EXHIBITS 10.4
OPPORTUNITIES AGREEMENT
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THIS OPPORTUNITIES AGREEMENT (this "Agreement"), made and entered into this
___ day of _________, 1998, by and among POTLATCH CORPORATION, a Delaware
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corporation ("Potlatch"), TIMBERLAND GROWTH LIMITED PARTNERSHIP, a Delaware
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limited partnership (the "Partnership"), and TIMBERLAND GROWTH CORPORATION, a
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Delaware corporation (the "Company"),
W I T N E S S E T H:
WHEREAS, Potlatch has contributed its interests in certain Timberlands (as
hereinafter defined) to the Partnership pursuant to that certain Contribution
Agreement, dated as of __________, 1998; and
WHEREAS, the Company is the sole general partner of the Partnership; and
WHEREAS, with certain exceptions set forth below, it is Potlatch's
intention to acquire additional interests in Timberlands exclusively through its
limited partnership interest in the Partnership, except to the extent that the
Partnership elects not to avail itself of opportunities which may arise in the
future to acquire interests in Timberlands; and
WHEREAS, it is the Partnership's intention to afford to Potlatch the
opportunity to harvest and purchase, in accordance with the Timber Agreement (as
hereinafter defined), all timber located on Timberlands that may be acquired by
the Partnership within certain regions specified herein; and
WHEREAS, the parties hereto desire to enter into this Agreement to define
their respective rights and obligations with respect to future opportunities to
acquire interests in Timberlands:
NOW, THEREFORE, in consideration of the agreement of Potlatch to enter into
the transactions contemplated above, and of the mutual provisions, agreements
and covenants herein contained, Potlatch, the Company and the Partnership agree
as follows:
1. DEFINITIONS.
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1.1 Certain Definitions. The terms defined in this Section 1.1 shall, for
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all purposes of this Agreement, have the meanings herein specified:
(a) "Affiliate" shall mean, with respect to a party hereto, any Person as
to which more than 50% of the securities or other ownership interests having
power to elect the Board of Directors or persons performing similar fractions
are owned directly or indirectly
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by such party; provided, however, that neither the Partnership nor the Company
shall be deemed an Affiliate of Potlatch.
(b) "Appraiser" shall have the meaning specified in Section 2.4(b)(i)
hereof.
(c) "Appraiser's Certificate" shall have the meaning specified in Section
2.4(b)(ii) hereof.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City are generally required or
authorized to be closed.
(e) "Certificate Date" shall have the meaning specified in Section
2.4(b)(ii) hereof.
(f) "Company's Common Stock" shall mean the Common Stock, par value $.01
per share, of the Company.
(g) "Fair Market Value" of a specified asset shall mean, as of the date of
determination, the cash price at which a willing seller would sell, and a
willing buyer would buy, each being apprised of all relevant facts and neither
acting under compulsion, such asset in an arms'-length negotiated transaction
with an unaffiliated third party without time constraints.
(h) "Higher Value" shall have the meaning specified in Section 2.4(b)(iii)
hereof.
(i) "Interest" shall have the meaning specified in Section 2.1 hereof.
(j) "Lower Value" shall have the meaning specified in Section 2.4(b)(iii)
hereof.
(k) "Mixed Assets Interest" shall have the meaning specified in Section
2.2(a) hereof.
(l) "Offered Timberlands" shall have the meaning specified in Section
2.4(a) hereof.
(m) "Partnership Agreement" shall mean the agreement of limited partnership
governing the Partnership, as amended.
(n) "Partnership Appraiser" shall have the meaning specified in Section
2.4(b)(i) hereof.
(o) "Partnership Units" shall mean limited partnership interests in the
Partnership.
(p) "Person" shall mean any individual, partnership, limited liability
company, corporation, joint venture, trust or other entity.
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(q) "Potential Addition" shall have the meaning specified in Section 3
hereof.
(r) "Potlatch" shall mean Potlatch Corporation, a Delaware corporation, and
all successors to Potlatch Corporation by way of merger, consolidation or sale
of substantially all of its assets.
