EXHIBIT 10.3
FORM OF Draft: 11/03/97
CONTRIBUTION, CONVEYANCE AND ASSUMPTION AGREEMENT
This Contribution, Conveyance and Assumption Agreement, dated as of
November _____, 1997, is entered into by and among U.S. TIMBERLANDS COMPANY,
L.P., a Delaware limited partnership (the "Partnership"), U.S. TIMBERLANDS
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MANAGEMENT COMPANY, L.L.C., a Delaware limited liability company (formerly known
as U.S. Timberlands Services Company, L.L.C.) ("Old Services"), U.S. TIMBERLANDS
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KLAMATH FALLS, L.L.C., a Delaware limited liability company (the "Operating
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Company"), U.S. TIMBERLANDS HOLDINGS, L.L.C., a Delaware limited liability
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company ("Holdings"), U.S. TIMBERLANDS SERVICES COMPANY, L.L.C., a Delaware
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limited liability company (formerly known as New Services, L.L.C.) (the "General
Partner") and RUDEY TIMBER COMPANY, L.L.C., a Delaware limited liability company
("Rudey Timber").
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RECITALS
WHEREAS, Old Services has formed the General Partner contributing
$1,000.00 to it in exchange for all of the interest therein;
WHEREAS, the General Partner, as general partner, and ▇▇▇▇ ▇. ▇▇▇▇▇,
as the organizational limited partner, have formed the Partnership pursuant to
the Delaware Revised Uniform Limited Partnership Act for the purpose of owning
certain member interests in the Operating Company;
WHEREAS, the General Partner contributed $10.00 to the capital of the
Partnership and received a 1% general partner interest therein; and ▇▇▇▇ ▇.
▇▇▇▇▇ contributed $990.00 to the capital of the Partnership and received a 99%
limited partner interest therein;
WHEREAS, U.S. Timberlands Finance Corp. ("Finance Corp."), a Delaware
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corporation, was formed on August 20, 1997 and on August 26, 1997, the
Partnership contributed $1,000.00 to it in exchange for 1,000 shares of common
stock, par value $.01 per share, of Finance Corp. and on October 17, 1997, all
such shares were contributed by the Partnership to the Operating Company;
WHEREAS, Old Services has agreed to contribute to the General Partner
all of its assets in exchange for an additional interest in the General Partner;
WHEREAS, concurrently with the consummation of the transactions
contemplated hereby, the Operating Company will assume $130 million of
indebtedness of Holdings, together with all accrued interest and its obligation
to pay the guarantee fee to Weyerhaeuser Company pursuant to that certain
Indemnity and Operations Agreement dated as of August 30, 1996, between
Holdings, Rudey Timber, ▇▇▇▇ ▇. ▇▇▇▇▇ and Weyerhaeuser Company, as amended (the
"Guarantee Fee");
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WHEREAS, the General Partner has agreed to contribute its timber
operations to the Operating Company in exchange for an interest in the Operating
Company;
WHEREAS, Rudey Timber has agreed to contribute all of its interest in
the Operating Company to Holdings in exchange for an additional interest in
Holdings;
WHEREAS, pursuant to the Amended and Restated Agreement of Limited
Partnership of the Partnership (the "Partnership Agreement"), the General
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Partner has agreed to
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contribute to the Partnership, as a capital contribution thereto, all but
1.0101% of its member interest in the Operating Company (the "Operating Company
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LLC Interest") in exchange for (i) the continuation of its general partner
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interest in the Partnership and (ii) Subordinated Units;
WHEREAS, pursuant to the Partnership Agreement, Holdings has agreed to
contribute to the Partnership, as a capital contribution thereto, all of its
interests in the Operating Company in exchange for Subordinated Units;
NOW, THEREFORE, in consideration of their mutual undertakings and
agreements hereunder, the parties to this Agreement undertake and agree as
follows:
ARTICLE I
Definitions
The following capitalized terms shall have the meanings given below.
"Agreement" means this Contribution, Conveyance and Assumption
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Agreement.
"Effective Time" means 9:00 a.m. Eastern Standard Time on November
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_____, 1997.
"Excluded General Partner Assets" means those assets of the General
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Partner described on Schedule I hereto.
"Excluded Liabilities" means all of the liabilities of the General
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Partner to the extent that such liabilities relate solely to the Excluded
General Partner Assets.
