be entitled at such time to present, the drafts or other documents required to draw under such Letters of Credit) to be immediately due and payable, and declare the unpaid principal amount of all outstanding Loans, all interest accrued and unpaid thereon, and all other amounts owing or payable hereunder or under any other Loan Document to be immediately due and payable; without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by the Company; and (c) exercise on behalf of itself and the Banks all rights and remedies available to it and the Banks under the Loan Documents or applicable law; provided, however, that upon the occurrence of any event specified in paragraph (g) or (h) of Section 9.01 above (in the case of clause (i) of paragraph (h) upon the expiration of the 60-day period mentioned therein), the obligation of each Bank and the Swingline Bank to make Loans and any obligation of the Issuing Banks to Issue Letters of Credit shall automatically terminate and the unpaid principal 122 128 amount of all outstanding Loans and all interest and other amounts as aforesaid shall automatically become due and payable without further act of the Agent, the Issuing Banks, the Swingline Bank, or any Bank. 9.03 Rights Not Exclusive. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, document or agreement now existing or hereafter arising. ARTICLE X THE AGENT 10.01 Appointment and Authorization. (a) Each Bank and each Issuing Bank hereby irrevocably appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto, including, without limitation, to enter into Cash Collateral Account Agreements from time to time in accordance with this Agreement, and to release funds to the Company in accordance with Section 1(b) of the Cash Collateral Account Agreement and, if applicable, pursuant to an Officer's Certificate substantially in the form attached thereto as Exhibit A. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Bank or any Issuing Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. (b) Each Issuing Bank shall act on behalf of the Banks with respect to any Letters of Credit Issued by it and the documents associated therewith until such time and except for so long as the Agent may agree at the request of the Majority Banks to act for such Issuing Bank with respect thereto; provided, however, that each Issuing Bank shall have all of the benefits and immunities (i) provided to the Agent in this Article X with respect to any acts taken or 123 129 omissions suffered by such Issuing Bank in connection with Letters of Credit Issued by it or proposed to be Issued by it and the application and agreements for letters of credit pertaining to the Letters of Credit as fully as if the term "Agent", as used in this Article X, included such Issuing Bank with respect to such acts or omissions, and (ii) as additionally provided in this Agreement with respect to the Issuing Banks. 10.02 Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 10.03 Liability of Agent. None of the Agent-Related Persons shall (i) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Banks for any recital, statement, representation or warranty made by the Company or any Subsidiary or Affiliate of the Company, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of the Company or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the Properties, books or records of the Company or any of the Company's Subsidiaries or Affiliates. 10.04 Reliance by Agent. (a) The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Company), independent 124 130 accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Majority Banks as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Banks against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Majority Banks and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Banks. (b) For purposes of determining compliance with the conditions specified in Section 5.01, each Bank that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter either sent or made available by the Agent to such Bank for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to the Bank, unless an officer of the Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from the Bank prior to the initial Credit Extension specifying its objection thereto and either such objection shall not have been withdrawn by notice to the Agent to that effect or the Bank shall not have made available to the Agent the Bank's ratable portion of such Credit Extension. 10.05 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Banks, unless the Agent shall have received written notice from a Bank or the Company referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give prompt notice thereof to the Banks. The Agent shall take such action with respect to such Default or Event of Default as shall be requested by the Majority Banks in accordance with Article IX; provided, however, that unless and until the Agent shall have received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Banks. 125 131 10.06 Credit Decision. Each Bank expressly acknowledges that none of the Agent-Related Persons has made any representation or warranty to it and that no act by the Agent hereinafter taken, including any review of the affairs of the Company and its Subsidiaries shall be deemed to constitute any representation or warranty by any of the Agent-Related Persons to any Bank. Each Bank represents to the Agent that it has, independently and without reliance upon any of the Agent-Related Persons and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of the Company and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated thereby, and made its own decision to enter into this Agreement and extend credit to the Company hereunder. Each Bank also represents that it will, independently and without reliance upon any of the Agent-Related Persons and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Company. Except for notices, reports and other documents expressly herein required to be furnished to the Banks by the Agent, the Agent shall not have any duty or responsibility to provide any Bank with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Company which may come into the possession of any of the Agent-Related Persons. 10.07 Indemnification. Whether or not the transactions contemplated hereby shall be consummated, the Banks shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Company and without limiting the obligation of the Company to do so), ratably from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind whatsoever which may at any time (including at any time following the termination of the Letters of Credit, the repayment of the Loans and the termination or resignation of the Agent) be imposed on, incurred by or asserted against any such Person in any way relating to or arising out of this Agreement, or any document contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any such Person 126 132 under or in connection with any of the foregoing; provided, however, that no Bank shall be liable for the payment to the Agent-Related Persons of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Bank shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including reasonable Attorney Costs) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Company. Without limiting the generality of the foregoing, if the Internal Revenue Service or any other Governmental Authority of the United States or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Bank hereunder (because the appropriate form was not delivered, was not properly executed, or because such Bank failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Bank shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section, together with all costs and expenses and attorneys' fees (including reasonable Attorney Costs). The obligation of the Banks in this Section shall survive the payment of all Obligations hereunder. 10.08 Agent in Individual Capacity. BofA and ABN and their Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory or other business with the Company and its Subsidiaries and Affiliates as though neither BofA nor ABN was the Agent and the Co-Agent, respectively, or an Issuing Bank hereunder and without notice to or consent of the Banks. With respect to its Loans and participation in Letters of Credit, each of BofA and ABN shall have the same rights and powers under this Agreement as any other Bank and may exercise the same as though it were not the Agent or the Co-Agent, as the case may be, and the terms "Bank" and "Banks" shall include each of BofA and ABN in its individual capacity. 127 133 10.09 Successor Agent. The Agent may, and at the request of the Majority Banks shall, resign as Agent upon 30 days notice to the Banks. If the Agent shall resign as Agent under this Agreement, the Majority Banks shall appoint from among the Banks a successor agent for the Banks. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Banks and the Company, a successor agent from among the Banks. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article X and Sections 11.04 and 11.05 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Banks shall perform all of the duties of the Agent hereunder until such time, if any, as the Majority Banks appoint a successor agent as provided for above. Notwithstanding the foregoing, however, BofA may not be removed as the Agent at the request of the Majority Banks unless BofA shall also simultaneously be replaced as an "Issuing Bank" hereunder pursuant to documentation in form and substance satisfactory to BofA. 10.10 Co-Agent. None of the Banks identified on the facing page or signature pages of this Agreement as a "co-agent" shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Banks as such. Each Bank acknowledges that it has not relied, and will not rely, on any of the Banks so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. ARTICLE XI MISCELLANEOUS 11.01 Amendments and Waivers. No amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by the Company therefrom, shall be effective unless the same shall be in writing and signed by the Majority Banks, the Company and acknowledged by the Agent, and then such waiver 128 134 shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Banks, the Company and acknowledged by the Agent, do any of the following: (a) increase or extend the Commitment of any Bank or the Swingline Commitment of the Swingline Bank (or reinstate any such Commitment terminated pursuant to subsection 9.02(a)), including, without limitation, any amendment to or waiver of subsection 2.09(b) or any other provision providing for a mandatory commitment reduction, or subject any Bank to any additional obligations; (b) postpone or delay any date fixed for any payment of principal, interest, fees or other amounts due to the Banks (or any of them) hereunder or under any other Loan Document; (c) reduce the principal of, or the rate of interest specified herein on any Loan, or (subject to clause (iii) below) of any fees or other amounts payable hereunder or under any other Loan Document; (d) change the percentage of the Commitments or of the aggregate unpaid principal amount of the Loans which shall be required for the Banks or any of them to take any action hereunder; or (e) amend this Section 11.01 or Section 2.17 or any provision providing for consent or other action by all Banks; and, provided further, that (i) no amendment, waiver or consent shall, unless in writing signed by the relevant Issuing Bank in addition to the Majority Banks or all the Banks, as the case may be, affect the rights or duties of such Issuing Bank under this Agreement or any L/C-Related Document relating to any Letter of Credit Issued or to be Issued by it, (ii) no amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Majority Banks or all the Banks, as the case may be, affect the rights or duties of the Agent under this Agreement or any other Loan Document, (iii) no amendment, waiver or consent shall, unless in writing and signed by the Swingline Bank in addition to the Majority Banks or all the Banks, as the case may be, affect the rights or duties of the Swingline Bank under this Agreement or any other Loan Document, and (iv) the fee letter between the Company and BofA may be amended, or rights and privileges thereunder waived, in a writing executed by the parties thereto. 129 135 11.02 Notices. (a) All notices, requests and other communications provided for hereunder shall be in writing (including, unless the context expressly otherwise provides, by facsimile transmission, provided that any matter transmitted by the Company by facsimile (i) shall be immediately confirmed by a telephone call to the recipient at the number specified on the applicable signature page hereof, and (ii) shall be followed promptly by a hard copy original thereof) and mailed, faxed or delivered, to the address or facsimile number specified for notices on the applicable signature page hereof; or, as directed to the Company or the Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as directed to each other party, at such other address as shall be designated by such party in a written notice to the Company and the Agent. (b) All such notices, requests and communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the U.S. mail, or if delivered, upon delivery; except that, notwithstanding the foregoing, notices pursuant to Article III to an Issuing Bank shall not be effective until actually received by the Issuing Bank at the address specified for the "Issuing Bank" on the signature page hereof, and notices to the Company or the Agent shall not be effective until actually received by the Company or the Agent, respectively. (c) The Company acknowledges and agrees that any agreement of the Agent, the Issuing Banks, and the Banks at Article II and Article III herein to receive certain notices by telephone and facsimile is solely for the convenience and at the request of the Company. The Agent, the Issuing Banks, and the Banks shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Company to give such notice and the Agent, the Issuing Banks and the Banks shall not have any liability to the Company or other Person on account of any action taken or not taken by the Agent, the Issuing Banks or the Banks in reliance upon such telephonic or facsimile notice. The obligation of the Company to repay the Loans and L/C Obligations shall not be affected in any way or to any extent by any failure by the Agent, the Issuing Banks, and the Banks to receive written confirmation of any telephonic or facsimile notice or the receipt by the Agent, the Issuing 130 136 Banks and the Banks of a confirmation which is at variance with the terms understood by the Agent, the Issuing Banks, and the Banks to be contained in the telephonic or facsimile notice. 11.03 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any Bank, any right, remedy, power or privilege hereunder, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. 11.04 Costs and Expenses. The Company shall, whether or not the transactions contemplated hereby shall be consummated: (a) pay or reimburse BofA (including in its capacity as Agent) within five Business Days after demand (subject to subsection 5.01(e)) for all reasonable costs and expenses incurred by BofA (including in its capacity as Agent) in connection with the development, preparation, delivery, administration and execution of, and any amendment, supplement, waiver or modification to (in each case, whether or not consummated), this Agreement, any Loan Document and any other documents prepared in connection herewith or therewith, and the consummation of the transactions contemplated hereby and thereby, including the reasonable Attorney Costs incurred by BofA (including in its capacity as Agent) with respect thereto; provided, however, that this subsection (a) shall not apply to any such costs and expenses incurred by BofA after any date that BofA is no longer the Agent hereunder and after any such date any references in this subsection (a) to BofA shall be deemed a reference to the successor Agent; and (b) pay or reimburse each Bank, the Agent, and the Arranger within five Business Days after demand (subject to subsection 5.01(e)) for all costs and expenses incurred by them in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies (including in connection with any "workout" or restructuring regarding the Loans, and including in any Insolvency Proceeding or appellate proceeding) under this Agreement, any other Loan Document, and any such other documents, including Attorney Costs and appraisal (including the allocated cost of internal appraisal services), audit, environmental inspection and review (including the allocated cost of such internal services), and search and filing costs, fees and expenses, incurred by the Agent, the Arranger and any Bank. 131 137 11.05 Indemnity. Whether or not the transactions contemplated hereby shall be consummated: The Company shall pay, indemnify, and hold each Bank, the Agent, and each of their respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person") harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including Attorney Costs) of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, any Loan Documents, or the transactions contemplated hereby and thereby, and with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to this Agreement, or the Loans or the Letters of Credit or the use of the proceeds thereof, whether or not any Indemnified Person is a party thereto (all the foregoing, collectively, the "Indemnified Liabilities"); provided, that the Company shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities arising from the gross negligence or willful misconduct of such Indemnified Person. The agreements in this Section shall survive payment of all other Obligations. 11.06 Marshalling; Payments Set Aside. Neither the Agent nor the Banks shall be under any obligation to marshall any assets in favor of the Company or any other Person or against or in payment of any or all of the Obligations. To the extent that the Company makes a payment or payments to the Agent or the Banks, or the Agent or the Banks enforce their Liens or exercise their rights of set-off, and such payment or payments or the proceeds of such enforcement or set-off or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by the Agent in its discretion) to be repaid to a trustee, receiver or any other party in connection with any Insolvency Proceeding, or otherwise, then (a) to the extent of such recovery the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or set-off had not occurred, and (b) each Bank severally agrees to pay to the Agent upon demand its ratable share of the total amount so recovered from or repaid by the Agent. 11.07 Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and 132 138 assigns, except that the Company may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of the Agent and each Bank. 11.08 Assignments, Participations, Etc. (a) Any Bank may, with the written consent of the Company at all times other than during the existence of an Event of Default and the Agent, which consents shall not be unreasonably withheld or delayed, at any time assign and delegate to one or more Eligible Assignees (provided that no written consent of the Company or the Agent shall be required in connection with any assignment and delegation by a Bank to an Eligible Assignee that is an Affiliate of such Bank) (each an "Assignee") all, or any ratable part of all, of the Loans, the Commitments, the L/C Obligations and the other rights and obligations of such Bank hereunder; provided, however, that (i) no assignment shall in any event be less than $10,000,000 of the combined Commitments of the assigning Bank under this Agreement and under and as defined in the Facility A Credit Agreement unless as a result of such assignment the assigning Bank's rights and obligations hereunder shall be reduced to zero; (ii) if a Bank assigns less than all of its rights and obligations hereunder, such Bank's remaining Commitment plus such Bank's Commitment under and as defined in the Facility A Credit Agreement, after giving effect to such assignment, shall not be less than $10,000,000; (iii) the Company and the Agent may continue to deal solely and directly with such Bank in connection with the interest so assigned to an Assignee until (A) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Company and the Agent by such Bank and the Assignee; (B) such Bank and its Assignee shall have delivered to the Company and the Agent an Assignment and Acceptance in the form of Exhibit F ("Assignment and Acceptance") and (C) the assignor Bank or Assignee has paid to the Agent a processing fee in the amount of $3,500; and (iv) no assignment of Committed Loans shall be effective, and shall instead be void and of no effect, unless performed simultaneously with an assignment of an identical percentage of the rights and obligations of the assigning Bank in Committed Loans under and as defined in the Facility A Credit Agreement. In connection with any assignment by BofA, its Swingline Commitment may be in whole but not in part included as part of the assignment transaction, and the Assignment and Acceptance may be appropriately modified to include an assignment and delegation of its Swingline Commitment and any outstanding Swingline Loans. 133 139 (b) From and after the date that the Agent notifies the assignor Bank that it has received (and provided its consent with respect to) an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under the Loan Documents. (c) Immediately upon each Assignee's making its processing fee payment under the Assignment and Acceptance, this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Bank pro tanto. (d) Any Bank may at any time sell to one or more commercial banks or other Persons not Affiliates of the Company (a "Participant") participating interests in any Loans, the Commitment of that Bank and the other interests of that Bank (the "originating Bank") hereunder and under the other Loan Documents; provided, however, that (i) the originating Bank's obligations under this Agreement shall remain unchanged, (ii) the originating Bank shall remain solely responsible for the performance of such obligations, (iii) the Company, the Issuing Bank and the Agent shall continue to deal solely and directly with the originating Bank in connection with the originating Bank's rights and obligations under this Agreement and the other Loan Documents, (iv) no such participation of Committed Loans shall be effective, and shall instead be void and of no effect, unless performed simultaneously with a participation of an identical percentage of the rights and obligations of the selling Bank in Committed Loans under and as defined in the Facility A Credit Agreement, and (v) no Bank shall transfer or grant any participating interest under which the Participant shall have rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document, except to the extent such amendment, consent or waiver would require unanimous consent of the Banks as described in the first proviso to Section 11.01, or the right to grant subparticipations in 134 140 Committed Loans except in strict compliance with the immediately preceding clause (iv) applied mutatis mutandis to such subparticipation. In the case of any such participation, the Participant shall be entitled to the benefit of Sections 4.01, 4.03 and 11.05 as though it were also a Bank hereunder, and if amounts outstanding under this Agreement are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Bank under this Agreement. (e) Each Bank agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" by the Company and provided to it by the Company or any Subsidiary of the Company, or by the Agent on such Company's or Subsidiary's behalf, in connection with this Agreement, the Original Loan Agreement, or any Loan Document, and neither it nor any of its Affiliates shall use any such information for any purpose or in any manner other than pursuant to the terms contemplated by this Agreement; provided, however, that any Bank may disclose such information (A) to the extent that such information was or becomes generally available to the public other than as a result of a disclosure by the Bank; (B) to the extent such information was or becomes available to such Bank to whom it was furnished on a non-confidential basis; (C) at the request or pursuant to any requirement of any Governmental Authority to which the Bank is subject or in connection with an examination of such Bank by any such authority; (D) pursuant to subpoena or other court process; (E) when required to do so in accordance with the provisions of any applicable Requirement of Law; (F) to the extent reasonably required in connection with any litigation or proceeding to which the Agent, any Bank or their respective Affiliates may be party; (G) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document; (H) to such Bank's independent auditors and other professional advisors and (I) to such Bank's Affiliates. Notwithstanding the foregoing, the Company authorizes each Bank to disclose to any Participant or Assignee (each, a "Transferee") and to any prospective Transferee, such financial and other information in such Bank's possession concerning the Company or its Subsidiaries which has been delivered to the Agent or the Banks pursuant to this Agreement or which has been delivered to the Agent or the Banks by the Company in connection with the Banks' credit evaluation of the Company 135 141 prior to entering into this Agreement; provided that, unless otherwise agreed by the Company, such Transferee agrees in writing to such Bank to keep such information confidential to the same extent required of the Banks hereunder. (f) Notwithstanding any other provision contained in this Agreement or any other Loan Document to the contrary, any Bank may assign all or any portion of the Loans held by it to any Federal Reserve Bank or the United States Treasury as collateral security pursuant to Regulation A of the Federal Reserve Board and any Operating Circular issued by such Federal Reserve Bank, provided that any payment in respect of such assigned Loans made by the Company to or for the account of the assigning or pledging Bank in accordance with the terms of this Agreement shall satisfy the Company's obligations hereunder in respect to such assigned Loans to the extent of such payment. No such assignment shall release the assigning Bank from its obligations hereunder. 11.09 Set-off. In addition to any rights and remedies of the Banks provided by law, if an Event of Default exists, each Bank is authorized at any time and from time to time, without prior notice to the Company, any such notice being waived by the Company to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing to, such Bank to or for the credit or the account of the Company against any and all Obligations owing to such Bank, now or hereafter existing, irrespective of whether or not the Agent or such Bank shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured. Each Bank agrees promptly to notify the Company and the Agent after any such set-off and application made by such Bank; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Bank under this Section 11.09 are in addition to the other rights and remedies (including other rights of set-off) which the Bank may have. 11.10 Automatic Debits of Fees. With respect to any commitment fee, facility fee, letter of credit fee or other fee, or any other cost or expense (including Attorney Costs) due and payable to the Agent, the Issuing Banks, the Swingline Bank or BofA under the Loan Documents, the Company hereby irrevocably authorizes BofA to debit any deposit account of the Company with BofA in an amount such that the aggregate amount debited from all such deposit accounts does not exceed such fee or other cost or expense. If there are 136 142 insufficient funds in such deposit accounts to cover the amount of the fee or other cost or expense then due, such debits will be reversed (in whole or in part, in BofA's sole discretion) and such amount not debited shall be deemed to be unpaid. No such debit under this Section 11.10 shall be deemed a setoff. 11.11 Notification of Addresses, Lending Offices, Etc. Each Bank shall notify the Agent in writing of any changes in the address to which notices to the Bank should be directed, of addresses of its Offshore Lending Office, of payment instructions in respect of all payments to be made to it hereunder and of such other administrative information as the Agent shall reasonably request. 11.12 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement in any number of separate counterparts, each of which, when so executed, shall be deemed an original, and all of said counterparts taken together shall be deemed to constitute but one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Company and the Agent. 11.13 Severability. The illegality or unenforceability of any provision of this Agreement or any instrument or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder. 11.14 No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Company, the Banks, the Issuing Banks, the Swingline Bank, the Co-Agent and the Agent, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with, this Agreement or any of the other Loan Documents. Neither the Agent, the Co-Agent, the Swingline Bank, the Issuing Banks nor any Bank shall have any obligation to any Person not a party to this Agreement or other Loan Documents. 11.15 Time. Time is of the essence as to each term or provision of this Agreement and each of the other Loan Documents. 11.16 Governing Law and Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW. 137 143 11.17 Arbitration; Reference. (a) Mandatory Arbitration. Any controversy or claim between or among the parties, including but not limited to those arising out of or relating to this Agreement or any agreements or instruments relating hereto or delivered in connection herewith and any claim based on or arising from an alleged tort, shall at the request of any party be determined by arbitration. The arbitration shall be conducted in accordance with the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law provision in this Agreement, and under the Commercial Rules of the American Arbitration Association ("AAA"). The arbitrator(s) shall give effect to applicable statutes of limitation in determining any claim. Any controversy concerning whether an issue is arbitrable shall be determined by the arbitrator(s). Judgment upon the arbitration award may be entered in any court having jurisdiction. The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief. (b) Judicial Reference. At the request of any party a controversy or claim which is not submitted to arbitration as provided and limited in subparagraph (a) shall be determined by a reference in accordance with California Code of Civil Procedure Section 638 et seq. If such an election is made, the parties shall designate to the court a referee or referees selected under the auspices of the AAA in the same manner as arbitrators are selected in AAA-sponsored proceedings. The presiding referee of the panel, or the referee if there is a single referee, shall be an active attorney or retired judge. Judgment upon the award rendered by such referee or referees shall be entered in the court in which such proceeding was commenced in accordance with California Code of Civil Procedure Sections 644 and 645. (c) Provisional Remedies, Self-Help and Foreclosure. No provision of this paragraph shall limit the right of any party to this Agreement to exercise self-help remedies such as setoff, foreclosure against or sale of any real or personal property collateral or security, or obtaining provisional or ancillary remedies from a court of competent jurisdiction before, after, or during the pendency of any arbitration or other proceeding. The exercise of a remedy does not waive the right of either party to resort to arbitration or reference. 138 144 11.18 Entire Agreement. This Agreement, together with the other Loan Documents, embodies the entire agreement and understanding among the Company, the Banks, the Swingline Bank, the Issuing Banks, the Co-Agent and the Agent, and supersedes all prior or contemporaneous Agreements and understandings of such Persons, verbal or written, relating to the subject matter hereof and thereof, except for the fee letter referenced in subsections 2.13(a) and (c), and any prior arrangements made with respect to the payment by the Company of (or any indemnification for) any fees, costs or 139 145 expenses payable to or incurred (or to be incurred) by or on behalf of the Agent or the Banks. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered in San Francisco, California by their proper and duly authorized officers as of the day and year first above written. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: /s/ Diane M. Irvine ----------------------------------- Title: Vice President and CFO ----------------------------------- Address for notices: 999 Third Avenue, Suite 2300 Seattle, WA 98104 Attn: Chief Financial Officer Facsimile: (206) 467-3797 Tel: (206) 467-3600 140 146 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /s/ Ivo Bakovic ------------------------------- Title: Vice President ---------------------------- Address for notices: 1455 Market Street, 12th Floor San Francisco, CA 94103 Attn: Agency Management Services #5596 Facsimile: (415) 622-4894 Tel: (415) 622-1158 Attention: Shannon Collins Address for payments: Bank of America NT&SA ABA 121-000-358 Attention: Agency Management Services #5596 1850 Gateway Blvd. Concord, CA 94520 for credit to Account No. 1233-6-14205 141 signatures continue 147 ABN AMRO BANK N.V. as a Co-Agent By: /s/ David McGinnis -------------------------------- Title: Vice President ----------------------------- By: /s/ Paul Calderon -------------------------------- Title: Vice President ----------------------------- Address for notices: 600 University Street Suite 2323 Seattle, WA 98101 Attention: David McGinnis, Vice President Facsimile: (206) 682-5641 Tel: (206) 587-0342 Address for payments: ABN AMRO Bank N.V., New York ABA 026009580 for credit to ABN AMRO Seattle, Account No. 651001085541 Reference: Plum Creek 142 signatures continue 148 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as a Bank, as the Swingline Bank and as an Issuing Bank By: /s/ Michael J. Balok -------------------------------- Title: Vice President ----------------------------- Address for notices (BofA as a Bank): San Francisco Credit Products (#3838) 555 California Street, 41st Floor San Francisco, CA 94104 Attention: Michael J. Balok Facsimile: (415) 622-4585 Tel: (415) 622-2018 Address for payments: Bank of America National Trust and Savings Association Global Payment Operations Customer Service Americas (#5693) 1850 Gateway Boulevard Concord, CA 94520 Attention: Terry Peach ABA 121-000-358 SF Domestic and Offshore Lending Office: Same as address for payments Address for Notices (BofA as an Issuing Bank): International Trade Banking Division #2621 333 S. Beaudry Ave., 19th Floor Los Angeles, California 90017 Attention: Cybele Sierra Telephone: (213) 345-6630 Facsimile: (213) 345-6684 143 signatures continue 149 ABN AMRO BANK N.V. as a Bank and as an Issuing Bank By: /s/ David McGinnis ----------------------------- Title: Vice President ----------------------------- By: /s/ Paul Calderon ----------------------------- Title: Vice President ----------------------------- Address for notices: 600 University Street Suite 2323 Seattle, WA 98101 Attention: David McGinnis, Vice President Facsimile: (206) 682-5641 Tel: (206) 587-0342 Address for payments: ABN AMRO Bank N.V., New York ABA 026009580 for credit to ABN AMRO Seattle, Account No. 651001085541 Reference: Plum Creek Domestic and Offshore Lending Offices: Same as notice address 144 signatures continue 150 NATIONSBANK OF NORTH CAROLINA, N.A. By: /s/ Michael O. Loneln ----------------------------- Title: Sr. Vice President ----------------------------- Address for notices: 1 NationsBank Plaza NC1-002-06-19 Charlotte, NC 28255 Attention: Kay Ostwalt Facsimile: (704) 386-8694 Tel: (704) 386-1110 Address for payments: NationsBank of North Carolina, N.A. ABA 053-000-196 Specialized Loan Support Account No. 13662122506 Domestic and Offshore Lending Office: Forest Products NationsBank Corporate Center, 8th Fl. Charlotte, NC 28255 145 signatures continue 151 U.S. BANK OF WASHINGTON, N.A. By: /s/ Peter Bentley ----------------------------- Title: Senior Vice President ----------------------------- Address for Notices: U.S. Bank of Washington, N.A. 1420 Fifth Avenue WWH276 Seattle, WA 98101 Attention: Peter G. Bentley Vice President Facsimile: (206) 587-5259 Tel: (206) 587-5237 Address for payments: United States National Bank of Oregon Commercial Note Department Attention: Jackie Ainsworth Reference: Plum Creek Domestic and Offshore Lending Office: Same as notice address 146 signatures continue 152 WELLS FARGO BANK, N.A. By: /s/ Ralph Turner --------------------------------- Title: Vice President ------------------------------ Address for notices: 420 Montgomery St., 9th Floor San Francisco, CA 94163 (for notices of Borrowings) Attention: Joan Nitis Facsimile: (415) 989-4319 Tel: (415) 396-4916 (for all other notices) Attention: Ralph Turner Facsimile: (415) 421-1352 Tel: (415) 396-4932 Address for payments: Wells Fargo Bank, N.A. ABA 121000248 Corporate Note Dept., SR 703 Account No. 2712-507201 Reference: Plum Creek Timber Company, L.P. Attention: Joan Nitis Domestic and Offshore Lending Office: Same as notice address 147 signatures continue 153 SEATTLE FIRST NATIONAL BANK By: /s/ John Wilson --------------------------------- Title: Vice President ----------------------------- Address for notices: 701 Fifth Avenue, 12th Floor Box 94010 Seattle, WA 98120-9410 Attention: John Wilson, Vice President, Northwest National Division Facsimile: (206) 358-3113 Tel: (206) 358-8945 Address for payments: Seattle First National Bank ABA 125000024 CLSC Loans RC #94680 Reference: Plum Creek Timber Company, L.P., AFS #7007143921 Domestic and Offshore Lending Office: same as notice address 148 signatures continue 154 THE BANK OF TOKYO, LTD. By:/s/ Stanley A. Lance ---------------------------------- Title: Vice President ------------------------------ Address for notices: 1201 Third Avenue, Suite 1100 Seattle, WA 98101 Attention: Corey W. Kalbfleisch, Corporate Banking Officer Facsimile: (206) 382-6067 Tel: (206) 382-6021 Address for payments: The Bank of Tokyo, Ltd., Seattle Branch ABA 1250-0162-9 Reference: Plum Creek Timber Co. (CBD) Domestic and Lending Offices: Seattle Branch 1201 Third Avenue, Suite 1100 Seattle, WA 98101 149 signatures continue 155 THE BANK OF CALIFORNIA, N.A. By: /s/ Kevin Sullivan --------------------------------- Title: Vice President ------------------------------ Address for notices: 400 California Street, 17th Fl. San Francisco, CA 94104 Attention: Kevin Sullivan Vice President Facsimile: (415) 765-3146 Tel: (415) 765-3148 Address for payments: The Bank of California, N.A. ABA 1210-000-15 for credit to Corporate Banking Note Dept., Bancontrol Acct. #001060235 Attention: E. DeLeon Reference: Plum Creek Domestic and Offshore Lending Offices: Same as notice address 150 156 SCHEDULE 1.01 April 5, 1993 Page 1 of 2 CORPORATE INVESTMENT POLICY I. OBJECTIVE This policy provides guidelines for the management of the Company's cash. It is essential that these assets be invested in a high quality portfolio which: o Preserves principal o Meets liquidity needs o Allows for appropriate diversification of investments o Delivers good yield in relationship to the guidelines and market conditions The Company is adverse to incurring market risk or credit risk, and will generally sacrifice yield in the interest of safety. Care must always be taken to insure that the Company's reported financial statements are never materially affected by decreases in the market value of securities held. II. MATURITY OR PUT Within the constraints provided throughout this document, or by addendum to this document, the maximum maturity or put of any investment instrument will be within two years from the purchase settlement date; however, the total portfolio must have an average maturity of less than 12 months. III. PERMISSIBLE INVESTMENTS A. Investments will be made in U.S. dollars only. B. The Company may own, purchase or acquire marketable direct obligations in the following: 1. Obligations (fixed and floating rate) issued by, or unconditionally guaranteed by the U.S. Treasury, or any agency thereof, or issued by any political subdivision of any state or public agency, 2. Commercial paper rated as A-1 or better by Standard & Poor's, and P-1 or better by Moody's (or equivalent). 3. Floating rate and fixed rate obligations of corporations, banks and agencies including: medium term notes and bonds, deposit notes, and euro dollar/yankee notes and bonds. 157 April 5, 1993 Page 2 of 2 4. Certificates of deposit, bankers acceptances and time deposits of commercial banks, domestic or foreign, whose short term credit ratings are A-1/P-1 (or equivalent). 5. Repurchase agreements collateralized by U.S. Treasury and agency securities. 6. Insurance company Funding Agreements, Investment Contracts, or similar obligations. 7. Asset backed and mortgage backed securities. 8. Master Notes. 9. Taxable money market preferreds. 10. Tax exempt securities including municipal bonds/notes, money market preferreds, and variable rate demand notes. C. Issuing institutions shall be Corporations, Trusts, Partnerships, and Banks domiciled in the U.S., Canada, Japan and Western Europe, or Insurance Companies domiciled in the U.S. IV. CREDIT REQUIREMENTS Safety shall always be a primary consideration in structuring the Company's investment portfolio. Credit ratings should be tied to duration as prescribed below in order to combine safety, liquidity and acceptable market performance:
DURATION MINIMUM CREDIT RATING -------- --------------------- S&P MOODY'S --- ------- 6 months or less A- A3 6 - 18 months AA Aa2 18 months or more AAA Aaa
Original issue securities allowable under this policy with less than twelve months to maturity may substitute the issuers short term credit rating if that rating is A-1/P-1 or better. V. DIVERSIFICATION To diversiffy risk, no more than $2 million or 10% of the portfolio can be invested with any one issuer. Exceptions are issues of the U.S. Treasury or agency securities, insured or government collateralized issues and daily money market funds. 158 SCHEDULE 2.01 COMMITMENTS
Commitment Bank Commitment Percentage - ---- ---------- ---------- Bank of America National Trust and Savings Association $ 6,481,481.48 18.51851852% ABN AMRO Bank N.V $ 6,481,481.48 18.51851852% NationsBank of North Carolina, N.A. $ 3,888,888.89 11.11111111% U.S. Bank of Washington, N.A. $ 3,888,888.89 11.11111111% Wells Fargo Bank, N.A. $ 3,888,888.89 11.11111111% Seattle First National Bank $ 3,888,888.89 11.11111111% The Bank of Tokyo, Ltd. $ 3,888,888.89 11.11111111% The Bank of California, N.A. $ 2,592,592.59 7.40740741% -------------- ------------- $35,000,000.00 100.00000000% ============== =============
159 PLUM CREEK TIMBER COMPANY, L.P. SCHEDULE 6.05 LITIGATION NONE 160 SCHEDULE 6.07 6.07(a) QUALIFIED PLANS: Plum Creek Pension Plan Plum Creek Thrift and Profit Sharing Plan Plum Creek Welfare Plan - Component Documents listed in Appendix II, thereto NON-QUALIFIED PLANS: Plum Creek Management Company, L.P. Executive Unit Award Plan Plum Creek Management Company, L.P. Key Employee Long Term Incentive Plan Plum Creek Management Company, L.P. Long Term Incentive Plan Plum Creek Management Company, L.P. Management Incentive Plan Plum Creek Management Company, L.P. Key Employee Unit Award Plan Plum Creek Management Company, L.P. Executive and Key Employee Salary and Incentive Compensation Deferral Plan Plum Creek Management Company, L.P. Executive Incentive Sharing Plan Plum Creek Supplemental Benefits Plan Plum Creek Timber Company, L.P. Key Employee Supplemental Pension Plan PC Advisory Corp I Deferred Compensation Plan for Directors MULTI-EMPLOYER PLANS: None 161 SCHEDULE 6.07 - CONTINUED 6.07(c) A favorable determination letter from the IRS has been received for the Plum Creek Thrift and Profit Sharing Plan. The Plum Creek Pension Plan, adopted in March 1990, is intended to be a qualified plan pursuant to Internal Revenue Code section 401(a) and the Trust is intended to be tax exempt pursuant to Code section 501(a). The current plan has not been submitted for a determination letter which will confirm it is qualified. The Plum Creek Pension Plan will be submitted for a favorable determination letter request no later than the last day of its plan year (December 31, 1994) and the Company will adopt any appropriate amendments and take any action requested by the Internal Revenue Service as a condition of issuing a favorable determination letter on the Plum Creek Pension Plan. 6.07(d) and (e) None 6.07(f) Retiree Life Insurance: -- Insured plan -- $10,000 coverage per salaried retiree -- Approximately 50 retirees covered -- Plan continues to be available to salaried retirees Retiree Medical: -- Liability to cover four retirees for life and two retirees to age 65 -- Plan continues to be available to salaried retirees at retiree-pay-all basis -- Liability to provide Mr. Leland and family with coverage until Mr. Leland is no longer a Board member. Active Medical -- Liability to provide Mr. Sletten and family with continuing medical coverage, under its "COBRA" coverage until December 31, 1995. The Retiree Life, Retiree Medical, and Active Medical Communications contain disclaimers regarding the rights of the Company to modify, amend or terminate the Plans. The Accumulated Post-retirement Benefit Obligation at December 31, 1993 was $393,725. 6.07(h), (j), and (k) None 162 SCHEDULE 6.12 ENVIRONMENTAL MATTERS 6.12(a) None. 6.12(b) Plum Creek Manufacturing L.P. is in the process of applying for a groundwater discharge permits at the Columbia Falls complex. It has not been determined yet whether a Groundwater Discharge Permit will be required at the Pablo or Ksanka facilities. 6.12(c) Consent Decrees: Columbia Falls Veneer Dryers, May 21, 1990 Evergreen Veneer Dryers, May 26, 1991 Evergreen Boiler, May 19, 1992 Notice of Violation or Citation: EPA NOV/Evergreen Veneer Dryers, February 21, 1991, May 1, 1992 Montana Air Quality Bureau Citation/Columbia Falls Boiler, April 25, 1994 Montana Air Quality Bureau Citation/Columbia Falls Boiler, August 31, 1994 Environmental Claims related to: EPA/North American Environmental Inc. (Clearfield, UT) EPA/Evergreen Plywood glue pit EPA/Somers site (Somers, MT) DOE/Old Landsburg Mine Site (Ravensdale, WA) 6.12(d) None. 163 PLUM CREEK TIMBER COMPANY, L.P. SCHEDULE 6.18 SUBSIDIARIES 6.18(a) Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Company") has direct ownership in two subsidiaries, and indirect ownership of two additional subsidiaries. The Company owns 98% of Plum Creek Manufacturing, L.P., a Delaware limited partnership. The remaining 2% of Plum Creek Manufacturing, L.P. is owned by Plum Creek Management Company, L.P., a Delaware limited partnership, general partner of the Company. The Company owns 96% of the issued and outstanding stock of Plum Creek Marketing, Inc., a Delaware corporation. The remaining 4% of the issued and outstanding stock of Plum Creek Marketing, Inc. is owned by Plum Creek Management Company, L.P., general partner of the Company. Plum Creek Marketing, Inc. owns 100% of the issued and outstanding stock of Plum Creek remanufacturing, Inc., a Washington corporation, and Plum Creek Foreign Sales Corp., a Guam corporation. Plum Creek Foreign Sales Corp. is an inactive corporation. 6.18(b): None 164 PLUM CREEK TIMBER COMPANY, L.P. SCHEDULE 8.01 PERMITTED LIENS NONE 165 SCHEDULE 8.04 PERMITTED INVESTMENTS 1. 98% interest in Plum Creek Manufacturing, L.P. 2. 96% interest in Plum Creek Marketing, Inc. 166 EXHIBIT A NOTICE OF BORROWING Date: __________________ To: Bank of America National Trust and Savings Association, as Agent for the Banks parties to the Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Credit Agreement") among Plum Creek Timber Company, L.P., certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank, and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. [If applicable] With a copy to Bank of America National Trust and Savings Association, as the Swingline Bank. Ladies and Gentlemen: The undersigned, Plum Creek Timber Company, L.P, (the "Company"), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section [2.03] [2.12(b)] of the Credit Agreement, of the Borrowing specified herein: 1. The aggregate amount of the proposed [Committed] [Swingline] Borrowing is $__________. 2. The Business Day of the proposed [Committed] [Swingline] Borrowing is ____________________, 19___. [3. The Borrowing is to be comprised of $__________ of [CD Rate] [Offshore Rate] [Base Rate] Committed Loans.] or [3. The Borrowing is to be comprised of a Swingline Loan.] 1 167 4. [If applicable] The duration of the Interest Period for the [CD Rate Committed Loans] [Offshore Rate Committed Loans] included in the Borrowing shall be [__________ days] [__________ months]. 5. [If applicable] The Borrowing shall be allocated to the [Revolving Facility Tranche] [Capital Expenditure Tranche]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed [Swingline] [Committed] Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom: (a) the representations and warranties of the Company contained in Article VI of the Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct as of such earlier date); (b) no Default or Event of Default exists; and (c) the proposed Borrowing will not cause [(i)] the Effective Amount of all outstanding Committed Loans, Swingline Loans and Bid Loans plus the Effective Amount of all L/C Obligations to exceed the Aggregate Commitment [and (ii) the Effective Amount of all Swingline Loans to exceed the Swingline Commitment]. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: _________________________________ Title: ______________________________ 2 168 EXHIBIT B NOTICE OF CONVERSION/CONTINUATION Date: __________________ To: Bank of America National Trust and Savings Association, as Agent for the Banks parties to the Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Credit Agreement") among Plum Creek Timber Company, L.P., certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Ladies and Gentlemen: The undersigned, Plum Creek Timber Company, L.P. (the "Company"), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.04 of the Credit Agreement, of the [conversion] [continuation] of the Committed Loans specified herein, that: 1. The date of the [conversion] [continuation] is ____________________, 19__. 2. The aggregate amount of the Committed Loans [converted] [continued] is $__________. 3. The Committed Loans are to be [converted into] [continued as] [CD Rate] [Offshore Rate] [Base Rate] Committed Loans. 4. [If applicable] The duration of the Interest Period for the Committed Loans included in the [conversion] [continuation] shall be [__________ days] [__________ months]. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed [conversion] [continuation], before and after giving effect thereto and to the application of the proceeds therefrom: 1 169 (a) the representations and warranties of the Company contained in Article VI of the Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct as of such earlier date); (b) no Default or Event of Default exists; and (c) the proposed [conversion] [continuation] will not cause the Effective Amount of all outstanding Committed Loans, Swingline Loans and Bid Loans plus the Effective Amount of all L/C Obligations to exceed the Aggregate Commitment. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: __________________________________ Title: _______________________________ 2 170 EXHIBIT C-1 LEGAL OPINION OF COUNSEL FOR THE COMPANY [Unless otherwise defined herein, capitalized terms used in this Exhibit C-1 have the meanings assigned to them in the Agreement.] (a) Each of the Company, the General Partner, PCMC General Partner and Plum Creek Manufacturing, L.P. is a limited partnership duly formed under the laws of the State of Delaware, with a stated term beyond the term of the Loan Documents (in those cases where the Loan Documents have a fixed term) and is duly qualified and in good standing in each state in which the failure to so qualify would have a Material Adverse Effect. (b) Each of PC Advisory General Partner and Plum Creek Marketing, Inc. is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified and in good standing in each state in which the failure to so qualify would have a Material Adverse Effect. (c) The Company and each of the Partner Entities have the partnership or corporate, as applicable, power and authority to execute and deliver, and to perform and observe the provisions of, the Loan Documents. (d) The execution, delivery and performance by the Company of the Loan Documents have been duly authorized by all necessary corporate and partnership action on behalf of PC Advisory General Partner, as general partner of PCMC General Partner, as general partner of the General Partner, as general partner of the Company. (e) The Loan Documents have been duly executed and delivered by the Company. (f) The Company and each of its Subsidiaries has the power and authority and all governmental licenses, authorizations, consents and approvals to own its assets and carry on its business, except for such governmental licenses, authorizations, consents and approvals, the lack thereof would not have a Material Adverse Effect. (g) No registration with, consent or approval of, notice to, or other action by, any Governmental Authority is 1 171 required on the part of the Company or the Partner Entities or any of their Subsidiaries for the execution, delivery or performance by the Company of the Loan Documents, or if required, such registration has been made, such consent or approval has been obtained, such notice has been given or such other appropriate action has been taken. (h) The execution, delivery and performance of the Loan Documents by the Company are not in violation of the partnership documents of the Company, the General Partner or the PCMC General Partner or the Articles of Incorporation and Bylaws of the PC Advisory General Partner. (i) The execution, delivery and performance of the Loan Documents by the Company will not violate or result in a breach of any of the terms of or constitute a default under or result in a creation of any Lien on any property or assets of the Company or any of the Partner Entities, pursuant to the terms of any indenture, mortgage, deed of trust or other agreement to which such Person is a party or any order, injunction, writ or decree of any Governmental Authority to which such Person or its property is subject. (j) The execution, delivery and performance of the Loan Documents will not conflict with or contravene any of Regulations G, T, U and X promulgated by the Federal Reserve Board. (k) Neither the Company, the Partner Entities, any Person controlling the Company or the Partner Entities, or any Subsidiary of the Company or the Partner Entities, is an "Investment Company" within the meaning of the Investment Company Act of 1940, as amended, or subject to regulation under the Public Utility Holding Company Act of 1935, as amended. (l) There are no actions, suits, proceedings, claims or disputes pending or, to the best of my knowledge, threatened against the Company, the Partner Entities or any of their Subsidiaries or any of their respective properties before any court, regulatory body, administrative agency, at law, in equity, in arbitration or before any Governmental Authority which (a) purport to affect or pertain to the Loan Documents, or any of the transactions contemplated thereby, (b) have a reasonable probability of success on the merits and which, if determined adversely to the Company, the Partner Entities or their Subsidiaries, would reasonably be expected to have a Material Adverse Effect. 2 172 EXHIBIT C-2 LEGAL OPINION OF PERKINS COIE [Unless otherwise defined herein, capitalized terms used in this Exhibit C-2 have the meanings assigned to them in the Agreement.] (a) The Agreement constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms. 173 EXHIBIT D PLUM CREEK TIMBER COMPANY, L.P. COMPLIANCE CERTIFICATE DATE: _______________________ Reference is made to that certain Credit Agreement dated as of November 15, 1994 (the "Credit Agreement") among Plum Creek Timber Company, L.P., a Delaware limited partnership (the "Company"), certain financial institutions from time to time parties to the Credit Agreement (the "Banks"), ABN Amro Bank N.V., as co-agent and a letter of credit issuing bank and Bank of America National Trust and Savings Association, a national banking association, as agent for the Banks (in such capacity, the "Agent") and as a letter of credit issuing bank. Unless otherwise defined herein, capitalized terms used herein have the respective meanings assigned to them in the Credit Agreement. The undersigned Responsible Officer of the Company, hereby certifies as of the date hereof that he/she is the ___________________________ of the Company, and that, as such, he/she is authorized to execute and deliver this Certificate to the Banks and the Agent on the behalf of the Company and its Subsidiaries and not as an individual, and that: [Use the following paragraph if this Certificate is delivered in connection with the financial statements required by subsection 7.01(a) of the Credit Agreement.] 1. Attached as Schedule 1 hereto are (a) a true and correct copy of the audited combined balance sheet of the Company as at the end of the fiscal year ended December 31, ____ and (b) the related combined statements of income and statement of cash flows for such fiscal year, setting forth in each case in comparative form the figures for the previous fiscal year, and accompanied by the opinion of Coopers & Lybrand or another nationally-recognized certified independent public accounting firm. Such opinion is not qualified or limited because of a restricted or limited examination by such accountant of any material portion of the Company's or any Subsidiary's records and is delivered to the Agent pursuant to a reliance agreement between the Agent and Banks and such accounting firm which you have advised us is in form and substance satisfactory to the Agent and the Majority Banks; 1 174 or [Use the following paragraph if this Certificate is delivered in connection with the financial statements required by subsection 7.01(b) of the Credit Agreement.] 1. Attached as Schedule 1 hereto are (a) a true and correct copy of the audited combining balance sheets of the Company and each of its Subsidiaries as at the end of the fiscal year ended December 31, ____ and (b) the related combining statements of income and statement of cash flows for such fiscal year; which financial statements were used in connection with the preparation of the audited combined balance sheet of the Company as of the end of such fiscal year and the related combined statements of income and statement of cash flows for such fiscal year. or [Use the following paragraph if this Certificate is delivered in connection with the financial statements required by subsections 7.01(c) and (d) of the Credit Agreement.] 