(s) "Potlatch Appraiser" shall have the meaning specified in Section
2.4(b)(i) hereof.
(t) "Potlatch Northern Territory" shall mean the geographic areas within a
150-mile radius of any converting facility currently operated by Potlatch or any
Affiliate of Potlatch in Idaho and Minnesota as of the date hereof. A list of
such facilities and their respective addresses is attached hereto as Exhibit A.
(u) "Potlatch Northern Territory Interest" shall have the meaning specified
in Section 2.2(b) hereof.
(v) "Potlatch Southern Territory" shall mean the geographic areas with a
150-mile radius of (i) the converting facilities operated by Potlatch in
Arkansas as of the date hereof and (ii) the converting facilities that Potlatch
will acquire in Mississippi pursuant to that certain Sawmill Subsidiary Asset
Purchase Agreement, dated as of February 9, 1998, between Potlatch and ▇▇▇▇▇▇▇▇-
▇▇▇▇▇ Lumber Company. A list of the converting facilities referred to in
clauses (i) and (ii) of the preceding sentence and their respective addresses is
attached hereto as Exhibit B.
(w) "Third Appraiser" shall have the meaning specified in Section
2.4(b)(iv) hereof.
(x) "Third Value" shall have the meaning specified in Section 2.4(b)(iv)
hereof.
(y) "Timber" shall mean a tree as it stands uncut in the ▇▇▇▇▇.
(z) "Timber Agreement" shall mean that certain Timberlands Management and
Timber Purchase Agreement, dated as of ____________, 1998, between Potlatch and
the Partnership, as the same may be amended, modified or supplemented from time
to time.
(aa) "Timberlands" shall mean real property that contains Timber which is
(or upon the completion of the growth cycle then in process is expected to
become) of a commercial quantity and of merchantable quality.
1.2 Other Definitions. In addition to the terms defined in this Section
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1.1, certain other terms are defined elsewhere in this Agreement, and, wherever
such terms are used in this Agreement, they shall have their respective defined
meanings, unless the context expressly or by necessary implication requires.
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2. OPPORTUNITIES.
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2.1 The Company's and the Partnership's Right of First Opportunity.
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Except as otherwise provided in Sections 2.2 and 2.3, the Company or the
Partnership shall have the right to pursue, to the exclusion of Potlatch, all
opportunities to acquire any direct or indirect interest in Timberlands (an
"Interest"). If Potlatch desires to acquire any Interest, Potlatch shall
promptly provide written notice of its desire to acquire such Interest to the
Company. As soon as reasonably practicable and in any event within 10 Business
Days after the date such notice is received by the Company, the Company shall
notify Potlatch in writing whether the Company or the Partnership elects to
pursue the acquisition of such Interest. If the Company (for itself or on
behalf of the Partnership) elects to pursue such acquisition, then such party or
its Affiliate shall have the exclusive right (as between the parties hereto) to
pursue and complete the acquisition of such Interest. Should Company (for
itself and on behalf of the Partnership) decide to reject the opportunity to
pursue the acquisition or should the Company or the Partnership, as applicable,
(and its Affiliates) decide to terminate its pursuit of the acquisition of such
Interest at any time, then the Company shall promptly notify Potlatch in writing
concerning such decision. Potlatch and its Affiliates shall have the exclusive
right (as between the parties hereto) to pursue and complete such acquisition at
any time within one year following, as applicable, the date of rejection, the
end of such 10 Business Day period if no written response has been received by
Potlatch during such period as provided above, or the date of receipt by
Potlatch of written notice from the Company or the Partnership that it has
terminated its pursuit of the acquisition. If Potlatch (and its Affiliates)
obtains such exclusive right, then the Company and the Partnership (and their
respective Affiliates) shall, at Potlatch's written request, provide to Potlatch
any information they may have which is relevant to the acquisition of such
Interest (except to the extent prohibited by any confidentiality agreement then
in effect).