"Existing Indebtedness" means the bank indebtedness of Holdings in the
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principal amount of $130,000,000, together with accrued interest thereon and the
Guarantee Fee.
"General Partner" has the meaning assigned to such term in the
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Recitals to this Agreement.
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"General Partner Assets" means all timber assets owned, leased or held
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by the General Partner, as of the Effective Time, of every kind, character and
description, whether tangible or intangible, whether real, personal or mixed,
whether accrued or contingent, and wherever located, including, without
limitation, all right, title and interest of the General Partner in and to the
assets described on Schedule 2 attached hereto, excluding all Excluded General
Partner Assets.
"General Partner Assumed Liabilities" means all of the General
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Partner's liabilities arising from or relating to the General Partner Assets, as
of the Effective Time, of every kind, character and description, whether matured
or unmatured, known or unknown, accrued or contingent, liquidated or
unliquidated, and whether or not reflected on the books and records of the
General Partner as of the Effective Time, excluding, however, any of such
liabilities that constitute Excluded Liabilities.
"Guarantee Fee" has the meaning assigned to such term in the recitals
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to this Agreement.
"Holdings" has the meaning assigned to such term in the opening
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paragraph of this Agreement.
"Old Services" has the meaning assigned to such term in the opening
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paragraph of this Agreement.
"Old Services Assets" shall mean all assets owned, leased or held by
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Old Services, as of the Effective Time of every kind, character and description,
whether tangible or intangible, whether real, personal or mixed, whether accrued
or contingent, and wherever located, excluding $1 million cash.
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"Operating Company" has the meaning assigned to such term in the
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opening paragraph of this Agreement.
"Operating Company LLC Interest" has the meaning assigned to such term
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in the Recitals to this Agreement.
"Partnership" has the meaning assigned to such term in the opening
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paragraph of this Agreement.
"Partnership Agreement" has the meaning assigned to such term in the
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Recitals to this Agreement.
"Restriction" has the meaning assigned to such term in Section 7.5.
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"Restriction-Asset" has the meaning assigned to such term in Section
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7.5.
"▇▇▇▇ Timber" has the meaning assigned to such term in the opening
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paragraph of this Agreement.
"Subordinated Units" has the meaning assigned to such term in the
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Partnership Agreement.
"Weyerhaeuser Agreement" means that certain letter agreement dated May
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14, 1997 by and among Weyerhaeuser Company, Holdings, the Operating Company, Old
Services, Rudey Timber and ▇▇▇▇ ▇. ▇▇▇▇▇.
ARTICLE II
Contributions to the General Partner, the Operating Company and Holdings
2.1 Contribution of Old Services Assets. Effective as of the Effective
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Time, Old Services hereby grants, contributes, transfers and conveys to the
General Partner, its successors and assigns, for its and their own use forever,
all right, title and interest in and to the Old Services Assets in
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exchange for (i) member interests in the General Partner and (ii) other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and the General Partner hereby accepts the Old Services Assets, as
a contribution to the capital of the General Partner.
TO HAVE AND TO HOLD the Old Services Assets unto the General Partner,
its successors and assigns, together with all and singular the rights and
appurtenances thereto, subject, however, to the terms and conditions stated in
this Agreement, forever.
2.2 Contribution of General Partner Assets. Effective as of the Effective
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Time, the General Partner hereby grants, contributes, transfers and conveys to
the Operating Company, its successors and assigns, for its and their own use
forever, all right, title and interest of the General Partner in and to the
General Partner Assets in exchange for (i) member interests in the Operating
Company and (ii) other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and the Operating Company accepts
the General Partner Assets as a contribution to the capital of the Operating
Company.
TO HAVE AND TO HOLD the General Partner Assets unto the Operating
Company, its successors and assigns, together with all and singular the rights
and appurtenances thereto, subject, however, to the terms and conditions stated
in this Agreement, forever.
2.3 Contribution of Rudey Timber. Effective as of the Effective Time,
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Rudey Timber hereby grants, contributes, transfers and conveys to Holdings, its
successors and assigns, for its and their own use forever, all right, title and
interest of Rudey Timber in and to its member interest in the Operating Company
in exchange for an additional interest in Holdings, the receipt and sufficiency
of which are hereby acknowledged and Holdings accepts the member interest in the
Operating Company as a contribution to the capital of Holdings.
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TO HAVE AND TO HOLD the member interest in the Operating Company unto
Holdings, its successors and assigns, together with all and singular the rights
and appurtenances thereto, subject, however, to the terms and conditions stated
in this Agreement, forever.