1. (a) Attached as Schedule 1A hereto is (i) a true and correct copy of the unaudited combined balance sheet of the Company and its combined Subsidiaries as of the end of the fiscal quarter ended ______________ ____, and (ii) the related combined statements of income and statement of cash flows of the Company and its combined Subsidiaries for the period commencing on the first day and ending on the last day of such quarter, setting forth in each case in comparative form the figures for the previous year (subject to normal year-end audit adjustments). (b) Attach as Schedule 1B hereto is (i) a true and correct copy of the unaudited combining balance sheets of the Company and each of its Subsidiaries as of the end of the fiscal quarter ended ___________ ___, ____, and (ii) the related combining statements of income and statement of cash flows for such quarter, which financial statements were used in connection with the preparation of the financial statements referred to in paragraph 1(a) above of this Certificate. 2. The undersigned has reviewed and is familiar with the terms of the Credit Agreement and has made, or has caused to be made under his/her supervision, a detailed review of the transactions and conditions (financial or 2 175 otherwise) of the Company during the accounting period covered by the attached financial statements. 3. The attached financial statements are complete and correct, and have been prepared in accordance with GAAP on a basis consistent with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 4. The attached financial statements are certified by a Responsible Officer of the Company and fairly state the financial position and results of operations of the Company and its combined Subsidiaries. 5. To the best of the undersigned's knowledge, the Company, during such period, has observed, performed or satisfied all of its covenants and other agreements, and satisfied every condition in the Credit Agreement to be observed, performed or satisfied by the Company, and the undersigned has no knowledge of any Default or Event of Default. 6. The financial covenant analyses and information set forth on Schedule 2 attached hereto are true and accurate on and as of the date of this Certificate. 7. For the fiscal quarter commencing __________________, the Applicable Margin is (i) _____% in the case of Offshore Rate Committed Loans, (ii) _____% in the case of CD Rate Committed Loans and (iii) 0.0000% in the case of Base Rate Committed Loans. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of ____________________, ____. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By:___________________________________ Title:________________________________ 3 176 PLUM CREEK TIMBER COMPANY, L.P. SCHEDULE 2 COMPLIANCE CERTIFICATE COMPUTATION STATEMENT ($ IN THOUSANDS) Fixed Charge Coverage Ratio (used for Applicable Margin and Commitment Fee Percentage) EBITDA Net Income Plus: DD&A LIFO Adjustments Accrued Income Taxes ----- Total $0 (A) ----- To: 4 Qtrs. Combined Interest Expense plus: scheduled principal repayments ----- Total $0 (B) ----- "A" divided "B" 0.00 x NEGATIVE COVENANTS 1) SECTION 8.02(h): ASSET SALES Maximum Allowed calendar year ________ $0 Sales as of ________ $0 2) SECTION 8.03: HARVESTING RESTRICTIONS (MMBF) 199__ Maximum Allowable Harvest 0 Add: Prior year Cumulative Carryover Harvest 0 ----- Available to Harvest in 199__ 0 Actual 199__ Harvest 0 ----- 199__ Carryover Harvest 0 ===== 3) SECTION 8.04(i): INVESTMENTS NOT OTHERWISE PERMITTED: The greater of $30 million or 60% of the Average annual Pro Forma Free Cash Flow from the two fiscal years preceding 2 Year Average Proforma Free Cash Flow $0 The greater of $30 million or Average (above) $0 Cumulative investments made through _________ $0 177 4) SECTION 8.05(b): FUNDED DEBT INCURRED TO FINANCE CAPITAL IMPROVEMENTS: Maximum Allowed $20,000 Outstanding at ____________ $0 5) SECTION 8.05(d): INDEBTEDNESS INCURRED FOR THE REVOLVING CREDIT FACILITY Maximum Allowed $15,000 Outstanding at ____________ $0 6) SECTION 8.05(f): GUARANTEE OF FACILITIES SUBSIDIARY REVOLVING CREDIT FACILITY: Maximum Allowed $20,000 Outstanding at ____________ $0 7) SECTION 8.05(g): GUARANTEE OF FACILITY SUBSIDIARY CAPITAL IMPROVEMENT FUNDED DEBT: Maximum Allowed $20,000 Outstanding at ____________ $0 8) SECTION 8.05(h): AGGREGATE PRINCIPAL AMOUNT OF INDEBTEDNESS SECURED BY LIENS: Maximum Allowed $0 Outstanding at ____________ $0 9) SECTION 8.05(i): ADDITIONAL FUNDED DEBT: Pro Forma Free Cash Flow $0 to Maximum Pro Forma Annual Interest Charges $0 Ratio = 0.00 x Amount Outstanding $0 Not to exceed $400 million $400,000 178 10) SECTION 8.13(a): RESTRICTED PAYMENTS: Available Cash means, with respect to any calendar quarter, (i)(a) Net Income $0 (a) Excluding Gain on sale of any Capital Assets 0 Plus: (b) DD&A 0 (b) Other non-cash charges (incl. LIFO inventory) 0 (c) Reduction in reserves of the types referred to in clause (ii)(d) below, Interest 0 Principal 0 (d) Proceeds received from the sale of Designated Acres 0 (e) Cash from Capital Transactions used to Refinance or refund indebtedness 0 Less (ii) the sum of: (a) All payments of Principal Indebtedness 0 (b) Capital Expenditures 0 (c) Capital Expenditures made in prior quarter, anticipated to financed, but have not been refinanced 0 (d) Reserve for future Principal Payments: Bank 0 Senior and First Mortgage Notes 0 (d) Reserve for future Capital Expenditures 0 (d) Reserve for additional Working Capital 0 (d) Reserve for future Distributions 0 (d) Reserve for future Interest Payments 0 (e) Other noncash credits 0 (f) The amount of any investments 0 (g) Any investments made in prior quarter anticipated to be financed, but have not been refinanced 0 -- Available Cash - __________ $0 == General Partner 2% Interest 0 General Partner Incentive Distribution 0 Allocable to Unitholders - net 0 -- Total Distribution $0 == 179 EXHIBIT E FORM OF CASH COLLATERAL ACCOUNT AGREEMENT This CASH COLLATERAL ACCOUNT AGREEMENT ("Agreement") dated as of ______________, 199_ is entered into by and between PLUM CREEK TIMBER COMPANY, L.P., a Delaware limited partnership (the "Company"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent (solely in such capacity, "Agent") for the financial institutions from time to time parties to the Credit Agreement referred to below (such entities, together with their respective successors and assigns, being collectively referred to as the "Banks"). RECITALS A. The Company, Agent, ABN Amro Bank N.V., as co-agent ("Co-Agent") and the Banks have entered into a Credit Agreement dated as of November 15, 1994 (as the same may from time to time be amended, amended and restated, modified, supplemented or renewed, the "Credit Agreement"). Capitalized terms used herein without definition shall have the meanings given to them in the Credit Agreement. [B. Pursuant to Section 3.07 or subsection 2.09(a)(ii) of the Credit Agreement, Agent has required that the Company immediately Cash Collateralize all or a portion of the L/C Obligations as provided in that Section or subsection in a cash collateral account at Bank of America National Trust and Savings Association ("BofA").] or [B. In accordance with subsection 2.09(a)[(i)] [(ii)] and subsection 2.09(c) of the Credit Agreement, the Company is required to prepay or Cash Collateralize [CD Rate Committed Loans] [and] [Offshore Rate Committed Loans] in an amount equal to $ _____________ in a cash collateral account at Bank of America National Trust and Savings Association ("BofA"). The Company has elected to Cash Collateralize such Committed Loans which cash collateral amount shall be applied to repay [CD Rate Committed Loans] [and] [Offshore Rate Committed Loans] at maturity thereof.] or [B. In accordance with subsection 2.09(a)[(i)][(ii)] and subsection 2.09(c) of the Credit 1 180 Agreement, the Swingline Bank has required the Company to Cash Collateralize Swingline Loans in an amount equal to $_______________ in a cash collateral account at Bank of America National Trust and Savings Association ("BofA"), which cash collateral amount shall be applied to repay Swingline Loans at maturity thereof.] or [B. In accordance with subsection 2.09(a)(iii) of the Credit Agreement, the Company is required to Cash Collateralize Bid Loans in an amount equal to $ ___________ in a cash collateral account at Bank of America National Trust and Savings Association ("BofA"), which amount shall be applied to Bid Loans at maturity thereof.] NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the Company and Agent hereby agree as follows: 1. Cash Collateral Account. a. Cash Collateral Account. For purposes of [Section 3.07] [subsection 2.09(a)(ii)] [subsection 2.09(c)] [subsection 2.09(a)(iii)] of the Credit Agreement, the Company has established with BofA, for the benefit of Agent on behalf of itself [IF WITH RESPECT TO SUBSECTION 2.09(c) AND NOT RELATING TO SWINGLINE LOANS: and the Banks] [IF WITH RESPECT TO SUBSECTION 2.07(c) RELATING TO SWINGLINE LOANS: the Swingline Bank and the Banks] [IF WITH RESPECT TO SECTION 3.07 OR SUBSECTION 2.09(a)(ii): the Issuing Banks and the Banks] [IF WITH RESPECT TO SUBSECTION 2.09(a)(iii): and the Bid Loan Lenders], a special purpose restricted deposit account in the name of the Company, deposit account #__________ (together with any successor account(s) that may be established from time to time in replacement thereof, the "Cash Collateral Account"). Agent shall have exclusive control over the Cash Collateral Account and the sole right of withdrawal therefrom, except as expressly provided in Section 1(b) below. The Company agrees that the Cash Collateral Account shall be a blocked account, and upon the deposit of funds into the Cash Collateral Account by or at the direction of the Company, such deposit shall become (except as expressly provided in such Section 1(b) hereof) irrevocable and the Company shall have no right to withdraw amounts contained therein or interest accrued thereon except as provided in Section 1(b) hereof or upon the indefeasible payment in full of the Obligations; and until such indefeasible payment in full of the Obligations the Company waives (i) the right to make withdrawals from the Cash Collateral Account and (ii) the right to instruct BofA to 2 181 honor drafts drawn against the Cash Collateral Account, except in each case as expressly provided in Section 1(b) hereof. [IF WITH RESPECT TO SECTION 3.07 AND SUBSECTION 2.09(a)(ii)] [(b Application to Letters of Credit. Subject to the prior application by Agent of amounts held hereunder pursuant to Section 2, on the Honor Date of a Letter of Credit, Agent shall promptly apply any amounts remaining in the Cash Collateral Account to reimburse the Issuing Bank which issued such Letter of Credit, for the drawing on such Letter of Credit, and the Company irrevocably directs Agent to apply such funds at such time to reimburse such Issuing Bank in accordance with subsection 3.03(c) of the Credit Agreement. At any time that there are no outstanding L/C Obligations and so long as no Default or Event of Default shall then exist, Agent shall release and transfer to the Company any amounts remaining in the Cash Collateral Account.] [IF WITH RESPECT TO SUBSECTION 2.09(c) AND NOT RELATING TO SWINGLINE LOANS] [(b) Application to Committed Loans. Subject to the prior application by Agent of amounts held hereunder pursuant to Section 2, on the maturity date of any Interest Period with respect to [a CD Rate Committed Loan] [and] [an Offshore Rate Committed Loan], Agent shall apply any amounts remaining in the Cash Collateral Account to repay such [CD Rate Committed Loan] [or] [[Offshore Rate Committed Loan], and the Company irrevocably directs Agent to apply such funds at such time to repay [CD Rate Committed Loans] [or] Offshore Rate Committed Loans]. [IF WITH RESPECT TO SUBSECTION 2.09(c) RELATING TO SWINGLINE LOANS] [(b) Application to Swingline Loans. Subject to the prior application by Agent of amounts held hereunder pursuant to Section 2, on the maturity date of any Swingline Loan or on any Clean-Up Day, Agent shall apply any amounts remaining in the Cash Collateral Account to repay such Swingline Loans and the Company irrevocably directs Agent to apply such funds at such time to repay Swingline Loans. [IF WITH RESPECT TO SUBSECTION 2.09(a)(iii)] [(b) Application to Bid Loans. Subject to the prior application by Agent of amounts held hereunder pursuant to Section 2, on the maturity date of any Interest Period with respect to a Bid Loan, Agent shall apply any amounts remaining in the Cash Collateral Account to repay such Bid Loan, and the Company irrevocably directs Agent to apply such funds at such time to repay Bid Loans.] 3 182 2. Lien. The Cash Collateral Account, all funds and investments contained therein, all interest accrued thereon, and all proceeds thereof shall be held by BofA for the benefit of Agent on behalf of itself [IF RESPECT TO SUBSECTION 2.09(c) AND NOT RELATING TO SWINGLINE LOANS: and the Banks] [IF WITH RESPECT TO SUBSECTION 2.09(c) RELATING TO SWINGLINE LOANS: the Swingline Bank and the Banks] [IF WITH RESPECT TO SECTION 3.07 OR SUBSECTION 2.09(a)(ii): the Issuing Banks and the Banks] [IF WITH RESPECT TO SUBSECTION 2.09(a)(iii): and the Bid Loan Lenders] as cash collateral to secure the Company's Obligations. As security for the payment and performance of all obligations of the Company hereunder and under the Credit Agreement, the Company hereby grants to Agent on behalf of itself [IF WITH RESPECT TO SUBSECTION 2.09(c) AND NOT RELATING TO SWINGLINE LOANS: and the Banks] [IF WITH RESPECT TO SUBSECTION 2.09(c) RELATING TO SWINGLINE LOANS: the Swingline Bank and the Banks] [IF WITH RESPECT TO SECTION 3.07 OR SUBSECTION 2.09(a)(ii): the Issuing Banks and the Banks] [IF WITH RESPECT TO SUBSECTION 2.09(a)(iii): and the Bid Loan Lenders] a first priority perfected security interest in all of its rights, title and interest now existing or hereafter arising in and to the Cash Collateral Account and any proceeds or products thereof. Agent and the Company hereby notify BofA of the foregoing lien, and BofA, by its signature below, acknowledges receipt of such notice. The Company shall be deemed in default under this Agreement upon the occurrence of an Event of Default, as that term is defined in the Credit Agreement. Upon the occurrence of any such Event of Default, Agent may, at its option, and without notice to or demand on the Company and in addition to all rights and remedies available to Agent under the Credit Agreement, do any one or more of the following: (a) foreclose or otherwise enforce Agent's security interest in any manner permitted by law, or provided for in this Agreement; (b) dispose of the Cash Collateral Account on such terms and in such manner as Agent may determine; and (c) recover from the Company all costs and expenses, including, without limitation, Attorneys Costs, incurred or paid by Agent in exercising any right, power or remedy provided by this Agreement, the Loan Documents, or by law. 3. Investments. Upon the Company's written instructions as provided in Section 4 below, if no Default or Event of Default exists, Agent shall invest the funds on deposit in the Cash Collateral Account in any of the permitted investments described in the Investment Policy attached as Schedule 1.01 to the Credit Agreement; provided 4 183 that with respect to any instruction to invest funds in any investment that does not constitute a "deposit account" (as defined in Division 9 of the California Uniform Commercial Code) maintained with BofA, Agent shall take no action to effect such instructions to invest funds unless and until the Company has duly executed and delivered such documents and instruments and caused to be delivered such opinions of counsel as the Majority Lenders may reasonably deem necessary or appropriate to perfect or to confirm the perfection and first priority status of Agent's security interest in such investments. 4. Investment Direction. With respect to the investment of funds on deposit in the Cash Collateral Account pursuant to Section 3 above, Agent shall be entitled to rely upon the written instructions of those individuals whose signatures appear in the spaces provided below, or such other individuals as may hereafter be designated in writing by the Company: ________________________________________________ ________________________________________________ ________________________________________________ 5. Compensation. BofA shall be entitled to compensation from the Company for the maintenance of and investment of funds contained in the Cash Collateral Account in accordance with its standard fees for such services in effect from time to time. Such compensation shall be payable upon demand. 6. Notices, Etc. Any notice or other communication herein required or permitted to be given shall be in writing and may be delivered in person, with receipt acknowledged, or sent by telex, telecopy or by United States mail, registered or certified, return receipt requested, postage prepaid and addressed as set forth on the signature pages to this Agreement or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. All such notices and communications shall be effective upon receipt. Failure 5 184 or delay in delivering copies of any notice, demand, request, consent, approval, declaration or other communication to the persons designated above to receive copies shall in no way adversely affect the effectiveness of such notice, demand, request, consent, approval, declaration or other communication. 7. Termination. This Agreement shall terminate when transfers of amounts in the Cash Collateral Account pursuant to Section 1 hereof shall have reduced the balance of the Cash Collateral Account to zero. 8. Successors and Assigns; Governing Law. This Agreement shall be binding upon and inure to the benefit of the Company, Agent [and the Banks] [and the Bid Loan Lenders]* and their respective successors and assigns, except that the Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of Agent [and each Bank] [and each Bid Loan Lender]. Except as otherwise expressly provided herein or in any of the other Loan Documents, in all respects, including all matters of construction, validity and performance, this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California applicable to contracts made and performed in such state, without regard to the principles thereof regarding conflict of laws, and any applicable laws of the United States of America. 9. Entire Agreement; Construction; Amendments and Waivers. a. Entire Agreement. This Agreement, the Credit Agreement and the other Loan Documents, taken together, constitute and contain the entire agreement among the parties and supersede any and all prior agreements, negotiations, correspondence, understandings and communications among the parties, whether written or oral, respecting the subject matter hereof. b. Construction. This Agreement is the result of negotiations between and has been reviewed by each of the Company, Agent [and the Banks] [and the Bid Loan Lenders] and their respective counsel; accordingly, this Agreement shall be deemed to be the product of the parties hereto, and no ambiguity shall be construed in favor of or ____________________ * Bracketed references to Bid Loan Lenders shall be employed only if the only Obligations secured hereby are Bid Loans. In other circumstances, references to Banks and Majority Banks should be employed. 6 185 against the Company, Agent [or the Banks] [or the Bid Loan Lenders]. The Company, Agent [and the Banks] [and the Bid Loan Lenders] agree that they intend the literal words of this Agreement and that no parol evidence shall be necessary or appropriate to establish the Company's, Agent's [or any Bank's] [or any Bid Loan Lender's] actual intentions. c. Interpretation. The terms of this Agreement shall be interpreted in accordance with the provisions of Article I of the Credit Agreement, provided, however, that (a) any reference to a "Section" shall refer to the relevant Section to this Agreement, unless specifically indicated to the contrary and (b) the words "herein," "hereof" and "hereunder" and other words of similar import (including, without limitation, in Article I of the Credit Agreement) shall refer to this Agreement as a whole, as the same may from time to time be amended, amended and restated, modified or supplemented, and not to any particular section, subsection or clause contained in this Agreement. d. Amendments; Waivers. No amendment, modification, discharge or waiver of, or consent to any departure by the Company from, any provision of this Agreement shall be effective unless the same shall be in writing and signed by the Agent with the written consent of [the Majority Banks] [and the Swingline Bank] [the Bid Loan Lenders], and then such waiver shall be effective only in the specific instance and for the specific purpose for which given. 10. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be valid, legal and enforceable under the applicable law of any jurisdiction. Without limiting the generality of the foregoing sentence, in case any provision of this Agreement shall be invalid, illegal or unenforceable under the applicable law of any jurisdiction, the validity, legality and enforceability of the remaining provisions, or of such provision in any other jurisdiction, shall not in any way be affected or impaired thereby. 11. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 12. No Third Parties Benefited. This Agreement is made and entered into for the sole protection and legal benefit of the Company, Agent, [the Banks] [the Bid Loan Lenders], and their permitted successors and assigns, and no 7 186 other Person shall be a direct or indirect legal beneficiary of, or have any direct or indirect cause of action or claim in connection with this Agreement. Neither Agent [nor any Bank] [nor any Bid Loan Lender] shall have any obligation to any Person not a party to this Agreement. 13. Counterparts. This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: _______________________________ Title: _______________________________ Notice to be sent to: Plum Creek Timber Company, L.P. 999 Third Avenue, Suite 2300 Seattle, WA 98104 Attn: Chief Financial Officer Tel: (206) 467-3600 Fax: (206) 467-3797 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: _____________________________________ Printed Name: Title: 8 187 Notice to be sent to: Bank of America National Trust and Savings Association 1455 Market Street, 12th Floor San Francisco, CA 94103 Attn: Shannon Collins Agency Management Services #5596 Tel: (415) 622-1158 Fax: (415) 622-4894 Notice of security interest acknowledged: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as depository By: ____________________________ Printed Name: Title: Notice to be sent to: Bank of America National Trust and Savings Association 555 California Street, 41st Floor San Francisco, CA 94104 Attn: Michael J. Balok Tel: (415) 622-2018 Fax: (415) 622-4585 9 188 EXHIBIT F FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this "Agreement") dated as of ____________________, ____ is made between _____________________ _________________ (the "Assignor") and ______________________________ (the "Assignee"). RECITALS WHEREAS, the Assignor is party to that certain Credit Agreement dated as of November 15, 1994 among PLUM CREEK TIMBER COMPANY, L.P., a Delaware limited partnership (the "Company"), the several financial institutions from time to time party thereto (including the Assignor, the "Banks"), ABN AMRO BANK N.V., as Co-Agent and as a letter of credit issuing bank, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent and as a letter of credit issuing bank (as from time to time amended, amended and restated, modified, supplemented or renewed, the "Credit Agreement"). Any terms defined in the Credit Agreement and not defined in this Agreement are used herein as defined in the Credit Agreement; WHEREAS, as provided under the Credit Agreement, the Assignor has [(i)] committed to making [(A)] committed loans (the "Committed Loans") to the Company in an aggregate amount not to exceed $__________ (the "Commitment") [(B) Swingline Loans (the "Swingline Loans") to the Company in an aggregate amount not to exceed $__________ (the "Swingline Commitment")] and [(ii)] has agreed to provide the Company with Bid Loans from time to time in the Assignor's sole discretion; WHEREAS, [the Assignor has made Committed Loans in the aggregate principal amount of $__________, [Swingline Loans in the aggregate principal amount of $__________] [and Bid Loans in the aggregate principal amount of $_________] to the Company] [no Committed Loans are outstanding under the Credit Agreement] [no Swingline Loans are outstanding under the Credit Agreement] [no Bid Loans are outstanding under the Credit Agreement]; and WHEREAS, [the Assignor has acquired a participation in an Issuing Bank's liability under Letters of Credit in an aggregate principal amount of $_________ (the "L/C Obligations")] [and a participation in the Swingline Bank's liability under Swingline Loans in an 1 189 aggregate principal amount of $___________] [No Letters of Credit and no Swingline Loans are outstanding under the Credit Agreement]; and WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of the Assignor under the Credit Agreement in respect of (i) its Commitment, [together with a corresponding portion of each of its outstanding Committed Loans and L/C Obligations,] in an amount equal to $__________ (the "Assigned Amount") [and] (ii) [the Swingline Commitment, [together with a corresponding portion of its outstanding Swingline Loans,] in an amount equal to $________ and (iii)] its outstanding Bid Loans in an amount equal to $ ________, in each case on the terms and subject to the conditions set forth herein and the Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such conditions; NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows: 1. Assignment and Acceptance. (a) Subject to the terms and conditions of this Agreement, (i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from the Assignor, without recourse and without representation or warranty (except as provided in this Agreement) (A) __% (the "Assignee's Percentage Share") of the Commitment [and the Committed Loans and L/C Obligations] [, the Swingline Commitment [and the Swingline Loans]] of the Assignor, (B) [$ ____________ in principal amount of outstanding Bid Loans, and (C)] all related rights, benefits, obligations, liabilities and indemnities of the Assignor under and in connection with the Credit Agreement and the Loan Documents. [If appropriate, add paragraph specifying payment to Assignor by Assignee of outstanding principal of, accrued interest on, and fees with respect to, Committed Loans, Swingline Loans, Bid Loans and L/C Obligations assigned.] (b) With effect on and after the Effective Date (as defined herein), the Assignee shall be a party to the Credit Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Bank [and the Swingline Bank] under the Credit 2 190 Agreement, including the requirements concerning confidentiality, with a Commitment in an amount equal to the Assigned Amount [and the Swingline Commitment]. The Assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Bank [and as the Swingline Bank]. It is the intent of the parties hereto that the Commitment of the Assignor shall, as of the Effective Date, be reduced by an amount equal to the Assigned Amount [and the Swingline Commitment shall be entirely assumed by the Assignee,] and the Assignor shall relinquish its rights and be released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee. (c) After giving effect to the assignment and assumption, on the Effective Date the Assignee's Commitment will be $__________ [and Assignee's Swingline Commitment will be $__________]. (d) After giving effect to the assignment and assumption, on the Effective Date the Assignor's Commitment will be $_________[and Assignor's Swingline Commitment will be $0]. 2. Payments. (a) As consideration for the sale, assignment and transfer contemplated in Section 1, the Assignee shall pay to the Assignor on the Effective Date in immediately available funds an amount equal to $__________, representing [the principal amount of the Swingline Loans and] the Assignee's Percentage Share of the principal amount of all Committed Loans and $__________ of the principal balance of Bid Loans previously made, and currently owed, by the Company to the Assignor under the Credit Agreement and outstanding on the Effective Date. (b) The [Assignor] [Assignee] further agrees to pay to the Agent a processing fee in the amount specified in Section 11.08(a) of the Credit Agreement. 3. Reallocation of Payments. Any interest, fees and other payments accrued to the Effective Date with respect to the Committed Loans, [Swingline Loans] [Bid Loans,] and L/C Obligations and the Commitment [and Swingline Commitment] shall be for the account of the Assignor. Any interest, fees and other 3 191 payments accrued on and after the Effective Date with respect to the Assigned Amount [, the Swingline Commitment, Swingline Loans] and Bid Loans assigned hereunder shall be for the account of the Assignee. Each of the Assignor and the Assignee agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt. 4. Independent Credit Decision. The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements referred to in Section 7.01 of the Credit Agreement, and such other documents and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Agreement; and (b) agrees that it will, independently and without reliance upon the Assignor, the Agent or any other Bank and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit and legal decisions in taking or not taking action under the Credit Agreement. 5. Effective Date; Notices. (a) As between the Assignor and the Assignee, the effective date for this Agreement shall be __________, ____ (the "Effective Date"); provided that the following conditions precedent have been satisfied on or before the Effective Date: (i) this Agreement shall be executed and delivered by the Assignor and the Assignee; (ii) the consent of the Company and the Agent required for an effective assignment of the Assigned Amount [, the Swingline Commitment, Swingline Loans] and the Bid Loans assigned hereunder by the Assignor to the Assignee under Section 11.08(a) of the Credit Agreement shall have been duly obtained and shall be in full force and effect as of the Effective Date; (iii) the Assignee shall pay to the Assignor all amounts due to the Assignor under this Agreement; 4 192 (iv) the Assignee shall have complied with Section 4.01(f) of the Credit Agreement (if applicable); (v) the processing fee referred to in Section 2(b) hereof and in Section 11.08(a) of the Credit Agreement shall have been paid to the Agent; and (vi) the Assignor shall have assigned and the Assignee shall have assumed a percentage equal to Assignee's Percentage Share of the rights and obligations of the Assignor under, and of the Assignor's Committed Loans and L/C Obligations under and as defined in, the Facility A Credit Agreement. (b) Promptly following the execution of this Agreement, the Assignor shall deliver to the Company and the Agent for acknowledgement by the Agent, a Notice of Assignment in the form attached hereto as Schedule 1. [6. Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT] (a) The Assignee hereby appoints and authorizes the Assignor to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the Banks pursuant to the terms of the Credit Agreement. (b) The Assignee shall assume no duties or obligations held by the Assignor in its capacity as Agent under the Credit Agreement.] 7. Withholding Tax. The Assignee agrees to comply with Section 4.01(f) of the Credit Agreement (if applicable). 8. Representations and Warranties. (a) The Assignor represents and warrants that (i) it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any lien, security interest or other adverse claim; (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Agreement and any other documents required or permitted to be executed or delivered by it in connection with this Agreement and to fulfill its obligations hereunder; 5 193 (iii) no notices to, or consents, authorizations or approvals of, any person are required (other than any already given or obtained) for its due execution, delivery and performance of this Agreement, and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any person is required of it for such execution, delivery or performance; and (iv) this Agreement has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles. (b) The Assignor makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto. The Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements of the Company, or the performance or observance by the Company, of any of its respective obligations under the Credit Agreement or any other instrument or document furnished in connection therewith. (c) The Assignee represents and warrants that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Agreement and any other documents required or permitted to be executed or delivered by it in connection with this Agreement, and to fulfill its obligations hereunder; (ii) no notices to, or consents, authorizations or approvals of, any person are required (other than any already given or obtained) for its due execution, delivery and performance of this Agreement; and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any person is required of it for such execution, delivery or performance; (iii) this Agreement has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignee, enforceable against the Assignee in 6 194 accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors' rights and to general equitable principles; and (iv) it is an Eligible Assignee. 9. Further Assurances. The Assignor and the Assignee each hereby agrees to execute and deliver such other instruments, and take such other action, as either party may reasonably request in connection with the transactions contemplated by this Agreement, including the delivery of any notices or other documents or instruments to the Company or the Agent, which may be required in connection with the assignment and assumption contemplated hereby. 10. Miscellaneous. (a) Any amendment or waiver of any provision of this Agreement shall be in writing and signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Agreement shall be without prejudice to any rights with respect to any other or further breach thereof. (b) All payments made hereunder shall be made without any set-off or counterclaim. (c) The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Agreement. (d) This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. (e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF CALIFORNIA. The Assignor and the Assignee each irrevocably submits to the non-exclusive jurisdiction of any State or Federal court sitting in California over any suit, action or proceeding arising out of or relating to this Agreement and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such California State or 7 195 Federal court. Each party to this Agreement hereby irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding. (f) THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN). [Other provisions to be added as may be negotiated between the Assignor and the Assignee, provided that such provisions are not inconsistent with the Credit Agreement.] IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance Agreement to be executed and delivered by their duly authorized officers as of the date first above written. ______________________________________ Assignor By: _________________________________ Title: ______________________________ Address: ____________________________ _____________________________________ Assignor By: _________________________________ Title: ______________________________ Address: ____________________________ 8 196 SCHEDULE 1 NOTICE OF ASSIGNMENT AND ACCEPTANCE _______________, 19__ Bank of America National Trust and Savings Association, as Agent 1455 Market Street, 12th Floor San Francisco, CA 94103 Attn: Agency Management Services #5596 Plum Creek Timber Company, L.P. 999 Third Avenue, Suite 2300 Seattle, WA 98104 Attn: Chief Financial Officer Ladies and Gentlemen: We refer to the Credit Agreement dated as of November 15, 1994 (the "Credit Agreement") among Plum Creek Timber Company, L.P. (the "Company"), the Banks referred to therein, ABN AMRO Bank N.V., as Co-Agent and as a letter of credit issuing bank, and Bank of America National Trust and Savings Association, as Agent and as a letter of credit issuing bank. Terms defined in the Credit Agreement are used herein as therein defined. 1. We hereby give you notice of, and request the consent of the Company to, the assignment by ________________________ _____ (the "Assignor") to ______________________________ (the "Assignee") of _____% of the right, title and interest of the Assignor in and to the Credit Agreement (including, without limitation, the right, title and interest of the Assignor in and to the Commitments [and the Swingline Commitment] of the Assignor and all outstanding Committed Loans [, Swingline Loans] and Bid Loans made by the Assignor and the Assignor's participation in Letters of Credit and Swingline Loans). Before giving effect to such assignment the Assignor's Commitment is $__________, and the aggregate amount of its outstanding Committed Loans is $__________ and Bid Loans is $ _____________, and its participation in L/C Obligations is $_________ and in Swingline Loans is $__________. 2. The Assignee agrees that, upon receiving the consent of the Company and the Agent to such assignment, 9 197 the Assignee will be bound by the terms of the Credit Agreement as fully and to the same extent as if the Assignee were the Bank originally holding such interest in the Credit Agreement. 3. The following administrative details apply to the Assignee: (A) Notice Address: Assignee name: ______________________________________ Address: ____________________________________________ ____________________________________________ ____________________________________________ Attention: __________________________________________ Telephone: (____) __________________________________ Telecopier: (____) __________________________________ Telex (answerback): _________________________________ (B) Payment Instructions: Account No.: ________________________________________ At: ________________________________________ ________________________________________ ________________________________________ Reference: ________________________________________ Attention: ________________________________________ (C) Domestic and Offshore Lending Office: [same as notice address] [or] Address: ____________________________________________ ____________________________________________ ____________________________________________ Attention: __________________________________________ Telephone: (____) __________________________________ Telecopier: (____) __________________________________ Telex (answerback): _________________________________ 10 198 IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment Notice and Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first above mentioned. Very truly yours, [Name of Assignor] By: ________________________________ Title: [Name of Assignee] By: ________________________________ Title: ACKNOWLEDGED AND ASSIGNMENT CONSENTED TO: PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P. By: ________________________________ Its: _______________________________ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: ________________________________ Vice President 11 199 EXHIBIT G COMPETITIVE BID REQUEST Date: _______________ VIA FACSIMILE To: Bank of America National Trust and Savings Association, as Agent for the Banks parties to the Credit Agreement, dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Credit Agreement"), among Plum Creek Timber Company, L.P., certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Ladies and Gentlemen: The undersigned, Plum Creek Timber Company, L.P. (the "Company"), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice that this is a Competitive Bid Request for Bid Loans pursuant to Section 2.06 of the Credit Agreement as follows: 1. The Business Day of the proposed Bid Borrowing is ____________________, 199_. 2. The aggregate amount of the proposed Bid Borrowing is $______________. 3. The proposed Bid Borrowing to be made pursuant to Section 2.06 shall be comprised of [LIBOR] [Absolute Rate] Bid Loans. 4. The duration of the Interest Period[s] for the Bid Loans comprised in the Borrowing shall be ____________________, [____________________] and [____________________]. 5. [If applicable] The Interest Payment Date for the Bid Loans comprised in the Borrowing shall be ____________________, [____________________] and [____________________]. 6. [If applicable] The proposed Bid Borrowing shall be allocated to [the Revolving Facility tranche] [the Capital Expenditure Tranche]. 1 200 The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Bid Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom: (a) the representations and warranties of the Company contained in Article VI of the Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct as of such earlier date); (b) no Default or Event of Default exists; and (c) the proposed Borrowing will not cause the Effective Amount of all outstanding Committed Loans, Swingline Loans and Bid Loans, plus the Effective Amount of all L/C Obligations, to exceed the Aggregate Commitment. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By: _____________________________ Title:_____________________________ 2 201 EXHIBIT H INVITATION FOR COMPETITIVE BIDS Date: _______________ VIA FACSIMILE To: The Banks party to the Credit Agreement referred to below: Ladies and Gentlemen: Reference is made to the Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Credit Agreement") among Plum Creek Timber Company, L.P. (the "Company"), certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank, and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Capitalized terms used herein have the meanings specified in the Credit Agreement. Pursuant to subsection 2.06(b) of the Credit Agreement, you are hereby invited to submit offers to make Bid Loans to the Company based on the following specifications: 1. The Business Day of the proposed Bid Borrowing is ____________________, 199_. 2. The aggregate amount of the proposed Bid Borrowing is $______________. 3. The proposed Bid Borrowing to be made pursuant to Section 2.06 shall be comprised of [LIBOR] [Absolute Rate] Bid Loans. 4. The duration of the Interest Period[s] for the Bid Loans comprised in the Borrowing shall be______________, [____________________] and [____________________]. 5. [If applicable] The Interest Payment Dates for the Bid Loans comprised in the Borrowing shall be ______________________,[____________________] and [____________________]. 1 202 6. [If applicable] The proposed Bid Borrowing shall be allocated to [the Revolving Facility Tranche] [the Capital Expenditure Tranche]. All Competitive Bids must be in the form of Exhibit I to the Credit Agreement and must be received by the Agent no later than 6:30 a.m. (or, in the case of a Competitive Bid by the Agent or an Affiliate of the Agent in the capacity of a Bank, 6:15 a.m.) (San Francisco time) on ______________, 199_. BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: ____________________________ Title: ____________________________ 2 203 EXHIBIT I COMPETITIVE BID Date: _______________ VIA FACSIMILE Bank of America National Trust and Savings Association, as Agent 1455 Market Street, 12th Floor San Francisco, CA 94103 Attention: Shannon Collins Agency Management Services #5596 Facsimile: (415) 622-4894 Ladies and Gentlemen: Reference is made to the Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Credit Agreement"), among Plum Creek Timber Company, L.P. (the "Company"), certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Capitalized terms used herein have the meanings specified in the Credit Agreement. In response to the Competitive Bid Request of the Company, dated ______________, 199_, and in accordance with subsection 2.06(c)(ii) of the Credit Agreement, the undersigned Bank offers to make [a] Bid Loan[s] to the Company thereunder in the following principal amount[s] at the following interest rates for the following Interest Period[s] [with the following Interest Payment Dates]: Date of Borrowing: ______________, 199_ Aggregate Maximum Bid Amount: $______________ 1 204 Principal Principal Principal Amount (a) $____________________ Amount (a) $____________________ Amount (a) $___________________ (b) $____________________ (b) $____________________ (b) $___________________ (c) $____________________ (c) $____________________ (c) $___________________ Interest: Interest: Interest: [Absolute [Absolute [Absolute Rate (a) ____% Rate (a) ____% Rate (a) ____% (b) ____% (b) ____% (b) ____% (c) ____%] (c) ____%] (c) ____%] [or] [LIBOR Bid [LIBOR Bid [LIBOR Bid Margin (a) +/- __% Margin (a) +/- __% Margin (a) +/- __% (b) +/- __% (b) +/- __% (b) +/- __% (c) +/- __%] (c) +/- __%] (c) +/- __%] Interest Interest Interest Period _________________________ Period _________________________ Period ________________________ [Interest Payment [Interest Payment [Interest Payment Date _________________________] Date __________________________] Date _________________________]
[NAME OF BANK] By: ________________________________ Title: _____________________________ 2 205 EXHIBIT J REVOLVING EXTENSION REQUEST Date: __________________ To: Bank of America National Trust and Savings Association, as Agent for the Banks parties to the Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Credit Agreement") among Plum Creek Timber Company, L.P., certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank, and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Ladies and Gentlemen: The undersigned, Plum Creek Timber Company, L.P, (the "Company"), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby irrevocably requests, pursuant to Section 2.10(a) of the Credit Agreement, that the Banks extend the Revolving Termination Date for an additional 364 days to ___________, 199_. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the Revolving Termination Date: (a) the representations and warranties of the Company contained in Article VI of the Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct as of such earlier date); and 1 206 (b) no Default or Event of Default exists, or would result from such extension. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By:__________________________________ Title:_______________________________ The undersigned Bank hereby consents to the request to extend the Revolving Termination Date, as set forth above. [BANK] By:______________________________ Title:___________________________ 2 207 EXHIBIT K NOTICE OF INSTALLMENT REPAYMENT ELECTION Date: __________________ To: Bank of America National Trust and Savings Association, as Agent for the Banks parties to the Credit Agreement dated as of November 15, 1994 (as extended, renewed, amended or restated from time to time, the "Credit Agreement") among Plum Creek Timber Company, L.P., certain Banks that are signatories thereto, ABN Amro Bank N.V., as Co-Agent and an Issuing Bank, and Bank of America National Trust and Savings Association, as Agent and an Issuing Bank. Ladies and Gentlemen: The undersigned, Plum Creek Timber Company, L.P, (the "Company"), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably, pursuant to Section 2.10(c) of the Credit Agreement, that the Company elects to repay in installments the aggregate Committed Loans outstanding on the Revolving Termination Date in accordance with subsection 2.10(c) of the Credit Agreement. The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the Revolving Termination Date: (a) the representations and warranties of the Company contained in Article VI of the Credit Agreement are true and correct as though made on and as of such date (except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct as of such earlier date); and (b) no Default or Event of Default exists, or would result from such installment repayment election. PLUM CREEK TIMBER COMPANY, L.P. By: Plum Creek Management Company, L.P., its general partner By:__________________________________ Title:_______________________________ EX-10.B.1 7 EXHIBIT 10.B.1 1 EXHIBIT 10.B.1 PLUM CREEK SUPPLEMENTAL BENEFITS PLAN ADOPTED EFFECTIVE JANUARY 1, 1993 2 TABLE OF CONTENTS
Page ---- PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION I -- DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.1 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.2 Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.3 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.4 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.5 Deferred Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.6 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.7 Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.8 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.9 RSP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.10 Surviving Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SECTION 2 -- BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.1 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 3 -- PARTICIPANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3.1 Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 4 -- BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4.1 Supplemental Pension Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4.2 Supplemental Thrift Plan Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4.3 Other Supplemental Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.4 Time and Manner of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 SECTION 5 -- GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.1 Unfunded Obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.2 Discretionary Investment by Company . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.3 Incapacity of Participant, Surviving Spouse or Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 5.4 Nonassignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.5 No Right to Continued Employment . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.6 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.7 Termination and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.8 ERISA Exemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 5.9 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 5.10 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3 Table of Contents (continued)