2.2 Exceptions. Section 2.1 shall not apply to Potlatch's pursuit of any
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opportunity to acquire, or acquisition of, Interests in any of the following
circumstances: (a) where the Fair Market Value of the Interest being offered
represents a minority of the Fair Market Value of the total consideration being
offered by the seller or Affiliated sellers (a "Mixed Assets Interest"); (b)
where the Interest being offered relates exclusively to Timberlands located
within a Potlatch Northern Territory (a "Potlatch Northern Territory Interest");
(c) where the Interest involves an investment in not more than 10% of the
outstanding equity securities of a Person whose securities are publicly held and
actively traded; (d) where the Interest involves any right to cut Timber at the
▇▇▇▇▇ pursuant to a timber deed or timber cutting contract with a term of less
than 10 years, or a lease of Timberlands with a term of less than 10 years; (e)
where the Interest involves the outstanding securities of Potlatch or any
subsidiary of Potlatch or the outstanding securities of the Company, the
Partnership or any of their subsidiaries; (f) where the purchase and sale of the
Interest is between Potlatch and its Affiliate or between Affiliates of
Potlatch; or (g) any Interest which Potlatch has the right to acquire under the
Timber Agreement.
2.3 Potlatch's Right of First Opportunity. Potlatch (and its Affiliates)
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shall have the right to pursue, to the exclusion of the Company or the
Partnership, any Mixed Assets
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Interest or Potlatch Northern Territory Interest. If the Company or the
Partnership desires to acquire any Mixed Assets Interest or Potlatch Northern
Territory Interest, the Company or the Partnership shall promptly provide
written notice of its desire to acquire such Interest to Potlatch. As soon as
practicable and in any event within 10 Business Days after the date such notice
is received by Potlatch, Potlatch shall notify the Company or the Partnership,
as applicable, in writing whether Potlatch elects to pursue the acquisition of
such Interest. If Potlatch elects to pursue such acquisition, then Potlatch or
its Affiliate shall have the exclusive right (as between the parties hereto) to
pursue and complete the acquisition of such Interest. Should Potlatch decide to
reject the opportunity to pursue the acquisition or should Potlatch (and its
Affiliates) decide to terminate its pursuit of the acquisition of such Interest
at any time, then Potlatch shall promptly notify the Company in writing
concerning such decision. The Company or the Partnership (and their respective
Affiliates), as applicable, shall have the exclusive right (as between the
parties hereto) to pursue and complete such acquisition at any time within one
year following, as applicable, the date of rejection, the end of such 10
Business Day period if no written response has been received by the Company or
the Partnership, as applicable, during such period as provided above, or the
date of receipt by the Company and the Partnership of written notice from
Potlatch that it has otherwise terminated its pursuit of the acquisition. If
the Company or the Partnership (and their respective Affiliates) shall, at the
Company's written request, provide to the Company or the Partnership, as
applicable, any information they may have which is relevant to the acquisition
of such Interest (except to the extent prohibited by any confidentiality
agreement then in effect).
2.4 Potlatch's Obligation to Sell Certain Timberlands.
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(a) In the event that Potlatch completes an acquisition of a Mixed Assets
Interest, Potlatch shall promptly make a written offer to the Partnership to
sell to the Partnership the Timberlands acquired in connected with such
acquisition (the "Offered Timberlands"), unless (i) a sale of the Offered
Timberlands to the Partnership would be legally impermissible, (ii) Potlatch's
interest in the Offered Timberlands is such that Potlatch would not be capable
of causing the Offered Timberlands to be sold or (iii) such a sale would cause
Potlatch or any of its Affiliates to violate any fiduciary or contractual duty
owed to any other Person. In the event that Potlatch does not promptly make
such written offer in reliance on any of clauses (i), (ii) or (iii) above,
Potlatch's obligation to make such offer (subject to such clauses) shall
continue for the six-month period following Potlatch's acquisition of the
Offered Timberlands. Potlatch's written offer to the Partnership shall state
whether the price is to be paid in cash, Partnership Units (valued based on the
number of shares of the Company's Common Stock into which such Partnership Units
could be exchanged under the Partnership Agreement without regard to any
requirements for the passage of time or any other conditions or limitations set
forth therein, and the average closing sale price of the Company's Common Stock
during the 20 trading days immediately preceding the date of Potlatch's
acquisition of the Offered Timberlands) or any specified combination of cash and
Partnership Units. Potlatch's written offer must be accepted (if at all) by
written notice to Potlatch delivered within 30 days after the Partnership's
receipt of Potlatch's written offer, and upon such acceptance Potlatch and the
Partnership shall be legally bound. In order to facilitate the Partnership's
evaluation of each offer, during such
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30-day period, Potlatch shall provide to the Partnership any information
available to Potlatch and reasonably requested by the Partnership (subject to
the Partnership's execution of a confidentiality agreement in customary form).