ARTICLE III
Contributions to the Partnership
3.1 General Partner Contribution. Effective as of the Effective Time,
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the General Partner hereby grants, contributes, transfers and conveys to the
Partnership, its successors and assigns, for its and their own use forever, all
right, title and interest of the General Partner in and to the Operating Company
LLC Interest in exchange for (i) the continuation of the General Partner's
interest in the Partnership, (ii) the right to receive Incentive Distributions
and receipt of 1,428,571 Subordinated Units, and (iii) other good and valuable
consideration, the sufficiency of which is hereby acknowledged and the
Partnership hereby accepts the Operating Company LLC Interest, as a contribution
to the capital of the Partnership.
TO HAVE AND TO HOLD the Operating Company LLC Interest unto the
Partnership, its successors and assigns, together with all and singular the
rights and appurtenances thereto, subject, however, to the terms and conditions
stated in this Agreement, forever.
3.2 Holdings Contribution. Effective as of the Effective Time, Holdings
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hereby grants, contributes, transfers and conveys to the Partnership, its
successors and assigns, for its and their own use forever, all right, title and
interest of Holdings in and to its member interest in the Operating Company in
exchange for (i) the receipt of 2,978,833 Subordinated Units and (ii) other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged and the Partnership hereby accepts said interest as a contribution
to the capital of the Partnership.
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TO HAVE AND TO HOLD the member interest in the Operating Company unto the
Partnership, its successors and assigns, together with all and singular the
rights and appurtenances thereto in anywise belonging, subject, however, to the
terms and conditions stated in this Agreement, forever.
ARTICLE IV
Assumption of Certain Liabilities
4.1 Assumption of Certain Liabilities by the Operating Company. In
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connection with the contribution and transfer of the General Partner Assets to
the Operating Company by the General Partner, the Operating Company hereby
assumes and agrees to duly and timely pay, perform and discharge the General
Partner Assumed Liabilities, to the full extent that the General Partner has
been heretofore or would have been in the future, were it not for the execution
and delivery of this Agreement, obligated to pay, perform and discharge the
General Partner Assumed Liabilities; provided, however, that said assumption and
agreement to duly and timely pay, perform and discharge the General Partner
Assumed Liabilities shall not increase the obligation of the Operating Company
with respect to the General Partner Assumed Liabilities beyond that of the
General Partner, waive any valid defense that was available to General Partner
with respect to the General Partner or enlarge any rights or remedies of any
third party under any of the General Partner Assumed Liabilities.
4.2 Assumption of Existing Indebtedness by the Operating Company. The
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Operating Company hereby assumes and agrees to discharge the Existing
Indebtedness to the full extent that Holdings has been heretofore or would have
been in the future, were it not for the execution and delivery of this
Agreement, obligated to pay, perform and discharge the Existing Indebtedness;
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provided, however, that said assumption and agreement to duly and timely pay,
perform and discharge the Existing Indebtedness shall not increase the
obligation of the Operating Company with respect to the Existing Indebtedness
beyond that of Holdings, waive any valid defense that was available to Holdings
with respect to the Existing Indebtedness or enlarge any rights or remedies of
any third party under any of the Existing Indebtedness.
ARTICLE V
Indemnification
5.1 Indemnification With Respect to the Weyerhaeuser Agreement. The
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Partnership shall indemnify, defend and hold harmless ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇
Timber, their respective members, officers and directors and their respective
successors and assigns from and against any and all claims, demands, costs,
liabilities (including, without limitation, liabilities arising by way of active
or passive negligence) and expenses (including court costs and reasonable
attorneys' fees) of every kind, character and description, arising from or
relating to the Weyerhaeuser Agreement.
ARTICLE VI
[Reserved]
ARTICLE VII
Miscellaneous
7.1 Subrogation. The contribution of the General Partner Assets made
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under Section 2.2 is made with full rights of substitution and subrogation of
the Operating Company, and all persons claiming by, through and under the
Operating Company, to the extent assignable, in and to all
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covenants and warranties by the predecessors-in-title of the General Partner,
and with full subrogation of all rights accruing under applicable statutes of
limitation and all rights of action of warranty against all former owners of the
General Partner Assets.
7.2 Waiver of Bulk Sales Laws. Each of the parties hereto hereby waives
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compliance with any applicable bulk sales law or any similar law in any
applicable jurisdiction in respect of the transactions contemplated by this
Agreement.