Page ---- SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . 12 APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 APPENDIX C . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4 PREAMBLE THIS SUPPLEMENTAL RETIREMENT PLAN (hereinafter referred to as the "Plan" and known as the Plum Creek Supplemental Benefits Plan) is adopted effective January 1, 1993 by Plum Creek Timber Company, L.P. (hereinafter "Company"). WHEREAS, the purpose of the Plan is to attract and retain exceptional executives by providing retirement benefits to selected officers and key salaried employees of outstanding competence. NOW, THEREFORE, the Company does hereby adopt the Plan as set forth in the following pages, effective January 1, 1993. 1 5 SECTION 1 DEFINITIONS For purposes of this Plan, the following terms shall have the meanings indicated: 1.1 Beneficiary "Beneficiary" means the individual(s) designated by a Participant to receive benefits from this Plan in the event of his or her death. If no designated Beneficiary survives the Participant, the Beneficiary shall be the person or persons in the first of the following classes who survive the Participant: (a) spouse at date of death, (b) descendants, per stirpes, (c) parents, (d) brothers and sisters, (e) estate. 1.2 Board "Board" means the Board of Directors of PC Advisory Corp. I, the general partner of PC Advisory Partners I, L.P., which serves as the general partner of Plum Creek Management Company, L.P., which serves as the general partner of the Company. 1.3 Code "Code" means the Internal Revenue Code of 1986, as amended. 1.4 Company "Company" means Plum Creek Timber Company, L.P., a Delaware limited partnership. 1.5 Deferred Compensation Plans "Deferred Compensation Plans" means the Plum Creek Management Company Key Employee Salary and Incentive Compensation Deferral Plan and such additional deferred compensation plans as may be designated by the Company from time to time. 1.6 Participant "Participant" means each individual who participates in the Plan in accordance with Section 3. 2 6 1.7 Pension Plan "Pension Plan" means the Burlington Resources Inc. Pension Plan as in effect on December 31, 1992, a copy of which is attached in Appendix B. 1.8 Plan "Plan" means the Plum Creek Supplemental Benefits Plan either in its present form or as amended from time to time. 1.9 RSP "RSP" means the Burlington Resources Inc. Retirement Savings Plan, as in effect on December 31, 1992, a copy of which is attached in Appendix C. 1.10 Surviving Spouse "Surviving Spouse" means the person to whom surviving spouse death benefits are to be paid pursuant to the terms of the Pension Plan. 1.11 Thrift Plan "Thrift Plan" means the Plum Creek Thrift and Profit Sharing Plan. 1.12 Plan Administrator "Plan Administrator" shall be the Vice President, Human Resources of the Company. 3 7 SECTION 2 ADMINISTRATION 2.1 Plan Administrator This Plan shall be administered by the Plan Administrator of the Company. Subject to approval by the Board, the Plan Administrator shall have discretion and authority to interpret the Plan, prescribe, amend and rescind rules relating to it, and take all other action necessary for its administration, which actions shall be final and binding upon all Participants. 4 8 SECTION 3 PARTICIPANTS 3.1 Participants The President and Vice Presidents of the Company who were participants in the Burlington Resources Inc. Supplemental Benefits Plan on December 31, 1992 shall be Participants in this Plan. The Board of Directors shall determine and designate any other officers and key salaried employees of the Company who are eligible to become Participants and receive benefits under the Plan. Each Participant must be a selected management or highly compensated employee, or entitled to qualified plan benefits in excess of the Code Section 415 limitations on benefits. A Participant who is not a select management or highly compensated employee shall be eligible only for the benefits described in Sections 4.1(a)(1) and 4.2(a)(1). Individuals who are Participants shall be listed in Appendix A. 5 9 SECTION 4 BENEFITS 4.1 Supplemental Pension Benefits Upon the termination of employment of a Participant, the Company shall pay or cause to be paid to such Participant (or his or her Surviving Spouse in the case of his or her death) supplemental pension benefits under this Plan which equals the amount described in (a) less the amount described in (b). Supplemental pension benefits under this Section 4 shall be vested and nonforfeitable to the same extent that the related benefits under the Pension Plan would be vested and nonforfeitable. (a) Pension Plan Amount The amount which the Participant would have been entitled to receive under the Pension Plan as in effect on December 31, 1992 if the Participant had continued participation in the Pension Plan and had the Pension Plan's benefit formula been applied: (1) without regard to the limitations of Section 415 of the Code (including, without limitation, the maximum benefit payable under Section 415(b)(1), the actuarial reduction for early retirement of Section 415(b)(2)(C), the reduction for limited service or participation of Section 415(b)(5) and the combined limits of Section 415(e)), (2) by including in the Participant's compensation during the period for which the Pension Plan benefits are computed, to the extent not already done so under the Pension Plan, any amount that has not been taken into account due to the limitations of Section 401(a)(17) of the Code ($235,840 for plan years beginning in 1993) or due to a reduction of compensation that has occurred pursuant to an election of the Participant under Section 125 or Section 401(k) of the Code or under the Deferred Compensation Plans, and (3) by taking into account any service granted to the Participant and any benefit formula adjustments required by an employment contract. (b) Offset Amount The amount specified for each Participant listed in Appendix A increased annually from 12/31/92 to the December 31st immediately preceding the date of termination of employment by the immediate PBGC interest rate in effect on January 1 of each year. 6 10 (c) Determination of Lump Sum Supplemental Pension Benefit Payments For purposes of determining the amount described in Section 4.1(a), the amount of a lump sum payment of supplemental pension benefits to a Participant (or his or her Surviving Spouse in the event of the Participant's termination of employment on account of death) shall be determined by calculating the benefit according to the terms of the Pension Plan as a whole life annuity, then calculating the present value of such benefit, using the actuarial assumptions specified in the Pension Plan for determining benefits of equivalent value except, in lieu of the Pension Benefit Guaranty Corporation ("PBGC") rates for calculating lump sums specified in the Pension Plan, the interest rate shall be the immediate PBGC rate in effect on January 1 of the year in which the lump sum payment becomes distributable. The amount of a lump sum payment of supplemental pension benefits to a Participant's Surviving Spouse shall be determined as if the Participant had terminated his or her employment on the date of death. Pre-retirement death benefit provisions under the Pension Plan shall not apply. 4.2 Supplemental Thrift Plan Benefits Upon the termination of employment of a Participant, the Company shall pay or cause to be paid to such Participant (or his or her Beneficiary in the case of his or her death) supplemental Thrift Plan benefits determined by calculating the amount described in (a) less the amount described in (b). (a) The Company shall periodically determine the amount of any additional employer-matching contributions that would have been credited to a Participant's account under the RSP if he or she was an employee of Burlington Resources Inc. and contributed at the maximum employee contribution rate offered under the RSP without regard to: (1) the maximum dollar limit under Code Section 415(c)(1)(A) on RSP annual additions ($30,000 for plan years beginning in 1993); (2) the maximum limit under Code Section 401(a)(17) on the compensation taken into account under the RSP ($235,840 for plan years beginning in 1993); and (3) any further reductions in the compensation which would have been taken into account under the RSP as a result of any deferrals of compensation elected by the Participant pursuant to Section 125 or Section 401(k) of the Code or under the Deferred Compensation Plans. (b) The Company matching contribution to the Thrift Plan on behalf of the Participant for the same period of time for which the amount in (a) is determined. 7 11 From time to time, as determined by the Board of Directors, the Company shall allocate amounts equal to such additional employer-matching contributions to a ledger account (the "Memorandum Account") for the Participant as of the time or times that such amounts would have been contributed to the RSP if permitted thereunder. Interest will be credited to the balance in each Participant's Memorandum Account on a semi-monthly basis or at such other intervals as may be determined by the Board of Directors. From time to time the Board of Directors shall determine the rate to be used in crediting such interest and in so doing may take into account the earnings, losses, appreciation or depreciation attributable to any discretionary investment made pursuant to Section 5.2, and any other factors it deems appropriate. Supplemental Thrift Plan benefits under this Section 4.2 shall be vested and nonforfeitable to the same extent that the related benefits under the Thrift Plan are vested and nonforfeitable. 4.3 Other Supplemental Benefits Upon the termination of employment of a Participant, the Company shall pay or cause to be paid to such Participant (or his or her Beneficiary in the case of his or her death) other supplemental benefits, if any, as determined by the Board and contained in the Participant's employment contract or other agreement with the Company. Other supplemental benefits under this Section 4.3 shall be vested and nonforfeitable to the extent provided in the applicable employment contract or agreement. 4.4 Time and Manner Of Payment The payment of any supplemental pension benefits owed to a Participant (or his or her Surviving Spouse) pursuant to Section 4.1 shall be made in a lump sum, as determined under Section 4.1(c), as soon as practicable after the Participant's termination of employment with the Company. The payment of any supplemental RSP benefits pursuant to Section 4.2 owed to a Participant (or his or her Beneficiary) shall likewise be made in a lump sum as soon as practicable after the Participant's termination of employment with the Company and shall be in an amount equal to the Participant's Memorandum Account balance at the time of payment. The payment of any other supplemental benefits pursuant to an employment contract under Section 4.3 shall be made as provided in the employment contract. Such payment shall constitute a complete discharge of all obligations to the Participant and his or her Surviving Spouse or Beneficiary under the Plan. 8 12 SECTION 5 GENERAL PROVISIONS 5.1 Unfunded Obligation The supplemental benefits to be paid to Participants and/or their Surviving Spouses and Beneficiaries pursuant to this Plan are unfunded obligations of the Company, and shall, until actual payment, continue to be part of the general funds of the Company. The Company is not required to segregate any monies from its general funds, or to create any trusts, or to make any special deposits with respect to these obligations. Title to and beneficial ownership of any investments including trust investments which the Company may make to fulfill these obligations shall at all times remain in the Company. Any investments and the creation or maintenance of any trust or memorandum accounts shall not create or constitute a trust or a fiduciary relationship between the Plan Administrator or the Company and a Participant, or otherwise create any vested or beneficial interest in any Participant or his or her Surviving Spouse or Beneficiary or his or her creditors in any assets of the Company whatsoever. The Participants and their Surviving Spouses and Beneficiaries shall have no claim against the Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to this Plan. 5.2 Discretionary Investment by Company The Plan Administrator, after consulting with the actuary employed by the Company in conjunction with the Pension Plan, may from time to time direct the investment by the Company of an amount sufficient to meet all or such portion of the supplemental pension benefits to be paid under this Plan as the Plan Administrator, in its sole discretion, shall determine. The Plan Administrator may in its sole discretion determine that all or some portion of the amount to be invested shall be paid into one or more grantor trusts to be established by the Company of which it shall be the beneficiary, and to the assets of which it shall become entitled as and to the extent that Participants (or their Surviving Spouses or Beneficiaries in the case of their deaths) receive benefits under this Plan. The Plan Administrator may designate an investment advisor to direct investments and reinvestments of the funds, including investments of any grantor trusts hereunder. 5.3 Incapacity of Participant, Surviving Spouse or Beneficiary If the Plan Administrator finds that any Participant, Surviving Spouse or Beneficiary to whom a payment is payable under the Plan is unable to care for his or her affairs because of illness or accident or is under a legal disability, any payment due (unless a prior claim therefor shall have been made by a duly appointed legal representative) at the discretion of the Plan Administrator may be paid to the spouse, child, parent or brother or sister of such Participant, Surviving Spouse or Beneficiary, or to any person whom the Plan Administrator has determined has incurred expense for such Participant, Surviving 9 13 Spouse or Beneficiary. Any such payment shall be a complete discharge of the obligations of the Company under the provisions of the Plan. 5.4 Nonassignment The right of a Participant or his or her Surviving Spouse or Beneficiary to the payment of any amounts under the Plan may not be assigned, transferred, pledged or encumbered nor shall such right or other interests be subject to attachment, garnishment, execution or other legal process. 5.5 No Right to Continued Employment Nothing in the Plan shall be construed to confer upon any Participant any right to continued employment with the Company or a subsidiary nor interfere in any way with the right of the Company or a subsidiary to terminate the employment of such Participant at any time without assigning any reason therefor. 5.6 Withholding Taxes Appropriate payroll taxes shall be withheld from cash payments made to Participants pursuant to this Plan. 5.7 Termination and Amendment The Board may from time to time amend, suspend, or terminate the Plan, in whole or in part, and if the Plan is suspended or terminated, the Board may reinstate any or all of its provisions. The Plan Administrator may amend the Plan provided that it may not suspend or terminate the Plan, substantially increase the administrative cost of the Plan or increase the obligations of the Company, or expand the classification of employees who are eligible to participate in the Plan. No amendment, suspension or termination may, however, impair the right of a Participant or his or her Surviving Spouse or Beneficiary to receive the supplemental benefits accrued prior to the effective date of such amendment, suspension or termination. If the Plan is terminated, Participants, Surviving Spouses and Beneficiaries who have accrued benefits under the Plan as of the date of termination will receive payment of such benefits at the times specified in the Plan. 5.8 ERISA Exemption The portion of this Plan providing benefits in excess of the limitations of Section 415 of the Code is intended to qualify for exemption from the Employee Retirement Income Security Act of 1974 ("ERISA") as an unfunded excess benefit plan under Sections 3(36) and 4(b)(5) of ERISA. The portion of this Plan providing benefits in excess of the limitation of Section 401(a)(17) of the Code and other supplemental benefits is intended to qualify for exemption from Parts II, III and IV of ERISA as a plan maintained primarily for the purpose of providing deferred compensation for a select group of 10 14 management or highly compensated employees under Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA. 5.9 Applicable Law The Plan shall be construed and governed in accordance with the laws of the State of Washington. 5.10 Indemnification The Company agrees, to the extent permitted by law, to indemnify and hold the Plan Administrator harmless from and against any liability that the Plan Administrator may incur in the administration of the Plan (including attorneys' fees and expenses), unless arising from the Plan Administrator's own gross negligence, willful misconduct, or willful breach of the provisions of its obligations under this Plan. 11 15 The Plum Creek Supplemental Benefits Plan is adopted by Plum Creek Timber Company, L.P. IN WITNESS WHEREOF, the Company has caused this Plan to be executed on this 8th day of June, 1993. For PLUM CREEK TIMBER COMPANY, L.P. By PLUM CREEK MANAGEMENT COMPANY, L.P., General Partner /s/ SUSANNA N. DUKE /s/ KEITH SLETTEN - ------------------------ ------------------------------ Witness Authorized Officer Vice President Human Resources ------------------------------ Title (CORPORATE SEAL) 12 16 APPENDIX A TO THE PLUM CREEK SUPPLEMENTAL BENEFITS PLAN Pursuant to Section 3.1 Participants, the following individuals are Participants in the Plan commencing on the date specified, and each individual shall remain a Participant until his or her entire benefit under the Plan is distributed. The offset amount for each Participant pursuant to Section 4.1(b) is shown below.
Offset Amount Pursuant to Name Section 4.1 (b) Commencement Date ------------------ ------------------------- ----------------- 1. Charles P. Grenier $ 85,822.88 01/01/93 2. Richard R. Holley $ 103,817.95 01/01/93 3. James A. Kraft $ 63,620.87 01/01/93 4. Robert E. Manne $ 121,427.55 01/01/93 5. Keith B. Sletten $ 269,104.59 01/01/93 6. David D. Leland $3,517,430.10 01/01/93
ACKNOWLEDGED AND APPROVED: By: /s/ Keith Sletten ---------------------------------- Title: Vice President Human Resources ------------------------------ Date: June 8, 1993 ------------------------------- 13 17 APPENDIX B TO THE PLUM CREEK SUPPLEMENTAL BENEFITS PLAN BURLINGTON RESOURCES INC. PENSION PLAN AS OF DECEMBER 31, 1992 14 18 BURLINGTON RESOURCES INC. PENSION PLAN ADOPTED EFFECTIVE JANUARY 1, 1989 19 TABLE OF CONTENTS
Page ---- PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1 - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.01 Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.02 Active Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.03 Actuarially Equivalent . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.04 Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1.05 Affiliated Companies . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.06 Authorized Leave of Absence . . . . . . . . . . . . . . . . . . . . . . 3 1.07 Basic Monthly Compensation . . . . . . . . . . . . . . . . . . . . . . . 3 1.08 Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.09 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.10 Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.11 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.12 Credited Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.13 Deferred Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . 5 1.14 Deferred Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . 5 1.15 Disabled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.16 Early Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . 5 1.17 Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.18 Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1.19 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
20 Table of Contents (continued)
Page ----- 1.20 Eligible Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.21 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.22 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.23 Employment Commencement Date . . . . . . . . . . . . . . . . . . . . . . . 7 1.24 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.25 Final Average Monthly Earnings . . . . . . . . . . . . . . . . . . . . . . 7 1.26 Hour of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1.27 Integration Level . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.28 Normal Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . 8 1.29 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.30 Participant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.31 Pension Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1.32 Pension Starting Date . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.33 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.34 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.35 Plan Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.36 Predecessor Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.37 Primary Social Security Benefit . . . . . . . . . . . . . . . . . . . . . 9 1.38 Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 1.39 Social Security Covered Compensation . . . . . . . . . . . . . . . . . . . 10 1.40 Social Security Retirement Age . . . . . . . . . . . . . . . . . . . . . . 10 1.41 Trust or Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
21 Table of Contents (continued)
Page ---- 1.42 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.43 Vested Termination Benefit . . . . . . . . . . . . . . . . . . . . . . . 11 1.44 Vested Termination Date . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.45 Year of Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 1.46 Additional Definitions in Plan . . . . . . . . . . . . . . . . . . . . . 11 SECTION 2 - PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.01 Eligibility for Participation . . . . . . . . . . . . . . . . . . . . . . 13 2.02 Reemployment After Termination . . . . . . . . . . . . . . . . . . . . . 13 2.03 Change of Employment Status . . . . . . . . . . . . . . . . . . . . . . . 13 2.04 Leased Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 SECTION 3 - RETIREMENT DATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 3.01 Normal Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . 14 3.02 Early Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . . 14 3.03 Deferred Retirement Date . . . . . . . . . . . . . . . . . . . . . . . . 14 3.04 Vested Termination Date . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 4 - RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 4.01 Accrued Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 4.02 Normal Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . 16 4.03 Early Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . . . 16 4.04 Deferred Retirement Benefit . . . . . . . . . . . . . . . . . . . . . . 17 4.05 Vested Termination Benefit . . . . . . . . . . . . . . . . . . . . . . . 17 4.06 Reemployment After Retirement . . . . . . . . . . . . . . . . . . . . . 17
22 Table of Contents (continued)
Page ---- 4.07 Benefits For Terminated Participants . . . . . . . . . . . . . . . . . . 18 SECTION 5 - FORMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 5.01 Forms of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 5.02 Automatic Form of Benefit . . . . . . . . . . . . . . . . . . . . . . . 21 5.03 Limitation on Forms of Payment . . . . . . . . . . . . . . . . . . . . . 22 5.04 Explanation of Forms of Payment . . . . . . . . . . . . . . . . . . . . 22 SECTION 6 - DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 6.01 Pre-Retirement Spouse's Death Benefit . . . . . . . . . . . . . . . . . . 23 6.02 Post Retirement Spouse's Death Benefit . . . . . . . . . . . . . . . . . 26 SECTION 7 - VESTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 7.01 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 7.02 Termination Prior to Vesting . . . . . . . . . . . . . . . . . . . . . . 27 7.03 Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 8 - LIMITATIONS ON BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . 28 8.01 Limitation on Benefits . . . . . . . . . . . . . . . . . . . . . . . . . 28 8.02 Maximum Annual Benefit Payable Under the Plan . . . . . . . . . . . . . 30 8.03 Additional Limitation Relating to Defined Contribution Plans . . . . . . 32 SECTION 9 - TOP HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 9.01 Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 9.02 Top Heavy Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 9.03 Minimum Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 9.04 Benefit Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
23 Table of Contents (continued)
Page ---- 9.05 Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 10 - ADMINISTRATION OF THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . . 39 10.01 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 10.02 The Pension Committee . . . . . . . . . . . . . . . . . . . . . . . . . 39 10.03 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 10.04 Bonding and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 42 10.05 Commencement of Benefits . . . . . . . . . . . . . . . . . . . . . . . . 43 10.06 Appeal Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 10.07 Plan Administration - Miscellaneous . . . . . . . . . . . . . . . . . . . 45 10.08 Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . . . 48 10.09 Plan Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 10.10 Deductible Contribution . . . . . . . . . . . . . . . . . . . . . . . . 49 10.11 Payment of Benefits Through Purchase of Annuity Contract . . . . . . . . 49 SECTION 11 - PARTICIPATION BY OTHER EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . 51 11.01 Adoption of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 11.02 Prior Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 11.03 Withdrawal from Participation . . . . . . . . . . . . . . . . . . . . . . 51 11.04 Company As Agent For Employers . . . . . . . . . . . . . . . . . . . . . 51 SECTION 12 - AMENDMENT AND TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 52 12.01 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 12.02 Amendment - Consolidation or Merger . . . . . . . . . . . . . . . . . . 52 12.03 Termination of the Plan . . . . . . . . . . . . . . . . . . . . . . . . 52
24 Table of Contents (continued)
Page ---- 12.04 Effect of Withdrawal from Plan . . . . . . . . . . . . . . . . . . . . . 53 12.05 Allocation of the Trust on Termination of Plan . . . . . . . . . . . . . 53 SECTION 13 - FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 13.01 Contributions to the Trust . . . . . . . . . . . . . . . . . . . . . . . 54 13.02 Trust for Exclusive Benefit of Participants . . . . . . . . . . . . . . 54 13.03 Disposition of Credits and Forfeitures . . . . . . . . . . . . . . . . . 54 13.04 Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 13.05 Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 APPENDIX I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
25 PREAMBLE THIS RETIREMENT PLAN (hereinafter referred to as the "Plan" and known as the Burlington Resources Inc. Pension Plan) is adopted effective January 1, 1989 by Burlington Resources Inc. (hereinafter "Company"). WHEREAS, the purpose of the Plan is to provide retirement benefits to employees who become covered under the plan, and WHEREAS, effective January 1, 1989 the Burlington Northern Inc. Pension Plan shall spin off assets and liabilities to form this Plan; and WHEREAS, this Plan is intended to provide identical benefits on the effective date to those provided under the predecessor Burlington Northern Inc. Pension Plan on December 31, 1988; and WHEREAS, the Plan shall be maintained for the exclusive benefit of covered employees, and is intended to comply with the Internal Revenue Code of 1986, as amended, the Employee Retirement Income Security Act of 1974, as amended, and other applicable law; NOW, THEREFORE, effective January 1, 1989, the Company does hereby adopt the Plan as set forth in the following pages. 1 26 SECTION 1 DEFINITIONS The following terms when used herein shall have the following meaning, unless a different meaning is plainly required by the context. Capitalized terms are used throughout the Plan text for terms defined by this and other sections. 1.01 Accrued Benefit "Accrued Benefit" means on any date, the benefit determined under the formula specified in Section 4.01, as of such date. Notwithstanding the foregoing, a Participant's Accrued Benefit shall not be less than his or her Accrued Benefit on December 31, 1988 under the terms of the Burlington Northern Inc. Pension Plan in effect on such date. 1.02 Active Participant "Active Participant" means a Participant who currently qualifies as an Eligible Employee. 1.03 Actuarially Equivalent "Actuarially Equivalent" and similar terms (for purposes other than determining contributions to the Trust) means that the present value of two payments or series of payments shall be of equal value when computed at an 8% rate of interest and on the basis of the male mortality rates under the 1983 Group Annuity Mortality Table, provided; however, the interest rate and mortality table described below shall be used to calculate lump sum benefits if they result in a larger lump sum benefit. Lump sum benefits shall be calculated based on the 1984 Unisex Pension Mortality Table set forward one year, and the interest rate shall be the Pension Benefit Guaranty Corporation interest rate for immediate or deferred annuities from a single employer plan in effect on January 1 of the Plan Year which contains the Pension Starting Date. 1.04 Adoption Agreement "Adoption Agreement" means the agreement executed by each Employer pursuant to Section 11.01 whereby such Employer adopts the Plan. 2 27 1.05 Affiliated Companies "Affiliated Companies" means: (a) the Employer, (b) any other corporation which is a member of a controlled group of corporations which includes the Employer (as defined in Section 414(b) of the Code), (c) any other trade or business under common control with the Employer (as defined in Section 414(c) of the Code), or (d) any other member of an affiliated service group which includes the Employer (as defined in Section 414(m) of the Code). For purposes of the limitation on benefits in Sections 8.02 and 8.03, the determination of whether an entity is an Affiliated Company will be made by modifying Sections 414(b) and (c) of the Code as specified in Section 415(h) of the Code. 1.06 Authorized Leave of Absence "Authorized Leave of Absence" means any absence authorized by an Employer under the Employer's standard personnel practices, provided, that the Participant returns to active employment within the period specified in such Authorized Leave of Absence, or is specifically not required by the Employer to return to work after such Authorized Leave of Absence terminates. 1.07 Basic Monthly Compensation "Basic Monthly Compensation" means a Participant's monthly salary, or total monthly pay during the last full month of Credited Service with respect to a Participant paid on an hourly basis, including average monthly overtime over the last twelve full months of Credited Service and pre-tax employee contributions to a qualified retirement plan or welfare benefit plan, but excluding non-deferred bonuses paid or accrued and the other extraordinary items which are not considered Earnings. 3 28 1.08 Beneficiary "Beneficiary" means the person or persons designated to be the Beneficiary by the Participant in writing to the Pension Committee. In the event a married Participant designates someone other than his or her spouse as Beneficiary, such initial designation or subsequent change shall be invalid unless the spouse consents in a writing which names the designated Beneficiary and is notarized, or witnessed by a Plan representative. If no designated Beneficiary survives the Participant, the Pension Committee may direct that payment of benefits which may be due may be made to the Participant's estate. 1.09 Code "Code" means the Internal Revenue Code of 1986, as amended and including all regulations promulgated pursuant thereto. 1.10 Company "Company" means Burlington Resources Inc., a Delaware corporation. 1.11 Compensation "Compensation" for any tax year has the meaning set forth in Section 415(c)(3) of the Code. 1.12 Credited Service "Credited Service" means: (a) with respect to an individual who becomes a Participant on January 1, 1989, the Participant's Credited Service under the Predecessor Plan as of December 31, 1988, and (b) all Plan Years commencing on and after January 1, 1989 during which an Employee completes 1,000 or more Hours of Service for an Employer, and (c) with respect to the Plan Years in which service commences and terminates, the fraction of a Plan Year which is equal to the Hours of Service for an Employer during such Plan Year divided by 2,280, and (d) any period of time immediately following a period during which the Employee is an Active Participant, during which the Participant: 4 29 (i) is Disabled, (ii) is on Authorized Leave of Absence, or (iii) is laid off due to a reduction of force for a period not exceeding twelve consecutive months. 1.13 Deferred Retirement Benefit "Deferred Retirement Benefit" has the meaning set forth in Section 4.04. 1.14 Deferred Retirement Date "Deferred Retirement Date" has the meaning set forth in Section 3.03. 1.15 Disabled "Disabled" means a Participant who has not attained age 65 and who is entitled to benefits under the Employer-sponsored long or short term disability plan. 1.16 Early Retirement Benefit "Early Retirement Benefit" has the meaning set forth in Section 4.03. 1.17 Early Retirement Date "Early Retirement Date" has the meaning set forth in Section 3.02. 1.18 Earnings "Earnings" for each Plan Year means the total earnings, including overtime payments for each full month earned by an Employee from an Employer, including nondeferred cash incentive bonuses paid or accrued and salary reduction amounts contributed by an Employer on behalf of the employee to a qualified retirement plan or welfare benefit plan; but excluding payments under non-qualified deferred compensation plans, stock option, stock bonus, capital income and phantom stock plans and all other commissions and extra or added compensation or benefits of any kind or nature. Notwithstanding the foregoing, annual Earnings in excess of $200,000 shall be disregarded; provided, however, that this $200,000 limit shall be automatically adjusted to the maximum permissible dollar limitation permitted by the Commissioner of the Internal Revenue Service. In determining Earnings of a 5 30 Participant for purposes of this limitation, the family aggregation rules of Section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. If as a result of the application of such rules the adjusted $200,000 limitation is exceeded, then the limitation shall be prorated among the affected individuals in proportion to each such individual's Earnings as determined under this Section 1.18 prior to the application of this limitation. 1.19 Effective Date "Effective Date" means January 1, 1989, or with respect to any Employer specified in appendices to this Plan, the date such Employer adopted the Plan. 1.20 Eligible Employee "Eligible Employee" means any Employee, except any leased employee and any Employee who is covered under a collective bargaining agreement where retirement benefits were the subject of good faith bargaining which does not provide for retirement benefits under this Plan. Notwithstanding the foregoing, an Employee whose employment commenced after the first day of the calendar month following his or her 60th birthday and before January 1, 1988 shall not be considered an Eligible Employee earlier than January 1, 1988. 1.21 Employee "Employee" means any person who is employed by an Employer as a common law employee determined from appropriate personnel records of the Employer and any leased employee within the meaning of Code Section 414(n)(2); provided, however, if leased employees constitute twenty percent (20%) or less of all Employer's non-highly compensated work force, the term "Employee" shall not include a leased employee who is covered by a plan maintained by the leasing organization which meets the requirements of Code Section 414(n)(5). 1.22 Employer "Employer" means Burlington Resources Inc., a Delaware corporation. The term "Employer" shall also include other companies as provided from time to time in appendices to this Plan. 6 31 1.23 Employment Commencement Date "Employment Commencement Date" means the date on which an Employee first completes an Hour of Service for the Employer or an Affiliated Company during the current period of employment, 1.24 ERISA "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, including all regulations thereunder. 1.25 Final Average Monthly Earnings "Final Average Monthly Earnings" means the highest average monthly Earnings received by the Participant during any 60 consecutive month period within the last ten years prior to termination. In the event the Participant has been employed for less than 60 consecutive months, the computation period shall be based upon (1) the most recent 60 months of employment (whether or not consecutive), or (2) the total period of employment, whichever is less. If a Participant is Disabled or is on an Authorized Leave of Absence, such Participant shall be deemed to receive monthly Earnings during the period he or she is Disabled or on Authorized Leave of Absence equal to his or her Earnings for the last calendar month immediately prior to such Disability or Authorized Leave of Absence. Notwithstanding the foregoing, an individual who was hired after age 60 and before January 1, 1988 shall be deemed an Active Participant for purposes of determining Final Average Monthly Earnings for all periods he or she would have been an Active Participant under the Predecessor Plan but for the prior exclusion from participation of employees who were hired after age 60. 1.26 Hour of Service "Hour of Service" means each hour for which an employee is paid or entitled to payment by the Employer or any Affiliated Company on account of: (a) Performance of duties; (b) A period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, or Authorized Leave of Absence. Hours under this paragraph shall be 7 32 calculated and credited pursuant to 29 CFR 2530.200b-2(b) and (c), which are incorporated herein by this reference; and (c) An award of back pay, irrespective of mitigation of damages, agreed to by the Employer or any Affiliated Company. However, hours credited under (a) or (b) above shall not also be credited under this subsection (c). An employee shall be credited with 190 Hours of Service for each month in which he or she has at least one Hour of Service. 1.27 Integration Level "Integration Level" means one thirty-sixth of the Social Security Wage Base (ie., the maximum earnings subject to Social Security taxes) in the year of termination; provided that the Integration Level multiplied by twelve shall not exceed Social Security Covered Compensation. 1.28 Normal Retirement Benefit "Normal Retirement Benefit" has the meaning set forth in Section 4.02. 1.29 Normal Retirement Date "Normal Retirement Date" has the meaning set forth in Section 3.01. 1.30 Participant "Participant" means any Eligible Employee who qualifies for participation pursuant to Section 2.01 or 2.02. A vested Participant shall cease to be a Participant when his or her benefit payments from the plan are completed. 1.31 Pension Committee "Pension Committee" means the Committee as from time to time constituted and appointed by the Chief Executive Officer of the Company to administer the Plan. 1.32 Pension Starting Date "Pension Starting Date" means (i) the first day of the month for which a Plan benefit is payable as an annuity, or (ii) in the case of a Plan benefit not payable in the form of an annuity, the first day on which all events have occurred which entitle the Participant to such benefit. 8 33 1.33 Plan "Plan" means the Burlington Resources Inc. Pension Plan either in its previous or present form or as amended from time to time. 1.34 Plan Administrator "Plan Administrator" means the person or entity designated in Section 10 to administer the Plan. 1.35 Plan Year "Plan Year" means the twelve month period commencing each January 1 and ending each December 31 from and after the Effective Date. 1.36 Predecessor Plan "Predecessor Plan" initially means the Burlington Northern Inc. Pension Plan and its predecessor plans, including, without limitation, the Employees Retirement Income Plan of The El Paso Company and Affiliated Companies. In the event the Plan recognizes service under other predecessor plans, the term "Predecessor Plan" shall also include other plans as provided from time to time in appendices to this Plan. 1.37 Primary Social Security Benefit "Primary Social Security Benefit" means the Participants estimated monthly old age benefit at age 65 from Social Security based on the Social Security Act provisions in effect on January 1 preceding the termination date. If the Participant terminates prior to attaining Early Retirement Age, the Primary Social Security Benefit shall be calculated on the assumption that his or her earnings remain constant until age 65. The Primary Social Security Benefit for a Participant who terminates after attaining Early Retirement Age shall be determined based on earnings at termination and shall not be adjusted for any difference between the Primary Social Security Benefit determined under this provision and the actual primary Social Security benefit to which he or she ultimately becomes entitled. Earnings prior to termination may be determined by projecting earnings backward at 6% per year. A Participant shall be given the opportunity to provide an actual earnings history in the form specified by the Pension Committee which will be used in the calculation of the Primary Social Security Benefit in lieu of the above approximation. However, the Participant must supply such actual earnings history within one year after termination. Periods of compensation under the Railroad 9 34 Retirement Act shall be treated as periods of compensation under the Social Security Act. 1.38 Retirement Date The Retirement Date for a Participant shall be one of the dates specified in Sections 3.01, 3.02 or 3.03, on which benefits are to commence. 1.39 Social Security Covered Compensation "Social Security Covered Compensation" means the Participant's average (without indexing) annual Social Security Wage Base (ie. the maximum earnings for any employee subject to Social Security taxes) for each calendar year during the 35-year period ending with the calendar year in which the Participant attains (or will attain) his or her Social Security Retirement Age. A Participant's Social Security Covered Compensation shall be adjusted for each Plan Year. In determining a Participant's Social Security Covered Compensation for a Plan Year, the Social Security Wage Base for the current Plan Year and any subsequent Plan Year shall be assumed to be the same as the Social Security Wage Base in effect as of the beginning of the Plan Year for which the determination is being made. A Participant's Social Security Covered Compensation for a Plan Year after the 35-year period described above is the Participant's Social Security Covered Compensation for the Plan Year during which the Participant attained Social Security Retirement Age. A Participant's Social Security Covered Compensation for a calendar year before the 35-year period is the Social Security Wage Base in effect as of the beginning of the Plan Year. 1.40 Social Security Retirement Age "Social Security Retirement Age" means the following ages depending on the Participant's year of birth: age 65 for Participants born prior to 1938, age 66 for Participants born after 1937 but prior to 1955, and age 67 for Participants born after 1954. 1.41 Trust or Trust Fund "Trust" or "Trust Fund" means the trust fund into which shall be paid all contributions and from which all benefits shall be paid under this Plan. 10 35 1.42 Trustee "Trustee" means the trustee or trustees who receive, hold, invest, and disburse the assets of the Trust in accordance with the terms and provisions set forth in a trust agreement. 1.43 Vested Termination Benefit "Vested Termination Benefit" has the meaning set forth in Section 4.05. 1.44 Vested Termination Date "Vested Termination Date" has the meaning set forth in Section 3.04. 1.45 Year of Service "Year of Service" means each January 1 to December 31 period in which an employee has 1,000 or more Hours of Service. An employee's Years of Service shall also include all periods of Credited Service pursuant to Section 1.12(d) which are not otherwise included pursuant to this Section 1.45. Where the Employer maintains the plan of a predecessor employer, service for such predecessor employer will be treated as service for the Employer, to the extent required by the Code. Notwithstanding the foregoing, in no event shall a Participant's Years of Service on the Effective Date be less than his or her Years of Service on December 31, 1988 under the Burlington Northern Inc. Pension Plan. 1.46 Additional Definitions in Plan The following terms are defined in the following sections of the Plan:
Section ------- Aggregate Account 9.02(e) Aggregation Group 9.02(h) Determination Date 9.02(c) Joint and Survivor Annuity 5.01(b) Key Employee 9.02(g) Lump Sum 5.01(c) Present Value of Accrued Benefits 9.02(f) Single Life Annuity 5.01(a)
11 36
Section ------- Super Top Heavy 9.02(b) Top Heavy 9.02(a) Valuation Date (for Top Heavy) 9.02(d)
12 37 SECTION 2 PARTICIPATION 2.01 Eligibility for Participation Each Eligible Employee shall become a Participant under this Plan on the later of the Effective Date and the first day of the month coinciding with or next following completion of a twelve consecutive month period within which the Employee has at least 1,000 Hours of Service. The twelve-month period used for this determination shall start on the Employee's Employment Commencement Date and January firsts thereafter. 2.02 Reemployment After Termination Upon the reemployment of a terminated former Active Participant as an Eligible Employee, he or she shall immediately become an Active Participant. An employee who terminates prior to becoming a Participant and is later reemployed shall become a Participant upon satisfying the requirements of Section 2.01. In the event 1,000 Hours of Service were earned during a twelve month period described in Section 2.01 prior to termination, such service shall be restored upon reemployment. 2.03 Change of Employment Status If a person who is not a Participant becomes an Eligible Employee because of a change in employment status, such person shall become a Participant immediately as of the date of such change if he or she has satisfied the service requirement of Section 2.01; otherwise, the Eligible Employee shall become a Participant as of the first day of the month coinciding with or following satisfaction of such service requirement. 2.04 Leased Employees Notwithstanding any Plan provision to the contrary, for purposes of applying the qualified plan requirements set forth in Section 414(n)(3) of the Code, the term "Employees" shall have the meaning set forth in Plan Section 1.21 herein. However, a leased Employee shall not be eligible to become a Participant in this Plan. 13 38 SECTION 3 RETIREMENT DATES 3.01 Normal Retirement Date The Normal Retirement Date for a Participant shall be the first day of the month coinciding with or next following the attainment of age 65. A Participant who terminates prior to retirement with a vested Accrued Benefit shall commence receiving his or her benefit at the Normal Retirement Date, unless such Participant qualifies for and elects to receive benefits at an Early Retirement Date. A Participant shall retire on his or her Normal Retirement Date if: (a) during the two-year period immediately preceding the Normal Retirement Date such Participant was employed in a bona fide executive or high policy making position, and (b) the aggregate amount of his or her Accrued Benefit together with any other non-forfeitable retirement benefit from a pension, profit sharing, deferred compensation plan or any combination of such plans derived from Employer contributions is Actuarially Equivalent to at least $44,000 per year commencing at Normal Retirement Date, payable in the form of a single life annuity. 3.02 Early Retirement Date Each Participant who satisfies the early retirement requirements of his or her Employer's Adoption Agreement may elect, in writing, an Early Retirement Date. Such Early Retirement Date shall be before the Normal Retirement Date and after termination on the first day of any month coinciding with or following the date the early retirement requirements are met. 3.03 Deferred Retirement Date The Deferred Retirement Date for a Participant who continues working after the Normal Retirement Date shall be the first day of the month coinciding with or next following his or her termination date; provided, however, the Deferred Retirement Date for a Participant shall not be later than April 1 following the calendar year in which he or she attains age 70-1/2, regardless of whether he or she remains in service after that date. 14 39 3.04 Vested Termination Date In lieu of a retirement benefit, a Participant who is vested and terminates prior to retirement may elect in writing upon termination of employment, to receive the Vested Termination Benefit on a Vested Termination Date, which shall be the first day of the month following the month in which termination of employment occurs. 15 40 SECTION 4 RETIREMENT BENEFITS 4.01 Accrued Benefit The Accrued Benefit for any Participant shall be determined in accordance with the Adoption Agreement of such Participant's Employer, and the provisions of this Section 4.01. The Accrued Benefit shall be reduced by the Actuarial Equivalent of any prior distribution from the Plan. The Accrued Benefit is payable in the form of a single life annuity commencing at Normal Retirement Date. Notwithstanding any other contrary provision of the Plan, the Accrued Benefit at any time during 1989 for a Participant who is not a highly compensated employee described in Section 414(q)(1)(A) or (B) of the Code, shall not be less than his or her Accrued Benefit would have been at such time if the Accrued Benefit had been determined under the terms of the Burlington Northern Inc. Pension Plan in effect on December 31, 1988. Also notwithstanding any Plan provision to the contrary, the Accrued Benefit for a Participant who is a highly compensated employee described in Section 414(q)(1)(A) or (B) of the Code, shall be the greater of his or her Accrued Benefit under the Burlington Northern Inc. Pension Plan as of December 31, 1988, and the Accrued Benefit determined under the terms of this Plan; provided that such Participant shall not receive a distribution after December 31, 1988 of a benefit that exceeds the benefit he or she had accrued as of December 31, 1988 under such Predecessor Plan until the date this Plan is adopted. 4.02 Normal Retirement Benefit A Participant's monthly Normal Retirement Benefit shall equal his or her vested Accrued Benefit as of the date of termination, and then adjusted for form of payment. 4.03 Early Retirement Benefit The monthly Early Retirement Benefit for a Participant who terminates on or after his or her earliest Early Retirement Date shall be determined in accordance with the Adoption Agreement of such Participant's Employer. 16 41 4.04 Deferred Retirement Benefit A Participant's monthly Deferred Retirement Benefit shall equal his or her vested Accrued Benefit as of the date of termination, and then adjusted for form of payment. Service and Earnings beyond Normal Retirement Date shall be taken into consideration. In no event shall the benefit provided under this paragraph be less than the retirement benefit to which the Participant would have been entitled if he or she had actually retired on the Normal Retirement Date. In the event a Participant continues working after the date benefits are required to commence following age 70-1/2 pursuant to Section 10.05, the Deferred Retirement Benefit shall be recalculated and adjusted annually. 4.05 Vested Termination Benefit The monthly Vested Termination Benefit shall equal the Participant's vested Accrued Benefit pursuant to Section 4.01(a)(2) as of the date of termination, then adjusted for form of payment. In the event the Participant will receive an annuity form of payment, such benefit shall be reduced by 1/180 for each of the first 60 months by which the Vested Termination Date precedes the Normal Retirement Date, and reduced by 1/360 for each of the next 60 months by which the Vested Termination Date precedes the Normal Retirement Date, and reduced Actuarially thereafter. 4.06 Reemployment After Retirement Upon reemployment, a retired Participant shall resume accruing benefits under the Plan. A Participant shall cease to receive retirement benefits during any month during which the Participant works on 8 or more days (or works during 8 or more separate work shifts) and which is before the date benefits are required to be paid following age 70-1/2 pursuant to Section 10.05. In the event such a Participant is reemployed and works on less than 8 days (and works less than 8 separate work shifts) in any month, he or she shall continue receiving retirement benefits during such month. At the Participant's subsequent retirement, benefits payable shall be based on his or her total Credited Service and Earnings at the time of subsequent retirement, and shall be reduced by the Actuarially Equivalent value of benefits previously received by the Participant. In no event shall the benefit upon subsequent retirement, prior to any reduction for previously received benefits, be less than the initial retirement benefit. 17 42 4.07 Benefits For Terminated Participants Benefits under the Plan shall be determined and paid in accordance with the provisions of the Plan in effect on the most recent date of a termination of employment. 18 43 SECTION 5 FORMS OF PAYMENT 5.01 Forms of Payment The following forms of benefit payments are available under this Plan: (a) Single Life Annuity: A single life annuity shall be payable monthly from the Retirement Date or Vested Termination Date through the first of the month preceding death. The amount of the monthly benefit shall equal the monthly Normal, Early or Deferred Retirement Benefit or Vested Termination Benefit, whichever applies. (b) Joint and Survivor Annuity: A reduced joint and survivor annuity shall be payable monthly to a Participant from the Retirement Date or Vested Termination Date through the first of the month preceding death. Following the Participant's death, a benefit equal to 25%, 50%, 75% or 100% of the reduced mount payable to the Participant shall be payable for life to the Participant's spouse, if living at the time of the Participant's death. A Participant who elects a Normal, Early or Deferred Retirement Benefit may elect which percentage shall be payable to the spouse. A Participant who elects a Vested Termination Benefit may not elect a 25%, 75% or 100% joint and survivor annuity. If the spouse dies after the Participant's benefit begins, the Participant's payments will be in the same reduced amount as is otherwise payable under the joint and survivor annuity. If the spouse dies prior to the date as of which the Participant's benefit begins, any election of a form of benefit under this Section 5.01(b) shall be automatically canceled. If the Participant dies prior to the date as of which his or her benefit is to begin, the spouse shall not be entitled to receive any payments under this Section 5.01(b). However, a spouse joint annuitant may be entitled to a benefit under Section 6.01. (i) The 25% joint and survivor annuity shall be equal to the Participant's benefit payable in the form of a single life annuity multiplied by the following factor (not to exceed 1): 19 44 FACTOR = .93 - .0025 x (AGE DIFFERENCE) where AGE DIFFERENCE is the Participant's age less the spouse's age (computed to the birthdate anniversary nearest the Retirement Date or Vested Termination Date, whichever applies). (ii) The 50% joint and survivor annuity shall be equal to the Participant's benefit payable in the form of a single life annuity multiplied by the following factor (not to exceed 1): FACTOR = .87 - .005 x (AGE DIFFERENCE) where AGE DIFFERENCE is the Participant's age less the spouse's age (computed to the birthdate anniversary nearest the Retirement Date or Vested Termination Date, whichever applies). (iii) The 75% joint and survivor annuity shall be equal to the Participant's benefit payable in the form of a single life annuity multiplied by the following factor (not to exceed 1): FACTOR = .82 - .006 x (AGE DIFFERENCE) where AGE DIFFERENCE is the Participant's age less the spouse's age (computed to the birthdate anniversary nearest the Retirement Date or Vested Termination Date, whichever applies). (iv) The 100% joint and survivor annuity shall be equal to the Participant's benefit payable in the form of a single life annuity multiplied by the following factor (not to exceed 1): FACTOR = .79 - .0075 x (AGE DIFFERENCE) where AGE DIFFERENCE is the Participant's age less the spouse's age (computed to the birthdate anniversary nearest the Retirement Date or Vested Termination Date, whichever applies). (c) Lump Sum: A lump sum distribution shall be a single sum payment, Actuarially Equivalent to the Participant's Early, Normal or Deferred Retirement Benefit, or Vested Termination Benefit, whichever applies and shall represent the Participant's entire interest in the Plan. A Participant in the Plan on January 1, 1989 may elect a lump sum form of payment of any amount if he or she elects to receive a Vested Termination Benefit. Such a Participant may elect a lump sum form of payment if the amount is $25,000 or less if he or she elects to receive a Normal, Early or Deferred Retirement Benefit. 20 45 An Eligible Employee who becomes a Participant after January 1, 1989 may elect a lump sum form of payment if he or she elects to receive a Vested Termination Benefit or a Normal, Early or Deferred Retirement Benefit, provided, a lump sum may only be elected if the amount is $25,000 or less. 5.02 Automatic Form of Benefit Unless a Participant elects otherwise, benefits shall be paid as provided below: (a) Married Participants The qualified joint and survivor annuity under this Plan with respect to a married Participant shall be the 50% joint and survivor annuity. Any Participant who is married on his or her Retirement Date or Vested Termination Date, whichever applies, shall automatically be deemed to have elected the 50% joint and survivor annuity option, effective as of such date, with his or her spouse as the joint annuitant. A Participant may reject the statutory 50% joint and survivor annuity option, by filing a written notice with the Pension Committee within 90 days prior to his or her Pension Starting Date. Such initial notice, or any subsequent change, must specify the forms of payment elected and acknowledge the effect of the election, and must be signed by the Participant's spouse. The spouse's signature must be notarized, or witnessed by a Plan representative. In the event the statutory 50% joint and survivor annuity option is rejected and another form is not elected, benefits shall be paid in the form of a single life annuity. A married Participant may file a rejection notice or revoke any such notice at anytime during the ninety-day period immediately preceding the Pension Starting Date. (b) Single Participants The qualified joint and survivor annuity under the Plan with respect to an unmarried Participant shall be the single life annuity. Any unmarried Participant shall receive his or her Retirement or Vested Termination Benefits in the form of a single life annuity. An unmarried Participant may reject the single life annuity option by filing a written notice with the Pension Committee with ninety days prior to his or her Pension Starting Date. An unmarried Participant may file a rejection notice or revoke any such notice at any time during the ninety-day period immediately preceding the Pension Starting Date. 21 46 5.03 Limitation on Forms of Payment A Participant may not elect a joint annuitant other than his or her spouse. A Participant must elect a form of payment under which payments will be completed within the Participant's and Beneficiary's life times or within their life expectancies. 5.04 Explanation of Forms of Payment The Pension Committee shall furnish each Participant with a written explanation in non-technical language of the terms and conditions of the forms of payment within a reasonable period (but not more than ninety days) prior to the Participant's Pension Starting Date. 22 47 SECTION 6 DEATH BENEFITS 6.01 Pre-Retirement Spouse's Death Benefit In the event an Eligible Employee or a Participant dies before commencing to receive Retirement or Vested Termination Benefits under the Plan, his or her spouse may receive a pre-retirement death benefit. The amount of the spouse's benefit and time of commencement is described below. The spouse of a Participant who has started to receive benefits is not entitled to this death benefit. (a) Death While Employed If an Eligible Employee dies while in the employ of an Employer, such Employee's surviving spouse shall receive a monthly benefit. The monthly benefit shall commence on the later of: (i) the first day of the month following death, or (ii) the Participant's Normal Retirement Date, determined as if he or she had survived, or the first day of any earlier month elected by the surviving spouse which is on or after the Participant's death. The amount of such monthly benefit shall be equal to 50% of the Accrued Benefit determined for such Eligible Employee, (iii) if death occurs on or after Normal Retirement Date, as if he or she had retired on the day immediately prior to his or her death, or (iv) if death occurs before Normal Retirement Date, based on the assumption that such Eligible Employee died on his or her Normal Retirement Date, completed 30 years of Credited Service and that his or her Basic Monthly Compensation at death continued until Normal Retirement Date, provided that such Basic Monthly Compensation shall be increased by the average mount of non-deferred cash bonus actually earned by such Eligible Employee during the five calendar years preceding his or her death. 23 48 The monthly benefit described in this subparagraph (a) shall continue to be paid to such surviving spouse until the earlier of such spouse's death or remarriage provided, however, that had the Participant been vested prior to death, the spouse shall receive a monthly benefit after remarriage equal to the amount payable to the surviving spouse under a 50% joint and survivor annuity form of payment as if the Participant had commenced receiving Retirement or Vested Termination Benefit payments as of the date spouse benefits commence. At the death of a spouse entitled to benefits under this subparagraph (a), provided such spouse did not remarry, a lump sum payment shall be made to his or her estate in the event dependent children of the Eligible Employee survive such spouse. The lump sum payment shall be Actuarially Equivalent to the payment of the monthly amount described above which was payable to the spouse commencing on the first day of the month following the spouse's death and continuing through the first day of the month preceding the youngest child's eighteenth birthday. If at the Eligible Employee's death there is no surviving spouse, a lump sum payment shall be paid to or on behalf of the Eligible Employee's dependent children, to be used for the benefit of such children as the person providing the care and support for such children shall deem appropriate. The lump sum payment shall be Actuarially Equivalent to the payment of the monthly benefit described in the first paragraph of this subsection (a) commencing on the first day of the month following the Participant's death and continuing through the first day of the month preceding the youngest child's eighteenth birthday. If an Eligible Employee should die before becoming a Participant, he or she shall be treated as having become a Participant on the day he or she became an Eligible Employee. Notwithstanding the foregoing, in no event shall the Actuarially Equivalent value of the spouse benefit payable under this subsection 6.01(a) be less than the Actuarially Equivalent value of the pre-retirement survivor annuity benefit required pursuant to Code Section 417. (b) Death Following Termination Prior to Early Retirement Date If the Participant dies after becoming vested and terminating employment, and prior to becoming eligible to elect an Early Retirement Date, such Participant's surviving spouse shall receive a monthly benefit provided they were married throughout the one year period ending on the date of death. The monthly benefit shall commence on the later of: 24 49 (i) the first of the month following death, or (ii) the Participant's Normal Retirement Date, determined as if he or she had survived, or the first day of any earlier month elected by the surviving spouse which is on or after the Participant's earliest Early Retirement Date, and continue through the first of the month preceding the spouse's death. The benefit shall equal the amount payable to the surviving spouse under a 50% joint and survivor annuity form of payment as if the Participant had commenced receiving a Vested Termination Benefit as of the date spouse benefits commence. The spouse of a Participant in the Plan on January 1, 1989 may elect to receive a lump sum form of payment of any amount in lieu of the monthly benefit described above. The spouse of a Participant who became a Participant after January 1, 1989 may elect to receive a lump sum form of payment if the mount is $25,000 or less, in lieu of the monthly benefit described above. Such election must be in writing and prior to the actual commencement of monthly benefits. A lump sum benefit is only payable on the first of the month following the Participant's date of death, or as soon thereafter as administratively feasible. The lump sum benefit shall be Actuarially Equivalent to the monthly benefit described above. (c) Death Following Termination, Following Early Retirement Date If the Participant dies after becoming vested and terminating employment, and after his or her Normal Retirement Date, or after he or she becomes eligible to elect an Early Retirement Date, such Participant's surviving spouse shall receive a monthly benefit provided they were married throughout the one year period ending on the date of death. The monthly benefit shall commence on the later of: (i) the first day of the month following death, or (ii) the Participant's Normal Retirement Date, determined as if he or she had survived, or the first day of any earlier month elected by the surviving spouse which is on or after the Participant's death, and continue through the first of the month preceding the spouse's death. 25 50 The benefit shall equal the amount payable to the surviving spouse under a 50% joint and survivor annuity form of payment as if the Participant had commenced receiving Retirement Benefit payments as of the date spouse benefits commence. The surviving spouse may elect to receive a lump sum form of payment in lieu of the monthly benefit described above, provided the Actuarial Equivalent of the benefit provided under this subparagraph (c) and the benefit payable under Section 6.02, if any, does not exceed $25,000. In the event the surviving spouse elects a lump sum payment, any benefit payable under Section 6.02 shall also be paid as a lump sum. Such election must be in writing and prior to the date monthly benefits would otherwise commence. A lump sum benefit is only payable on the first of the month following the Participant's date of death, or as soon thereafter as administratively feasible. The lump sum benefit shall be Actuarially Equivalent to the monthly benefit described above. 6.02 Post-Retirement Spouse's Death Benefit Upon the death of a Participant who was a Participant in the Burlington Northern Inc. Pension Plan on December 31, 1983 and who terminated on or after his or her earliest Retirement Date, and had Credited Service prior to January 1, 1984, the Participant's surviving spouse, if the Participant was married to such spouse throughout the one-year period ending on the Retirement Date, shall receive a monthly benefit commencing on the first day of the month following the date of the Participant's death, and continuing through the first day of the month preceding the spouse's death. The amount of such monthly benefit shall be equal to .5% (1/2 percent) of such Participant's "limited compensation" multiplied by the number of his or her years of Credited Service as of January 1, 1984. For purposes of this Section 6.02, "limited compensation" means 90% of the Participant's Basic Monthly Compensation as of December 31, 1983 increased by the average amount of non-deferred cash bonus paid or accrued to such Participant from 1979 through 1983. 26 51 SECTION 7 VESTING 7.01 Vesting Each Participant shall have a vested, nonforfeitable right to his or her Accrued Benefit multiplied by the appropriate vesting percentage in accordance with the following table:
Years of Service Percent Vested ---------------- -------------- Less than 5 0% 5 100%
In addition, each Participant shall have a 100% nonforfeitable right to his or her Accrued Benefit on death, or the date he or she attains age 65, provided he or she is an Employee on such date. An employee who terminates with 0% vested shall be deemed "nonvested". 7.02 Termination Prior to Vesting For vesting and Accrued Benefit purposes, all Years of Service and Credited Service before and after a break-in-service shall be aggregated. Notwithstanding the foregoing, in the event service is forfeited under the terms of a Predecessor Plan and the individual later becomes a Participant in this Plan, such forfeited service shall remain forfeited. 7.03 Forfeitures Any forfeitures arising under this Plan shall be used only to offset future Employer contributions and shall not affect any Participant's Accrued Benefit. 27 52 SECTION 8 LIMITATIONS ON BENEFITS 8.01 Limitation on Benefits To prevent discrimination in favor of highly-compensated Participants upon early termination of the Plan, the following limitations govern allocation of Trust assets. (a) General Rule During the first ten years after any "Commencement Date" (as defined below) or if later, until the full current costs of the plan are first met, the benefits provided by the Employer's contributions to employees in the "Restricted Group" (as defined below) are subject to the limitations set forth in paragraph (c) below. (b) Definitions For the purposes of these limitations: (1) Commencement Date means the Effective Date, or the effective date of any subsequent amendment of the Plan which substantially increases the extent of possible discrimination as to contributions and benefits actually payable in the event of subsequent discontinuance of contributions or Plan termination; (2) the Restricted Group consists of the twenty-five highest-paid employees as of any Commencement Date, including any employees who are not Participants but may later become Participants, whose annual retirement benefit provided by the Employer's contributions can be anticipated to exceed $1,500. (c) Limitation Subject to the conditions set forth in paragraphs (a) and (b) above, the amount of Employer contributions (or funds attributable thereto) that may be applied for the benefit of any Participant in the Restricted Group shall not exceed the greater of: (1) Employer contributions (or funds attributable thereto) which would have been applied to provide retirement benefits for the Participant under the Plan if the Plan as in effect on the day preceding the Commencement Date had been continued without change; 28 53 (2) $20,000; (3) the sum of (i) the Employer's contributions (or funds attributable thereto) which would have been applied to provide retirement benefits for the employee if the Plan had been terminated on the day before the Commencement Date, plus (ii) 20% of the first $50,000 of the Participant's average annual compensation during the last five years multiplied by the number of years since the Commencement Date for which the full current costs have been met; or (4) (i) if the Participant is a substantial owner (as defined in Section 4022(b)(5) of ERISA), a dollar amount equal to the present value of the benefit guaranteed for the Participant under Section 4022 of ERISA or, if the Plan has not terminated, the present value of the benefit that would be guaranteed if the Plan had terminated on the date the benefit commences, or (ii) if the Participant is not a substantial owner, a dollar mount equal to the present value of the maximum benefit described in Section 4022(b)(3)(B) of ERISA (determined on the date the Plan terminates or the date benefits commence, whichever is earlier). For purposes of subparagraph (4), the present value of any benefit shall be determined in accordance with regulations of the Pension Benefit Guaranty Corporation, and for purposes of clause (ii), without regard to any other limitations in Section 4022 of ERISA. (d) Limitations Not Effective The limitations contained in this Section 8.01 shall not restrict the current payment of benefits in a form of payment that does not provide more rapid payments than a single life annuity, while the Plan is in full effect and the full current costs are met. Further, the limitations shall not restrict the payment of a lump sum benefit or other form of payment more rapid than a single life annuity, to a Participant in the Restricted Group provided the Participant agrees to repay benefits received in the event the full current costs are not met or the Plan terminates early. Such Participant must agree to repay amounts paid to him or her to the extent they exceed the greater of the amount he or she would have received if the restrictions under this Section 8.01 had been applied, or the amount he or she would have received under a single life annuity form of payment. The agreement to repay must be secured by deposit in escrow of property having a market value of 125% of the amount subject to repayment, and the value of the escrow shall be maintained at not less than 110% of such amount. 29 54 (e) Excess Funds Any funds not allocated to a Participant as a result of this Section shall be used proportionately to provide additional benefits for all other Participants. 8.02 Maximum Annual Benefit Payable Under the Plan For purposes of this Section 8.02, the Employer and any affiliated Companies shall be considered a single employer, to the extent required by the Code. (a) Primary Rule Notwithstanding any other Plan provision to the contrary, the annual Employer provided benefit payable to or on behalf of a Participant under the Plan (after any adjustments required under the Plan to reflect commencement of benefits other than at Normal Retirement Date, an optional form of payment or death benefit coverage) shall not exceed the lesser of: (1) $90,000 adjusted in accordance with this Section 8.02) or, if greater, the Participant's current Accrued Benefit on December 31, 1982 under the Burlington Northern Inc. Pension Plan; or (2) the Participant's average annual Compensation from the Employer for the consecutive calendar years (not in excess of three such years) during which he or she was an active Participant in the Plan and for which such average is highest. (b) Cost-of-Living Adjustment The $90,000 limit prescribed above shall be automatically adjusted for cost-of-living increases, to the maximum permissible dollar limitation determined by the Commissioner of the Internal Revenue Service. The dollar amount applicable in computing the benefit payable to any Participant shall be the dollar amount in effect for the calendar year in which the benefit commences. For 1989, the limit is $98,064. 30 55 (c) Adjustment for Early or Late Retirement For purposes of Sections 8.02 and 8.03, if the Participant's benefit commences before the Social Security Retirement Age, the limit prescribed in Section 8.02(a)(1) shall be Actuarially reduced to reflect such early commencement. If the Participant's benefit commences after the Social Security Retirement Age, the limit prescribed in Section 8.02(a)(1) shall be Actuarially increased for purposes of Sections 8.02 and 8.03 to reflect such late commencement. (d) Annual Benefit Notwithstanding the foregoing, if the benefit to be paid to a Participant under the Plan is not in the form of an "Annual Benefit" as described below, the benefit considered to be payable to a Participant under the Plan for purposes of Sections 8.02 and 8.03 shall be Actuarially adjusted to the extent required under Section 415(b)(2) of the Code. For purposes of the foregoing, "Annual Benefit" means the benefit payable annually in the form of a straight life annuity without ancillary benefits or in the statutory 50% joint and survivor annuity option. (e) Interest Rate Any Actuarial adjustments under this Section 8.02 shall be based on the Actuarial Equivalent factors applicable for comparable purposes under the Plan on the applicable date, except that the interest rate shall be 5%. (f) Special Provisions Regarding Participants With Fewer Than Ten Years of Participation or Service In the case of any Participant who Participates in the Plan for fewer than ten years, the maximum dollar benefit otherwise applicable under Section 8.02(a)(1) shall be multiplied by a fraction whose numerator is the Participant's years of participation in the Plan (including fractions thereof, but not less than one) and whose denominator is ten. In the case of any Participant who was employed by the Employer for fewer than ten years, the maximum benefit otherwise applicable under Sections 8.02(a)(2) and 8.03 shall be multiplied by a fraction whose numerator is the Participant's years of employment with the Employer (including fractions thereof, but not less than one) and whose denominator is ten. 31 56 (g) Aggregation With Other Defined Benefit Plans If a Participant also participates in any other defined benefit pension plan maintained by the Employer, the provisions of Sections 8.02 and 8.03 shall be applied on an aggregate basis to the benefits payable under this Plan and each such other plan. Any reduction in the aggregate benefits payable under this Plan and any such other plan due to the application of this Section shall be made on a pro rata basis. 8.03 Additional Limitation Relating to Defined Contribution Plans (a) Primary Rule For Participants who participate in this Plan and a defined contribution plan maintained by the Employer, the sum of (1) and (2) below for any calendar year may not exceed 1.0, as determined by the Pension Committee. (1) The defined benefit plan fraction for any year is equal to the quotient of (i) divided by (ii) below expressed as a fraction: (i) The projected annual benefit (determined by projecting service, but not Earnings, to normal retirement age) of the Participant under the Plan determined as of the close of the year. (ii) The lesser of: (a) 1.25 multiplied by the dollar limitation determined under Section 8.02 (a)(1) in effect for such year, or (b) 1.4 multiplied by the limitation determined under Section 8.02 (a)(2) (generally, 100% of the Participant's average annual Compensation). (2) The defined contribution plan fraction for any year is equal to the quotient of (i) divided by (ii) below expressed as a fraction: (i) The sum of the "annual additions" to the Participant's accounts for the current year, as of the close of the year, and for all prior years. (ii) The sum of the lesser of the following amounts for such year and for each prior year of service with the Employer (regardless of whether a plan was in existence during those years): (a) 1.25 multiplied by the dollar limitation in effect for defined contribution plans under Section 415 of the Code for such year, or (b) 1.4 multiplied by 25% of a Participant's Compensation for such year. 32 57 (b) Remedy If such sum exceeds 1.0, the benefit under this defined benefit Plan shall be reduced to the extent necessary to satisfy the limitation of this section. 33 58 SECTION 9 TOP HEAVY PROVISIONS 9.01 Scope Notwithstanding any Plan provision to the contrary, for any Plan Year in which the Plan is Top Heavy within the meaning of Section 416(g) of the Code, the provisions of this Section 9 shall govern to the extent they conflict with or specify additional requirements to the Plan provisions governing Plan Years which are not Top Heavy. 9.02 Top Heavy Status (a) Top Heavy This Plan shall be "Top Heavy" if, as of the Determination Date, (1) the sum of the Aggregate Accounts of Key Employees, or (2) the Present Value of Accrued Benefits of Key Employees under this Plan and any plan of an Aggregation Group, exceeds 60% of the Aggregate Accounts or the Present Value of Accrued Benefits of all Participants under this Plan and any plan of an Aggregation Group. The Present Value of Accrued Benefits and/or Aggregate Account balance of a Participant who was previously a Key Employee but is no longer a Key Employee (or his or her Beneficiary), shall not be taken into account for purposes of determining Top Heavy status. Further, a Participant's Present Value of Accrued Benefits and/or Aggregate Account balance shall not be taken into account if he or she has not performed services for the Affiliated Companies during the five year period ending on the Determination Date. (b) Super Top Heavy This Plan shall be "Super Top Heavy" if, as of the Determination Date, (1) the sum of the Aggregate Accounts of Key Employees, or (2) the Present Value of Accrued Benefits of Key Employees under this Plan and any plan of an Aggregation Group, exceeds 90% of the Aggregate Accounts or the Present Value of Accrued Benefits of all Participants under this Plan and any plan of an Aggregation Group. (c) Determination Date Whether the Plan is Top Heavy for any Plan Year shall be determined as of the Determination Date. "Determination Date" means (a) the last day 34 59 of the preceding Plan Year, or (b) in the case of the first Plan Year, the last day of such Plan Year. (d) Valuation Date "Valuation Date" means, for purposes of determining Top Heaviness, the Determination Date. (e) Aggregate Account "Aggregate Account" means, with respect to a Participant, his or her adjusted account balance in a defined contribution plan, as determined under the top heavy provisions of such plan. (f) Present Value of Accrued Benefits "Present Value of Accrued Benefits" means the sum of: (i) the Actuarial Equivalent present value of the accrued normal retirement benefit under the Plan as of the Valuation Date, and (ii) distributions prior to the Valuation Date, made during the Plan Year that contains the Determination Date and the four preceding Plan Years. (g) Key Employee "Key Employee" means an employee or former employee (and his or her Beneficiaries) who, at any time during the Plan Year containing the Determination Date or any of the four preceding Plan Years, is included in one of the following categories as within the meaning of Section 416(i) of the Code and regulations thereunder. (i) an officer of the Employer whose annual aggregate Compensation from Affiliated Companies exceeds 50% of the dollar limitation under Section 415(b)(1)(A) of the Code (for 1989, this amount is $49,032), provided that no more than 50 employees shall be considered officers, or if less, the greater of 10% of the employees or 3, (ii) one of the ten employees owning the largest interest in the Employer who owns more than a 0.5% interest of the Employer, and whose annual aggregate Compensation from the Affiliated Companies exceeds the dollar limitation under Section 415(c)(1)(A) of the Code (for 1989, this amount is $30,000), 35 60 (iii) an employee who owns more than 5% of the Employer, or (iv) an employee who owns more than 1% of the Employer with annual aggregate Compensation from the Affiliated Companies that exceeds $150,000. (h) Aggregation Group "Aggregation Group" means the group of plans that must be considered as a single plan for purposes of determining whether the plans within the group are Top Heavy (Required Aggregation Group), or the group of plans that may be aggregated for purposes of Top Heavy testing (Permissive Aggregation Group). The Determination Date for each plan must fall within the same calendar year in order to aggregate the plans. (i) The Required Aggregation Group includes each plan of the Affiliated Companies in which a Key Employee is a participant in the Plan Year containing the Determination Date or any of the four preceding Plan Years, and each other plan of the Affiliated Companies which, during this period, enables any plan in which a Key Employee participates to meet the minimum participation standards or non-discriminatory contribution requirements of Code Sections 401(a)(4) and 410. (ii) A Permissive Aggregation Group may include any plan sponsored by an Affiliated Company provided the group as a whole continues to satisfy the minimum participation standards and non-discriminatory contribution requirements of Code Sections 401(a)(4) or 410. Each plan belonging to a Required Aggregation Group shall be deemed Top Heavy, or non-Top Heavy in accordance with the group's status. In a Permissive Aggregation Group that is determined Top Heavy only those plans that are required to be aggregated shall be Top Heavy. In a Permissive Aggregation Group that is not Top Heavy, no plan in the group shall be Top Heavy. 9.03 Minimum Benefit (a) General Rule For any Top Heavy Plan Year, a non-Key Employee who completes a Year of Service shall have an Accrued Benefit at least equal to the minimum benefit described herein. The minimum Accrued Benefit at any point in time equals the lesser of: (i) two percent multiplied by Top Heavy Years of Service, or 36 61 (ii) twenty percent, multiplied by such Participant's "Average Compensation". "Average Compensation" means a Participant's average Compensation for the five consecutive years when such Participant had the highest aggregate Compensation from the Employer. However, Compensation received for non-Top Heavy Plan Years shall be disregarded. The benefit described herein is expressed as an annual benefit in the form of a single life annuity (with no ancillary benefits), commencing at normal retirement age. A non-Key Employee shall not be denied this minimum benefit because he or she was not employed on a specified date, failed to make any mandatory employee contributions, or failed to earn a specified amount of Compensation. (b) Special Two Plan Rule Where this Plan and a defined contribution plan belong to an Aggregation Group that is determined Top Heavy, the minimum benefit required under (a) above for any non-Key Participant who also participates in the defined contribution plan shall be reduced by the minimum contribution and forfeiture allocated to the non-Key Participant's accounts pursuant to the defined contribution plan's top heavy provisions. Such offset shall be in accordance with the safe harbor rules of Treasury Regulation 1.416-1(m-12). 9.04 Benefit Limitation For any Top Heavy Plan Year in which the Employer does not make the extra minimum allocation provided below, 1.0 shall replace the 1.25 factor found in the denominators of the defined benefit and defined contribution plan fractions for purposes of calculating the combined limitation on benefits under a defined benefit and defined contribution plan pursuant to Section 415(e) of the Code [see Section 8.03]. If this Plan is Top Heavy, but is not Super Top Heavy, the above referenced fractions shall remain unchanged provided the Employer provides an extra minimum Accrued Benefit for each non-Key Employee. The extra benefit (in addition to the minimum benefit set forth in Section 9.03) shall equal the lesser of: (i) one percent multiplied by Top Heavy Years of Service, or (ii) ten percent, multiplied by such Participant's "Average Compensation", as defined in Section 9.03. 37 62 9.05 Vesting (a) Top Heavy Schedule. For any Top Heavy Plan Year, each Participant who completes an Hour of Service in such Year shall become vested and have a nonforfeitable right to retirement benefits he or she has earned under the Plan in accordance with the following table:
Years of Service Vesting Percentage ---------------- ------------------ Less than 2 0% 2 20% 3 40% 4 60% 5 or More 100%
Provided, however, that a Participant's vesting percentage shall not be less than the percentage determined under the table in Section 7.01. (b) Return to Non-Top Heavy Status If the Plan becomes Top Heavy and ceases to be Top Heavy in any subsequent Plan Year, the vesting schedule shall automatically revert to the vesting schedule in effect before the Plan became Top Heavy. Such reversion shall be treated as a Plan amendment pursuant to the terms of the Plan, and shall not cause a reduction of any Participant's nonforfeitable interest in the Plan on the date of such amendment. A Participant with three or more Years of Service as of the end of the election period, may elect to remain covered by the Top Heavy vesting schedule. The Participant's election period shall commence on the adoption date of the amendment and shall end 60 days after the latest of: (i) the adoption date of the amendment, (ii) the effective date of the amendment, or (iii) the date the Participant receive written notice of the amendment from the Pension Committee. 38 63 SECTION 10 ADMINISTRATION OF THE PLAN 10.01 Plan Administrator Each Employer, and the members of the Pension Committee, and the Senior Vice President-Finance and the Senior Vice President-Human Resources and Administration of the Company (or officers holding the equivalent positions) shall be deemed fiduciaries. Each fiduciary shall have only those specific powers, duties, responsibilities and obligations provided to them under the Plan or the Trust, as follows: (a) The Company shall have the sole authority to appoint and remove the Trustee and the investment manager. (b) The Company shall be the Plan Administrator. The Pension Committee acting on behalf of the Company shall have the sole authority to and responsibility for the administration of the Plan as specified in the Plan and the Trust, including the discretionary authority to interpret the provisions of the Plan and the facts and circumstances of claims for benefits. The Senior Vice President-Human Resources and Administration (or the officer holding the equivalent position) shall have the responsibility of implementing the administration of the Plan as the Pension Committee shall direct. (c) The Trustee shall have the responsibility for administration of the Trust and management of the assets held under the Trust as provided therein. Each fiduciary may rely upon any such direction, information or action of another fiduciary as being proper under the Plan or the Trust, and is not required to inquire into the propriety of any such direction, information or action. Each fiduciary may designate any person, partnership or corporation, to carry out any of its responsibilities under the Plan or the Trust. Any such designation shall be reduced to writing, and such writing shall be kept with the records of such fiduciary. No fiduciary guarantees the Trust Fund in any manner against investment loss or depreciation in asset value. 10.02 The Pension Committee (a) General The Chief Executive Officer of the Company shall appoint a committee consisting of three or more members which shall be known as the Pension Committee. The Pension Committee shall be responsible for carrying out the Company's duties as Plan Administrator and, except for duties specifically 39 64 vested in the Trustee, for the administration of the provisions of the Plan. The Chief Executive Officer of the Company shall have the right at any time, with or without cause, to remove any member or members of the Pension Committee. A member of the Pension Committee may resign, effective upon delivery of a written resignation to the Chief Executive Officer of the Company. Upon the resignation, removal or failure or inability for any reason of any member of the Pension Committee to act hereunder, the Chief Executive Officer of the Company shall appoint a successor member if the failure to do so would cause the Pension Committee to consist of less than three members. All successor members of the Pension Committee shall have all the rights, privileges and duties of their predecessors, but shall not be held accountable for the acts of their predecessors. (b) Notice to Trustee of Committee Members Promptly after the appointment of the original members, and any successor member of the Pension Committee, the Trustee shall be notified as to the names of the persons appointed as members or successor members of the Pension Committee by delivery to the Trustee of a certified copy of the appointment. (c) Procedures The Pension Committee may act at a meeting, or by writing without a meeting, by a vote or written assent of a majority of its members. The Pension Committee shall elect a chairman and a secretary. The secretary may, but need not be, a member of the Pension Committee. The chairman shall be the Plan's agent for service of legal process, and shall forward all necessary communication to the Trustee. The chairman may sign all reports required by law on behalf of all members of the Pension Committee. The Pension Committee shall keep a record of all of its proceedings and shall keep or cause to be kept all books of account, records and other data as may be necessary or advisable in its judgement for the administration of the Plan, including records relating to each Participant's service accrued benefits, notifications to Participants and annual reports to the Internal Revenue Service, the Department of Labor and the Pension Benefit Guaranty Corporation. The Pension Committee may adopt such additional rules and procedures as it deems desirable for the conduct of its affairs and the administration of the Plan, provided that any such rules and procedures shall be consistent with the provisions of the Plan and ERISA. 40 65 (d) Decisions Affecting a Member Each member of the Pension Committee shall be an employee of one of the Employers. Such status shall not disqualify the Committee member from taking any action hereunder or render him or her accountable for any distribution or other material advantage received by him or her under the Plan, provided that no member of the Pension Committee who is a Participant shall take part in any action of the Pension Committee or any matter involving solely his or her rights under the Plan. (e) Allocation and Delegation of Responsibilities The members of the Pension Committee may allocate their responsibilities among themselves and may designate any person, partnership or corporation to carry out any of their responsibilities. Any such allocation or designation shall be reduced to writing and such writing shall be kept with the records of the Pension Committee. The Pension Committee may employ such counsel (who may be counsel for any Employer) and agents and may obtain for such administrative, clerical, medical, legal, audit, actuarial, and other services as it may require in carrying out the provisions of the Plan. (f) Plan Interpretation and Records The Pension Committee shall have the duty and authority to interpret and construe the Plan in regard to all questions of eligibility, the status and rights of Participants and surviving spouses under the Plan, and the manner, time and amount of payment of any distributions under the Plan. Each Employer shall, from time to time, upon request of the Pension Committee, furnish to the Pension Committee and certify thereto as correct such data and information as the Pension Committee shall require in the performance of its duties. (g) Exclusive Benefit The members of the Pension Committee, and each of them, shall discharge their duties with respect to the Plan (i) solely in the interest of the Participants and their surviving spouses, and (ii) for the exclusive purposes of providing benefits to Participants and their surviving spouses and of defraying reasonable expenses of administering the Plan. 41 66 (h) No Compensation No member of the Pension Committee shall receive any compensation or fee for his or her services on the Pension Committee, but the Employers shall reimburse the Pension Committee members for any necessary expenditures incurred in the discharge of their duties as Pension Committee members. (i) Reliance on Information The members of the Pension Committee and the Employers and their officers and directors shall be entitled to rely on all tables, valuations, certificates and reports made by its accountants and upon all opinions given by legal counsel employed by them. The members of the Pension Committee and the Employers and their officers and directors, shall be fully protected in respect of any action taken or suffered by them in good faith in reliance upon any such actuary, accountants or counsel, and all action so taken or suffered shall be conclusive upon all Participants and Beneficiaries under the Plan. (j) Indemnification To the extent permitted by law, the Employers hereby jointly and severally indemnify the members of the Pension Committee, and each of them, from the effects and consequences of their acts, omissions and conduct in their official capacity, except to the extent that such effects and consequences shall result from their own willful misconduct. 10.03 Expenses All costs and expenses incurred in administering the Plan and the Trust Fund, including without limitation the expenses of the Pension Committee, the fees of the actuary, the fees of counsel and any agents for the Pension Committee, the fees and expenses of the Trustee, the fees of counsel for the Trustee and other administrative expenses shall be paid by the Trustee from the Trust Fund to the extent such expenses are not paid by the Employers. The Pension Committee, in its sole discretion, after considering the nature of a particular expense, shall determine the portion of such expense which is to be borne by a particular Employer. 10.04 Bonding and Insurance To the extent required by law, every Pension Committee member, every fiduciary of the Plan and every person handling Plan funds shall be bonded. The Pension Committee shall take such steps as are necessary to assure compliance with applicable bonding requirements. The Pension Committee may apply for and obtain fiduciary liability insurance insuring the Plan against damages by reason of breach of fiduciary responsibility 42 67 at the Plan's expense and insuring each fiduciary against liability to the extent permissible by law at the Employer's expense. 10.05 Commencement of Benefits (a) Conditions of Payment Benefit payments under the Plan shall not be payable prior to the fulfillment of the following conditions: (1) The Pension Committee has been furnished with such applications, proofs of birth or death, address, form of benefit election, spouse consent if required and other information the Pension Committee deems necessary; (2) The Participant has terminated employment with the Employer, reached age 70-1/2 or died; and (3) The Participant or Beneficiary is eligible to receive benefits under the Plan as determined by the Pension Committee. The Pension Committee may rely upon all such information so furnished it, including the Participant's current mailing address. (b) Commencement of Payment Unless a Participant elects otherwise, the payment of benefits shall commence no later than 60 days after the end of the Plan Year in which the latest of the following occurs: (1) the date the Participant reaches Normal Retirement Date, (2) the tenth anniversary of the year in which the Participant commenced participation in the Plan, or (3) the Participant terminates employment with the Employer; provided that payments shall not commence later than the April 1 following the calendar year in which the Participant reaches age 70-1/2. In no event shall payments commence prior to the Participant's Normal Retirement Date if the Participant's Accrued Benefit exceeds $3,500 without the written consent of the Participant and the spouse. Spouse consent must acknowledge the effect of such election and be notarized or witnessed by a Plan representative. 43 68 If the information required in Section 10.05(a) above is not available prior to such date, the amount of payment will not be ascertainable. In such event, the commencement of payment shall be delayed until no more than 60 days after the date the amount of such payment is ascertainable. The Pension Committee shall direct the Trustee to make all payments under the Plan. 10.06 Appeal Procedure (a) Submission of Claim A claim for benefit payment shall be considered filed when an application form is submitted to the Pension Committee. (b) Notice of Denial Any time a claim for benefits is wholly or partially denied, the Participant or Beneficiary (hereinafter "Claimant") shall be given written notice of such action within 90 days after the claim is filed, unless special circumstances require an extension of time for proceeding. If there is an extension, the Claimant shall be notified of the extension and the reason for the extension within the initial 90 day period. The extension shall not exceed 180 days after the claim is filed. Such notice will indicate the reason for denial, the pertinent provisions of the Plan on which the denial is based, an explanation of the claims appeal procedure set forth herein, and a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary. (c) Right to Request Review Any person who has had a claim for benefits denied by the Pension Committee, who disputes the amount of benefit payment determined by the Pension Committee, or is otherwise adversely affected by action of the Pension Committee, shall have the right to request review by the Pension Committee. Such request must be in writing, and must be made within 60 days after such person is advised of the Pension Committee's action. If written request for review is not made within such 60-day period, the Claimant shall forfeit his or her right to review. The Claimant or a duly authorized representative of the Claimant may review all pertinent documents and submit issues and comments in writing. 44 69 (d) Review of Claim The Pension Committee shall then review the claim. It may hold a hearing if it deems it necessary and shall issue a written decision reaffirming, modifying or setting aside its former action within 60 days after receipt of the written request for review, or 120 days if special circumstances, such as a hearing, require an extension. The Claimant shall be notified in writing of any such extension within 60 days following the request for review. A copy of the decision shall be furnished to the Claimant. The decision shall set forth its reasons and pertinent Plan provisions on which it is based. The decision shall be final and binding upon the Claimant and the Pension Committee and all other persons involved. 10.07 Plan Administration - Miscellaneous (a) Limitations on Assignments Benefits under the Plan may not be assigned, sold, transferred, or encumbered, in whole or in part, either directly or by operation of law or otherwise, and any attempt to do so shall be void. The interest of a Participant in benefits under the Plan shall not be subject to debts or liabilities of any kind and shall not be subject to attachment, garnishment or other legal process, except as provided in Section 10.08 relating to Domestic Relations Orders, or otherwise permitted by law. (b) Masculine and Feminine, Singular and Plural Whenever used herein, words in one gender shall include the opposite gender, the singular shall include the plural and the plural shall include the singular whenever the context shall plainly so require. (c) Small Benefits In cases where the Actuarially Equivalent present value of a vested or payable benefit is less than or equal to the maximum permissible amount under the Code which may be distributed without the consent of a Participant or his or her spouse (in 1989, the amount is $3,500), the Pension Committee shall direct such present value be paid in a lump sum distribution as soon as practical following termination and prior to the Pension Starting Date. (d) No Additional Rights No person shall have any rights in or to the Trust, or any part thereof, or under the Plan, except as, and only to the extent, expressly provided for in 45 70 the Plan. Neither the establishment of the Plan, the granting of a retirement benefit nor any action of the Employer or the Pension Committee shall be held or construed to confer upon any person any right to be continued as an employee, or, upon dismissal, any right or interest in the Trust other than as herein provided. The Employer expressly reserves the right to discharge any employee at any time. (e) Governing Law This Plan shall be construed in accordance with applicable federal law and the laws of the State of Washington, wherein venue shall lie for any dispute arising hereunder. (f) Disclosure to Participants Each Participant shall be advised of the general provisions of the Plan and, upon written request addressed to the Pension Committee, shall be furnished any information requested regarding the Participant's status, rights and privileges under the Plan as may be required by law. (g) Income Tax Withholding Requirements Any retirement benefit payment made under the Plan shall be subject to any applicable income tax withholding requirements. For this purpose, the Pension Committee shall provide the Trustee with any information the Trustee needs to satisfy such withholding obligations and with any other information that may be required under the Code. (h) Severability If any provision of this Plan shall be held illegal or invalid for any reason, such determination shall not affect the remaining provisions of this Plan which shall be construed as if said illegal or invalid provision had never been included. (i) Facility of Payment Whenever, in the Pension Committee's opinion, a person entitled to receive any benefit payment is under a legal disability or is incapacitated in any way so as to be unable to manage his or her affairs, the Pension Committee may direct the Trustee to make payments to such person or to his or her guardian or other legal representative, or in the absence of a guardian or legal representative, to a custodian for such person under a Uniform Gifts to Minors Act or to any relative of such person by blood or marriage, for such person's benefit. Any payment made in good faith pursuant to this 46 71 provision shall fully discharge the Employer and the Plan of any liability to the extent of such payment. (j) Correction Of Errors Any Employer contribution to the Trust made under a mistake of fact (or investment proceeds of such contribution if a lesser amount) shall be returned to the Employer within one year after payment of the contribution. In the event an incorrect amount is paid to a Participant or Beneficiary, any remaining payments may be adjusted to correct the error. The Pension Committee may take such other action it deems necessary and equitable to correct any such error. (k) Responsibility to Advise Pension Committee of Current Address Each person entitled to receive a payment under the Plan shall file with the Pension Committee in writing his or her complete mailing address and each change therein. A check or communication mailed to any person at the address on file with the Pension Committee shall be deemed to have been received by such person for all purposes of the Plan, and no member of the Pension Committee, the Employers or the Trustee shall be obligated to search for or ascertain the location of any person. If the Pension Committee doubts whether payments are being received by the person entitled thereto, it shall, by registered mail addressed to the person concerned at the last address known to the Pension Committee, notify such person that all future Pension payments will be withheld until such person submits to the Pension Committee evidence that he or she is still living and the proper mailing address. (l) Notices to Participants and Surviving Spouses All notices, reports and statements given, made, delivered or transmitted to a Participant or surviving spouse shall be deemed to have been duly given, made or transmitted when mailed by first class mail with postage prepaid and addressed to such Participant or spouse at the address last appearing on the records of the Pension Committee. A Participant or surviving spouse may record any change of address from time to time by written notice filed with the Pension Committee. (m) Notices to Employers or Pension Committee Written directions, notices and other communications from Participants or surviving spouses to the Employers or the Pension Committee shall be deemed to have been duly given, made or transmitted either when delivered 47 72 to such location as shall be specified upon the forms prescribed by the Pension Committee for the giving of such directions, notices and other communications or when mailed by first class mail with postage prepaid and addressed to the addressee at the address specified on such forms. 10.08 Domestic Relations Orders Notwithstanding any Plan provisions to the contrary, benefits under the Plan may be paid to someone other than the Participant, Beneficiary or joint annuitant, pursuant to a Qualified Domestic Relations Order, in accordance with Section 414(p) of the Coda. A Qualified Domestic Relations Order is a judgment, decree, or order ("Order") including approval of a property settlement agreement) that: (a) relates to the provision of child support, alimony payments or marital property rights to a spouse, former spouse, child or other dependent of a Participant; (b) is made pursuant to a state domestic relations law (including a community property law); (c) creates or recognizes the existence of an alternate payee's right to, or assigns to an alternate payee the right to, receive all or a portion of the benefits payable to a Participant under the Plan; (d) specifies the name and last known address of the Participant and each alternate payee; (e) specifies the amount or method of determining the amount of benefit payable to an alternate payee; (f) specifies the number of payments or period during which payments are to be made; (g) names each plan to which the order applies; (h) does not require any form, type or amount of benefit not otherwise provided under the Plan; (i) does not conflict with a prior Domestic Relations Order that meets the requirements of this section. Payments to an alternate payee pursuant to a Qualified Domestic Relations Order may commence on the date the Participant attains age 50 as if the Participant retired on such date, regardless of whether the Participant continues working after that date. 48 73 The Pension Committee shall determine whether an order meets the requirements of this section within a reasonable period after receiving an order. The Pension Committee shall notify the Participant and any alternate payee that an order has been received and with respect to benefits which are in pay status shall establish a separate account under the Plan for any alternate payee pending determination that an order meets the requirements of this section. If within eighteen months after such a separate account is established, the order has not been determined to be a qualified Order, the amount in the separate account shall be distributed to the individual who would have been entitled to such amount if there had been no order. 10.09 Plan Qualification Any modification or amendment of the Plan may be made retroactive, as necessary or appropriate, to establish and maintain a "qualified plan" pursuant to Section 401 of the Code, and ERISA and regulations thereunder and the exempt status of the Trust under Section 501 of the Code. Notwithstanding anything herein to the contrary, this Plan shall be contingent upon a favorable Internal Revenue Service ruling that the Plan, with respect to each Employer, is qualified under Section 401(a) of the Code and exempt from income taxation under Section 501(a) of the Code. In the event the Plan is not initially recognized as a "qualified plan", or the assets of the Plan are not initially exempt under Section 501 of the Code with respect to an Employer and the Plan is not amended retroactively for any reason to correct the defaults, then the Employer may terminate its participation in the Plan and direct the Trustee to pay and deliver to such Employer within one year the portion of the Trust Fund applicable to Participants employed by such Employer, determined by the Company. In the event all Employers terminate participation under this section, all amounts contributed by the Employer to the Plan, plus investment earnings, less expenses paid, shall be returned within one year. 10.10 Deductible Contribution Notwithstanding anything herein to the contrary, any contribution by the Employer to the Trust is conditioned upon the deductibility of the contribution by the Employer under the Code and, to the extent any such deduction is disallowed, the Employer may within one year following a final determination of the disallowance, demand repayment of such disallowed contribution and the Trustee shall return such contribution less any losses attributable thereto within one year following the disallowance. 10.11 Payment of Benefits Through Purchase of Annuity Contract In lieu of paying benefits directly from the Trust to a Participant or a Beneficiary, the Trustee may purchase, with Trust assets, an individual annuity contract from an insurance company which, as far as possible, provides benefits equal to (or Actuarially Equivalent to) those provided in the Plan for such Participant or Beneficiary, but provides 49 74 no optional form of retirement income or benefit which would not be permitted under the Plan, whereupon the liability of the Trust and of the Plan will cease and terminate with respect to such benefits that are so purchased and for which the premiums are duly paid. Such an individual annuity contract may be purchased by the Trustee on a single-premium basis or on the basis of annual premiums payable over a period of years and may be purchased at any time on or after the Participant's Vested Termination Date, Retirement Date or death to provide the benefits due under the Plan to the Participant or a Beneficiary on or after the date of such purchase. Any annuity contract distributed by the Trustee to a Participant or Beneficiary under the provisions of the Plan shall bear on the face thereof the designation "NOT TRANSFERABLE", and such contract shall contain a provision to the effect that the contract may not be sold, assigned, discounted or pledged as collateral for a loan or as security for the performance of an obligation or for any other purpose to any person other than the issuer thereof. 50 75 SECTION 11 PARTICIPATION BY OTHER EMPLOYERS 11.01 Adoption Of Plan With the consent of the Company, any corporation which is a current member or a former member of the affiliated group (as defined in Section 1504 of the Code) of which the Company is the common parent corporation or a successor company thereto may become a participating Employer under the Plan by (a) taking such action as shall be necessary to adopt the Plan, (b) filing with the Pension Committee a duly certified copy of the Adoption Agreement in form specified by the Company as adopted by such corporation, (c) becoming a party to the trust agreement establishing the Trust Fund, and (d) executing and delivering such instruments and taking such other action as may be necessary or desirable to put the Plan into effect with respect to such corporation. The Adoption Agreement shall specify the terms under which each such corporation shall participate in the Plan, including the amount of benefits to be provided to the employees of such corporation. Such Adoption Agreement shall also contain any modifications of the terms of this Plan as may be desired by such corporation and agreed to by the Company. 11.02 Prior Service Unless otherwise specified in an Adoption Agreement, periods of service credited under a retirement plan of an Employer, or service with an Employer which did not maintain a retirement plan; prior to the time such Employer becomes a participating Employer shall not be considered in determining a Participant's Years of Service and Credited Service. 11.03 Withdrawal from Participation Any Employer may withdraw from participation in the Plan at any time by filing with the Pension Committee a duly certified copy of a resolution of its board of directors to that effect and giving notice of its intended withdrawal to the Pension Committee, the other Employers and the Trustees prior to the effective date of withdrawal. 11.04 Company As Agent For Employers Each corporation which shall become a participating Employer pursuant to Section 11.01 shall be deemed to have appointed the Company its agent to exercise on its behalf all of the powers and authorities hereby conferred upon the Company by the terms of the Plan, including, but not by way of limitation, the power to amend and terminate the Plan. The authority of the Company to act as such agent shall continue until such Employer shall withdraw from the Plan. Notwithstanding the foregoing, the Company shall not have the authority to amend the adoption agreement executed by another Employer. 51 76 SECTION 12 AMENDMENT AND TERMINATION 12.01 Amendment The Plan may at any time and from time to time be amended or modified, without further approval of the Board of Directors of the Company, by written instrument which is approved by the Senior Vice President-Human Resources and Administration and which is duly adopted by the Compensation and Nominating Committee of the Board of Directors of the Company. Each Employer may at any time and from time to time amend or modify its Adoption Agreement with the consent of the Company by written instrument duly executed by such Employer. Any such amendment or modification shall become effective on such date as the Company or the Employer, as the case may be, shall determine and may apply to Participants in the Plan at the time thereof as well as to future Participants. Any amendments made pursuant to this section shall be subject to any advance notice or other requirements of ERISA. 12.02 Amendment - Consolidation or Merger In the event the Plan's assets and liabilities are merged into, transferred to or otherwise consolidated with any other retirement plan, then such must be accomplished so as to ensure that each Participant would (if the other retirement plan then terminated) receive a benefit immediately after the merger, transfer or consolidation, which is equal to or greater than the benefit the Participant would have been entitled to receive immediately before the merger, transfer or consolidation (as if the Plan had then terminated). This provision shall not be construed as limiting the powers of the Company to appoint a successor Trustee. 12.03 Termination of the Plan The termination of the Plan shall not cause or permit any part of the Trust to be diverted to purposes other than for the exclusive benefit of the Participants, or cause or permit any portion of the Trust to revert to or become the property of an Employer at any time prior to the satisfaction of all liabilities with respect to the Participants. Upon termination of this Plan, the Pension Committee shall continue to act for the purpose of complying with the preceding paragraph and shall have all power necessary or convenient to the winding up and dissolution of the Plan as herein provided. While so acting, the Pension Committee shall be in the same status and position with respect to other persons as if the Plan remained in existence. 52 77 12.04 Effect of Withdrawal from Plan If an Employer shall withdraw from or terminate participation in the Plan under Section 11.03, the Company shall, subject to Section 12.05, determine the manner by which the benefits of Participants who are employees (or former employees) of such Employer shall be provided. 12.05 Allocation of the Trust on Termination of Plan In the event of a complete Plan termination, the right of each Participant to benefits accrued to the date of such termination that would be vested under the provisions of the Plan in the absence of such termination shall continue to be vested and non-forfeitable; and the right of each Participant to any other benefits accrued to the date of termination shall be fully vested and non-forfeitable to the extent then funded under the priority rules set forth in Section 4044 of ERISA. In any event, a Participant or a Beneficiary shall have recourse only against Plan assets for the payment of benefits thereunder, subject to any applicable guarantee provisions of Title IV of ERISA. The Pension Committee shall direct the Trustee to allocate Trust assets to those affected Participants to the extent and in the order of preference set forth in Section 4044 of ERISA. Upon Plan termination, each Participant shall elect a form of payment pursuant to Section 5 and benefits shall be distributed by purchase of nontransferable annuity contracts or lump sum payments in accordance with the Participants election; provided, however, that small benefits shall be distributed pursuant to Section 10.07(c). If Trust assets as of the date of Plan termination exceed the amounts required under the priority rules set forth in Section 4044 of ERISA, such excess shall, after all liabilities of the Plan have been satisfied, revert to the Employer to the extent permitted by applicable law. If at any time the Plan is terminated with respect to any group of Participants under such circumstances as to constitute a partial Plan termination within the meaning of Section 411(d)(3) of the Code, each affected Participant's right to benefits that have accrued to the date of partial termination that would be vested under the provisions of the Plan in the absence of such termination shall continue to be so vested; and the right of each affected Participant to any other benefits accrued to the date of such termination shall be vested to the extent assets would be allocable to such benefits under the priority rules set forth in Section 4044 of ERISA in the event of a complete Plan termination. In any event, affected Participants shall have recourse only against Plan assets for payment of benefits thereunder, subject to any applicable guarantee provisions of Title IV of ERISA. Subject to the foregoing, the vested benefits of such Participants shall be payable as though such termination had not occurred; provided, however, that the Pension Committee, in its discretion, subject to any necessary governmental approval, may direct that the amounts held in the Trust that are allocable to the Participants as to whom such termination occurred be segregated by the Trustee as a separate plan. The assets thus allocated to such separate plan shall be applied for the benefit of such Participants in the manner described in the preceding paragraph. 53 78 SECTION 13 FUNDING 13.01 Contributions to the Trust As a part of this Plan the Company shall maintain one or more Trusts. From time to time, the Employers shall make such contributions to the Trust as it determines, with the advice of its actuary, are required to maintain the Plan on a sound actuarial basis. Employees shall not be required or permitted to make contributions. The Pension Committee shall, with the approval of the board of directors of the Company, establish a funding policy and method consistent with the objectives of the Plan and ERISA and shall communicate such policy and method, and any changes in such policy and method, to the Trustee. 13.02 Trust for Exclusive Benefit of Participants The Plan and Trust are for the exclusive benefit of Participants. Except as provided in Sections 10.07(j) (Correction of Errors), 10.08 (Domestic Relations Orders) and 10.10 (Deductible Contribution), no portion of the Trust shall be diverted to purposes other than this or revert to or become the property of the Employer at any time prior to the satisfaction of all liabilities with respect to the Participants. 13.03 Disposition of Credits and Forfeitures In no event shall any credits or forfeitures which may arise under the Plan be used to increase benefits under the Plan. 13.04 Trustee As a part of this Plan, the Company has entered into an agreement with a Trustee. The Company has the power and duty to appoint the Trustee and it shall have the power to remove the Trustee and appoint successors at any time. As a condition to exercising its power to remove any Trustee hereunder, the Company must first enter into an agreement with a successor Trustee. The Pension Committee may delegate the authority to direct the investment of all or a portion of the Trust Fund to the Trustee. Each Trustee shall hold all monies and other property received by it and invest and reinvest the same, together with the income therefrom, on behalf of the Participants collectively in accordance with the provisions of the Trust agreement. Each Trustee shall make distributions from the Trust Fund at such time or times to such person or persons and in such amounts as the Pension Committee shall direct in accordance with the Plan. 54 79 13.05 Investment Manager The Company has the power to appoint, remove or change from time to time an Investment Manager to direct the investment of all or a portion of the Trust held by the Trustee. For purposes of this section "Investment Manager" shall mean any fiduciary (other than the Trustee) who: (a) has the power to manage, acquire, or dispose of any asset of the Plan; (b) is either (1) registered as an investment advisor under the Investment Advisors Act of 1940, or (2) is a bank, or (3) is an insurance company qualified under the laws of more than one state to perform the services described in subparagraph (a); and (c) has acknowledged in writing that he, she or it is a fiduciary with respect to the Plan. 55 80 The Burlington Resources Inc. Pension Plan is adopted by Burlington Resources Inc. IN WITNESS WHEREOF, Burlington Resources Inc. has caused this Plan to be duly executed on this 19th day of December, 1989. FOR BURLINGTON RESOURCES INC. /s/ RJ FRENCH /s/ AR BOYCE - ---------------------------------- ------------------------------------- Witness Authorized Officer Sr. Vice President ------------------------------------- Title (CORPORATE SEAL) 56 81 APPENDIX I Burlington Resources Inc. Pension Plan "Employer" is defined in Section 1.22 shall also include the following employers during the specified time periods.