(b) If the Partnership accepts Potlatch's written offer pursuant to Section
2.4(a) above, Potlatch and the Partnership shall promptly memorialize their
agreement with respect to the sale of Offered Timberlands, which written
agreement shall provide for: (i) an assignment of the representations and
warranties received by Potlatch from the seller in connection with Potlatch's
acquisition of the Mixed Assets Interest to the extent that such representations
and warranties pertain to the Offered Timberlands; (ii) the transfer of the
Offered Timberlands by the same form of deed by which Potlatch acquired the
Offered Timberlands (or, if the form of the acquisition transaction did not
require delivery of a deed, a limited warranty deed); (iii) full indemnification
of Potlatch by the Partnership for any liabilities (including environmental
liabilities) associated with the Offered Timberlands (other than those
liabilities arising during the period when Potlatch was the owner of the Offered
Timberlands); (iv) the payment by the Partnership of all applicable transfer
taxes; and (v) other customary covenants and closing conditions. The purchase
price to be paid by the Partnership for the Offered Timberlands shall be equal
to the Fair Market Value of such Offered Timberlands as of the date of their
acquisition by Potlatch. The Fair Market Value of the Offered Timberlands shall
be determined (x) by mutual agreement of Potlatch and the Partnership or (y) if
no such agreement is reached within 30 days after the date of the Partnership's
acceptance of Potlatch's written offer, such Fair Market Value shall be
determined as follows:
(i) Each of the Partnership and Potlatch shall designate by written
notice to the other a firm of recognized national standing experienced in
appraisal techniques applicable to Timberland assets to serve as an
Appraiser pursuant to this Section 2.4 (the firms designed by the
Partnership and Potlatch being referred to herein as the "Partnership
Appraiser" and the "Potlatch Appraiser," respectively) within 30 days after
the failure to reach agreement in accordance with the terms of clause (y)
above.
(ii) Each Appraiser shall be directed to determine the Fair Market
Value of the Offered Timberlands. Each Appraiser will also be directed to
deliver a certificate stating such Fair Market Value (an "Appraiser's
Certificate") to both the Partnership and Potlatch on or before the forty-
fifth (45th) day after their respective designation (the "Certificate
Date"), upon the conclusion of its evaluation, and each Appraiser's
Certificate once delivered may not be retracted or modified in any respect.
Each Appraiser will keep confidential all information disclosed by Potlatch
in the course of conducting its evaluation, and to that end, will execute
such customary documentation as Potlatch may reasonably request with
respect to such confidentiality obligation. Potlatch shall provide each
Appraiser with such information within Potlatch's possession as may be
reasonably requested in writing by the Appraiser for purposes of its
evaluation hereunder. The Appraisers may, but shall be under no obligation
to, consult with each other in the course of
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conducting their respective evaluations. Each Appraiser will be directed
to comply with the provisions of this Section 2.4, and to that end, each of
Potlatch and the Partnership will provide to its respective Appraiser a
complete and correct copy of this Section 2.4 (and the definitions of
capitalized terms used in this Section 2.4 that are defined elsewhere in
this Agreement).