7.3 Further Assurances. From time to time after the date hereof, and
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without any further consideration, Old Services and the General Partner shall
each execute, acknowledge and deliver all such additional deeds, assignments,
bills of sale, conveyances, instruments, notices, releases, acquittances and
other documents, and will do all such other acts and things, all in accordance
with applicable law, as may be necessary or appropriate (i) more fully to assure
the Operating Company, its successors and assigns, all of the properties,
rights, titles, interests, estates, remedies, powers and privileges by this
Agreement granted to the Operating Company or intended so to be, (ii) more fully
and effectively to vest in the Operating Company and its successors and assigns
beneficial and record title to the General Partner Assets hereby contributed and
assigned to the Operating Company or intended so to be and to put the Operating
Company in actual possession and control of the General Partner Assets and to
more fully and effectively carry out the purposes and intent of this Agreement.
7.4 Power of Attorney. The General Partner hereby constitutes and
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appoints the Operating Company, its successors and assigns, its true and lawful
attorney-in-fact with full power of substitution for it and in its name, place
and stead or otherwise on behalf of the General Partner, its successors and
assigns, and for the benefit of the Operating Company, its successors and
assigns,
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to demand and receive from time to time the General Partner Assets and to
execute in the name of the General Partner and its successors and assigns
instruments of conveyance, instruments of further assurance and to give receipts
and releases in respect of the same, and from time to time to institute and
prosecute in the name of the Operating Company or the General Partner for the
benefit of the Operating Company, as may be appropriate, any and all proceedings
at law, in equity or otherwise which the Operating Company, its successors and
assigns may deem proper in order to collect, assert or enforce any claims,
rights or titles of any kind in and to the General Partner Assets, and to defend
and compromise any and all actions, suits or proceedings in respect of any of
the General Partner Assets and to do any and all such acts and things in
furtherance of this Agreement as the Operating Company, its successors or
assigns shall deem advisable. The General Partner hereby declares that the
appointment hereby made and the powers hereby granted are coupled with an
interest and are and shall be irrevocable and perpetual and shall not be
terminated by any act of the General Partner, its successors or assigns or by
operation of law.
7.5 Consents; Restriction on Assignment. If there are prohibitions
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against or conditions to the conveyance of any assets conveyed herein without
the prior written consent of third parties, including, without limitation,
governmental agencies (other than consents of a ministerial nature which are
normally granted in the ordinary course of business), which if not satisfied
would result in a breach of such prohibitions or conditions or would give an
outside party the right to terminate the Operating Company's rights with respect
to such assets (herein called a "Restriction"), then any provision contained in
this Agreement to the contrary notwithstanding, the transfer of title to or
interest in each such asset (herein called the "Restriction-Asset") pursuant to
this Agreement shall not become effective unless and until such Restriction is
satisfied, waived or no longer applies.
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When and if such a Restriction is so satisfied, waived or no longer applies, to
the extent permitted by applicable law and any applicable contractual
provisions, the assignment of the Restriction-Asset subject thereto shall become
effective automatically as of the Effective Time, without further action on the
part of the Operating Company, Old Services or the General Partner. Old
Services, the General Partner and the Operating Company agree to use their best
efforts to obtain satisfaction of any Restriction on a timely basis. The
description of the assets as a "Restriction-Asset" shall not be construed as an
admission that any Restriction exists with respect to the transfer of such
assets. In the event that any Restriction-Asset exists, Old Services and the
General Partners, as the case may be, agree to hold such Restriction-Asset in
trust for the exclusive benefit of the Operating Company and to otherwise use
its best efforts to provide the Operating Company with the benefits thereof, and
the General Partner will enter into other agreements, or take such other action
as it deems necessary, in order to help ensure that the Operating Company has
the assets and concomitant rights necessary to enable it to operate the General
Partner Assets contributed to the Operating Company in all material respects as
they were operated prior to the Effective Time.
7.6 Costs. The Operating Company shall pay all sales, use and similar
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taxes arising out of the contributions, conveyances and deliveries to be made
hereunder, and shall pay all documentary, filing, recording, transfer, deed, and
conveyance taxes and fees required in connection therewith. In addition, the
Operating Company shall be responsible for all costs, liabilities and expenses
(including court costs and reasonable attorneys' fees) incurred in connection
with the satisfaction or waiver of any Restriction pursuant to Section 7.5.