Employer Beginning Ending -------- --------- ------- 1. El Paso Natural Gas Company 1/1/89 2. Glacier Park Company 1/1/89 3. BR Services Inc. 1/1/89 4. Meridian Minerals Company 1/1/89 5. Meridian Oil, Inc. 1/1/89 6. Plum Creek Timber Company, Inc. 1/1/89 6/07/89 7. Plum Creek Timber Company, L.P. 6/8/89 8. Plum Creek Management Company 6/8/89 9. Plum Creek Manufacturing, Inc. 6/8/89
Acknowledged and Accepted By: /s/ RJ FRENCH ------------------------------------------- Title: Director Benefits --------------------------------------- Date: 12-19-89 --------------------------------------- 57 82 FIRST AMENDMENT TO THE BURLINGTON RESOURCES INC. PENSION PLAN The Burlington Resources Inc. Pension Plan ("Plan"), as adopted effective January 1, 1989, is amended as follows pursuant to Section 12.01 of the Plan, effective January 1, 1991, except as otherwise specified: 1. Effective January 1, 1989, Section 1.12 Credited Service, subparagraphs (b) and (c), shall be replaced in their entirety by the following: (b) all Plan Years commencing on and after January 1, 1989 during which an Eligible Employee completes 1,000 or more Hours of Service for an Employer, and (c) with respect to the Plan Years in which service as an Eligible Employee commences and terminates, the fraction of a Plan Year which is equal to the number of months during which the Participant has at least one Hour of Service for an Employer during the Plan Year divided by 12, and 2. Section 1.18 Earnings shall be amended by replacing the first paragraph in its entirety with the following: "Earnings" for each Plan Year means the total earnings, including overtime payments for each full month earned by an Employee from an Employer, including nondeferred cash incentive bonuses paid or accrued and salary reduction amounts contributed by an Employer on behalf of the employee to a qualified retirement plan or welfare benefit plan; but excluding payments under non-qualified deferred compensation plans, stock option, stock bonus, capital income and phantom stock plans, Christmas bonuses and all other commissions and extra or added compensation or benefits of any kind or nature. 3. Section 1.20 Eligible Employee shall be amended by replacing the first sentence in its entirety with the following: "Eligible Employee" means any Employee who is employed on a regular, full-time basis, who is regularly scheduled to work at least 32 hours per week, except any leased employee and any Employee who is covered under a collective bargaining agreement where retirement benefits were the subject of good faith bargaining which does not provide for retirement benefits under this Plan. 4. Section 3.01 Normal Retirement Date shall be amended by inserting the following clause at the end of the last sentence: "or Vested Termination Date". 83 5. Section 3.04 Vested Termination Date shall be replaced in its entirety by the following: A Participant who is vested and terminates prior to a Retirement Date may elect in writing upon termination of employment, to receive the Vested Termination Benefit on a Vested Termination Date, which shall be the first day of the month following the month in which termination of employment occurs, or the first day of any month following attainment of age 55 and before the Normal Retirement Date. Such individual shall not be entitled to a retirement benefit, 6. Section 4.06 Reemployment After Retirement shall be replaced in its entirety by the following: Upon reemployment, a retired Participant shall resume accruing benefits under the Plan. A Participant shall cease to receive retirement benefits during any month in which the Participant completes at least 40 Hours of Service and which is before the date benefits are required to be paid following age 70-1/2 pursuant to section 10.05. In the event such a Participant is reemployed and completes less than 40 Hours of Service in any month, he or she shall continue receiving retirement benefits during such month. At the Participant's subsequent retirement, benefits payable shall be based on his or her total Credited Service and Earnings at the time of subsequent retirement, and shall be reduced by the Actuarially Equivalent value of benefits previously received by the Participant. In no event shall the benefit upon subsequent retirement, prior to any reduction for previously received benefits be less than the initial retirement benefit. 7. Section 5.01 Forms of Payment shall be amended by deleting the phrase ". . . (completed to the birthdate anniversary nearest the Retirement Date or Vested Termination Date, whichever applies). . ." in subparagraphs (b)(i) and (b)(iv). IN WITNESS WHEREOF, Burlington Resources Inc. has caused this first amendment to be duly executed in this 1st day of January 1990. FOR BURLINGTON RESOURCES INC By: A. R. BOYCE ---------------------------------- R. J. FRENCH Its: Sr. V.P. Hum. Res. & Admin. - ------------------------------------ --------------------------------- Witness (CORPORATE SEAL) 84 SECOND AMENDMENT TO THE BURLINGTON RESOURCES INC. PENSION PLAN The Burlington Resources Inc. Plan ("Plan"), as adopted effective January 1, 1989, is amended as follows pursuant to Section 12.01 of the Plan, effective January 1, 1992: 1. Section 11.03 Withdrawal From Participation shall be amended by inserting the following paragraph immediately following the first paragraph: In the event an Employer ceases to be an Affiliated Company, the Company, in its sole discretion, may terminate that Employer's participation in the Plan. In this circumstance, an Employer shall not be entitled to notice prior to the effective date of withdrawal of participation in the Plan. 2. Section 11.04 Company as Agent for Employers shall be replaced in its entirety by the following: Each corporation which shall become a participating Employer pursuant to Section 11.01 shall be deemed to have appointed the Company its agent to exercise on its behalf all of the powers and authorities hereby conferred upon the Company by the terms of the Plan, including, but not by way of limitation, the power to amend and terminate the Plan. The authority of the Company to act as such agent shall continue until such Employer withdraws from the Plan in accordance with Section 11.03. IN WITNESS WHEREOF, Burlington Resources Inc. has caused this second amendment to be duly executed on this 1st day of December 1992. FOR BURLINGTON RESOURCES INC. By: /s/ Harold E. Hanschild ----------------------------------- M.A. Salin VP Human Resources - ------------------------------------ Title: ------------------------------- Witness (CORPORATE SEAL) Prepared for Review by Legal Counsel 85 APPENDIX 1 Burlington Resources Inc. Pension Plan "Employer" as defined in Section 1.22 shall also include the following employers during the specified time periods.
Employer Beginning Ending -------- --------- ------ 1. El Paso Natural Gas Company 1/1/89 7/1/92 2. Glacier Park Company 1/1/89 10/31/92 3. BR Services Inc. 1/1/89 4. Meridian Minerals Company 1/1/89 5. Meridian Oil, Inc. 1/1/89 6. Plum Creek Timber Company, Inc. 1/1/89 6/7/89 7. Plum Creek Timber Company, L.P. 6/8/89 3/30/90 8. Plum Creek Management Company 6/8/89 12/31/92 9. Plum Creek Manufacturing, Inc. 6/8/89 3/30/90
Acknowledged and Accepted: By: /s/ Harold E. Hanschild ------------------------------ Title: VP Human Resources --------------------------- Date: 4/20/93 ---------------------------- 53 86 APPENDIX C TO THE PLUM CREEK SUPPLEMENTAL BENEFITS PLAN BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN AS OF DECEMBER 31, 1992 15 87 BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN (Effective as of January 1, 1990) 88 BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN (Effective as of January 1, 1990) TABLE OF CONTENTS
Article Section Page - ------- ------- ---- 1 Restatement and Renaming of the Plan ------------------------------------ 1.1 Restatement and Renaming of the Plan 1 1.2 Applicability 1 1.3 Purpose of the Plan 2 2 Definitions ----------- 2.1 General Definitions 3 2.2 Gender and Number 18 3 Participation and Service ------------------------- 3.1 Date of Participation 19 3.2 Duration 19 3.3 Transfers to Participation 20 3.4 Inactive Participant 20 4 Contributions Elected by Participants ------------------------------------- 4.1 Basic Contributions 21 4.2 Elections 24 4.3 Election Changes 24 4.4 Suspension of Basic Contributions 25 4.5 Compensation Reduction 26 4.6 Supplemental Contributions 26 4.7 Changes in Supplemental Contributions 27 4.8 Suspension of Supplemental Contributions 27 4.9 Transfer and Crediting of Basic and Supplemental Contributions 27 4.10 Flex Contributions 28 4.11 Restrictions on Basic Contributions and Flex Contributions 28 5 Company Matching Contributions and Rollovers -------------------------------------------- 5.1 Company Matching Contributions 32 5.2 Restrictions on Company Matching Contributions 33 5.3 Deductibility Limitation 36 5.4 Transfer of Company Matching Contributions 36 5.5 Crediting of Company Matching Contributions 36 5.6 Rollovers 36
-i- 89 BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN (Effective as of January 1, 1990) TABLE OF CONTENTS
Article Section Page - ------- ------- ---- 6 Maximum Contributions and Benefit Limitations --------------------------------------------- 6.1 Limitation on Annual Additions 40 6.2 Other Defined Contribution Plans 40 6.3 Defined Benefit Plans 41 6.4 Adjustment of Allocations 41 6.5 Limitation of Certain Annual Compensation to $200,000 42 7 Benefits -------- 7.1 Vesting 43 7.2 Distributions Upon Separation from Service (Excluding Death) 44 7.3 Distributions Upon Death or Divorce 45 7.4 Form of Payments 46 7.5 Timing of Payments 48 7.6 Withdrawals 49 7.7 Hardship Withdrawals 50 7.8 Loans to Participants and Beneficiaries 53 7.9 Debiting of Investment Funds 57 7.10 Missing Persons 57 7.11 Requirement for Consent to Certain Distributions 59 8 Investment Elections -------------------- 8.1 Investment of Contributions 59 8.2 Investment Transfers 59 8.3 Investment Elections 60 8.4 Transfer of Assets 60 8.5 Voting Company Stock 60 8.6 Tender Offers 61 9 Accounts and Records of the Plan -------------------------------- 9.1 Accounts and Records 64 9.2 Investment Funds 65 9.3 Valuation Adjustments 65 10 Financing --------- 10.1 Financing 67 10.2 Employer Contributions 67 10.3 Non-Reversion 68 10.4 Transaction Involving Employer Securities 68
-ii- 90 BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN (Effective as of January 1, 1990) TABLE OF CONTENTS
Article Section Page - ------- ------- ---- 11 Administration -------------- 11.1 Named Fiduciaries 70 11.2 Committee 71 11.3 Organization of Committee 71 11.4 Procedures 72 11.5 Committee's Powers and Duties 72 11.6 Committee's Decisions Conclusive 73 11.7 Indemnity 74 11.8 Claims Procedure 74 12 Plan Amendment, Termination, Merger, and Adoption by Affiliates ------------------------------------ 12.1 Amendment and Termination 77 12.2 Distribution on Termination 77 12.3 Corporate Reorganization 78 12.4 Plan Merger or Transfer 78 12.5 Affiliate Participation 79 12.6 Action Binding on Participating Affiliates 79 12.7 Termination of Participation of Affiliate 80 13 Top-Heavy Provisions -------------------- 13.1 Application 81 13.2 Key Employees 81 13.3 Top-Heavy Group 83 13.4 Additional Rules 84 13.5 Code Section 415(h) Adjustment 85 13.6 Minimum Contributions 85 14 Miscellaneous Provisions ------------------------ 14.1 Employment Rights 86 14.2 No Examination or Accounting 86 14.3 Investment Risk 86 14.4 Non-Alienation 86 14.5 Incompetency 88 14.6 Severability 89 14.7 Service of Legal Process 89 14.8 Headings of Articles and Sections 89 14.9 Applicable Law 89
-iii- 91 BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN (Effective as of January 1, 1990) Article 1. Restatement and Renaming of the Plan 1.1 Restatement and Renaming of the Plan. Effective January 1, 1990, The El Paso Company amends and restates the Employees Savings Plan of The El Paso Company and Affiliated Companies as provided herein. This amended and restated plan is a continuation of the plan originally established effective as of January 1, 1961, and is hereby renamed the Burlington Resources Inc. Retirement Savings Plan (the "Plan"). Upon such amendment and restatement, The El Paso Company cedes the sponsorship of the renamed Plan to its parent company, Burlington Resources Inc., and Burlington Resources Inc. (the "Company") accepts such sponsorship and adopts the Plan as its own. In addition, effective as of January 1, 1990, the Company hereby merges its Burlington Resources Inc. Thrift and Profit Sharing Plan into this Plan, which shall continue as the survivor of such merger. The Plan covers Employees of Burlington Resources Inc. and selected Affiliates, including subsidiaries of The El Paso Company which were participating in the Plan immediately prior to this restatement. 1.2 Applicability. Except as otherwise provided, the Plan provisions set forth herein are applicable only to Employees in the employ of the Company or its Affiliates on or after January 1, 1990. With respect to any Employee who has had a balance transferred directly to this Plan from the Burlington Resources Inc. Thrift and Profit Sharing Plan, this Plan shall, to the full extent legally required, be treated as a continuation of the plan from which the balance was transferred and shall include all the Employee's years of participation in such plan -1- 92 prior to the Employee's participation in this Plan and shall preserve all legally protected, valuable rights of the Employee with respect to the transferred balance in accordance with Code sections 414(1) and 411(d)(6), as well as any other applicable laws. 1.3 Purpose of the Plan. This Plan is intended to encourage and assist Eligible Employees in adopting a regular program of saving to provide additional security for their retirement. For tax purposes, the Plan is intended to qualify as a profit sharing plan with a qualified cash or deferred arrangement and nondiscriminatory matching contributions. In accordance with Code section 401(a)(27), this determination shall be made for Basic Contributions and Flex Contributions that are provided on a before-tax basis without regard to whether the Company and its Affiliates have current or accumulated profits. However, Company Matching Contributions shall be conditioned on the availability of current and/or accumulated profits. -2- 93 Article 2. Definitions 2.1 General Definitions. Whenever used in the Plan, the following terms shall have the respective meanings set forth below unless otherwise expressly provided herein: (a) "Affiliate" means a corporation or other employer which, at the time for which the determination is made, is controlled by, or under common control with, the Company, within the meaning of sections 414 and 1563 of the Code. The determination of control shall be made without reference to paragraphs (a)(4) and (e)(3)(C) of section 1563, and solely for the purpose of applying the limitations of Article 6 and section 13.5 of this Plan and for the purpose of allowing a related corporation or other employer to adopt the Plan with the Company's permission under an arrangement resulting in treatment of the Plan as a multiple employer plan described in Code section 413(c), the phrase "more than 50 percent" shall be substituted for the phrase "at least 80 percent" each place it appears in section 1563(a)(1). In addition, to the extent that the context may so require, "Affiliate" shall mean a member of an affiliated service group (within the meaning of Code section 414(m)) of which the Company or an Affiliate is a member, any leasing organization (as defined in Code section 414(n)) to the extent its employees constitute Leased Employees with respect to the Company or any Affiliate, and any other entity required to be aggregated with the Company in accordance with section 414(o) of the Code. (b) "Alternate Payee" means a spouse, former spouse, child or other dependent of a Participant who is recognized by a Qualified Domestic Relations Order as having a right to receive all, or a portion of, the benefits payable under the Plan with respect to a Participant. -3- 94 (c) "Annual Addition" means with respect to any Participant, the sum of the following items for a Plan Year (which is also the limitation year): (i) all employer and Employee contributions (including as employer contributions both before-tax Basic Contributions and Flex Contributions elected by the Participant) and all forfeitures allocated to the Participant under this and any other qualified defined contribution plan maintained by the Company or an Affiliate, and (ii) any contributions allocated to any individual medical account under a qualified defined benefit plan or a welfare benefit fund to the extent required by Code section 415(1) or 419A(d)(2). The Annual Additions resulting from contributions to the Plan shall be determined on a cash basis as of the time of the contribution, except that contributions made after the end of the prior Plan Year and treated as attributable to such prior year for purposes of deductions and percentage testing under sections 4.11 and 5.2 shall be treated as Annual Additions for such prior year. (d) "Basic Contributions" means contributions made by the Employer or Employee under section 4.1 at the election of the Employee and any similar amounts transferred from another plan. (e) "Beneficiary" means the person or persons (who may be named contingently or successively) designated by a Participant (or the Beneficiary of a deceased Participant) to receive his Account in the event of his death. Each designation shall be in the form prescribed by the Committee, shall be effective only when filed in writing as prescribed by the Committee, and shall revoke all prior designations by the same Participant. The designation by a married Participant of someone other than his spouse as a Beneficiary shall be invalid unless -4- 95 the spouse consents in writing to such designation, the consent acknowledges the effect of such designation and is notarized or is witnessed by a Plan representative, and the Beneficiary designation complies in all other respects with the requirements of Code sections 401(a)(11)(B)(iii)(I) and 417(a)(2). However, no consent shall be required if it is established to the satisfaction of the Plan representative that such consent cannot be obtained because there is no spouse or because the spouse cannot be located. If there is no surviving spouse and if no other Beneficiary is designated, then the Beneficiary shall be the Participant's estate. If a designation is ineffective in whole or in part, all or such part of the Participant's Account as has not been distributed, shall be payable to the Participant's surviving spouse, or if the deceased Participant has no surviving spouse, to his estate. If a designated Beneficiary is receiving payments and does not survive to receive all payments due hereunder, the remaining payments shall be made to his Beneficiary or, if there is none, to his estate. (f) "Board of Directors" means the Board of Directors of the Company. (g) "Change Date" means the first day of any month as of which a Participant is allowed to make an election that changes his level of contributions or his investments under the Plan in accordance with the terms and limitations specified below and elsewhere in the Plan. A Change Date may be used by a Participant to begin, stop, increase, or decrease the amount of Basic Contributions -5- 96 or Supplemental Contributions to his Account under the Plan, or to change the before-tax or after-tax nature of Basic Contributions, or to direct the way that amounts in his Account are to be invested, or to make any number of the foregoing choices on any Change Date, provided that the Participant may not make any such choices on a Change Date that is less than three months after the last Change Date on which he elected to make one or more of the foregoing choices, unless the particular choice on such early Change Date is specifically authorized by a Plan provision that makes an exception to this three-month rule. January 1, 1990, and any initial date on which a new Participant or a rehired Participant first makes an election are two such specifically authorized exceptions. All choices that are implemented on behalf of a Participant on a Change Date are subject to the completion of such forms and the satisfaction of such other reasonable procedural requirements, with such reasonable advance notice, as may be specified in the Plan or prescribed by the Committee. (h) "Code" means the Internal Revenue Code of 1986, as amended from time to time. Where reference is made to an incorrect or outdated Code section, the reference shall be reformed to indicate a proper Code section that is consistent with the context and the intended meaning. (i) "Committee" means the Thrift and Profit Sharing Committee appointed by the Chief Executive Officer to administer the Plan as described in section 11.2 hereof. (j) "Company" means Burlington Resources Inc. (k) "Company Matching Contributions" means the matching contributions made by an Employer under section 5.1 on behalf of a Participant, conditioned on the making of -6- 97 certain Basic Contributions, as described in Articles 4 and 5, and includes any similar amounts transferred from an Other Plan. (l) "Compensation" means, with respect to a Participant for a period considered under the Plan, the Participant's full salary and wages from an Employer (including all payments of salary, wages, short-term disability or sick pay continuation of salary and wages, spot bonuses and annual performance bonuses, commissions, shift differentials, and overtime compensation) plus his before-tax Basic Contributions under this Plan, but excluding all amounts described in the next following sentence, and provided, in addition, that Flex Contributions shall also be treated as Compensation hereunder, but only if and to the extent that a Participant elects to have unmatched Flex Contributions made on his behalf under the Plan and then only for the purpose of making such Flex Contributions. All of the following items shall be excluded in determining a Participant's Compensation: (i) gifts and other non-bonus payments of like character, (ii) reimbursement for expenses or allowances therefor, including automobile allowances and moving allowances, (iii) any amount contributed by the Employer to any pension plan or plan of deferred compensation other than this Plan, (iv) any amount contributed by the Employer to this Plan other than before-tax contributions elected by the Participant, (v) any amount paid by an Employer or a separate funding vehicle under a long-term disability plan, (vi) termination payments, (vii) income attributable to the exercise of options or lapse of restrictions on Company stock, (viii) any other special or extraordinary forms of remuneration, whether or not paid pursuant to an incentive compensation plan and (ix) -7- 98 any amount paid by the Employer for other fringe benefits, such as health and welfare, hospitalization, group life insurance benefits, or perquisites. (m) "Disability" means a total and presumably permanent incapacity resulting from personal injury or sickness whether or not resulting from employment with the Employer, which in the opinion of the Committee, after reviewing any medical evidence and requiring any reasonable medical examination the Committee considers necessary, will prevent a Participant or inactive Participant from performing the principal duties of his occupation and from engaging in any employment or occupation for remuneration or profit for which he is or may reasonably become qualified by training, education or experience. The Committee may rely upon the adjudication of such Participant's or inactive Participant's total and permanent disability by the Social Security Administration, or such other evidence as the Committee, in its discretion, deems appropriate. (n) "Effective Date" means, unless otherwise expressly provided, January 1, 1990. (o) "Eligible Employee" means any Employee employed by an Employer other than an Employee, if there is any, who is (i) a member of a unit covered by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining and no provision was made for including such Employee in the Plan, (ii) a nonresident alien who receives no earned income from an Employer which constitutes income from sources within the United States, or (iii) a Leased Employee. (p) "Employee" means any person who is employed as a common law employee by the Company or an Affiliate, as determined from appropriate personnel records, and shall also -8- 99 include any Leased Employee to the extent required under Code section 414(n) and Code section 401(a), 410, 411, 415 or 416. (q) "Employer" means either the Company or any Affiliate which, with the approval of the Company, elects to become a party to the Plan by adopting the Plan for the benefit of some or all of its Eligible Employees. (r) "ERISA" means the Employee Retirement Income Security Act of 1974, as mended from time to time. (s) "Flex Contribution" means an amount transferred from the Code section 125 FlexPlan of Burlington Resources Inc. on a before- tax basis at a Participant's election and credited to his Basic Account. (t) "Highly Compensated Employee" means an Employee described in Code section 414(q) and generally includes any Employee who, during the current Plan Year or immediately preceding Plan Year: (1) was at any time a 5-percent owner (as defined in subsection 13.2(b) of the Plan); (2) received compensation in excess of $75,000, as adjusted by reference to Code section 414(q); (3) received compensation in excess of $50,000, as adjusted by reference to Code section 414(q), and was in the group of Employees consisting of the top 20 percent of all active Employees when ranked on the basis of compensation paid for the Plan Year; or (4) was at any time an officer and received compensation in excess of $45,000, as adjusted by reference to Code section 415(b)(1)(A), for the Plan Year; provided that for this purpose no more than 50 Employees or, if lesser, the greater of 3 Employees or 10 percent of all Employees shall be considered officers and, if no officer has -9- 100 compensation exceeding $45,000, as adjusted, the officer with the highest compensation shall be treated as a Highly Compensated Employee under this subparagraph. For purposes of this subsection, "compensation" means Section 415 Compensation for the Plan Year plus any Code section 401(k) deferrals (including before-tax Basic Contributions and Flex Contributions under this Plan) and any Code section 125 salary reduction amounts under a plan maintained by the Company or an Affiliate for the Plan Year. For the Plan Year for which the determination is being made, a person, who during the preceding Plan Year, was not an Employee described in subparagraphs (2), (3) or (4) shall not be treated as so described during the current Plan Year, unless he is among the group of 100 Employees receiving the highest compensation. In determining the group of Employees consisting of the top 20 percent of all active Employees under subparagraph (3), Employees who are nonresident aliens receiving no U.S. source income from the Company or an Affiliate and, except as prohibited by Treasury regulations, Employees who are covered by a collective bargaining agreement shall be disregarded. A former Employee shall be treated as a Highly Compensated Employee if he was a Highly Compensated Employee when he incurred a Separation from Service or at any time after attaining age 55. If an Employee is a family member of a 5-percent owner or a Highly Compensated Employee among the group of 10 Employees receiving the highest compensation for the Plan Year, then such Employee shall not be considered a separate Employee under this subsection and any -10- 101 compensation paid to him shall be treated as having been paid to the Highly Compensated Employee. For this purpose, "family member" means the Employee's spouse and lineal ascendants or descendants and the spouses of such lineal ascendants or descendants. (u) "Investment Fund" means any of the following funds of the Trust Fund, all of which may hold a reasonable amount of cash and liquid assets in addition to the assets described below, but may not include direct holdings by the Trustee of securities of an Employer except as specifically authorized in the case of the Company Stock Fund, and each of which may make appropriate investments either directly, or indirectly by means of securities of a regulated investment company or trust or interests in an insurance company's pooled account or a common trust fund or collective investment fund of a bank or similar financial institution with a similar investment purpose, in accordance with the description of the fund: (1) A "Company Stock Fund" which shall be invested primarily in shares of the common stock of the Company. (2) An "Equity Fund" which shall be invested primarily in such common stocks and other equity securities, as described in the Trust, as the Trustee, acting in accordance with the provisions of the Trust and instructions from the Committee or an investment manager designated by the Committee, deems advisable. (3) An "Income Fund" which shall be invested primarily in such interest bearing deposits of banks and similar financial institutions, securities, guaranteed investment contracts of insurance companies, and other similar investment vehicles, as described -11- 102 in the Trust, as the Trustee, acting in accordance with the provisions of the Trust and instructions from the Committee or an investment manager designated by the Committee, deems advisable. (4) An "International Equity Fund" which shall be invested primarily in such common stocks and other equity securities of major companies headquartered outside the United States, as described in the Trust, as the Trustee, acting in accordance with the provisions of the Trust and instructions from the Committee or an investment manager designated by the Committee, deems advisable. (5) An "Over-the-Counter Equity Fund" which shall be invested primarily in such common stocks and other equity securities of smaller, often newer companies in the United States, as described in the Trust, as the Trustee, acting in accordance with the provisions of the Trust and instructions from the Committee or an investment manager designated by the Committee, deems advisable. (6) A "Real Estate Fund" which shall be invested in such real estate and such real estate-related investments, as described in the Trust, as the Trustee, acting in accordance with the provisions of the Trust and instructions from the Committee or an investment manager designated by the Committee, deems advisable. (7) A "Loan Fund" which shall be invested individually for each borrowing Participant in any loans that such Participant has under the Plan. (8) "Additional Funds" which may be established from time to time by the Committee and which shall be invested in such appropriate investments, as described in the Trust, as the Trustee, acting in -12- 103 accordance with the provisions of the Trust and instructions from the Committee or an investment manager designated by the Committee, deems advisable. (v) "Leased Employee" means a person who is not a common law employee but who performs services for the Company or an Affiliate pursuant to an agreement with a leasing organization (within the meaning of Code section 414(n)(2)) if such person has performed the services on substantially a full-time basis for a period of at least one year, the services are of a type historically performed by Employees, and the person is required to be treated as an Employee pursuant to Code section 414(n), but only for the period and the purposes to which such requirements apply. (w) "Other Plan" means the Burlington Resources Inc. Thrift and Profit Sharing Plan and any similar defined contribution plan if it is maintained by an Affiliate and is designated by the Committee as an Other Plan for purposes of section 3.3 or section 12.4, provided that such plan is qualified under Code section 401(a) and does not provide a life annuity form of benefit. (x) "Participant's Account or Account" means the separate account maintained for each Participant which represents his total proportionate interest in the Trust Fund as of any Valuation Date and which consists of the sum of his Basic Account, his Company Match Account, his IRA Account, his Supplemental Account, his Rollover Account and his ESOP Rollover Account (together with any additional Accounts that the Committee may establish from time to time and including any subaccount that may be maintained under an existing Account), as described further below and in section 12.4 with respect to amounts attributable to certain balances transferred -13- 104 directly to this Plan from similar accounts in an Other Plan. (1) "Basic Account" means the Account maintained for each Participant under each Investment Fund in which all or part of the Participant's Basic Contributions and any Flex Contributions have been invested and adjusted from time to time as provided in section 9.3. (2) "Company Match Account" means the Account maintained for each Participant under each Investment Fund in which all or part of the Company Matching Contributions conditioned on certain Basic Contributions have been invested and adjusted from time to time as provided in section 9.3. This Account includes the former subaccount I relating to the value of contributions for periods before 1985 and having a December 31, 1989 grandfathered value (excluding any subsequent earnings and investment gains or losses thereon) that continues to be available for withdrawals under section 7.6. This Account also includes the former subaccount II relating to the value of contributions for periods after 1984. (3) "Rollover Account" means the Account described in section 5.6 maintained for each Participant under each Investment Fund in which all or part of the Participant's rollover contributions have been invested and adjusted from time to time as provided in section 9.3. (4) "Supplemental Account" means the Account maintained for each Participant under each Investment Fund in which all or part of the Supplemental Contributions which have been made by the Participant have been -14- 105 invested and adjusted from time to time as provided in section 9.3. (5) "IRA Account" means, with respect to amounts attributable to certain balances transferred to this Plan from an Other Plan, the Account maintained for each Participant under each Investment Fund in which all or part of the deductible contributions made by the Participant, as permitted under the terms of the Other Plan and Code section 219 prior to January 1, 1987, have been invested and adjusted from time to time as provided in section 9.3. (6) "ESOP Rollover Account" means the Account described in subsection 5.6(f). (y) "Participant" means any Eligible Employee who has met the requirements to become a Participant as set forth in section 3.1 hereof, and shall include, where appropriate to the context, any former Participant described in section 3.2 and any inactive Participant described in section 3.4. (z) "Pay" means all remuneration for service performed for the Company or an Affiliate which is currently includible in gross income and generally reportable on Form W-2, which remuneration shall, except as prohibited by applicable law and regulations, be the same as Section 415 Compensation. In addition, except as prohibited by Treasury regulations, the Company may elect to include as Pay all before-tax Basic Contributions, Flex Contributions, and other Code section 401(k) elective deferrals and all Code section 125 salary reduction amounts, if any, under a plan maintained by the Company or an Affiliate, provided that such treatment and the -15- 106 determination of Pay in general shall be applied on a consistent basis in accordance with Code section 414(s) and the regulations thereunder. (aa) "Plan Year" means the calendar year. (bb) "Qualified Domestic Relations Order" means a judgment, decree or order (including approval of a property settlement agreement) pursuant to a state domestic relations law (including a community property law) that provides benefits to an Alternate Payee in accordance with Code section 414(p) and subsections 7.3(b) and 11.5(o) and section 14.4 of this Plan and the procedures established thereunder. (cc) "Qualified Nonelective Contributions" means any contributions described in Code section 401(m)(4)(C). (dd) "Section 415 Compensation" means, generally, an Employee's taxable W-2 earnings, with such modifications as may be required to conform to the definition of "participant's compensation" in Code section 415(c)(3) and the regulation thereunder, and, to the extent consistent with such authorities, shall be construed as an Employee's wages, salaries, commissions, professional fees and other amounts received for personal services rendered in the course of employment with the Company and Affiliates: (1) including amounts received through accident or health insurance (but only to the extent includible in gross income), disability payments (whether or not excludable from gross income), earned income from sources outside the United States (whether or not excludable or deductible from gross income), amounts paid or reimbursed for nondeductible moving expenses, the value of nonqualified stock options to the extent includible in gross income in the taxable year in which granted, and amounts includible in gross income upon making the election described in Code section -16- 107 83(b); but (2) excluding Company or Affiliate contributions to a deferred compensation plan (to the extent excludable from gross income when contributed), distributions from a qualified plan, amounts realized on the exercise of nonqualified stock options or when restricted property either becomes transferable or is no longer subject to a substantial risk of forfeitures, amounts realized on the disposition of stock acquired under a qualified or incentive stock option, and other amounts which receive special tax benefits. (ee) "Separation from Service" means any termination of the employment relationship between an Employee and the Company or Affiliate for any reason including death, resignation, discharge, retirement or Disability. A Separation from Service shall not occur upon a Participant's transfer to a position where he continues to be an Employee but is no longer an Eligible Employee (whether by reason of becoming a member of a labor union or otherwise), nor shall a Separation from Service occur as a result of a leave of absence authorized by the Employer or Affiliate if the Employee returns to employment upon expiration of such leave. Except as otherwise agreed by the parties to the transaction, a disposition of the stock or other ownership interest in a subsidiary or a disposition of substantially all the assets used in a trade or business of an Employer shall be treated as a Separation from Service for the purpose of making lump sum distributions to the Employees who continue to work in essentially the same business and employment position following the disposition, provided that the date of such disposition is treated as a permissible distribution event under Code sections 401(k)(2)(B)(i)(II) and 401(k)(10). -17- 108 (ff) "Supplemental Contributions" means the after-tax contributions made by a Participant under section 4.6 and any similar amounts transferred from an Other Plan. (gg) "Trust" or "Trust Agreement" means any agreement in the nature of a trust established to form a part of the Plan to receive, hold, invest, and dispose of the Trust Fund. (hh) "Trust Fund" means the assets of every kind and description held under any Trust Agreement forming a part of the Plan. (ii) "Trustee" means the corporation, or persons acting as trustee under any Trust Agreement at any time of reference. (jj) "Valuation Date" means the last day of each month and such other dates as may be declared by the Committee. 2.2 Gender and Number. Except when otherwise indicated by the context, any masculine or feminine terminology herein shall also include the opposite gender, and the definition of any term herein in the singular or plural shall also include the opposite number. -18- 109 Article 3. Participation and Service 3.1 Date of Participation. Each person who is an Eligible Employee and was a participant in this Plan or an Other Plan on December 31, 1989, shall become a Participant on January 1, 1990. Except as provided in section 3.3 with regard to transfers, each Employee who is not at the time a Participant and who is or becomes an Eligible Employee on or after January 1, 1990, shall become a Participant in the Plan on the first day of the month coincident with or next following the date he first completes an hour of service as an Eligible Employee. For this purpose, the term "hour of service" shall mean any hour for which an Employee is paid or entitled to payment for services rendered to an Employer or an Affiliate. 3.2 Duration. An Employee who becomes a Participant shall remain a Participant until he has a Separation from Service, and thereafter shall be a former Participant for as long as he is entitled to receive any benefits hereunder. A Participant who has a Separation from Service and is subsequently reemployed as an Eligible Employee shall become a Participant as of the date of his reemployment, and shall be eligible to elect to make Basic Contributions or Supplemental Contributions beginning with the first day of the month coincident with or next following his reemployment date. A Participant who is transferred from one Employer to another Employer and continues to perform services as an Eligible Employee shall remain a Participant on the same basis as immediately prior to the transfer, except as he may be affected by special provisions of his Employer's adoption agreement relating to this Plan. -19- 110 3.3 Transfers to Participation. An Employee other than a Participant who is transferred by or from an Employer or Affiliate into employment that causes him to be an Eligible Employee shall become a Participant pursuant to section 3.1 on the first day of the month coincident with or next following his date of transfer, except that he shall become a Participant and make elections hereunder as of the date of his transfer if he was a participant in an Other Plan immediately prior to his transfer. 3.4 Inactive Participant. Any Participant who transfers to an employment status with the Company or an Affiliate in which he is no longer an Eligible Employee shall become an inactive Participant. An inactive Participant shall not be eligible to make Basic Contributions or Supplemental Contributions based on Compensation earned after the date of his transfer during the period he is an Employee. If a Participant becomes an inactive Participant, his Account shall continue to be held under the Plan until he becomes entitled to a distribution under the provisions of Article 7. An inactive Participant shall have the right to receive a loan or make a withdrawal under the provisions of sections 7.6, 7.7, or 7.8, and to exercise voting and investment election rights under Article 8. -20- 111 Article 4. Contributions Elected by Participants 4.1 Basic Contributions (a) On or after the Effective Date, each Participant may elect to have his Employer contribute to the Plan on his behalf an amount equal to any whole percentage from two percent to eight percent of his Compensation from such Employer during the period in which the election is in effect. Such amount shall be contributed as a Basic Contribution that is made on a before-tax basis in lieu of current cash payment of the percentage of Compensation that the Participant elected to defer. Such election shall be made in accordance with the rules set forth in this Article 4 and such other consistent rules of an administrative nature as the Committee may prescribe. No before-tax Basic Contributions may be elected under this subsection 4.1(a) for any period during which the Participant has in effect an election to make after-tax contributions pursuant to subsection 4.1(d) below. (b) The Committee shall adopt reasonable procedures to assist a Participant in fulfilling his responsibility of ensuring that the before-tax Basic Contributions and Flex Contributions made on his behalf under this Plan, together with any elective deferrals under other qualified plans of the Company and its Affiliates, for the Participant's taxable year do not exceed $7,000 (or such other amount as may be prescribed under Code section 402(g)(5)), less any other elective deferrals of the Participant under other plans of other employers. The Participant will be treated as having a calendar taxable year and as having no elective -21- 112 deferrals other than Basic Contributions and Flex Contributions and elective deferrals under other qualified plans of the Company and its Affiliates, unless the Participant notifies the Committee differently, in writing, before his initial election of Basic Contributions for the Plan Year. For purposes of this subsection, "elective deferrals" include: (i) employer contributions to a Code section 401(k) qualified cash or deferred arrangement to the extent excluded from the Participant's gross income for the taxable year pursuant to Code section 402(a)(8); (ii) employer contributions to a simplified employee pension to the extent excluded from the Participant's gross income for the taxable year under Code section 402(h)(1)(b), and (iii) employer contributions to purchase an annuity contract under Code section 403(b) under a salary reduction agreement. If the Participant notifies the Committee in writing no later than March 1 following his taxable year of the amount of any excess before-tax Basic Contributions and Flex Contributions that exist under this subsection for such taxable year, after the application of the limitations specified under subsection 4.1(c), the Plan may, but need not, distribute such excess (and any income and investment gain or loss allocable to such excess) to him no later than April 15 following such taxable year and, if so distributed, such excess shall not be included as an Annual Addition for the Participant -22- 113 for the immediately preceding Plan Year. The Pay of the Participant for the Plan Year of the excess before-tax Basic Contributions and Flex Contributions shall be increased by the excess amount that is distributed under this subsection. The distribution described in this subsection may be made notwithstanding any other Plan provision. The Committee shall adopt reasonable procedures for coordinating distributions of excess before-tax Basic Contributions and Flex Contributions under this section and section 4.11, in accordance with any applicable legal requirements. (c) In furtherance of the limitation set forth in subsection 4.1(b) above, a Participant's before-tax Basic Contributions and Flex Contributions under this Plan and his Code section 401(k) elective deferrals under other qualified plans of the Company and its Affiliates in each Plan Year shall be restricted, based on the chronological order in which such elective deferrals are contributed, so as not to exceed the $7,000 or other applicable annual limit specified pursuant to subsection 4.1(b). If a Participant's election to have before-tax Basic Contributions or Flex Contributions made on his behalf causes him to reach the point at which the total of such contributions under the Plan for the year equals such annual limit, then all further Basic Contributions of the Participant in excess of such limit for such year shall be restricted so as not to exceed the maximum percentage that is eligible for Company Matching Contributions under Article 5 and shall be made and accounted for on an after-tax basis, and all further Flex Contributions elected by the -23- 114 Participant shall be paid to the Participant in cash rather than contributed to the Plan. (d) In lieu of electing to make any Basic Contributions on a before-tax basis as provided in subsection 4.1(a), a Participant may elect to make after-tax Basic Contributions of a similar amount and subject to similar rules. After-tax Basic Contributions that are made pursuant to the foregoing sentence or to subsection 4.1(c) shall be eligible for Company Matching Contributions under section 5.1 to the same extent as if they had been before-tax Basic Contributions, and they shall also be treated as such for all other purposes of the Plan except those directly related to their tax character. 4.2 Elections. Each Participant (or Employee expected to become a Participant by the time that the election will take effect) shall make the elections described in section 4.1 by completing an election form which will be made available to Participants by the Committee prior to the Change Date on which it is to be effective. The Participant shall return the election form in accordance with such reasonable notice requirements and other rules as the Committee may specify so that the form may be processed as of the next Change Date as of which the Participant wishes to have the Employer make Basic Contributions on his behalf. Except as otherwise provided herein, all elections shall be irrevocable for each month beginning on or after the effective date of the election. 4.3 Election Changes. Elections made in accordance with section 4.2 shall remain in effect until a new election to begin, stop, increase, or decrease the Participant's Basic Contributions is filed, in accordance with such reasonable notice requirements and other rules as the Committee may specify, prior -24- 115 to the Change Date for which the Participant desires the change to become effective. Any new election so filed shall become effective on the specified Change Date and shall remain in effect until changed under the rules of this section. If a Participant has less than 5 Years of Employment and is making Basic Contributions of 4 percent or 5 percent of Compensation under this Plan as of December 31, 1989, such Participant's election of Basic Contributions shall automatically be increased to 6 percent of Compensation as of January 1, 1990, unless the Participant files a new election and specifies a different level of Basic Contributions commencing as of such date. If a Participant has at least 10 Years of Employment and is making Basic Contributions of 6 percent or 7 percent of Compensation under the Burlington Resources Inc. Thrift and Profit Sharing Plan as of December 31, 1989, such Participant's election of Basic Contributions under this Plan shall automatically be increased to 8 percent of Compensation as of January 1, 1990, unless the Participant files a new election and specifies a different level of Basic Contributions commencing as of such date. On or after January 1, 1990, the Committee may in its discretion provide for rules and procedures pursuant to which the percentage of Compensation being contributed as Basic Contributions will increase automatically from 6 percent or 7 percent to 8 percent of Compensation (without becoming subject to rules limiting the frequency of Change Dates) as of the beginning of any month in which occurs a change that increases the level of matchable Basic Contributions for which the Participant is eligible to 8 percent of Compensation. 4.4 Suspension of Basic Contributions. A Participant may suspend his Basic Contributions under the Plan by filing a written notice in accordance with such reasonable notice requirements and other rules as the Committee may specify. The -25- 116 suspension shall become effective as of the specified Change Date following the filing of such written notice. Such Participant shall be eligible to resume Basic Contributions under the Plan by filing a new election form with the Committee in accordance with section 4.2 prior to the next available Change Date on which he desires his election to become effective. A Participant shall not be permitted to make up suspended Basic Contributions. 4.5 Compensation Reduction. Except as otherwise provided in subsections 4.1(c) and 4.1(d) with respect to after-tax Basic Contributions, each Participant who makes an election to have the Employer contribute a percentage of his Compensation as Basic Contributions under this Plan shall, by the act of making such election, agree to have his Compensation reduced by an equivalent percentage for so long as the election remains in effect. 