(iii) The Fair Market Value of the Offered Timberlands shall be
determined on the basis of the Appraisers' Certificates in accordance with
the provisions of this subparagraph (iii). The higher of the Fair Market
Values set forth on the Appraisers' Certificates is hereinafter referred to
as the "Higher Value" and the lower of such Fair Market Values is
hereinafter referred to as the "Lower Value." If the Higher Value is not
more than 110% of the Lower Value, the Fair Market Value will be the
arithmetic average of such two Values. If the Higher Value is more than
110% of the Lower Value, a third appraiser shall be selected in accordance
with the provisions of subparagraph (iv) below, and the Fair Market Value
will be determined in accordance with the provisions of subparagraph (v)
below.
(iv) If the Higher Value is more than 110% of the Lower Value, within
fourteen (14) days thereafter the Partnership Appraiser and the Potlatch
Appraiser shall agree upon and jointly designate, by written notice to each
of the Partnership and Potlatch, a third firm of recognized national
standing experienced in appraisal techniques applicable to Timberland
assets, and who shall have no current, proposed or prior business or
financial relationship with Potlatch, the Partnership or their respective
Affiliates, to serve as an appraiser pursuant to this Section 2.4 (the
"Third Appraiser"). The Third Appraiser shall determine the Fair Market
Value of the Offered Timberlands (the "Third Value") in accordance with the
provisions of subparagraph (ii) above, and shall deliver to each of the
Partnership and Potlatch an Appraiser's Certificate on or before the
thirtieth (30th) day after the designation of such Appraiser hereunder.
The Third Appraiser will be directed to comply with the provisions of this
Section 2.4, and to that end the parties will provide to the Third
Appraiser a complete and correct copy of this Section 2.4.
(v) Upon the delivery of the Appraiser's Certificate of the Third
Appraiser, the Fair Market Value of the Offered Timberlands will be
determined as provided in this subparagraph (v). The Fair Market Value
will be (w) the Lower Value, if the Third Value is less than the Lower
Value, (x) the Higher Value, if the Third Value is greater than the Higher
Value, (y) the arithmetic average of the Third Value and the other Value
(Lower or Higher) that is closer to the Third Value if the Third Value
falls within the range between (and including) the Lower Value and the
Higher Value and (z) the Third Value, if the Lower Value and the Higher
Value are equally close to the Third Value.
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(vi) Each of the Partnership and Potlatch will bear the cost of the
Appraiser designated by it or on its behalf. If the Higher Value is not
more than 115% of the Lower Value, or if the Higher Value and the Lower
Value are equally close to the Third Value, each of the Partnership and
Potlatch shall bear 50% of the cost of the Third Appraiser, if any;
otherwise, the party whose Appraiser's determination of Fair Market Value
is further away from the Third Value shall bear the entire cost of the
Third Appraiser. The Partnership and Potlatch agree to pay when due the
fees and expenses of the Appraisers in accordance with the foregoing
provisions.
(vii) The determination of the Fair Market Value made pursuant to
this Section 2.4 shall be final and binding on the Partnership and
Potlatch, and such determination shall not be appealable to any court.
3. POTLATCH'S RIGHT TO TIMBER.
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In the event that the Partnership acquires or proposes to acquire any
Timberlands within the Potlatch Northern Territory or the Potlatch Southern
Territory or in the event that the Partnership acquires any Offered Timberlands
pursuant to Section 2.4 hereof (all such Timberlands being referred to herein as
"Potential Additions"), Potlatch shall have the right to cause such Potential
Addition to be added to the "Timberlands" (as such term is defined in the Timber
Agreement) and made subject to the provisions of the Timber Agreement, in
accordance with the terms of section 9.3 of the Timber Agreement.
4. RESTRICTIONS; SPECIFIC PERFORMANCE.
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4.1 Necessary and Reasonable Restrictions. Each of Potlatch, the
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Partnership and the Company acknowledges that the restrictions, prohibitions and
other provisions hereof are reasonable, fair and equitable in scope, terms and
duration, and are necessary to protect the legitimate business interests of the
parties. Each of Potlatch, the Partnership and the Company covenants that it
will not challenge the enforceability of this Agreement nor will it raise any
equitable defense to this Agreement's enforcement.