7.7 Headings: References: Interpretation. All Article and Section
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headings in this Agreement are for convenience only and shall not be deemed to
control or affect the meaning or
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construction of any of the provisions hereof. The words "hereof," "herein" and
"hereunder" and words of similar import, when used in this Agreement, shall
refer to this Agreement as a whole, including, without limitation, all Schedules
and Exhibits attached hereto, and not to any particular provision of this
Agreement. All references herein to Articles, Sections, Schedules and Exhibits
shall, unless the context requires a different construction, be deemed to be
references to the Articles and Sections of this Agreement and the Schedules and
Exhibits attached hereto, and all such Schedules and Exhibits attached hereto
are hereby incorporated herein and made a part hereof for all purposes. All
personal pronouns used in this Agreement, whether used in the masculine,
feminine or neuter gender, shall include all other genders, and the singular
shall include the plural and vice versa. The use herein of the word "including"
following any general statement, term or matter shall not be construed to limit
such statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
non-limiting language (such as "without limitation," "but not limited to," or
words of similar import) is used with reference thereto, but rather shall be
deemed to refer to all other items or matters that could reasonably fall within
the broadest possible scope of such general statement, term or matter.
7.8 Successors and Assigns. The Agreement shall be binding upon and inure
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to the benefit of the parties signatory hereto and their respective successors
and assigns.
7.9 No Third Party Rights. The provisions of this Agreement are intended
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to bind the parties signatory hereto as to each other and are not intended to
and do not create rights in any other person or confer upon any other person any
benefits, rights or remedies and no person is or is intended to be a third party
beneficiary of any of the provisions of this Agreement.
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7.10 Counterparts. This Agreement may be executed in any number of
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counterparts, all of which together shall constitute one agreement binding on
the parties hereto.
7.11 Governing Law. This Agreement shall be governed by, and construed in
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accordance with, the laws of the State of New York applicable to contracts made
and to be performed wholly within such state without giving effect to conflict
of law principles thereof, except to the extent that it is mandatory that the
law of some other jurisdiction, wherein the assets are located, shall apply.
7.12 Severability. If any of the provisions of this Agreement are held by
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any court of competent jurisdiction to contravene, or to be invalid under, the
laws of any political body having jurisdiction over the subject matter hereof,
such contravention or invalidity shall not invalidate the entire Agreement.
Instead, this Agreement shall be construed as if it did not contain the
particular provision or provisions held to be invalid, and an equitable
adjustment shall be made and necessary provision added so as to give effect to
the intention of the parties as expressed in this Agreement at the time of
execution of this Agreement.
7.13 Deed; ▇▇▇▇ of Sale; Assignment. To the extent required by applicable
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law, this Agreement shall also constitute a "deed," "▇▇▇▇ of sale" or
"assignment" of the Assets.
7.14 Amendment or Modification. This Agreement may be amended or modified
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from time to time only by the written agreement of all the parties hereto.
7.15 Integration. This Agreement supersedes all previous understandings
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or agreements between the parties, whether oral or written, with respect to its
subject matter. This document is an integrated agreement which contains the
entire understanding of the parties. No understanding, representation, promise
or agreement, whether oral or written, is intended to be or shall be included
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in or form part of this Agreement unless it is contained in a written amendment
hereto executed by the parties hereto after the date of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto as of the date first above written.
U.S. TIMBERLANDS COMPANY, L.P.,
a Delaware limited partnership
By:
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Name:
---------------------------------
Title:
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U.S. TIMBERLANDS MANAGEMENT
COMPANY, L.L.C., (formerly known as
U.S. Timberlands Services Company L.L.C.),
a Delaware limited liability company
By:
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Name:
---------------------------------
Title:
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U.S. TIMBERLANDS KLAMATH,
FALLS, L.L.C.,
a Delaware limited liability company
By:
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Name:
---------------------------------
Title:
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U.S. TIMBERLANDS HOLDINGS, L.L.C.,
a Delaware limited liability company
By:
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Name:
---------------------------------
Title:
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U.S. TIMBERLANDS SERVICES
COMPANY, L.L.C. (formerly known as
New Services, L.L.C.),
a Delaware limited liability company
By:
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Name:
---------------------------------
Title:
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RUDEY TIMBER COMPANY, L.L.C.,
a Delaware limited liability company
By:
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Name:
---------------------------------
Title:
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