4.6 Supplemental Contributions. A Participant may elect to make after-tax Supplemental Contributions as of any Change Date by filing the appropriate form prior to the proposed date of commencement of such contributions in accordance with such reasonable notice requirements and other rules as the Committee may specify, including any requirement relating to the Participant's written consent to the payroll deduction of Supplemental Contributions. Such Supplemental Contributions may be elected only if the Participant has in effect at the time an election to make Basic Contributions in an amount greater than or equal to the maximum percentage of Compensation (6 percent or 8 percent as applicable) for which the Participant is eligible to receive a Company Matching Contribution. Such Supplemental Contributions shall, upon satisfaction of the conditions for making such contributions, be in any whole percentage between one percent and five percent of the Participant's Compensation as he shall elect -26- 117 to contribute on an after-tax basis with respect to Compensation from the Employer during the period in which the election is in effect. In no event shall a Supplemental Contribution be matched by a Company Matching Contribution on behalf of the Participant. 4.7 Changes in Supplemental Contributions. A Participant may change the percentage of his Supplemental Contributions as of any Change Date by filing a form indicating the changed percentage in accordance with the election procedures of section 4.6 and subject to the conditions in such section and section 4.8 for continued eligibility to make Supplemental Contributions. 4.8 Suspension of Supplemental Contributions. A Participant may elect to suspend his Supplemental Contributions effective as of any Change Date by filing the appropriate form in accordance with such reasonable notice requirements and other rules as the Committee may specify. A Participant may thereafter elect to have his Supplemental Contributions resumed, at the same or a changed rate permitted under section 4.6, effective as of the next available Change Date. In addition, a Participant's Supplemental Contributions will be automatically suspended during any period in which he is permitted to elect the required level of Basic Contributions specified in section 4.6 and has chosen not to do so. A Participant shall not be permitted to make up suspended Supplemental Contributions. 4.9 Transfer and Crediting of Basic and Supplemental Contributions. Each Participant's Basic Contributions and Supplemental Contributions shall be transferred to the Trust Fund not later than 30 days after the end of the month in which a corresponding amount would have been paid to the Participant in the absence of his election of such contributions. Basic Contributions shall be allocated to the Participant's Basic Account, and Supplemental Contributions shall be allocated to the -27- 118 Participant's Supplemental Account, as of the last day of the month for which they are made. 4.10 Flex Contributions. Once each year in accordance with rules established by the Committee that are consistent with the rules of the Employer's Code section 125 cafeteria plan covering the Participant, the Participant may elect to have his Employer transfer to the Trust Fund, as a Flex Contribution made on a before-tax basis on his behalf, all or a portion of the amounts available for such transfer under such cafeteria plan. The Flex Contribution shall be transferred to the Trust when the amounts subject to this election are made available and shall then be credited immediately to the Participant's Basic Account. In no event shall a Flex Contribution be matched by a Company Matching Contribution on behalf of the Participant. 4.11 Restrictions on Basic Contributions and Flex Contributions. In conjunction with Participant elections of Basic Contributions and at such other times throughout the Plan Year as the Committee may determine, the Committee shall require testing of the elections of before-tax Basic Contributions and Flex Contributions by Participants (and any other Employer contributions that the Company elects to include in the testing under the conditions specified below) to assure that the average deferral percentage for the Plan Year of Participants who are Highly Compensated Employees will not exceed the greater of: (a) 1.25 times the average deferral percentage for the Plan Year of all other Participants who are non-Highly Compensated Employees, or (b) the lesser of (i) 2 percentage points more than, or (ii) 2 times the average deferral percentage for the Plan Year of all other Participants who are non-Highly Compensated Employees. -28- 119 For purposes of this section, the term "average deferral percentage" for each group of Participants for any period shall be the average of the percentages, calculated separately for each Participant in such group, of the aggregate amount of Pay that each Participant elects to have contributed to the Plan for the period as before-tax Basic Contributions or Flex Contributions, provided that, if the Company so elects in accordance with rules prescribed by the Secretary of the Treasury, Qualified Nonelective Contributions and Code section 401(m) matching contributions (including Company Matching Contributions under this Plan) that meet the withdrawal and vesting requirements of Code sections 401(k)(2)(B) and (C) shall be added to before-tax Basic Contributions and Flex Contributions in computing each Participant's average deferral percentage. Except as provided in Treasury Regulations, excess before-tax Basic Contributions and Flex Contributions under subsection 4.1(b) shall be treated as an amount elected under section 4.2 and contributed to the Plan, whether or not such excess contribution is distributed. Advance testing done under this section shall be based on a Participant's annual rate of Pay in effect at the time of the test, and corrections to be made to reduce the amount in excess of the maximum permissible deferral percentage shall be made from Pay to be earned for the remainder of the Plan Year. Final Plan Year compliance with the restrictions of this section shall be based on the Participant's actual Pay and before-tax contributions for the Plan Year. The adjustments in this paragraph shall be made if, at the end of the Plan Year, the percentage of before-tax Basic Contributions and Flex Contributions elected by Highly Compensated Employees (and any other Employer contributions that are included in the testing at the Company's election) would (if not distributed) cause the average deferral percentage of such Participants to -29- 120 exceed the maximum deferral percentage permitted for the Plan Year under this section. In such a case, before the end of the following Plan Year, the excess amount of such contributions (and income and investment gain or loss attributable thereto) for the Highly Compensated Employees shall be distributed to such Participants in the order of their average deferral percentages, beginning with the Highly Compensated Employees with the highest average deferral percentage until the limitations of this section are met. Except as otherwise required by applicable regulations, any amount distributed under this paragraph to a Highly Compensated Employee shall be included in that Employee's taxable wages for the Plan Year for which the contribution was made. The distribution described in this section may be made notwithstanding any other Plan provision. The Committee shall adopt reasonable procedures for coordinating distributions of excess contributions under this section and subsection 4.1(b). Moreover, notwithstanding the foregoing rules, the Committee shall take steps to ensure that this section 4.11 is interpreted and administered so as to comply with applicable legal requirements for the determination of what amounts constitute excess Code section 401(k) elective deferrals and for the return of such excess amounts and any income and investment gain or loss attributable thereto. If two or more plans which include Code section 401(k) cash or deferred arrangements are considered as one plan for purposes of Code section 401(a)(4) or 410(b), the cash or deferred arrangements included in such plans shall be treated as one arrangement for purposes of this section 4.11. If any Highly Compensated Employee is a participant under two or more cash or deferred arrangements of an Employer or Affiliate, all such cash or deferred arrangements shall be treated as one such arrangement for purposes of determining the actual deferral percentage with respect to such Employee. Moreover, no benefits other than Code section 401(m) matching contributions shall be conditioned on a -30- 121 Participant's election of before-tax Basic Contributions or Flex Contributions under this Plan. All determinations under this section 4.11 shall comply with Code section 401(k) and the regulations thereunder. In the event of any conflict, the rules of such Code section and regulations shall control. -31- 122 Article 5. Company Matching Contributions and Rollovers 5.1 Company Matching Contributions. (a) Subject to section 5.2 and the other limitations under this Plan, the Employer shall make Company Matching Contributions in an amount equal to 100 percent of the Basic Contributions made on behalf of each Participant who has such Basic Contributions allocated to his Account, as determined under the table below in accordance with the Participant's actual level of Basic Contributions and his Years of Employment during the month to which the contributions relate. Any increase that occurs in a Participant's Years of Employment during a month shall be given effect as of the beginning of that month. Such Company Matching Contributions shall be allocated to the Company Match Account of the Participants for whom matchable Basic Contributions are made, at the times and as of the monthly Valuation Dates applicable to such Basic Contributions.
Maximum Level of Basic Contributions to be Matched Participant's (Expressed as a Percentage Years of Employment of Compensation) ------------------- --------------------------- Up to 10 years 6 percent 10 or more years 8 percent
For this purpose, "Years of Employment" mean the sum of the number of years and any fraction of a year (counting each completed calendar month as 1/12th of a year) of employment with the Company or an Affiliate, as determined from appropriate personnel records, and subject to the limitation that Years of Employment for periods prior to January 1, 1990, shall be determined -32 - 123 under any applicable provisions of the Plan as in effect at the time. (b) Notwithstanding subsection 5.1(a), Company Matching Contributions may be made only if and to the extent that the Company and its Affiliates have current and/or accumulated profits, as determined in accordance with the Company's accounting records prior to taxes and contributions to this Plan that are treated for tax purposes as made by an Employer. 5.2 Restrictions on Company Matching Contributions. At such times throughout the Plan Year as the Committee may determine, the Committee shall require testing to assure that the contribution percentage for the Plan Year of Participants who are Highly Compensated Employees will not exceed the greater of: (a) 1.25 times the contribution percentage for the Plan Year of all other Participants who are non-Highly Compensated Employees, or (b) the lesser of (i) 2 percentage points more than, or (ii) 2 times the contribution percentage for the Plan Year of all other Participants who are non-Highly Compensated Employees. For purposes of this section, the term "contribution percentage" for each group of Participants shall be the average of the ratios, calculated separately for each Participant in such group, of the aggregate amount of Company Matching Contributions, after-tax Basic Contributions, and Supplemental Contributions made by or on behalf of the Participant for the Plan Year to that Participant's Pay for the Plan Year. To the extent permitted by Treasury Regulations, the Company may elect, in computing contribution percentages, to treat Qualified Nonelective Contributions and Code section 401(k) elective deferrals (including before-tax -33- 124 Basic Contributions and Flex Contributions) for the Plan Year as Company Matching Contributions. Advance testing under this section shall be based on a Participant's level of Basic Contributions and Supplemental Contributions and his annual rate of Pay in effect at the time of the test, and corrections to be made to reduce the amount in excess of the maximum permissible contribution percentage shall be from Company Matching Contributions and Supplemental Contributions to be made for the remainder of the Plan Year. Final Plan Year compliance with the restrictions of this section shall be based on the Participant's actual contributions and Pay for the Plan Year. The adjustments in this paragraph shall be made if, at the end of the Plan Year, the contribution percentage of Highly Compensated Employees exceeds the maximum contribution percentage permitted for the Plan Year under this section. In such a case, before the end of the following Plan Year (1) the excess Supplemental Contributions (and income and investment gain or loss attributable thereto) for Highly Compensated Employees shall be distributed to such Participants, (2) The excess after-tax Basic Contributions and the related Company Matching Contributions (and the income and investment gain or loss attributable thereto) for Highly Compensated Employees shall be distributed to such Participants, and (3) the remaining excess Company Matching Contributions (and income and investment gain or loss attributable thereto) for Highly Compensated Employees shall be distributed to such Participants, in the order of their contribution percentages beginning with the Highly Compensated Employee with the highest contribution percentage until the limitations of this section are met. Except as otherwise -34- 125 required by applicable regulations, any amount distributed under this paragraph to a Highly Compensated Employee (other than a return of his after-tax Basic Contributions or Supplemental Contributions) shall be included in that Employee's taxable wages for the Plan Year for which the contribution was made. The distribution described in this section may be made notwithstanding any other Plan provision. In the event that this Plan satisfies the requirements of section 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of section 410(b) of the Code only if aggregated with this Plan, then this section 5.2 shall be applied by determining the contribution percentages of eligible Participants as if all such plans were a single plan. If a Highly Compensated Employee participates in two or more plans of an Employer or Affiliate to which such contributions are made, all such contributions shall be aggregated for purposes of this section. Any Employee required to be taken into consideration under Code section 401(m)(5) shall be treated as an eligible Employee in accordance with such Code section for purposes of the application of this section 5.2. Moreover, the determination of excess contributions under this section 5.2 shall be made after first determining the excess deferrals (within the meaning of Code section 402(g)) pursuant to subsection 4.1(b) of this Plan and then determining the excess Code section 401(k) deferrals pursuant to section 4.11 of this Plan. All determinations under this section 5.2 shall comply with Code section 401(m) and the regulations thereunder, including any such regulations as may be necessary to prevent the multiple use of the alternative percentage limitations in Code sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) with respect to any Highly Compensated Employee and also including regulations -35- 126 permitting appropriate aggregation of plans and contributions. In the event of any conflict, the rules of such Code sections and regulations shall control. 5.3 Deductibility Limitation. The dollar amount of Company Matching Contributions shall be limited to the amount deductible under section 404 of the Code for the taxable year in which such amounts accrue or are paid, including by means of carryover deductions. 5.4 Transfer of Company Matching Contributions. The Company Matching Contributions under subsection 5.1 hereof shall be transferred to the Trust Fund together with the Basic Contributions to which they relate in accordance with the timing rules of section 4.9. 5.5 Crediting of Company Matching Contributions. The Company Matching Contributions described in section 5.1 shall be credited to the Company Match Account of the Participants on whose behalf they are made according to the amount of their matched Basic Contributions (those not in excess of the applicable percentage of Compensation specified in section 5.1) for the period. The crediting shall occur as of the last day of the month to which the Company Matching Contributions relate. 5.6 Rollovers. Amounts which an Eligible Employee has received from any other qualified employee benefit plan may, subject to the Committee's approval and in accordance with uniform, nondiscriminatory procedures designed to protect the qualification and the integrity of the administrative design of the Plan, be transferred by the Eligible Employee to this Plan in cash and/or common stock of the Company (or a former parent of the Company), provided the following conditions are satisfied: -36- 127 (a) Amounts that have previously been distributed to the Eligible Employee from another qualified plan and rolled over to this Plan shall be fully vested and shall be credited to the Eligible Employee's Rollover Account. (b) The amounts tendered to the Committee must have previously been received by the Eligible Employee as a qualified total distribution described in Code section 402(a)(5) ant must be transferred following a distribution from: (1) A plan qualified under Code section 401(a); or (2) A rollover or conduit individual retirement account or annuity which has received a rollover contribution described in Code section 408(d)(3) (determined without regard to section 408(d)(3)(D) thereof); (c) The amounts tendered must not include nondeductible employee contributions to a qualified plan by an Eligible Employee or amounts attributable to: (1) Contributions to an individual retirement account or annuity that are deductible under Code section 219, (2) Accumulated deductible employee contributions described in Code section 72(o)(5)(B), or (3) A partial distribution described in Code section 402(a)(5)(D) . (d) The transfer to this Plan of amounts described in paragraph (b) will only be accepted if the Eligible Employee presents to the Committee the Internal Revenue Service Form 1099, or equivalent, and the original and any other distribution checks, a copy thereof, or such other evidence as the Committee may require to ensure that they verify the nature of the amount and ensure that its receipt will not adversely affect the qualified status of this Plan. (e) Amounts must be received by the Committee not later than 60 days after a distribution was received by the Eligible Employee. -37- 128 (f) Previous rollovers of amounts received on account of termination of a tax credit employee stock ownership plan of a former parent of the Company or an Affiliate shall be retained in this Plan and are subject to the rules below in addition to the other specified requirements for rollovers, (1) while held in this Plan, such amounts and the related earnings must be held in a separate ESOP Rollover Account and must be invested in the Company Stock Fund and remain so invested, without regard to the otherwise applicable provisions for Investment Fund changes, until withdrawn or otherwise distributed in accordance with the terms of the Plan, provided, however, that this requirement to invest in the Company Stock Fund shall not apply to the extent that any such amounts and related earnings have been transferred to the Loan Fund and continue to secure an outstanding loan to the Eligible Employee, and (2) following receipt by this Plan, such amounts and the related earnings may be used as security for a loan and in determining the available loan amount pursuant to section 7.8(c) and may be withdrawn on account of hardship, but not for other reasons, provided, however, that the ESOP Rollover Account shall be the last Account that is made available for loans or hardship withdrawals. (g) An Eligible Employee who makes a rollover when he is not otherwise a Participant shall be treated as a Participant for purposes of implementing Plan provisions related to rollovers. Upon approval by the Committee, rollover amounts shall be transmitted to the Trustee, to be invested, except as provided in paragraph (f) above, in such Investment Funds as the Eligible -38- 129 Employee may select in accordance with the rules provided in Article 8. -39- 130 Article 6. Maximum Contributions and Benefit Limitations 6.1 Limitation on Annual Additions. Notwithstanding anything to the contrary contained in this Plan, the total Annual Additions under this Plan to a Participant's Account for any Plan Year, which shall be the limitation year for purposes of Code section 415, shall not exceed the lesser of: (a) $30,000 or such adjusted amount as may be prescribed under Code section 415(d), or (b) 25 percent of the Participant's Section 415 Compensation for the limitation year. 6.2 Other Defined Contribution Plans. If the Company or an Affiliate maintains or maintained any other defined contribution plan, as defined in Code section 414(i), for its Employees, some or all of whom are Participants of this Plan, then the limitation of section 6.1 shall apply to employer contributions, forfeitures, and Employee contributions credited to the Participant under all such plans. If a Participant receives allocations under this Plan and another defined contribution plan, then any reductions necessary to make allocations for the Participant under all such plans comply with the limit of section 6.1 shall first be made under such other plan, except that the reductions shall be made first under this Plan if the Participant is covered under this Plan at a time during the Plan Year when he has ceased to be covered under such other plan and is no longer eligible to receive further allocations of Annual Additions for the year under such other plan. Any reductions under this Plan for such a Participant which are necessary to comply with the above limitations shall be made prospectively to prevent the occurrence of excess contributions and -40- 131 other Annual Additions to the Participant's Account for the limitation year. Such reductions shall be made in the following order of priority with respect to the listed contributions to the extent that they are still available for such prospective reduction: first, by reducing the Participant's Flex Contributions, second, by reducing his Supplemental Contributions, third, by reducing his unmatched Basic Contributions, and, finally, by reducing his other Basic Contributions and his Company Matching Contributions proportionally. If such prospective reductions are not sufficient to satisfy applicable limits, the Committee may require a return of Supplemental Contributions to the Participant in accordance with Income Tax Regulation section 1.415-6(a)(6)(iv). 6.3 Defined Benefit Plans. If a Participant in this Plan is or was also a Participant in a defined benefit plan, as defined in section 414(j) of the Code, maintained by the Company or any Affiliate, then in addition to the limitations contained in section 6.1 of this Plan, the projected benefit of the Participant under the defined benefit plan shall be limited to the extent necessary to comply with the limitation set forth in Code section 415(e). 6.4 Adjustment of Allocations. If an allocation to a Participant's Account would exceed the limits described in this Article, and the excess is a result of an allocation of forfeitures, a reasonable error in estimating a Participant's Section 415 Compensation, or other appropriate circumstances recognized by the Commissioner of Internal Revenue, then, except in the case of a return of Supplemental Contributions pursuant to section 6.2, any amount which cannot be allocated shall be held in a suspense account and shall be allocated to the applicable Account of such Participant as of the last day of the first calendar month in which such an allocation is permissible. -41- 132 6.5 Limitation of Certain Annual Compensation to $200,000. Compensation, Pay, and any other elements of remuneration considered under the Plan shall be limited as necessary to comply with the requirement of Code section 401(a)(17) (and related Code sections and regulations) that the annual compensation (within the meaning of such Code sections and regulations) of each Employee taken into account under the Plan for any year shall not exceed $200,000 (or such adjusted amount as may be prescribed by the Secretary of the Treasury in connection with the adjustments prescribed under Code section 415(d)). -42- 133 Article 7. Benefits 7.1 Vesting. The interest of a Participant in his Participant's Account shall be fully vested in him at all times. For all purposes of the Plan, a vested interest means an interest that is nonforfeitable in the sense that it constitutes a claim that is unconditional and legally enforceable against the Plan. No benefit or interest which has become nonforfeitable under the provisions of this Plan shall be subject to becoming forfeitable, or being divested, by reason of subsequent events or conduct of the Participant. Being vested does not mean that a Participant's Account balance is guaranteed against investment risk or that a Participant has a right to receive his benefit. Benefits under the Plan shall be paid only in accordance with the Plan provisions related to distributions. Participants shall not be considered to have a vested right to amounts allocated under a mistake of fact or under any other circumstances causing them to be subject to a possible reversion to the Employer pursuant to section 10.3. Any balances in a Participant's Company Match Account which have been forfeited following the Participant's Separation from Service prior to January 1, 1986, in accordance with the provisions of a prior version of this Plan shall be subject to reinstatement as follows. If the Participant returns to employment with the Company or an Affiliate before he has five consecutive "one-year breaks in service," he may repay to the Plan in cash, provided he makes such repayment prior to the later of the end of a period of five consecutive "one-year breaks in service" or the fifth anniversary of his resumption of employment with the Company or an Affiliate as an Employee, the full value of the amount distributed to him (excluding amounts attributable to his IRA Account) upon his previous Separation from Service. Amounts attributable to the Participant's IRA Account may not be repaid to the Plan. Upon such repayment, the amount previously forfeited by the Participant shall -43- 134 be credited to his Company Match Account, and the amount repaid by the Participant shall be treated as previously taxed amounts and credited to the same Accounts and in the same amounts determined by the original distribution to the Participant. All such amounts shall be fully vested and nonforfeitable, as provided in the first paragraph of this section 7.1. The amount repaid to the Plan is not eligible for a Company Matching Contribution pursuant to section 7.1. The restoration of the amount previously forfeited by the Participant, shall be provided by the Company by means of a special contribution to the Plan. For purposes of this paragraph, a "one-year break in service" means a one-year period, measured from the Participant's date of employment as an Employee (or from any anniversary of such date) during which the Participant is not credited with at least one hour of service on account of an hour for which he is paid or entitled to payment in accordance with Department of Labor Regulations, 29 CFR section 2530.200b-2, or on account of the rules of Code section 410(a)(5)(E)) relating to maternity or paternity leaves. 7.2 Distributions Upon Separation from Service (Excluding Death). Every Participant (or inactive Participant) who incurs a Separation from Service for any reason other than death, shall have the value of his Participant's Account, distributed to him as soon as practicable after his Separation from Service (subject to his right to defer distribution in the event that his Account balance exceeds $3,500). When the Participant has elected a deferred distribution, the Committee may periodically deduct from the Participant's Account an amount to be determined from time to time to reimburse the Plan for the cost of administering such Account. A Participant or inactive Participant who is absent from employment due to illness, injury or physical or mental incapacity, shall not be treated as having incurred a Separation from Service, for purposes of this section 7.2, until such time as the Committee makes a determination that the Participant or inactive Participant -44- 135 has incurred a Disability. Unless a Participant is subsequently rehired as an Eligible Employee, no Employer contributions shall be allocated to such Participant's Account with respect to Plan Years subsequent to the Plan Year in which his Separation from Service occurred. 7.3 Distributions Upon Death or Divorce. (a) Upon the death of a Participant, the Committee shall direct the Trustee to pay the Participant's entire Account balance to his Beneficiary, as identified in accordance with subsection 2.1(e). (1) If a distribution to the Participant has commenced prior to his death in accordance with section 7.2, the remainder of his Participant's Account will be distributed to his Beneficiary under the method of distribution in effect prior to his death, unless the Beneficiary elects to accelerate the payments and receive the remaining balance in a lump sum instead. (2) If distribution to the Participant had not commenced at the time of his death, the entire balance of the Participant's Account will be distributed to his Beneficiary in a lump sum as soon as practicable and in any event not later than one year after the Participant's death. (b) Benefits under the Plan may be paid to an Alternate Payee, rather than to the Participant or his designated Beneficiary, in the manner provided by an order that is determined by the Committee to be a Qualified Domestic Relations Order. -45- 136 7.4 Form of Payments. (a) Distribution of benefits payments to Participants who do not elect a deferred distribution of benefits pursuant to sections 7.2 and 7.11 shall be in a lump sum cash payment (except to the extent that the Participant elects to receive common stock of the Company, as provided below) to be made as soon as practicable following the event giving rise to the distribution. Distribution of benefits to Participants who qualify for a deferred distribution shall, as elected by the Participant, be (i) in a lump sum distribution as soon as practicable after the Valuation Date which is coincident with or immediately following the Participant's Separation from Service or after any deferred Valuation Date falling within the time limits for benefit payouts under the Plan that the Participant may select, or (ii) in substantially equal installments, payable either quarterly or annually, following Separation from Service over a period specified by the Participant that ends on or before the April 1 of the year following the year in which the Participant attains age 70-1/2. If a Participant has elected a deferred lump sum or installments and later wishes to change the form of payment, the Participant may elect either an immediate lump sum of his remaining Account balance or installment payments that begin as soon as administratively possible. (b) Notwithstanding any other provision of this section 7.4, when any distribution is to be made from the Company Stock Fund, the value of the Participant's interest in the Company Stock Fund shall be distributed in cash, unless the Participant (or his Beneficiary) elects instead to -46- 137 receive whole shares of the common stock of the Company plus cash in lieu of any fractional share. In the case of a distribution of common stock of the Company, the number of shares available to be distributed, in whole or in part, by the Trustee are the number of shares credited to the Participant's Account as of the Valuation Date for the distribution. If common stock of the Company is distributed from the Plan at a time when it is not readily tradeable on an established securities market, then, if and to the extent required by Code section 401(a)(23), the Plan shall provide the Participant with a put option that complies with the requirements of section 409(h) of the Code. Such put option shall provide that if the Participant exercises the put option, the Employer, or the Plan if the Plan so elects, shall repurchase the such stock as follows: (1) If the distribution constitutes a total distribution, payment of the fair market value of Participant's Account balance shall be made in five substantially equal annual payments. The first installment shall be paid not later than 30 days after the Participant exercises the put option. The Plan will pay a reasonable rate of interest and provide adequate security on amounts not paid after 30 days. (2) If the distribution does not constitute a total distribution, the Plan shall pay the Participant, not later than 30 days after the Participant exercises the put option, an amount equal to the fair market value of the common stock of the Company being repurchased. For purposes of this subsection 7.4(b), "total distribution" shall mean a distribution to a Participant or a Participant's -47- 138 Beneficiary, within one taxable year of such recipient, of the entire balance to the credit of the Participant. 7.5 Timing of Payments. Payments on account of an event described in section 7.2 or 7.3 shall commence as soon as practicable after such event, or after the deferred distribution date (not later than April 1 of the year after the year in which the Participant attains age 70-1/2) that the Participant elects in accordance with the terms of the Plan. The precise timing of any distribution is subject to normal processing delays and any other administrative exigencies or special circumstances affecting the distribution and cannot, therefore, be guaranteed. However, distributions will normally be paid within approximately 45 days after the end of the month following the later to occur of (i) the Participant's Separation from Service or other distribution event, or (ii) receipt of any properly completed election form that is necessary to process the distribution. No interest or investment gains or losses will be allocated for the processing period with respect to an amount that is distributed. In addition, the timing of all payments under the Plan shall conform to the outside limits specified in Code sections 401(a)(9) and 401(a)(14) and all other applicable Code provisions. For this purpose, the entire value of the Account of a Participant who, at the time, has already had a Separation from Service and has not been rehired as an Employee shall be distributed by the April 1 of the year following the year in which the Participant attains age 70-1/2. Moreover, unless the Participant otherwise elects in accordance with the Plan, the payment of his benefits must begin no later than the 60th day after the close of the Plan Year in which occurs the latest of (i) the Participant's attainment of age 65, (ii) the 10th anniversary of the year in which the Participant commenced participation in the Plan, or (iii) the Participant's Separation from Service. Further, if a Participant who has not had -48- 139 a Separation from Service continues in employment beyond the April 1 of the year following the year of his attainment of age 70-1/2, his benefits shall commence and minimum required payments shall be made to him during his continued employment to the extent necessary to comply with Code section 401(a)(9) and related regulations. When any Participant has a Separation from Service after having begun to receive benefit payments during employment on account of this rule related to required payouts, his entire remaining Account balance shall be paid out as soon as administratively feasible following such separation. 7.6 Withdrawals. A Participant who is still an Employee may withdraw any amount up to the value of the Participant's Supplemental Account, his IRA Account, and the grandfathered December 31, 1989 value in his Company Match Account that corresponds to the former subaccount I under the prior version of such Account. The withdrawal may be made as of the last day of the month following compliance with such reasonable advance notice requirements and other rules as the Committee may specify. To make a withdrawal of all or part of the grandfathered December 31, 1989 value of the former subaccount I that is now included in the Company Match Account, the Participant must also withdraw the entire remaining balance in his Supplemental Account. A withdrawal under this section may be made for any reason upon written request to the Committee specifying the form of distribution, the amount to be withdrawn, and the Account (or Accounts, and the priority thereof) from which the withdrawal is to be paid. The amount to be withdrawn from each specified Account shall be limited as set forth above and also shall not exceed the Participant's balance in such Account. Withdrawals shall be paid in cash. In the case of a withdrawal elected in accordance with this section, the Committee shall direct the Trustee to pay the Participant or inactive Participant the amount so requested and the -49- 140 amount so withdrawn shall be debited, on a pro rata basis, from each of the Investment Funds in which the Participant's Account is invested. In addition, for any Participant who was subject to a suspension of Company Matching Contributions as of December 31, 1989, due to a recent withdrawal under this section that did not comply with the hardship standards of section 7.7, such suspension shall be lifted and Company Matching Contributions shall recommence as of January 1, 1990, for any matchable Basic Contributions being made by the Participant as of such date. 7.7 Hardship Withdrawals. (a) Any Participant or inactive Participant shall be permitted to make a cash withdrawal, in any whole percentage increment or dollar amount, of up to 100% of the unwithdrawn amount in his Basic Account (excluding any earnings arising after 1988 on before-tax Basic Contributions, Flex Contributions, and other similar Code section 401(k) deferrals that may have been transferred directly to this Plan from an Other Plan), his Supplemental Account, his Company Match Account, his Rollover Account, and his ESOP Rollover Account by making application therefor which demonstrates to the satisfaction of the Committee that the Participant is confronted by a financial hardship. (b) The Committee shall establish a hierarchy among the Accounts available for a hardship withdrawal under section 7.7(a) and shall use it to determine the order in which funds are considered to be withdrawn when less than a total withdrawal occurs. (c) Application for withdrawals shall be made on such forms as the Committee prescribes and may be made at any time, effective upon the last day of the month following satisfaction of the advance notice requirement specified by the Committee. Distribution of withdrawals shall be made in a -50- 141 lump sum as soon as is administratively possible following such date. Withdrawal distributions shall be based on the value of a Participant's Account as of the Valuation Date immediately preceding, or coinciding with, the effective date of the withdrawal. (d) For purposes of this section 7.7 "financial hardship" means an immediate and heavy financial need occurring in the personal affairs of the Participant (including a need that is reasonably foreseeable or voluntarily incurred by the Participant), as determined by the Committee based on all relevant facts and circumstances, taking into consideration that the need to pay the funeral expenses of a family member would generally constitute an immediate and heavy financial need and the need to purchase a boat or television set generally would not. In any event, the following distributions shall be deemed to be made on account of an immediate and heavy financial need: (1) Payment of medical expenses (described in Code section 213(d)) incurred by the Participant, the Participant's spouse, or dependents (as defined in Code section 152). (2) Purchase, excluding mortgage payments, of a principal residence for the Participant. (3) Payment of tuition for the next semester or quarter of post-secondary education for the Participant, the Participant's spouse, children, or dependents. (4) Payment to prevent the eviction of the Participant from his principal residence or the foreclosure of the mortgage on the Participant's principal residence. (5) Such other deemed financial needs as published from time to time by the Commissioner of Internal Revenue. (e) A hardship distribution may not exceed the amount necessary to meet the immediate and heavy financial need -51- 142 created by the hardship and not capable of being satisfied from other resources reasonably available to the Participant, generally including assets held by his spouse or minor children, but not including assets held for a child under an irrevocable trust or under the Uniform Gift to Minors Act. The Committee shall consider all relevant facts and circumstances and shall generally treat the requested distribution as necessary to meet the financial need upon receipt of a written representation that in the Participant's opinion his financial need cannot reasonably be relieved: (1) through reimbursement or compensation by insurance or otherwise, (2) by reasonable liquidation of the Participant's assets, to the extent that such liquidation itself is feasible and does not itself cause an immediate and heavy financial need, (3) by suspension of the Participant's before-tax Basic Contributions and Flex Contributions and his other contributions under the Plan, or (4) by other distributions or nontaxable loans (including withdrawals and loans under sections 7.6 and 7.8 of this Plan) from plans maintained by the Employer or any other employer or by borrowing from commercial sources on reasonable commercial terms. (f) The Committee may, without further investigation, accept the written statement of the Participant as to the foregoing matters unless it has reason to believe the statement is in error. In addition, hardship withdrawals shall be further limited to prevent the distribution of earnings arising after 1988 on before-tax Basic Contributions and Flex Contributions, and also to prevent the distribution of Company Matching Contributions and the earnings thereon to the extent necessary to satisfy the -52- 143 withdrawal restrictions of Code section 401(k)(2)(B) in the event that such Company Matching Contributions are used to satisfy the average deferral percentage test of section 4.11. (g) The foregoing notwithstanding, the Committee shall not approve a hardship withdrawal for any reason unless such hardship withdrawal complies with any applicable Treasury regulations. 7.8 Loans to Participants and Beneficiaries. The Committee, in its sole discretion and upon proper written application, may permit the Plan to make a loan to an eligible Participant or Beneficiary, provided that all loans shall comply with such rules and regulations as the Committee may establish for making Plan loans consistent with the following terms and conditions: (a) Loans shall be made available on a nondiscriminatory and reasonably equivalent basis to all Participants and Beneficiaries who are actively employed by the Company or an Affiliate or are otherwise "parties in interest" for purposes of ERISA section 3(14). Subsequent references to a Participant in this section shall be deemed to include a Beneficiary who is eligible for a loan. Loans may be processed as of the first day of any month. (b) To receive a loan from the Plan, a Participant and his spouse must sign a promissory note in the proper amount on a form prescribed by the Committee and authorize payroll deductions for payment of interest and principal in accordance with procedures adopted by the Committee. To secure repayment of the loan, the Participant and the Participant's spouse, if any, shall, within the 90 day period before the loan is made, consent to any distribution resulting from a setoff of the loan against the Participant's Account under subsection (i). However, except as otherwise specified by applicable law, the -53- 144 consent of the Participant's spouse shall not be required if it is established to the satisfaction of a Plan representative that such consent cannot be obtained because there is no spouse or because the spouse cannot be located. (c) The amount of the loan shall not be less than $1,000 nor more than 50 percent of the first $100,000 of the vested balance in the Participant's Account (excluding any IRA Account balance). The 50 percent limitation shall be reduced by the highest outstanding balance of loans to the Participant from the Plan during the 1-year period ending on the day before the date on which the loan is made. If such Participant is also covered under another qualified plan maintained by the Company or an Affiliate, the above limitations shall be applied as though all such qualified plans are one plan. In no event may a Participant have more than 2 loans from this Plan outstanding at any time nor may a Participant obtain more than 1 loan from the Plan in any period of 12 consecutive months. (d) The Committee shall establish a hierarchy among the Accounts listed in subsection 2.1(x) (other than the IRA Account) to be used in determining the order in which funds are considered to be withdrawn from a Participant's Account when a loan is made and the order in which funds are considered to be restored to such Account when loan repayments are received. Alternative hierarchies may be offered to provide the Participant a choice between (i) preserving his possible right to a tax deduction for payments of loan interest and (ii) abandoning this right in favor of making additional Account balances available for borrowing. The Account hierarchy or hierarchies shall be disclosed in the loan forms and agreed to by the -54- 145 Participant, who shall remain solely responsible for his personal tax situation, there being no guarantee of interest deductibility or of specific tax treatment of any sort for Participants or their Beneficiaries with respect to particular transactions under the Plan. (e) The loan repayment period shall be 1, 2, 3, 4, or 5 years as elected by the Participant. In no event, however, shall the loan repayment period end later than the end of the second month following the month in which the Participant ceases to be a party in interest for purposes of section 3(14) of ERISA. (f) Each loan shall bear an interest rate equal to one percentage point above the prime rate, as shown in the Money Rates published in The Wall Street Journal on the first business day of the month immediately prior to the quarter in which the loan is approved; provided, however, that such interest rate shall be reduced, if necessary, so as not to violate any applicable usury law then in effect. The interest rate so determined shall be fixed for the term of the loan. (g) The Committee shall establish a Loan Fund representing the Participant's individual investment of amounts that have been withdrawn from his various Accounts and lent to him against the security of such Accounts. Each repayment of principal on the loan received by the Trustee from the Participant shall reduce the Participant's investment in his Loan Fund and such repayment of principal together with each payment of loan interest shall increase pro rata the amount invested in each other Investment Fund in accordance with the Participant's investment elections at the time of such repayment, subject to any Investment Fund restrictions. (h) Except as otherwise provided below, repayment in equal semimonthly installments of interest and principal shall -55- 146 be accomplished through regular payroll deductions. The obligation to make repayments of principal and interest shall be suspended during the period not to exceed one year that the Participant is on an authorized leave of absence without pay (including a layoff that has not yet resulted in a Separation from Service). If the unpaid leave continues thereafter, the Participant shall be required to recommence repayments, on a monthly basis by check, until he returns to pay status and resumes regular repayments by means of payroll deductions. To satisfy legal requirements, the Committee may specify rules for redetermining the amount, timing, or manner of repayments following a period of suspension due to unpaid leave; but such redeterminations shall not be made for other reasons. The obligation to make repayments shall continue during a paid leave of absence or a transfer to a paid status as an Employee who is no longer an Eligible Employee. Where it is not feasible in such a case to continue processing the loan repayments as payroll deductions under a payroll system that currently covers the Participant, the repayments shall be made by the Participant by check on a monthly basis. A Participant shall be entitled at any time to prepay, without penalty, the total accrued interest and outstanding principal amount of the loan by direct payment. No other prepayments outside the regular payment schedule shall be permitted. (i) If a Participant (i) incurs a Separation from Service and either receives an immediate distribution of his remaining interest in the Plan or does not pay the total accrued interest and outstanding principal amount of the loan within 60 days or (ii) is in default for 90 days on any required loan payment prior to his repayment of the total principal and interest on an outstanding loan under the Plan, the Participant's note shall be canceled and the -56- 147 principal deemed distributed by the Trust Fund to him or, if applicable, his Beneficiary. This paragraph shall not apply, however, as long as a Participant, notwithstanding his Separation from Service, continues to be a party in interest under section 3(14) of ERISA and therefore has a legal right to continue his loan during such time as he is not in default on his regular loan payments. In this case, the regular loan payments may be made by check or other means suitable to the Committee once the Participant ceases to be covered by a payroll of the Company or an Affiliate. (j) The Company and the Trustee may make suitable arrangements, consistent with the requirements of the Code and ERISA, for holding the Participant's note under an agency, subtrust, or other arrangement that provides adequate safeguards while simplifying the handling of the loan and eliminating the need to transfer the actual note to the Trustee. (k) The foregoing provisions of this section notwithstanding, the Committee reserves the right to stop granting loans to Participants at any time. 7.9 Debiting of Investment Funds. If a Participant makes less than a total withdrawal of his Participant's Account or obtains a Plan loan under Article 7 of the Plan and has his Participant's Account invested in more than one Investment Fund, a portion of the amount withdrawn from his Participant's Account shall be debited from each such Investment Fund in the proportion which the current dollar balance of the Participant in such Fund bears to the value of his Participant's Account. 7.10 Missing Persons. If the Company or the Committee shall be unable, within two years after the Participant's distribution becomes due from the Trust Fund to a Participant, inactive -57- 148 Participant or Beneficiary, to make payment because the identity or whereabouts of such person cannot be ascertained, the Committee (a) shall be deemed to have elected to continue the Participant's interest in his Participant's Account (in which event the Committee shall not have the power to change the Participant's investment elections in effect when the distribution became due) until such time as (b) the Committee (i) pays such benefit pursuant to state escheat laws or (ii) directs that such Participant's interest in his Participant's Account and all further benefits with respect to such person be discontinued and all liability for the payment thereof terminated; provided, however, that in the event of the subsequent reappearance of the Participant, inactive Participant or Beneficiary, the benefit due such person (adjusted upward or downward in the manner provided in section 9.3 as if the Participant's Account had not been terminated) shall be paid in a single sum unless such discontinued interest was paid pursuant to state escheat laws. The amount of any discontinued interest shall be applied to reduce Company Matching Contributions under section 5.1, and reinstatement of a benefit shall be accomplished by the making of a special Employer Contribution in an appropriate amount to restore to the Trust the Participant's distribution. 