4.2 Specific Performance. Each of Potlatch, the Partnership and the
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Company acknowledges that the obligations undertaken by it pursuant to this
Agreement are unique and that the each of the parties hereto likely will have no
adequate remedy at law if either party hereto shall fail to perform any of its
obligations hereunder, and each of the parties hereto therefore confirms that
the other party's right to specific performance of the terms of this Agreement
is essential to protect such party's rights and interests. Accordingly, in
addition to any other remedies that either of the parties may have at law or in
equity, each of the parties hereto shall have the right to have all obligations,
covenants, agreements and other provisions of this Agreement specifically
performed by the other party, and each of the parties hereto shall have the
right to obtain preliminary and permanent injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of this Agreement by
the other party.
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5. OPERATIONS OF AFFILIATES.
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Each of Potlatch, the Partnership and the Company agrees that it will
refrain from authorizing any of its respective Affiliates to perform any
activity that would be prohibited by the terms of this Agreement if such
activity were performed by such party itself.
6. MISCELLANEOUS PROVISIONS.
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6.1 Term of Agreement. This Agreement shall terminate and the parties
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hereto shall not have any further obligations hereunder on the date on which the
outstanding voting securities of the Company beneficially owned by Potlatch
(determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended) represent less than 20% of the total number of votes entitled
to be cast generally in the election of the Company's directors. The
termination of this Agreement pursuant to this Section 6.1 shall not relieve any
party hereto of liability for any breach hereof occurring prior to such
termination.
6.2 Notices. Any notice, request, instruction or other document to be
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given hereunder by any party to the other shall be in writing and delivered
personally or sent by certified mail, telecopy or courier service, as follows:
(a) If to Potlatch, to:
Potlatch Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Partnership or the Company, to:
Timberland Growth Corporation
__________________________
Attention: Chief Executive Officer
Fax: (_____) _____-_________
6.3 Binding Effect; No Third Party Rights.
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(a) This Agreement shall be binding upon and inure to the benefit of
Potlatch, the Partnership and the Company and their respective successors,
assigns, heirs and legal representatives.
(b) Nothing in this Agreement, whether express or implied, is intended to
confer any rights or remedies under or by reason of this Agreement on any
persons other than the parties hereto and their respective successors and
assigns, nor is anything in this Agreement
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intended to relieve or discharge the obligation or liability of any third
persons to any party to this Agreement, nor shall any provision hereof give any
third persons any right of subrogation or action over or against any party to
this Agreement.
6.4 Waivers. The observance of any term of this Agreement may be waived
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(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the party against whom such
waiver is sought to be enforced. No waiver by any party of any default with
respect to any provision, condition or requirement hereof shall be deemed to be
a continuing waiver in the future thereof or a waiver of any other provision,
condition or requirement hereof; nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
6.5 Severability. If one or more provisions of this Agreement are held to
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be unenforceable, invalid or void by a court of competent jurisdiction, such
provision shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.
6.6 Entire Agreement; Amendments.
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(a) This Agreement contains the entire understanding of the parties with
respect to the matters covered herein and supersedes all prior agreements and
understandings, written or oral, between the parties relating to the subject
matter hereof.
(b) Any term of this Agreement may be amended and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively) only with the written
consent of the parties.
6.7 Governing Law. This Agreement shall be governed by and construed
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under the laws of the State of Arkansas (irrespective of its choice of law
principles).
6.8 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.9 Titles and Subtitles. The titles and subtitles used in this Agreement
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are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
POTLATCH CORPORATION
By: _________________________________
Name: _______________________________
Title: ______________________________
TIMBERLAND GROWTH LIMITED
PARTNERSHIP
By: TIMBERLAND GROWTH
CORPORATION, its General Partner
By: _________________________________
Name: _______________________________
Title: ______________________________
TIMBERLAND GROWTH CORPORATION
By: _________________________________
Name: _______________________________
Title: ______________________________
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