7.11 Requirement for Consent to Certain Distributions. Notwithstanding any other provision regarding the Plan distributions, the Plan may not immediately distribute the balance of a Participant's Account that exceeds $3,500 without the written consent of the Participant. Where the Participant does not consent to a distribution that is subject to the foregoing requirement, this section shall be interpreted and administered so as to comply with Code section 411(a)(11) by delaying any distribution that might otherwise be required under the Plan to the extent necessary to comply with said Code section. -58- 149 Article 8. Investment Elections 8.1 Investment of Contributions. Each Participant may elect to have all or any whole percentage of the total amount of his Accounts (excluding the ESOP Rollover Account or any other specialized Account to the extent that it is subject to particular investment restrictions) invested in any one or more of the available Investment Funds. If a Participant does not make an election in accordance with procedures approved by the Committee within the election period provided for that purpose, the balances in his Participant's Account shall be invested in the Income Fund. 8.2 Investment Transfers. As of any Change Date, each Participant may change the Investment Funds in which the balances in his Participant's Account are invested by electing, in increments of any whole percentage of the Account total, to have the assets in a particular Investment Fund transferred within a reasonable time after the election to any one or more of the other Investment Funds. As of any other date that the Committee may designate as a special election date for unusual reasons (such as the introduction of a new Investment Fund, the transfer of a Participant entitled to make a special election under section 3.3, or the investment of a rollover contribution received pursuant to section 5.6), each Participant shall be allowed to make a special election, without regard to the normal limits on the frequency of investment elections, in order to make a similar change in his choice of Investment Funds and have such assets and his Account balances transferred accordingly to other Investment Funds. The election may apply to the investment of amounts previously allocated to his Participant's Account or to future contributions, or both. As of January 1, 1990, any Participant who had previously been investing different types of future contributions in different ways under prior rules of the Plan will have all his future contributions invested in the same way as indicated by his most -59- 150 recent election for the investment of his Basic Contributions, unless he makes a new investment election applicable to all of his future contributions under the Plan. 8.3 Investment Elections. Each Participant may make the election described in section 8.1 by filing an election form with the Committee upon becoming a Participant. The elections described in sections 8.1 and 8.2 may be changed, together or separately, on any permissible Change Date, to be effective as of the Valuation Date next following receipt of such reasonable, advance written notice thereof as may be required by the Committee. Each investment election shall be within the independent control of the Participant who makes it. Neither the Trustee, the Employer, nor anyone else other than the Participant shall be liable for any loss that may result from the exercise of such control by the Participant. 8.4 Transfer of Assets. The Committee shall see that appropriate agreements and procedures exist to require the Trustee to transfer the appropriate amounts of money or other property to and from the appropriate Investment Funds in order to carry out the aggregate transfer transactions after the Committee has caused the necessary entries to be made in the Participants' Accounts and in the Investment Funds and has reconciled offsetting transfer elections, in accordance with the elections of Participants and accounting and investment rules approved by the Committee. 8.5 Voting Company Stock. Each Participant who has common stock of the Company allocated to his Participant's Account shall be entitled to instruct the Trustee regarding the voting of the number of such shares allocated to the Account at all stockholders meetings of the Company, determined on the last practicable day prior to such stockholders meeting. If clear and timely instructions have not been received from the Participant, or if -60- 151 shares of the Company's common stock have not yet been allocated to the Accounts of Participants, the Trustee shall vote such shares in the same proportion as are voted the shares for which clear and timely voting instructions have been received from Participants, unless the Trustee determines in the exercise of its fiduciary responsibility that it must vote such shares in a different manner to protect the interest of Participants and Beneficiaries. As agreed by the Company and the Trustee, the Company or the Trustee will send, or cause to be sent, to each Participant who has common stock of the Company allocated to his Participant's Account a voting instruction form and the same proxy solicitation material as is sent to stockholders generally. 8.6 Tender Offers. Notwithstanding any other provisions of the Plan to the contrary: (a) If any person shall make a tender offer to acquire (by purchase or exchange) common stock of the Company, including shares of such common stock that are held in the Trust, the Trustee shall act as follows: (1) The Trustee shall ensure that the materials made available to shareholders generally in connection with the tender offer are provided to each Participant who has shares of common stock of the Company allocated to his Participant's Account, and the response of the Trustee as to whether to accept or reject the tender offer with respect to the full and fractional shares of such common stock that are so allocated shall be made in accordance with the instructions of the Participant given to the Trustee on forms provided for that purpose. -61- 152 (2) Notwithstanding paragraph (1) above, if the Trustee in its sole discretion determines that under the circumstances of a particular tender offer there is not sufficient time to pass the decision through to Participants in the manner anticipated in paragraph (1), or if the Trustee fails to receive clear and timely instructions from a Participant in a case where instructions have been sought by the Trustee as provided in paragraph (1), the Trustee shall in its sole discretion determine whether to accept or reject the tender offer (in whole or in part) with respect to the affected full and fractional shares of common stock of the Company that are allocated to the Accounts of Participants. (3) With respect to full and fractional shares of common stock of the Company that have been acquired by the Plan and are not yet allocated (including any such common stock held in a suspense account because it cannot be allocated currently due to the Code section 415 limits), the Trustee shall in its sole discretion determine whether to accept the tender offer (in whole or in part). (b) If any tender offer is accepted (in whole or in part pursuant to subsection (a), the Trustee shall have the power to transfer common stock of the Company in order to effect such acceptance. (c) For purposes of this section 'tender offer' shall mean any offer to acquire common stock of the Company which is subject to either section 13(e) or 14(d) of the Securities Exchange Act of 1934 and which under applicable rules and regulations is required to be the subject of a filing with the Securities and Exchange Commission on either Schedule 13E-4 or Schedule 14D-9. -62- 153 (d) The foregoing notwithstanding, nothing herein shall serve to modify the related rules of the Trust Agreement or to expand the duties of the Trustee unless and until the Trustee gives its consent in the manner provided in the Trust Agreement. -63- 154 Article 9. Accounts and Records of the Plan 9.1 Accounts and Records. The accounts and records of the Plan shall be maintained at the direction of the Committee and shall accurately disclose the status of the Accounts of each Participant or his Beneficiary in the Plan. Such accounts and records may be kept in dollars or in units or both, as determined in accordance with generally acceptable principles of trust accounting approved by the Committee. The information maintained shall be sufficient to determine the number of shares of Company Stock that are allocated to the Participant's Account as of any Valuation Date and the tax status of distributions with respect to matters such as the determination of net unrealized appreciation on shares of the Company's common stock that are distributed and the determination of the Code section 72 contract and the Participant's investment in such contract for purposes of any withdrawal or other distributions from the Plan. Each Account of a Participant shall be assigned a share of each Investment Fund in which the Participant's Account is invested in the proportion which the balance of each such Account bears to the total Participant's Account. The Committee shall cause records to be maintained relative to a Participant's Account so that there may be determined as of any Valuation Date the current value of his Accounts in the Trust Fund and the adjustments from the previous Valuation Date that have produced such current value. Any portion of a Participant's Account that is invested in the Loan Fund in order to secure the outstanding balance of a loan to the Participant is subject to a possible setoff and deemed distribution for tax purposes, as described in subsection 7.8(i), and is therefore not available for actual payments to a Participant. -64 - 155 Each Participant shall be advised from time to time, at least once each Plan Year, as to the status of his Participant's Account and the portions thereof attributable to each Account existing thereunder in accordance with section 2.1(x). 9.2 Investment Funds. The Trust Fund shall consist of the Investment Funds, and each Participant who has any interest in an Investment Fund shall have an undivided proportionate interest. In order to implement and carryout investment objectives and policies established by the Committee, the Committee shall have the right from time to time to establish additional Investment Funds and to close Investment Funds and to transfer the assets to other Investment Funds pursuant to new investment elections by the Participants. 9.3 Valuation Adjustments. As of each Valuation Date, the recordkeeper, in accordance with accounting principles approved by the Committee, shall credit the Accounts of Participants and Beneficiaries with contributions made during the accounting period and debit such Accounts with withdrawals and distributions for such period, and shall also adjust the net credit balances of such Accounts in the respective Investment Funds of the Trust Fund, upward or downward, pro rata (using reasonable assumptions about the availability of current period contributions, withdrawals, and distributions for purposes of sharing in current period earnings and investment gains or losses), so that such net credit balances will equal the net worth of each Investment Fund of the Trust Fund as of that Valuation Date. The net worth of an Investment Fund shall be determined by the Trustee and reported to the recordkeeper under procedures approved by the Committee, by subtracting from the fair market value of assets held in such Investment Fund any expenses, withdrawals, distributions and transfers chargeable to that Investment Fund which have been incurred but not yet paid. All determinations made by the Trustee with respect to fair market -65- 156 values and net worth shall be made in accordance with generally accepted principles of trust accounting, and the accounting based thereon in accordance with procedures approved by the Committee, shall be conclusive and binding upon all persons having an interest under the Plan. -66- 157 Article 10. Financing 10.1 Financing. The Company shall maintain a Trust Fund to finance the benefits under the Plan, by entering into one or more Trust Agreements or insurance contracts approved by the Company, or by causing insurance contracts to be held under a Trust Agreement. Any Trust Agreement is designated as and shall constitute a part of this Plan, and all rights which may accrue to any person under this Plan shall be subject to all the terms and provisions of such Trust Agreement. The Company may modify any Trust Agreement or insurance contract from time to time to accomplish the purpose of the Plan and may replace any insurance company or appoint a successor Trustee or Trustees. By entering into such Trust Agreements or insurance contracts, the Company shall vest in the Trustee, or in one or more investment managers appointed under the terms of the Trust Agreement from time to time by action of the Committee, responsibility for the management and control of the Trust Fund. In the event the Committee appoints any such investment manager, the Trustee shall not be liable for the acts or omissions of the investment manager or have any responsibility to invest or otherwise manage any portion of the Trust Fund subject to the management and control of the investment manager. The Company from time to time shall establish a funding policy which is consistent with the objectives of the Plan and shall communicate it to the Trustee and each investment manager so that they may coordinate investment policies with such funding policy. Nothing in this section 10.1 shall eliminate the responsibility of Participants for the results of investment elections that are within their control, as provided in section 8.2. 10.2 Employer Contributions. Each Employer shall make such contributions to the Trust Fund as are required by this Plan, subject to the right of the Company to discontinue the Plan. -67- 158 10.3 Non-Reversion. Anything in this Plan to the contrary notwithstanding, it shall be impossible at any time for the contributions of the Employer or any part of the Trust Fund to revert to the Employer or Affiliate or to be used for or diverted to any purpose other than the exclusive benefit of Participants or their Beneficiaries, except that: (a) If all or any part of a contribution is made by the Employer by a mistake of fact, upon written request to the Committee, such contribution or such portion and any increment thereon shall be returned to the Employer within one year after the date of payment. (b) If all or any part of an Employer's Company Matching Contributions under the Plan is disallowed as a deduction for federal income tax purposes, then to the extent such contribution is disallowed, the contribution and any increment thereon shall be returned to the Employer within one year after such disallowance. (c) If all or any part of an Employer's contribution would give rise to an excise tax under Code section 4972(b), a correcting distribution with respect to such contribution shall be made to the Employer to the extent permitted by said Code section in order to avoid payment of an excise tax on excess contributions. (d) Any Basic Contributions or Flex Contributions that are returned to an Employer pursuant to this section 10.3 shall be paid over by the Employer to the Participant on whose behalf they were made (or to his Beneficiary). 10.4 Transactions Involving Employer Securities. In any transaction with a party in interest, as defined in section 3(14) of ERISA, involving the acquisition or sale of Employer securities by the Plan, the Plan shall pay no commission and the terms of the -68- 159 acquisition or sale shall be such that the Plan receives no less than adequate consideration, as determined under section 3(18) of ERISA, or otherwise satisfies the requirements of section 408(e) of ERISA. -69- 160 Article 11. Administration 11.1 Named Fiduciaries. The fiduciaries named in this section shall have only those specific powers, duties, responsibilities and obligations as are specifically given them under this Plan or the Trust. The Employer shall have the sole responsibility for making the contributions specified in Articles 4 and 5 (other than the contributions made by Employees on an after-tax basis). The Company shall have the sole authority to appoint and remove the Trustee and to amend or terminate, in whole or in part, this Plan or the Trust. The Company, acting directly or through the Committee, shall have the sole responsibility for the administration of this Plan, which responsibility is specifically described in this Plan and the Trust Agreement. The Senior Vice President-Human Resources and Administration of the Company, or the officer holding a position of comparable responsibilities, shall have the responsibility of implementing the Plan as the Committee shall direct. The Trustee shall have the sole responsibility for the administration of the Trust and the management of the assets held under the Trust, all as specifically provided in the Trust Agreement. A fiduciary may rely upon any direction, information or action of another fiduciary as being proper under this Plan or the Trust, and is not required under this Plan or the Trust to inquire into the propriety of any such direction, information or action. It is intended under this Plan and the Trust that each fiduciary shall be responsible for the proper exercise of his or its own powers, duties, responsibilities and obligations under this Plan and the Trust and shall not be responsible for any act or failure to act of another fiduciary. No fiduciary guarantees the Trust Fund in any manner against investment loss or depreciation in asset value. Any party may serve in more than one fiduciary capacity with respect to the Plan or Trust. -70- 161 11.2 Committee. Responsibility for the general administration of the Plan and for carrying out the provisions hereof shall be placed in a Committee of three or more members, each of whom shall be an Employee of an Employer and each of whom shall be appointed by the Chief Executive Officer of the Company and serve at the pleasure of the latter. Any member of the Committee may resign by notice in writing filed with the Secretary of the Committee, such resignation to become effective no earlier than the date of such written notice. All usual and reasonable expenses of the Committee will be paid by the Company. Members of the Committee shall not receive compensation with respect to their services for the Committee. 11.3 Organization of Committee. The Committee shall elect a Chairman and a Secretary. The Secretary need not be one of the members of the Committee. The Committee shall issue directions to the Trustee concerning all benefits which are to be paid from the Trust Fund pursuant to the provisions of the Plan. The Committee may authorize one or more of its number, or any agent, to direct any payment on behalf of the Committee (including instructions to the Trustee as to the application or disbursement of the Trust fund) and may appoint agents and clerks, and retain such professional services, including legal, medical, accounting, and actuarial specialists, as may be required in carrying out the provisions of the Plan. The Committee shall hold meetings upon notice, at such place or places, and at such time or times, as they may determine. A majority of the members of the Committee at the time in office shall constitute a quorum for the transaction of business. All resolutions or actions taken by the Committee at a meeting shall be by vote of the majority of the Committee present. Action by the Committee may be taken without a formal meeting by the -71- 162 written authorization of all of the members thereof. A Committee member shall be disqualified from acting upon any matter affecting only himself. 11.4 Procedures. The Committee shall adopt administrative rules as it deems desirable and shall keep all such books of accounts, records and other data as may be necessary for the proper administration of the Plan. The Committee shall keep a record of all actions and forward all necessary communications to the Trustee, Company or Employer, Participants, inactive Participants, Beneficiaries, Alternate Payees, providers of services to the Plan, and other interested parties, as the case may be. 11.5 Committee's Powers and Duties. The Committee shall have such powers and duties as may be necessary to discharge its functions hereunder, including but not limited to, the following: (a) To construe and interpret the Plan, to decide all questions of eligibility and determine the amount, manner and time of payment of any benefits hereunder; (b) To make a determination as to the right of any person to a benefit; (c) To obtain from the Employer and from Employees such information as shall be necessary for the proper administration of the Plan and, when appropriate, to furnish such information promptly to the Trustees or other persons entitled thereto; (d) To prepare and distribute, in such manner as the Committee determines to be appropriate, information explaining the Plan; (e) To furnish the Employer, upon request, such reports with respect to the administration of the Plan as are reasonable and appropriate; (f) To establish and maintain such accounts in the name of the Employer and of each Participant as are necessary; -72- 163 (g) To instruct the Trustee with respect to the payment of benefits hereunder; (h) To provide for any required bonding of fiduciaries and other persons who may from time to time handle Plan assets; (i) To prepare and file any reports required by the Code, ERISA, the Securities Act of 1933, the Securities Exchange Act of 1934, or any other applicable law; (j) To engage an independent public accountant to conduct such examinations and to render such opinions as may be required by the ERISA; (k) To allocate contributions and Trust Fund earnings and investment gains or losses to the Accounts of Participants; (l) To establish a funding policy and method consistent with the objectives of the Plan and the requirements of ERISA; (m) To correct any errors and remedy any defects in the administration of this Plan, including, if necessary, by requiring any Employer to make a Qualified Nonelective Contribution that prevents discrimination under Code section 401(k) or 401(m) without materially increasing the cost of the Plan; (n) To establish reasonable claims procedures in accordance with the terms of this Plan and ERISA; and (o) To establish procedures for identifying and complying with Qualified Domestic Relations Orders. 11.6 Committee's Decisions Conclusive. The Committee shall exercise its power hereunder in a uniform and nondiscriminatory manner. Any and all disputes with respect to the Plan which may arise involving Participants or their Beneficiaries shall be referred to the Committee and its decision shall be final, conclusive and binding. Furthermore, if any question arises as to the -73- 164 meaning, interpretation or application of any provision hereof, the decision of the Committee with respect thereto shall be final. 11.7 Indemnity. The Company shall indemnify each member of the Committee (which, for purposes of this section, includes any Employee to whom the Committee has delegated fiduciary duties) against any and all claims, losses, damages, expenses, including counsel fees, incurred by the Committee and any liability, including any amounts paid in settlement with the Company's approval, arising from the member's or the Committee's action or failure to act, except when the same is judicially determined to be attributable to the gross negligence or willful misconduct of such member. The right of indemnity described in the preceding sentence shall be conditioned upon (i) the timely receipt of notice by the Employer of any claim asserted against the Committee member, which notice, in the event of a lawsuit shall be given within 10 days after receipt by the Committee member, which notice, in the event of a lawsuit shall be given within 10 days after receipt by the Committee member of the complaint, and (ii) the receipt by the Company of an offer from the Committee member of an opportunity to participate in the settlement or defense of such claim. 11.8 Claims Procedure. (a) Claims for Benefits. Inquiries about benefits under the Plan may be made to appropriate Human Resources personnel of the Company and their designated field representatives. Formal claims for benefits shall be made in writing to the Chairman of the Committee. Written inquiries to Human Resources personnel and field representatives that cannot be resolved within a reasonable time will be treated as formal claims and forwarded to the Chairman of the Committee, in which case the claimant shall be advised of this action and of the claims procedure under the Plan. -74- 165 (b) Notice of Denial of Claim. If a claim for benefits is wholly or partially denied, the Chairman of the Committee shall within a reasonable period of time, but no later than 90 days after receipt of the claim, notify the claimant of the denial of benefits. If special circumstances justify extending the period up to an additional 90 days, the claimant shall be given written notice of this extension within the initial 90-day period and such notice shall set forth the special circumstances and the date a decision is expected. A notice of denial (1) shall be written in a manner calculated to be understood by the claimant; and (2) shall contain (i) the specific reasons for denial of the claim, (ii) specific reference to the Plan provisions on which the denial is based, (iii) a description of any additional material or information necessary for the claimant to perfect the claim, along with an explanation why such material or information is necessary, and (iv) an explanation of the Plan's claim review procedures. (c) Request for Review of Denial of Claim. Within 60 days of the receipt by the claimant of the written denial of his claim or, if the claim has not been granted within a reasonable period of time (which shall not be less than the 90 days described in subsection (b)), the claimant may file a written request with the full Committee that it conduct a full review of the denial of the claim, including a hearing if deemed necessary by the full Committee. In connection with the claimant's appeal, the claimant may review pertinent documents and may submit issues and comments in writing. (d) Decision of Review of Denial of Claim. The full Committee shall deliver to the claimant a written decision on the claim promptly, but not later than 60 days -75- 166 after the receipt of the claimant's request for such review, unless special circumstances exist which justify extending this period up to an additional 60 days. If the period is extended, the claimant shall be given written notice of this extension during the initial 60-day period. The decision on review of the denial of the claim (1) shall be written in a manner calculated to be understood by the claimant; (2) shall include specific reasons for the decision; and (3) shall contain specific references to the Plan provisions on which the decision is based. All decisions made under the procedure set out in this section shall be final, binding, and conclusive. -76- 167 Article 12. Plan Amendment, Termination, Merger, and Adoption by Affiliates 12.1 Amendment and Termination. The Company expects the Plan to be permanent and continue indefinitely, but since future conditions affecting the Company cannot be anticipated or foreseen, the Company must necessarily and does hereby reserve the right to amend, modify or terminate the Plan for itself and all other Employers at any time by action of the Compensation and Nominating Committee of the Board of Directors. In addition, the Senior Vice President-Human Resources and Administration of the Company may approve any modifications or amendments to the Plan that are necessary or appropriate to meet the requirements of ERISA, the Code, or any other law as now in effect or as hereafter amended, and the Chief Executive Officer of the Company (or the Senior Vice President-Human Resources and Administration if acting pursuant to authority delegated by the Chief Executive Officer) may approve any modification or amendment which does not significantly increase benefit costs. No amendment of the Plan shall cause any part of the Trust Fund to be used for, or diverted to, purposes other than for the exclusive benefit of the Participants or their beneficiaries covered by the Plan. Retroactive Plan amendments may not decrease the accrued benefits of any Participant determined as of effective date of the amendment applies or, if later, as of the time the amendment was adopted; provided, however, that retroactive amendments to preserve the qualification of the Plan shall be permitted to the full extent permitted by the Internal Revenue Service or section 1140 of the Tax Reform Act of 1986 or any other applicable laws. 12.2 Distribution on Termination. Upon termination of the Plan in whole or in part, or upon complete discontinuance of contributions to the Plan by the Employers, the value of the proportionate interest in the Trust Fund of each Participant -77- 168 affected by such termination having an interest in the Trust Fund shall be determined as of the date of such termination or discontinuance. The Accounts of such Participants shall continue to be fully vested and nonforfeitable, and thereafter distribution shall be made to such Participants as directed by the Committee in accordance with the Plan and applicable law. Upon the partial termination of the Plan, the Committee may in its sole discretion determine the timing of a distribution of the balance of the affected Participants' Accounts in accordance with the provisions of the Plan and applicable law. 12.3 Corporate Reorganization. The bankruptcy, dissolution, merger, consolidation or reorganization of the Company or any other Employer, or the sale of all or substantially all of the assets or stock of the Company or any other Employer, shall not automatically terminate the Plan, unless a Plan termination is otherwise required under this Article 12 and no provision is made for continuation of the Plan. 12.4 Plan Merger or Transfer. In the event of and effective as of the date of merger or consolidation with, or transfer of assets and liabilities of the Plan to or from any other employee benefit plan, each Participant in this Plan will (if the Plan had then terminated) receive a benefit immediately after the merger, consolidation or transfer which is not less than the benefit the Participant would have been entitled to receive immediately before the merger, consolidation or transfer of assets (if this Plan had then terminated). As of January 1, 1990, the Plan shall receive a direct transfer of assets from the Burlington Resources Inc. Thrift and Profit Sharing Plan. The Plan shall be treated as a continuation of such Other Plan with respect to the transferred balances and with respect to -78- 169 the affected Participants, (that is, those Participants who were participants in such Other Plan on December 31, 1989). The actual transfer of assets shall take place as soon as administratively practicable after January 1, 1990, subject to the prior satisfaction of applicable legal requirements, including the furnishing by both plans of any necessary advance notices to the Internal Revenue Service. Following such transfer, each affected Participant's years of participation in such Other Plan shall be carried over to this Plan, and his transferred balance shall continue to be fully vested and shall continue to be subject to the legally required protections under Code sections 414(1) and 411(d)(6), and other applicable laws that preserve certain rights of a Participant with respect to such a balance. In the future the Committee may authorize a direct transfer to this Plan from an Other Plan that it has designated, subject to the satisfaction of requirements similar to those applicable to the Burlington Resources Inc. Thrift and Profit Sharing Plan, as described above and elsewhere in this Plan. 12.5 Affiliate Participation. Subject to the approval of the Company, any Affiliate desiring to become an Employer may elect to become a party to the Plan by adopting the Plan for the benefit of any specified group of its Employees, with such modification of the terms of the Plan with respect to such Employees as the Company may approve, effective as of the date specified in such adoption, by filing with the Company an adoption agreement or such other or additional instruments evidencing the adoption as the Company may require. 12.6 Action Binding on Participating Affiliates. As long as the Company is a party to the Plan and the Trust Agreement, it shall be empowered to act thereunder for any Employer in all matters respecting the Committee and the Trustee and the designation of Affiliates and any action taken by the Company with respect -79- 170 thereto shall automatically include and be binding upon any Employer which is a party to the Plan. 12.7 Termination of Participation of Affiliate. The Company reserves the right, in its sole discretion and at any time, to terminate the participation in this Plan of any or all Employers. Such termination shall be effective immediately upon notice of such termination from the Company to the Trustee and the Employer being terminated. In event of such termination, this Plan shall not terminate, but the portion of the Plan attributable to the Affiliate shall become a separate Plan, and the Company shall inform the Trustee of the portion of the Trust Fund that is then attributable to the participation of such terminated Affiliate. Such portion shall as soon thereafter as is administratively feasible be set apart by the Trustee as a separate Trust which shall be a part of the separate Plan of such terminated Affiliate. Any Affiliate may withdraw from the Plan and Trust and end its status as an Employer hereunder, by action of its Board of Directors, after obtaining approval of the Company. Thereafter, the administration, control, and operation of the Plan with respect to such terminated Affiliate shall be on a separate basis in accordance with the terms hereof, or as such terms may be amended by appropriate action of such terminated Affiliate in accordance with the provisions of Article 12. -80- 171 Article 13. Top-Heavy Provisions 13.1 Application. The provisions of this Article 13 shall be interpreted and administered in accordance with the requirements of Code section 416. If as of the Determination Date in any Plan Year (a) the sum of the Account balances of Employees who are "Key Employees" for such Plan Year exceeds 60% of the sum of the Account balances of all Employees and their Beneficiaries; or (b) the Plan is part of a Top-Heavy Group; then the following provisions under this Article 13 shall apply for such Plan Year. The foregoing notwithstanding, the provisions of this Article 13 shall not apply to the Plan in any Plan Year during which it is part of an Aggregation Group (as defined in section 13.3), whether or not it is top-heavy as a single plan, unless the Aggregation Group of which it is a part is top-heavy in such Plan Year. The "Determination Date" is the date for determining the applicability of this Article 13 is: (i) for the first Plan Year, the last day of the Plan Year; and (ii) for any other Plan Year, the last day of the preceding Plan Year. 13.2 Key Employees. (a) A "non-Key Employee" means any Participant who is not a Key Employee (as hereafter defined), but who is an Employee on the last day of the Plan Year. For purposes of this Article 13, the term "Key Employee" means any Employee or former Employee (and the Beneficiary of such an Employee) who at any time during the Plan Year -81- 172 in which a determination of top-heaviness is made or any of the four preceding Plan Years is: (1) an officer of the Company or an Affiliate whose Section 415 Compensation during the relevant Plan Year exceeded 50% of the dollar limitation in effect under Code section 415(b)(1)(A); provided that no more than 50 Employees shall be treated as officers; (2) one of the 10 Employees having Section 415 Compensation for the relevant Plan Year in excess of the dollar limitation in effect under Code section 415(c)(1)(A) and owning (or considered as owning within the meaning of Code section 318) the largest interests in the Company or an Affiliate; provided, however, that if 2 Employees have the same interest in the Company or an Affiliate, then the Employee with the greater Section 415 Compensation shall be treated as having the larger interest; (3) a 5-percent owner of the Company or an Affiliate; or (4) a 1-percent owner of the Company or an Affiliate having annual Section 415 Compensation of more than $150,000. (b) An Employee is considered a "5-percent owner" if the Employee owns (or is considered as owning within the meaning of Code section 318, as modified by Code section 416(i)(1)(B)) more than 5 percent of the outstanding stock of the Company or an Affiliate or stock possessing 5 percent of the total combined voting power of all of the stock of the Company or an Affiliate. For purposes of this paragraph, "stock" shall also mean the appropriate ownership interest of -82- 173 an Affiliate which is not a corporation. The same rules apply to determine whether an Employee is a 1-percent owner. (c) If an Employee who has not terminated his employment ceases to be a Key Employee, such Employee's Account balance or accrued benefit shall be disregarded under the top-heavy plan computation for any Plan Year following the last Plan Year for which he was treated as a Key Employee. The Account balance or accrued benefit of any Employee or former Employee, who has not performed any services for the Company or any Affiliate at any time during the 5-year period ending on the Determination Date, will not be taken into account to determine whether the Plan or Aggregation Group is top-heavy. 13.3 Top-Heavy Group. For purposes of determining whether the Plan is a part of a Top-Heavy Group, the following rules shall apply: (a) Aggregation Group. The Aggregation Group shall include any plan maintained by the Company or an Affiliate which covers a Key Employee and any other plan which enables a plan covering a Key Employee to meet the requirements of Code section 401(a)(4) or 410. (b) Top-Heavy Group. An Aggregation Group is a Top-Heavy Group if the sum of the account balances of Key Employees under all defined contribution plans included in the group and the present value of the accumulated accrued benefits for Key Employees under all defined benefit plans in the group exceeds 60% of a similar sum determined for all Employees and their Beneficiaries under all such plans in the group. The present value of accrued benefits under defined benefit plans and the account balances under defined contribution plans shall -83- 174 be determined separately as of each plan's determination date. For purposes of determining whether an Aggregation Group is a Top-Heavy Group, the present value of accrued benefits under all defined benefit plans in the Aggregation Group shall be determined using a single set of actuarial assumptions, as defined in such defined benefit plans. The determination of whether the Aggregation Group is a Top-Heavy Group shall be made using each plan's results as of that plan's determination date which falls within the calendar year. In any Plan Year, in testing for top-heaviness under this Article 13, the Company may, in its discretion, take into account accumulated accrued benefits and account balances in any other plan maintained by it or an Affiliate, so long as such expanded Aggregation Group continues to meet the requirements of Code sections 401(a)(4) and 410. 13.4 Additional Rules. In determining the present value of the accrued benefits under a defined benefit plan and the sum of the account balances under a defined contribution plan, Company contributions and voluntary Employee contributions shall be taken into account and any rollover contribution or similar transaction initiated by the Employee, which results in a transfer to this Plan, shall not be taken into account. The present value of the accrued benefits in a defined benefit plan and the account balance in a defined contribution plan shall include any amount distributed to an Employee or Beneficiary within the five-year period ending on that plan's determination date. The present value of any Employee's accrued benefit under any defined benefit plan as of any determination date shall be calculated (i) as of the most recent Actuarial Valuation Date which is within a 12-month period ending on the Determination Date, -84- 175 (ii) as if his employment terminated as of such valuation date, and (iii) without regard to the automatic preretirement survivor annuity benefit or any other nonproportional subsidy. The term "Actuarial Valuation Date" shall mean the valuation date used for computing plan costs for minimum funding. 13.5 Code Section 415(h) Adjustment. If the Plan is determined to be top-heavy in any Plan Year, then the combined limits of Code section 415(e) and section 6.3 of the Plan shall be applied in accordance with Code section 416(h)(1) by substituting "1.0" for "1.25" in computing the defined benefit fraction and the defined contribution fraction under Plan section 6.3 and paragraphs 2(B) and 3(B) of Code section 415(e). 13.6 Minimum Contributions. If this Plan is determined to be top-heavy in any Plan Year under the provisions of section 13.1 or 13.3, then the aggregate contributions to be made by the Employer on behalf of each non-Key Employee for the Plan Year (excluding any contributions under sections 4.1, and 5.1, to the extent required in applicable regulations) shall not be less than 3 percent of the Participant's Section 415 Compensation for such year (or such lesser percentage as represents the maximum percentage of Section 415 Compensation contributed on behalf of a Key Employee for the Plan Year), as determined under section 416(c) of the Code. -85- 176 Article 14. Miscellaneous Provisions 14.1 Employment Rights. Neither anything contained in this Plan nor any modification of the same or act done in pursuance hereof shall be construed as giving any person any legal or equitable right against the Committee, the Employer, the Company, the Trustee or the Trust Fund, unless specifically provided herein, or as giving any person a right to be retained in the employ of the Employer. All Participants shall remain subject to assignment, reassignment, promotion, transfer, layoff, reduction, suspension and discharge to the same extent as if this Plan had never been established. 14.2 No Examination or Accounting. Neither this Plan nor any action taken thereunder shall be construed as giving any person the right to an accounting or to examine the books or affairs of an Employer. 14.3 Investment Risk. The Participants and their Beneficiaries shall assume all risks in connection with any decreases in the value of any assets or funds which may be invested or reinvested in the Trust Fund which supports this Plan. 14.4 Non-Alienation. Except as permitted under the Plan in accordance with Code section 401(a)(13) and ERISA section 206(d) with respect to matters such as loans to Participants and assignments to Alternate Payees under Qualified Domestic Relations Orders, no benefit payable at any time under the Plan shall be subject to the debts or liabilities of a Participant or his spouse or Beneficiary, and any attempt to alienate, sell, transfer, assign, pledge or otherwise encumber any such benefit, whether presently or thereafter payable, shall be void. Subject to the foregoing exception, no benefit under the Plan shall be -86- 177 subject in any manner to alienation, sale, transfer, assignment, pledge, attachment, garnishment or encumbrance of any kind. In accordance with procedures consistent with Code section 414(p) that are established by the Committee (including procedures requiring prompt notification of the affected Participant and each Alternate Payee of the Plan's receipt of a domestic relations order and its procedures for determining the qualified status of such order), judicial orders for purposes of enforcing family support obligations or pertaining to domestic relations (which orders do not alter the amount, timing or form of benefit other than to have it commence at the earliest legally permissible date) shall be honored by the Plan if the Committee determines that they constitute Qualified Domestic Relations Orders. Except as may otherwise be required by regulations of the Secretary of Labor, such orders may not require a retroactive transfer of all or part of a Participant's Account to or for the benefit of an Alternate Payee without permitting an appropriate adjustment for earnings and investment gains or losses that have occurred in the interim, nor shall such orders require the Plan to provide loans, self-directed investment elections, or other rights to Alternate Payees that are not available to Beneficiaries generally. In furtherance of this purpose, the investment restrictions of subsection 5.6(f) shall continue to apply to any portion of a Participant's ESOP Rollover Account that is retained under the Trust after having been transferred to an Alternate Payee. To the full extent permitted by Code section 414(p)(10) and by the terms of a Qualified Domestic Relations Order, amounts assigned to an Alternate Payee may be paid as soon as possible in a lump sum, notwithstanding the age, financial hardship, employment status, or other factors affecting the ability of the Participant to make a withdrawal or otherwise receive a distribution of balances to his credit under the Plan. -87- 178 In cases where such full and prompt payment of amounts assigned to an Alternate Payee will not be made, the assigned amounts will be transferred within a reasonable time to the Income Fund and, pending payment, shall be maintained in a separate Account, for the benefit of the Alternate Payee. 14.5 Incompetency. Every person receiving or claiming benefits under the Plan shall be conclusively presumed to be mentally competent and of age until the date on which the Committee receives a written notice, in a form and manner acceptable to the Committee, that such person is incompetent or a minor, for whom a guardian or other person legally vested with the care of his person or estate has been appointed; provided, however, that if the Committee shall find that any person to whom a benefit is payable under the Plan is unable to care for his affairs because of incompetency, or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly appointed legal representative) may be paid to the spouse, a child, a parent or a brother or sister, or to any person or institution deemed by the Committee to have incurred expense for such person otherwise entitled to payment. To the extent permitted by law, any such payment so made shall be a complete discharge of liability therefor under the Plan. In the event a guardian of the estate of any person receiving or claiming benefits under the Plan shall be appointed by a court of competent jurisdiction, benefit payments may be made to such guardian provided that proper proof of appointment and continuing qualification is furnished in a form and manner acceptable to the Committee. To the extent permitted by law, any such payment so made shall be a complete discharge of any liability therefor under the Plan. -88- 179 14.6 Severability. In the event any provision of this Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining parts of this Plan, and it shall be construed and enforced as if such illegal or invalid provision had never been inserted herein. 14.7 Service of Legal Process. The Committee is hereby designated agent of the Plan for the purpose of receiving service of summons, subpoena or other legal process. 14.8 Headings of Articles and Sections. The headings of Articles and sections are included solely for convenience of reference, and if there is any conflict between such headings and the text of the Plan, the text shall control. 14.9 Applicable Law. The Plan and all rights hereunder shall be governed, construed and administered in accordance with the laws of the State of Washington with the exception that any Trust Agreement which may constitute a part of the Plan shall be construed and enforced in all respects under and by the laws of the State in which the Trustee thereunder is located. -89- 180 IN WITNESS WHEREOF, The El Paso Company and the Company have caused the Plan to be executed effective as of January 1, 1990. THE EL PASO COMPANY By Thomas E. Ricks ------------------------------- Title Vice President & Controller ---------------------------- Date Signed 12/22/89 ---------------------- ATTEST: By Donald J. Masters, Jr. ------------------------------- Title Secretary ---------------------------- BURLINGTON RESOURCES INC. By A. R. Boyce ------------------------------- Title SUP HUM. RES. & ADMIN. ---------------------------- Date Signed 12/22/89 ----------------------------- ATTEST: By Leslie S. Leland ------------------------------- Title Corporate Secretary ---------------------------- -90- 181 IN WITNESS WHEREOF, The El Paso Company and the Company have caused the Plan to be executed effective as of January 1, 1990. THE EL PASO COMPANY By Thomas E. Ricks ------------------------------- Title Vice President & Controller ---------------------------- Date Signed 12/22/89 ---------------------- ATTEST: By Donald J. Masters, Jr. ------------------------------- Title Secretary ---------------------------- BURLINGTON RESOURCES INC. By A. R. Boyce ------------------------------- Title SUP HUM. RES. & ADMIN. ---------------------------- Date Signed 12/22/89 ---------------------- ATTEST: By Leslie S. Leland ------------------------------- Title Corporate Secretary ---------------------------- 182 AMENDMENT BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN AND PREDECESSOR PLANS This amendment applies to the Burlington Resources Inc. Retirement Savings Plan ("RSP") and to the predecessor plans described in RSP section 1.1; namely, the Employees Savings Plan of The El Paso Company and Affiliated Companies ("El Paso Predecessor Plan") and the Burlington Resources Inc. Thrift and Profit Sharing Plan ("BR Predecessor Plan"). Collectively, the RSP, El Paso Predecessor Plan, and BR Predecessor Plan are referred to herein as the "Plans." Except as otherwise provided herein for specific provisions, all provisions of this amendment are effective as of January 1, 1990, with respect to RSP and as of January 1, 1989, with respect to the El Paso Predecessor Plan and the BR Predecessor Plan. 1. Section 2.1(1) of each of the Plans is hereby amended by adding the following at the end thereof: As required by section 6.5 and by sections 4.11 and 5.2 as revised pursuant to this Amendment, Compensation shall be determined after application of the dollar limit of Code section 401(a)(17) and the family aggregation rules of Code section 414(q)(6) in cases governed by those Code sections. For this purpose, for years beginning after December 31, 1988, the annual Compensation of each Participant taken into account under the Plan for any year shall not exceed $200,000. This limitation shall be adjusted by the Plan as permitted by the Secretary of the Treasury at the same time and in the same manner as under section 415(d) of the Code, except that the dollar increase in effect on January 1 of any calendar year is effective for years beginning in such calendar year and the first adjustment to the $200,000 limitation is effected on January 1, 1990. If the Plan determines Compensation on a period of time that contains fewer than 12 calendar months, then the annual Compensation limit is an amount equal to the annual Compensation limit for the calendar year in which the Compensation period begins multiplied by the ratio obtained by dividing the number of full months in the period by 12. -1- 183 In determining the Compensation of a Participant for purposes of this limitation, the rules of section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. If, as a result of the application of such rules the adjusted $200,000 limitation is exceeded, then the limitation shall be prorated among the affected individuals in proportion to each such individual's Compensation as determined under this section prior to the application of this limitation. The rules regarding permitted disparity and the use of Compensation for a prior Plan Year do not apply to this Plan because it does not provide for any permitted disparity or any use of Compensation for a prior Plan Year in determining an Employee's contributions or benefits. 2. Section 2.1(z) of the RSP and the BR Predecessor Plan and section 2.1(aa) of the El Paso Predecessor Plan are each amended by adding the following at the end thereof: As required by section 6.5 and by sections 4.11 and 5.2 as revised pursuant to this Amendment, Pay shall be determined after the application of the dollar limit of Code section 401(a)(17) and the family aggregation rules of Code section 414(a)(6) in cases governed by those Code sections. For this purpose, for years beginning after December 31, 1988, the annual Pay of each Participant taken into account under the Plan for any year shall not exceed $200,000. This limitation shall be adjusted by the Plan as permitted by the Secretary of the Treasury at the same time and in the same manner as under section 415(d) of the Code, except that the dollar increase in effect on January 1 of any calendar year is effective for years beginning in such calendar year and the first adjustment to the $200,000 limitation is effected on January 1, 1990. If the Plan determines Pay on a period of time that contains fewer than 12 calendar months, then the annual Pay limit is an amount equal to the annual Pay limit for the calendar year in which the Pay period begins multiplied by the ratio obtained by dividing the number of full months in the period by 12. In determining the Pay of a Participant for purposes of this limitation, the rules of section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. If, as a result of the application of such rules the adjusted $200,000 limitation is exceeded, then the limitation shall be prorated among the affected individuals in proportion to each such individual's Pay as determined under this section prior to the application of this limitation. The rules regarding permitted disparity and -2- 184 the use of Pay for a prior Plan Year do not apply to this Plan because it does not provide for any permitted disparity or any use of Pay for a prior Plan Year in determining an Employee's contributions or benefits. 3. Section 2.1(dd) of each of the Plans is hereby amended to read as follows: (dd) "Section 415 Compensation" means, generally, an Employee's taxable W-2 earnings for income tax purposes under Code section 3401(a), with such modifications as may be required to conform to the definition of "participant's compensation" in Code section 415(c)(3) and the regulation thereunder, and, to the extent consistent with such authorities, shall be construed as an Employee's wages, salaries, commissions, professional fees and other amounts received for personal services rendered in the course of employment with the Company and Affiliates: (1) including amounts received through accident or health insurance (but only to the extent includible in gross income), disability payments (whether or not excludable from gross income), earned income from sources outside the United States (whether or not excludable or deductible from gross income), amounts paid or reimbursed for nondeductible moving expenses, the value of nonqualified stock options to the extent includible in gross income in the taxable year in which granted, and amounts includible in gross income upon making the election described in Code section 83(b); but (2) excluding Company or Affiliate contributions to a deferred compensation plan (to the extent excludable from gross income when contributed), distributions from a qualified plan, amounts realized on the exercise of nonqualified stock options or when restricted property either becomes transferable or is no longer subject to a substantial risk of forfeitures, amounts realized on the disposition of stock acquired under a qualified or incentive stock option, and other amounts which receive special tax benefits. 4. Section 4.11 of each of the Plans is hereby amended to read as follows: 4.11 Restrictions on Basic Contributions and Flex Contributions. In conjunction with Participant elections of Basic Contributions and at such other times throughout the Plan Year as the Committee may determine, the Committee shall require testing of the elections of before-tax Basic Contributions and Flex Contributions by Participants (and any other Employer con- -3- 185 tributions that the Company elects to include in the testing under the conditions specified below) to assure that the average deferral percentage for the Plan Year of Participants who are Highly Compensated Employees will not exceed the greater of: (a) 1.25 times the average deferral percentage for the Plan Year of all other Participants who are non-Highly Compensated Employees, or (b) the lesser of (i) 2 percentage points more than, or (ii) 2 times the average deferral percentage for the Plan Year of all other Participants who are non-Highly Compensated Employees. For purposes of this section, the term "average deferral percentage" for each group of Participants for any period shall be the average of the percentages, calculated separately for each Participant in such group, of the aggregate amount of Pay that each Participant elects to have contributed to the Plan for the period as before-tax Basic Contributions or Flex Contributions, provided that, if the Company so elects in accordance with rules prescribed by the Secretary of the Treasury, Qualified Nonelective Contributions and Code section 401(m) matching contributions (including Company Matching Contributions under this Plan) that meet the withdrawal and vesting requirements of Code sections 401(k)(2)(B) and (C) shall be added to before-tax Basic Contributions and Flex Contributions in computing each Participant's average deferral percentage. Except as provided in Treasury Regulations, excess before-tax Basic Contributions and Flex Contributions under subsection 4.1(b) shall be treated as an amount elected under section 4.2 and contributed to the Plan, whether or not such excess contribution is distributed. Advance testing done under this section shall be based on a Participant's annual rate of Pay in effect at the time of the test, and corrections to be made to reduce the amount in excess of the maximum permissible deferral percentage shall be made from Pay to be earned for the remainder of the Plan Year. Final Plan Year compliance with the restrictions of this section shall be based on the Participant's actual Pay and before-tax contributions for the Plan Year. The adjustments in this paragraph shall be made if, at the end of the Plan Year, the percentage of before-tax Basic Contributions and Flex Contributions elected by Highly Compensated Employees (and any other Employer contributions that are included in the testing at the Company's election) would (if not distributed) cause the average deferral percentage of such Participants to exceed the maximum deferral percentage permitted for the Plan Year under this section. In such a case, before the end of the following Plan Year, the excess amount of such contributions (and the income and investment gain or loss attributable thereto) for the Highly Compensated Employees shall be distributed to such Participants in the order of their average deferral percentages, beginning with the Highly Compensated Employees with the highest average deferral -4- 186 percentage until the limitations of this section are met. For this purpose, the income and investment gain or loss attributable to the excess contribution being distributed shall be determined under the Plan's normal method of accounting for the period following such contribution and continuing until the end of the Plan Year in which such contribution was made, excluding any subsequent period in the following Plan Year prior to the distribution of the excess amount. Except as otherwise required by applicable regulations, any amount distributed under this paragraph to a Highly Compensated Employee shall be included in that Employee's taxable wages for the Plan Year for which the contribution was made. The distribution described in this section may be made notwithstanding any other Plan provision. The Committee shall adopt reasonable procedures for coordinating distributions of excess contributions under this section and subsection 4.1(b). Moreover, notwithstanding the foregoing rules, the Committee shall take steps to ensure that this section 4.11 is interpreted and administered so as to comply with applicable legal requirements for the determination of what amounts constitute excess Code section 401(k) elective deferrals and for the return of such excess amounts and any income and investment gain or loss attributable thereto. If two or more plans which include Code section 401(k) cash or deferred arrangements are considered as one plan for purposes of Code section 401(a)(4) or 410(b), the cash or deferred arrangements included in such plans shall be treated as one arrangement for purposes of this section 4.11. If any Highly Compensated Employee is a participant under two or more cash or deferred arrangements of an Employer or Affiliate, all such cash or deferred arrangements shall be treated as one such arrangement for purposes of determining the actual deferral percentage with respect to such Employee. Moreover, no benefits other than Code section 401(m) matching contributions shall be conditioned on a Participant's election of before-tax Basic Contributions or Flex Contributions under this Plan. If a Participant is an eligible Highly Compensated Employee who is subject to the family aggregation rules of Code section 414(q)(6) because he is a 5 percent owner or is one of the 10 most highly compensated Employees, the combined average deferral percentage for the family group (which is treated as one Highly Compensated Employee) must be determined by combining the Code section 401(k) elective contributions, Pay, and amounts treated as Code section 401(k) elective contributions of all the eligible family members. The Code section 401(k) elective contributions, Pay, and amounts treated as Code section 401(k) elective contributions of all family members are disregarded for purposes of determining the average deferral percentage for the group of non-Highly Compensated Employees. If an Employee is required to be aggregated as a member of more than one family group in the Plan, all eligible Employees who are members of those family groups that include that Employee are aggregated as one family group. -5- 187 The determination and correction of excess contributions of a Highly Compensated Employee whose average deferral percentage is determined under the family aggregation rules of the preceding paragraph is accomplished by reducing the average deferral percentage as required under the "leveling" method described previously in this section and allocating the excess contributions for the family group among the family members in proportion to the elective contribution of each family member that is combined to determine the average deferral percentage. All determinations under this section 4.11 shall comply with Code section 401(k) and the regulations thereunder. In the event of any conflict, the rules of such Code section and regulations shall control. 5. Section 5.2 of each of the Plans is hereby amended to read as follows: 5.2 Restrictions on Company Matching Contributions. At such times throughout the Plan Year as the Committee may determine, the Committee shall require testing to assure that the contribution percentage for the Plan Year of Participants who are Highly Compensated Employees will not exceed the greater of: (a) 1.25 times the contribution percentage for the Plan Year of all other Participants who are non-Highly Compensated Employees, or (b) the lesser of (i) 2 percentage points more than, or (ii) 2 times the contribution percentage for the Plan Year of all other Participants who are non-Highly Compensated Employees. For purposes of this section, the term "contribution percentage" for each group of Participants shall be the average of the ratios, calculated separately for each Participant in such group, of the aggregate amount of Company Matching Contributions, after-tax Basic Contributions, and Supplemental Contributions made by or on behalf of the Participant for the Plan Year to that Participant's Pay for the Plan Year. To the extent permitted by Treasury Regulations, the Company may elect, in computing contribution percentages, to treat Qualified Nonelective Contributions and Code section 401(k) elective deferrals (including before-tax Basic Contributions and Flex Contributions) for the Plan Year as Company Matching Contributions. Advance testing under this section shall be based on a Participant's level of Basic Contributions and Supplemental Contributions and his annual rate of Pay in effect at the time of the test, and corrections to be made to reduce the amount in excess of the maximum permissible contribution percentage shall -6- 188 be from Company Matching Contributions and Supplemental Contributions to be made for the remainder of the Plan Year. Final Plan Year compliance with the restrictions of this section shall be based on the Participant's actual contributions and Pay for the Plan Year. The adjustments in this paragraph shall be made if, at the end of the Plan Year, the contribution percentage of Highly Compensated Employees exceeds the maximum contribution percentage permitted for the Plan Year under this section. In such a case, before the end of the following Plan Year (1) the excess Supplemental Contributions (and income and investment gain or loss attributable thereto) for Highly Compensated Employees shall be distributed to such Participants, (2) The excess after-tax Basic Contributions and the related Company Matching Contributions (and the income and investment gain or loss attributable thereto) for Highly Compensated Employees shall be distributed to such Participants, and (3) the remaining excess Company Matching Contributions (and income and investment gain or loss attributable thereto) for Highly Compensated Employees shall be distributed to such Participants, in the order of their contribution percentages beginning with the Highly Compensated Employee with the highest contribution percentage until the limitations of this section are met. (4) For purposes of the foregoing, the income and investment gain or loss attributable to the excess contribution being distributed shall be determined under the Plan's normal method of accounting for the period following such contribution and continuing until the end of the Plan Year in which such contribution was made, excluding any subsequent period in the following Plan Year prior to the distribution of the excess amount. Except as otherwise required by applicable regulations, any amount distributed under this paragraph to a Highly Compensated Employee (other than a return of his after-tax Basic Contributions or Supplemental Contributions) shall be included in that Employee's taxable wages for the Plan Year for which the contribution was made. The distribution described in this section may be made notwithstanding any other Plan provision. In the event that this Plan satisfies the requirements of section 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of section 410(b) of the Code only if aggregated -7- 189 with this Plan, then this section 5.2 shall be applied by determining the contribution percentages of eligible Participants as if all such plans were a single plan. If a Highly Compensated Employee participates in two or more plans of an Employer or Affiliate to which such contributions are made, all such contributions shall be aggregated for purposes of this section. Any Employee required to be taken into consideration under Code section 401(m)(5) shall be treated as an eligible Employee in accordance with such Code section for purposes of the application of this section 5.2. Moreover, the determination of excess contributions under this section 5.2 shall be made after first determining the excess deferrals (within the meaning of Code section 402(g)) pursuant to subsection 4.1(b) of this Plan and then determining the excess Code section 401(k) deferrals pursuant to section 4.11 of this Plan. In addition, the treatment of family members who are subject to the aggregation rules of Code section 414(q)(6) shall follow the procedures set forth in section 4.11, except that such procedures shall be applied under this section by substituting the contributions subject to this section 5.2 and section 401(m) of the Code in lieu of the contributions subject to section 4.11 of the Plan and section 401(k) of the Code. All determinations under this section 5.2 shall comply with Code section 401(m) and the regulations thereunder, including any such regulations as may be necessary to prevent the multiple use of the alternative percentage limitations in Code sections 401(k)(3)(A)(ii)(II) and 401(m)(2)(A)(ii) with respect to any Highly Compensated Employee and also including regulations permitting appropriate aggregation of plans and contributions. In the event of any conflict, the rules of such Code sections and regulations shall control. 6. Sections 7.7(d) and 7.7(e) of the RSP are hereby amended to read as follows, effective as of January 1, 1992: (d) For purposes of this section 7.7 "financial hardship" means an immediate and heavy financial need occurring in the personal affairs of the Participant (including a need that is reasonably foreseeable or voluntarily incurred by the Participant), as determined by the Committee based on all relevant facts and circumstances, taking into consideration that the need to pay the funeral expenses of a family member would generally constitute an immediate and heavy financial need and the need to purchase a boat or television set generally would not. In any event, distributions for the following reasons shall be deemed to be made on account of an immediate and heavy financial need: (1) To pay medical expenses (described in Code section 213(d)) previously incurred by the Participant, the Participant's spouse, or dependents (as defined in -8- 190 Code section 152), or to provide funds necessary for these persons to obtain medical care (described in Code section 213(d)). (2) To pay costs, excluding mortgage payments, directly related to the purchase of a principal residence for the Participant. (3) To pay tuition and related educational fees for the next 12 months of post-secondary education for the Participant, the Participant's spouse, children, or dependents. (4) To make a payment necessary to prevent the eviction of the Participant from his principal residence or the foreclosure of the mortgage on the Participant's principal residence. (5) To satisfy such other deemed financial needs as may be published from time to time by the Commissioner of Internal Revenue. (e) A hardship distribution may not exceed the amount necessary to meet the immediate and heavy financial need created by the hardship and not capable of being satisfied from other resources reasonably available to the Participant, generally including assets held by his spouse or minor children, but not including assets held for a child under an irrevocable trust or under the Uniform Gift to Minors Act. If the Participant so requests and agrees to have taxes withheld from the distribution, the foregoing amount shall include an additional amount considered necessary to pay any taxes or penalties that are imposed by the federal government or by a state that requires a tax withholding election for the distribution and that are reasonably anticipated to result from the distribution. The Committee shall consider all relevant facts and circumstances and shall generally treat the requested distribution as necessary to meet the financial need upon receipt of a written representation that in the Participant's opinion his financial need cannot reasonably be relieved: (1) through reimbursement or compensation by insurance or otherwise, (2) by reasonable liquidation of the Participant's assets, to the extent that such liquidation itself is feasible and does not itself cause an immediate and heavy financial need, (3) by suspension of the Participant's before-tax Basic Contributions and Flex Contributions and his other contributions under the Plan, or (4) by other distributions or nontaxable loans (including withdrawals and loans under sections 7.6 and 7.8 of this Plan) from plans maintained by the Employer or any other employer or by borrowing from commercial sources on reasonable commercial terms. For purposes of this paragraph, a need cannot reasonably be relieved by one of the actions listed above if the effect would be to increase the amount of the need. For example, the need to -9- 191 purchase a principal residence cannot reasonably be relieved by a Plan loan if the loan would disqualify the Employee from obtaining other necessary financing. 7. Section 7.8(c) of each of the Plans is hereby amended to read as follows: (c) The amount of the loan shall not be less than $1,000 nor more than 50 percent of the first $100,000 of the vested balance in the Participant's Account (excluding any IRA Account balance). The 50 percent limitation shall be reduced by the highest outstanding balance of loans to the Participant from the Plan during the 1-year period ending on the day before the date on which the loan is made. If such Participant is also covered under another qualified plan maintained by the Company or an Affiliate, the above limitations shall be applied as though all such qualified plans are one plan. A Participant shall not be allowed to have more than two loans from this Plan outstanding at any time or to obtain more than one loan from the Plan in any period of 12 consecutive months, provided, however, that these restrictions shall not apply if a Participant, for valid reasons such as a prior suspension of loan repayments during a period of unpaid leave, needs an additional loan that will be used in part to repay a loan that would otherwise extend beyond its original term of five years. 8. Section 7.8(i) of each of the Plans is hereby amended to read as follows: (i) If a Participant (i) incurs a Separation from Service and either receives an immediate distribution of his remaining interest in the Plan or does not pay the total accrued interest and outstanding principal amount of the loan within 60 days, or (ii) is in default for 90 days on any required loan payment prior to his repayment of the total principal and interest on an outstanding loan under the Plan and a permitted distribution event for the amount to be treated as a distribution has occurred under the rules for profit sharing plans or under Code section 401(k)(2)(B), the Participant's note shall be canceled and the principal deemed distributed by the Trust Fund to him or, if applicable, his Beneficiary, and a corresponding reduction shall be made to the Account from which the deemed distribution is made. This paragraph shall not apply, however, as long as a Participant, notwithstanding his Separation from Service, continues to be a party in interest under section 3(14) of ERISA and therefore has a legal right -10- 192 to continue his loan during such time as he is not in default on his regular loan payments. In this case, the regular loan payments may be made by check or other means suitable to the Committee once the Participant ceases to be covered by a payroll of the Company or an Affiliate. 9. Section 7.11 of each of the Plans is hereby amended to read as follows: 7.11 Requirement for Consent to Certain Distributions. Notwithstanding any other provision regarding the Plan distributions, the Plan may not immediately distribute the balance of a Participant's Account that exceeds or has ever exceeded $3,500 without the written consent of the Participant. Where the Participant does not consent to a distribution that is subject to the foregoing requirement, this section shall be interpreted and administered so as to comply with Code section 411(a)(11) by delaying any distribution that might otherwise be required under the Plan to the extent necessary to comply with said Code section. 10. Section 8.5 of each of the Plans is hereby amended to read as follows: 8.5 Voting Company Stock. Each Participant and Beneficiary who has common stock of the Company allocated to his Account shall be entitled to instruct the Trustee regarding the voting of the number of such shares allocated to the Account at all stockholders meetings of the Company, determined on the last practicable day prior to such stockholders meeting. If clear and timely instructions have not been received from the Participant or Beneficiary, or if shares of the Company's common stock have not yet been allocated to the Accounts of Participants and Beneficiaries, the Trustee shall vote such shares in the same proportion as are voted the shares for which clear and timely voting instructions have been received from Participants and Beneficiaries, unless the Trustee determines in the exercise of its fiduciary responsibility that it must vote such shares in a different manner to protect the interest of Participants and Beneficiaries. As agreed by the Company and the Trustee, the Company or the Trustee will send, or cause to be sent, to each Participant and Beneficiary who has common stock of the Company allocated to his Account a voting instruction form and the same proxy solicitation material as is sent to stockholders generally. -11- 193 11. Except as amended above, the terms of the Plans as in effect prior to this amendment shall continue unchanged. Adopted, effective as indicated above, pursuant to section 12.1 of each of the Plans. By A. R. Boyce --------------------------- Senior Vice President - Human Resources and Administration Burlington Resources Inc. Date Signed 12/13/91 -------- ATTEST: By Leslie S. Leland ------------------------------- Title Corporate Secretary ---------------------------- -12- 194 AMENDMENT ONE BURLINGTON RESOURCES INC. RETIREMENT SAVINGS PLAN (As adopted effective as of January 1, 1990) 1. Subsection 7.8(b) is hereby amended to read as follows, effective for loans granted on or after January 15, 1990: "(b) To receive a loan from the Plan, a Participant must sign a promissory note in the proper amount on a form prescribed by the Committee and authorize payroll deductions for payment of interest and principal in accordance with procedures adopted by the Committee. To secure repayment of the loan, the Participant shall, within the 90 day period before the loan is made, consent to any distribution resulting from a setoff of the loan against the Participant's Account under subsection (i)." 2. Except as amended above, the terms of the Plan as in effect prior to this amendment shall continue unchanged. Adopted, effective as indicated above, pursuant to section 12.1 of the Plan. BURLINGTON RESOURCES INC. By A. R. Boyce --------------------------------- Title SVP--Human Resources & Admin. ------------------------------ Date Signed 8/23/90 ------------------------ ATTEST: By Leslie S. Leland ------------------------------- Title Corporate Secretary ---------------------------- EX-10.B.8 8 EXHIBIT 10.B.8 1 Exhibit 10.B.8 PLUM CREEK MANAGEMENT COMPANY, L.P. EXECUTIVE AND KEY EMPLOYEE SALARY AND INCENTIVE COMPENSATION DEFERRAL PLAN (A Restatement of the Plum Creek Management Company Key Employee Salary and Incentive Compensation Deferral Plan). As amended January 1, 1994 2 PLUM CREEK MANAGEMENT COMPANY, L.P. EXECUTIVE AND KEY EMPLOYEE SALARY AND INCENTIVE COMPENSATION DEFERRAL PLAN SECTION 1 - RESTATEMENT, PURPOSE, AND EFFECTIVE DATE 1.1 Restatement. Plum Creek Management Company, L.P., a Delaware limited partnership (the "Company"), hereby restates and amends the "Plum Creek Management Company Key Employee Salary and Incentive Compensation Deferral Plan" and renames it the "PLUM CREEK MANAGEMENT COMPANY, L.P. EXECUTIVE AND KEY EMPLOYEE SALARY AND INCENTIVE COMPENSATION DEFERRAL PLAN (the "Plan"), for the benefit of certain executive and other key employees of the Company, Plum Creek Timber Company, L.P. (the "Partnership"), Plum Creek Manufacturing, L.P. (the "Manufacturing Partnership"), and Plum Creek Marketing, Inc. (the "Marketing Subsidiary"), (collectively, except for the Company, the "Related Companies"). Subject to the terms and conditions described herein, the Plan provides the opportunity for executive and key employees of the Company and Related Companies, to defer all or some part of their Base Salary and/or Incentive Compensation. 1.2 Purpose. The purpose of the Plan is to help attract and retain the services of executive and key employees at the Company and Related Companies by providing them with the opportunity to defer receipt of all or some part of their Base Salary and/or Incentive Compensation. 1.3 Effective Date. The restatement and amendment of the Plan shall be effective immediately upon its adoption by the Board of Directors of PC Advisory Corp. I (the "Board"), the general partner of PC Advisory Partners I, L.P., which serves as the general partner of Plum Creek Management Company, L.P., which serves as the general partner of the Company. SECTION 2 - DEFINITIONS 2.1 Definitions. When used in the Plan, the following terms shall have the meanings specified below. (a) "Beneficiary" means the person or persons to whom payments are to be made pursuant to the terms of the Plan in the event of the Participant's death. The designation shall be on a form provided by the Committee, executed by the Participant, and delivered to the Committee. A Participant may change his or her Beneficiary designation at any time. If no Beneficiary is designated, the designation is ineffective, or in the event the Beneficiary dies before the balance of the Memorandum Account is paid, the balance shall be paid to the Participant's estate (unless the Committee for a given year has designated investment in an annuity, in which case the payment options selected by the Participant with respect thereto shall govern), and to the extent required by community property law, to his or her surviving spouse. 1 3 (b) "Board" means the Board of Directors of PC Advisory Corp. I, the general partner of PC Advisory Partners I, L.P., which serves as the general partner of Plum Creek Managements Company, L.P., which serves as the general partner of the Company. (c) "Code" means the Internal Revenue Code of 1986 (or any successor to such Code), as amended and in effect at the time of reference. (d) "Committee" means a committee of two or more Board members appointed by the Board, none of whom is eligible to participate in the Plan. (e) "Company" means Plum Creek Management Company, L.P., a Delaware limited partnership. (f) "Employees" means employees regularly employed on a salaried basis by the Company and/or Related Companies. (g) "Executive Employee" means employees with the title of Vice President or higher. (h) "Participant" means an Employee who has been selected by the Committee to participate in the Plan. (i) "Plan Year" means the calendar year. (j) "Permanent Disability" means a condition that results in the Participant's being totally disabled, whether due to physical or mental causes, to the extent that he or she is prevented from engaging in further employment with the Company or Related Companies and the condition is likely to be permanent and continuous during the remainder of the Participant's life, as determined by the Committee, upon the basis of medical evidence. (k) "Plan" means the Plum Creek Management Company, L.P., Executive and Key Employee Salary and Incentive Compensation Deferral Plan as restated and amended and set forth herein. (l) "Related Company" means the Partnership, the Manufacturing Partnership, the Marketing Subsidiary, but not the Company, and any other entity owned, directly or indirectly, by the Partnership to the extent of 50% or more, including any partnerships, corporations, or other entities that meet any element of the foregoing definition in the future. (m) "Salary and/or Incentive Compensation" means the base salary being paid to a Participant for the Plan Year or partial year, and/or incentive compensation to be paid to the Participant during the same Plan Year under the terms of the "Plum Creek Incentive Compensation Program," but exclusive of all other forms of cash or non-cash compensation. (Executive Employees shall have the right to defer base salary only). 2 4 SECTION 3 - ADMINISTRATION 3.1 Administration. The Committee shall be responsible for the administration of the Plan. The Committee, by majority action thereof, is authorized to interpret the Plan, to prescribe, amend, and rescind rules and regulations relating to the Plan, to provide for conditions and assurances deemed necessary or advisable to protect the interests of the Company and/or Related Companies, and to make all other determinations necessary or advisable for the administration of the Plan, but only to the extent not contrary to the express provisions of the Plan. Determinations, interpretations, or other actions made or taken by the Committee under the Plan shall be final and binding for all purposes and upon all persons whomsoever. 3.2 Indemnification of Committee. The Company shall indemnify each member of the Committee (which, for purposes of this section 3.2, includes any Employee to whom the Committee has delegated fiduciary duties) against any and all claims, losses, damages, expenses, including counsel fees, incurred by the Committee, and any liability, including any amounts paid in settlement with the Company's approval, arising from the member's or the Committee's action or failure to act, except when the same is judicially determined to be attributable to the gross negligence or willful misconduct of such member. The right of indemnity described in the preceding sentence shall be conditioned upon (i) the timely receipt of notice by the Company of any claim asserted against the Committee member, which notice, in the event of a lawsuit shall be given within 10 days after receipt by the Committee member, and (ii) the timely receipt by the Company of an offer from the Committee member of an opportunity to participate in the settlement or defense of such claim. SECTION 4 - ELIGIBILITY AND PARTICIPATION 4.1 Eligibility and Participation. Participants in the Plan shall be selected by the Committee from among those Employees who are recommended for participation by the President and Chief Executive Officer of the Partnership and who, in the opinion of the Committee, are key employees in a position to contribute materially to the continued growth and long-term success of the Company and/or Related Companies, and each of whom is a select management or highly compensation Employee. SECTION 5 - DEFERRALS 5.1 Deferred Payment. Before January 1 of any calendar year (or, with respect to individuals who first become Participants during a year, on or before the date on which they become Participants) each Participant may elect to have the payment of all or a portion of his or her Salary for the year beginning January 1 (or, if later, so much of the year as commences on the day following the date on which the individual becomes a Participant) and/or Incentive Compensation (Executive Employees shall be limited to deferrals of base salary only), payable during that calendar year, deferred until his or her retirement, death, Permanent Disability, resignation or any other termination of employment with the Company. The election shall be irrevocable and shall be made on a form prescribed by the Committee. The election shall apply only to that calendar year or partial year. If a Participant has not made an election, the Salary and/or Incentive Compensation paid to him or her for that year shall be paid in accordance with the Company's or Related Companies customary payroll practices. 3 5 5.2 Memorandum Account. The Company shall establish a ledger account (the "Memorandum Account"), for each Participant who has elected to defer the receipt of some or all of his or her Salary and/or Incentive Compensation for the purpose of reflecting the Company's obligation to pay the deferred Salary and/or Incentive Compensation as provided in Section 5.4. A separate Memorandum Account shall be established for each Deferral for each Participant. Interest shall accrue on the deferred Salary and/or Incentive Compensation to the date of distribution, and shall be credited to the Memorandum Account at the end of each calendar quarter or such other periods as may be determined by the Committee. The Committee shall determine the rate of interest periodically and in so doing may take into account the earnings, losses, appreciation or depreciation attributable to any discretionary investments made pursuant to section 5.3. 5.3 Discretionary Investment by Company. The deferred Salary and/or Incentive Compensation to be paid to Participants is an unfunded obligation of the Company. The Committee may annually direct that an amount equal to the deferred Salary and/or Incentive Compensation for that year shall be invested as the Committee, in its sole discretion, shall determine. The Committee may in its sole discretion may determine that all or some portion of an amount equal to the deferred Salary and/or Incentive Compensation shall be paid into one or more grantor trusts to be established by the Company or a Related Company of which it shall be the beneficiary, and to the assets of which it shall become entitled as and to the extent that Participants receive benefits under this Plan. The Committee may designate an investment advisor to direct investments and reinvestment of the funds, including investment of any grantor trusts hereunder. 5.4 Payment of Deferred Salary and/or Incentive Compensation. Upon the retirement, death, Permanent Disability, resignation, or termination of employment of a Participant who has elected to defer Salary and/or Incentive Compensation for any year, the Company shall pay to such Participant (or his or her Beneficiary in the case of his or her death) an amount equal to the balance of the Participants Memorandum Account, plus interest (at a rate determined by the Committee pursuant to Section 5.2) on the outstanding account balance to the date of distribution and subject to approval of the Committee, as follows: (a) a lump sum cash payment; or (b) in periodic installments over a period of years to be determined by the Committee, in its discretion. Payment of deferred Salary and/or Incentive Compensation shall commence or be made in January of the year following the Participant's retirement, death, Permanent Disability, resignation or other termination of employment, provided that with respect to a Participant who retires or otherwise terminates on January 1, the Committee, in its discretion, may direct that payment shall commence or be made on January 1, of the year following retirement. 5.5 Acceleration of Payment of Deferred Salary and/or Incentive Compensation. The Committee, in its sole discretion, may accelerate the payment of the unpaid balance of a Participant's Memorandum Account in the event of the Participant's retirement, death, Permanent Disability, resignation or other termination of employment, or upon its determination 4 6 that a Participant who is in distribution status, (or his or her Beneficiary in the case of death) has incurred a severe financial hardship. The Committee in making its determination may consider such factors and require such information as it deems appropriate. 5.6 Incapacity of Participant or Beneficiary. If the Committee finds that any Participant or Beneficiary to whom a payment is payable under the Plan is unable to care for his or her affairs because of illness or accident or is under a legal disability, any payment due (unless a prior claim therefore shall have been made by a duly appointed legal representative), may at the discretion of the Committee, be paid to the spouse, child, parent or brother or sister of such Participant or Beneficiary. Any such payment shall be a complete discharge of the obligations of the Company under the provisions of the Plan. 5.7 Nonassignment. The right of a Participant or Beneficiary to the payment of any amounts under the Plan may not be assigned, transferred, pledged or encumbered nor shall such right or other interests be subject to attachment, garnishment, execution or other legal process. SECTION 6 - UNFUNDED OBLIGATION 6.1 Unfunded Obligation. The deferred amounts to be paid to Participants pursuant to this Plan are unfunded obligations of the Company. The Company is not required to segregate any monies from its general funds, to create any trusts, or to make any special deposits with respect to this obligation. Title to and beneficial ownership of any investments including trust investments which the Company or Related Companies may make to fulfill this obligation shall at all times remain in the Company or the Related Companies as the case may be. Any investments and the creation or maintenance of any trust or memorandum accounts shall not create or constitute a trust or a fiduciary relationship between the Committee, or the Company and/or Related Companies, and a Participant, or otherwise create any vested or beneficial interest in any Participant, or his or her Beneficiary, or his or her creditors, in any assets of the Company or Related Companies whatsoever. Participants shall have no claim against the Company or Related Companies for any changes in the value of any assets which may be invested or reinvested by the Company with respect to this Plan. SECTION 7 - RIGHTS OF EMPLOYMENT 7.1 Employment. Nothing in this Plan shall interfere with or limit in any way the right of the Company or Related Companies to terminate any Participant's employment at any time, nor confer upon any Participant any right to continue in the employ of the Company or Related Company. 7.2 Participant. No Employee shall have the right to be selected as a Participant, or, having been so selected, to be selected again as a Participant. SECTION 8 - TERMINATION AND AMENDMENT 8.1 Termination and Amendment. The Board may from time to time amend, suspend or terminate the Plan, in whole or in part, and if the Plan is suspended or terminated, the Board may reinstate any or all of its provisions. The Committee may amend the Plans provided that 5 7 it may not suspend or terminate the Plan, substantially increase the administrative cost of the Plan or the obligation of the Company or Related Companies or expand the classification of employees who are eligible to participate in the Plan. No amendment, suspension, or termination may impair the right of a Participant or designated Beneficiary to receive the deferred Salary and/or Incentive Compensation benefit accrued prior to the effective date of such amendment, suspension or termination. SECTION 9 - WITHHOLDING TAXES 9.1 Withholding Taxes. Appropriate payroll taxes shall be withheld from cash payments made to Participants pursuant to this Plan. SECTION 10 - REQUIREMENTS OF LAW AND GOVERNING LAW 10.1 Requirements of Law. The operation and administration of the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 10.2 Governing Law. The Plan, and all agreements under the Plan shall be constructed in accordance with and governed by the laws of the State of Washington. For PLUM CREEK TIMBER COMPANY, L.P. By PLUM CREEK MANAGEMENT COMPANY, L.P., General Partner KEITH B. SLETTEN ---------------------------------- Keith B. Sletten Vice President Human Resources February 11, 1994 ---------------------------------- Date 6 EX-10.B.9 9 EXHIBIT 10.B.9 1 EXHIBIT 10.B.9 PC ADVISORY CORP. I DEFERRED COMPENSATION PLAN FOR DIRECTORS 2 PC ADVISORY CORP. I DEFERRED COMPENSATION PLAN FOR DIRECTORS SECTION 1 - ESTABLISHMENT, PURPOSE, AND EFFECTIVE DATE 1.1 Establishment. PC Advisory Corp. I, (the "Company") a Delaware corporation hereby establishes the "PC Advisory Corp. I Deferred Compensation Plan for Directors" (the "Plan") for the benefit of the members of the Company's Board of Directors, ("Director's"). Subject to the terms and conditions described herein, the Plan provides the opportunity for Directors to defer receipt of all or some part of their annual Board retainer, Committee Chairman retainer, and Board and Committee meeting fees. 1.2 Purpose. The purpose of this Plan is to help attract and retain highly qualified individuals to serve as members of the Company's Board of Directors. 1.3 Effective Date. The Plan, upon its adoption by the Board shall be effective January 1, 1993. The "Plan Year" is the calendar year. SECTION 2 - ADMINISTRATION 2.1 Administration. The Plan shall be administered by the Board of Directors. The Board, by majority action thereof, shall interpret the Plan, prescribe, amend and rescind rules relating to it from time to time as it deems proper and in the best interests of the Company, and to take any other action necessary for the administration of the Plan. Any decision or interpretation adopted by the Board shall be final and conclusive and shall be binding upon all Participants. SECTION 3 - PARTICIPATION 3.1 Participation. Participation in this Plan is voluntary. Each Director of the Company may elect to participate in the Plan by written notice to the Company upon his or her election to the Board of Directors. The deferral election, which is irrevocable, shall remain in effect for the Plan Year. A referral election by a Director who is elected to the Board during a Plan Year, shall remain in effect until the start of the next Plan Year. SECTION 4 - DEFERRALS 4.1 Compensation, Memorandum Account. Each Director who elects to defer all or some part of his or her Compensation will be deemed to be a "Participant" in the Plan. A Participant may elect to have all or a specified percentage of his or her Compensation deferred until such time as that individual ceases to be a Director. "Compensation" shall include the annual Board retainer, Board meeting fees, Committee Chairperson retainer, and Committee 1 3 meeting fees. The Company shall establish a ledger account (the "Memorandum Account") for each Participant and shall credit such account for the deferred Compensation at the same time and in the same amount as such Compensation would have been paid to the Director, absent the deferral election. Interest shall be credited to each Memorandum Account at the end of each quarter or such other periods as may be determined by the Board. The Board shall periodically determine the rate of interest credited to each Memorandum Account. 4.2 Discretionary Investment by Company. The deferred Compensation to be paid to the Participant is an unfunded obligation of the Company. The Board may annually direct that an amount equal to the deferred Compensation for that year shall be invested, as the Board, in its sole discretion, shall determine. The Board may in its sole discretion determine that all or some portion of an amount equal to the deferred Compensation shall be paid into one or more grantor trusts to be established by the Company, or it may elect to participate in one or more grantor trusts established by Plum Creek Timber Co., L.P., (the "Limited Partnership"). If the Board establishes a separate grantor trust for the Plan; it may designate an investment advisor to direct investments and reinvestment of the funds. 4.3 Payment of Deferred Salary and/or Incentive Compensation. Upon the retirement, death, permanent disability, resignation, or other termination of Board service of a Participant who has elected to defer Compensation for any Plan Year, the Company shall pay to such Participant (or his or her Beneficiary in the case of his or her death) an amount equal to the balance of the Participants' Memorandum Account, plus interest (at a rate determined by the Board pursuant to Section 4.1) on the outstanding account balance to the date of distribution and subject to approval of the Board, as follows: (a) a lump sum cash payment; or (b) in periodic installments over a period of years to be determined by the Board, in its discretion. Payment of deferred Compensation shall commence or be made in January of the year following the Participant's retirement, death, permanent disability, resignation or termination of Board service. 4.4 Acceleration of Payment of Deferred Compensation. The Board, in its sole discretion, may accelerate the payment of the unpaid balance of a Participant's Memorandum Account in the event of the Participant's retirement, death, permanent disability, resignation or other termination of Board service, or upon its determination that a Participant who is in distribution status, (or his or her Beneficiary in the case of death) has incurred a severe financial hardship. The Board in making its determination may consider such factors and require such information as it deems appropriate. 2 4 4.5 Incapacity of Participant or Beneficiary. If the Board finds that a Participant or Beneficiary to whom a payment is payable under the Plan is unable to care for his or her affairs because of illness or accident or is under a legal disability, any payment due (unless a prior claim therefore shall have been made by a duly appointed legal representative), may at the discretion of the Board, be paid to the spouse, child, parent or brother or sister of such Participant or Beneficiary or to any person whom the Board has determined has incurred expense on behalf of such Participant or Beneficiary. Any such payment shall be a complete discharge of the obligations of the Company under the provisions of the Plan. 4.6 Nonassignment. The fight of a Participant or Beneficiary to the payment of any amounts under the Plan may not be assigned, transferred, pledged or encumbered nor shall such right or other interests be subject to attachment, garnishment, execution or other legal process. SECTION 5 - UNFUNDED OBLIGATION 5.1 Unfunded Obligation. The deferred amounts to be paid to Participants pursuant to this Plan are unfunded obligations of the Company. The Company is not required to segregate any monies from its general funds, to create any trusts, or to make any special deposits with respect to this obligation. Title to and beneficial ownership of any investments including trust investments which the Company may make to fulfill this obligation shall at all times remain in the Company. Any investments and the creation or maintenance of any trust or Memorandum Accounts shall not create or constitute a trust or a fiduciary relationship between the Board and a Participant, or otherwise create any vested or beneficial interest in any Participant, or his or her Beneficiary, or his or her creditors, in any assets of the Company whatsoever. The Participants shall have no claim against the Company for any changes in the value of any assets which may be invested or reinvested by the Company with respect to this Plan. SECTION 6 - TERMINATION AND AMENDMENT 6.1 Termination and Amendment. The Board of Directors may from time to time amend, suspend or terminate the Plan, in whole or in part, and if the Plan is suspended or terminated, the Board may reinstate any or all of its provisions. No amendment, suspension, or termination may impair the right of a Participant or designated Beneficiary to receive the deferred Compensation benefit accrued prior to the effective date of such amendment, suspension or termination. SECTION 7 - REQUIREMENTS OF LAW AND GOVERNING LAW 7.1 Requirements of Law. The operation and administration of the Plan shall be subject to all applicable laws, rules, and regulations, and to such approvals by any governmental agencies or national securities exchanges as may be required. 3 5 7.2 Governing Law. The Plan, and all agreements under the Plan shall be constructed in accordance with and governed by the laws of the State of Washington. Approved by the authorization of the Board of Directors of PC Advisory Corp. I: KEITH B. SLETTEN ---------------------------------- Keith B. Sletten Vice President Human Resources February 19, 1993 --------------------------------- Date 4 EX-27 10 EXHIBIT 27
5 This schedule contains summary information extracted from the Combined Financial Statements of Plum Creek Timber Company, L.P. for the year ended December 31, 1994 and is qualified in its entirety by reference to such financial statements. 1,000 12-MOS DEC-31-1994 DEC-31-1994 60,942 0 28,026 1,160 54,685 149,329 750,976 93,497 823,226 55,824 531,400 0 0 0 222,977 823,226 578,657 578,657 372,467 414,523 4,477 0 47,410 113,136 924 112,212 0 0 0 112,212 2.36 0
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