Exhibit (10)(o)(viii)
 
CONSENT AND MODIFICATION
 
September 11, 2002
 
Potlatch Corporation
601 West Riverside Avenue, Suite 1100
Spokane, WA 99201
Attn: Gerald L. Zuehlke, Vice President and Chief Financial Officer
 

 
Re:
 
Credit Agreement, dated as of June 29, 2001 among Potlatch Corporation, a
Delaware corporation, as Borrower, the Subsidiary Guarantors from time to time
party thereto, the Lenders from time to time party thereto, and Bank of America,
N.A., as Administrative Agent (as amended and modified by the First Amendment
thereto dated August 27, 2001, the Second Amendment thereto dated December 19,
2001, the Third Amendment and Waiver thereto dated January 24, 2002, that
certain consent letter dated March 19, 2002 (the “Cloquet Consent”), that
certain Consent and Modification dated June 12, 2002 relating to the Cloquet
Consent, and that certain Fourth Amendment to Credit Agreement and Waiver dated
as of July 16, 2002 and as further amended, modified, restated and supplemented
from time to time, the “Credit Agreement”).

 
Ladies and Gentlemen:
 
Reference is hereby made to the above-referenced Credit Agreement. Capitalized
terms used herein without definition shall have the meanings ascribed to such
terms in the Credit Agreement.
 
You have asked Bank of America, as Issuing Lender for all new Letters of Credit
under the Credit Agreement, to issue one or more Letters of Credit under the
Credit Agreement in euro (the “Euro Letters of Credit”). Pursuant to the terms
of Section 2.2(a) of the Credit Agreement, the Issuing Lender may only issue
Letters of Credit denominated in Dollars. Accordingly, you have requested that,
notwithstanding the terms of Section 2.2(a) of the Credit Agreement, the
Required Lenders, the Agent and the Issuing Lender consent to the issuance of
one or more Euro Letters of Credit under the Credit Agreement.
 
The Required Lenders, the Agent and the Issuing Lender hereby consent to (a) the
issuance of one or more Euro Letters of Credit, subject to the other terms and
conditions set forth in the Credit Agreement relating to Letters of Credit, and
(b) in order to facilitate the issuance of Euro Letters of Credit, the following
modifications to the Credit Agreement:
 
The Dollar Equivalent (as defined below) shall be determined with respect to
each Euro Letter of Credit (i) as of any date on which the Borrower or the
Lenders (to the extent such drawing has not been reimbursed directly by the
Borrower) are to reimburse the Issuing Lender for a drawing under a Euro Letter
of Credit, (ii) as of the last Business Day of each month, and, during the
occurrence and continuation of an Event of Default, such other dates as may be
requested in writing by the Required Lenders (but in any event no more than once
a week, unless consented to by the Agent and Issuing Lender), and (iii) as of
any other date as the Agent may elect (each such date under clauses (i), (ii)
and (iii), a “Determination Date”). For the purposes hereof “Dollar Equivalent”
shall mean, as of any Determination Date, (i) with respect to the amount of any
drawing that has been honored by the Issuing Lender under a Euro Letter of
Credit, the amount actually paid by the Issuing Lender in Dollars to purchase
euro through its foreign exchange office in order to honor such drawing under a
Euro Letter of Credit, and (ii) as to any other amount denominated in euro, the
equivalent amount in Dollars as determined by the Agent at such time on the
basis of the rate quoted by the Agent as the spot rate for the purchase by the
Agent of euro with Dollars through its foreign exchange trading office at
approximately 11:00 a.m. (San Francisco time) on the date one Business Day prior
to the date as of which the foreign exchange computation is made.

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Notwithstanding anything to the contrary contained in the Credit Agreement, (a)
to the extent the Borrower is reimbursing the Issuing Lender directly (as
opposed to with the proceeds of a Revolving Loan requested under the Credit
Agreement) for a drawing under a Euro Letter of Credit, such reimbursement shall
be made in Dollars, (b) to the extent the Lenders are reimbursing the Issuing
Lender for a drawing under a Euro Letter of Credit (i.e., through the funding by
the Lenders of (x) a Revolving Loan, the proceeds of which will reimburse the
Issuing Lender for a drawing under a Euro Letter of Credit or (y) Participation
Interests in a Euro Letter of Credit), such reimbursement shall be made in
Dollars and (c) for all purposes under the Credit Agreement, the Agent shall
calculate the Dollar Equivalent of drawings under, and LOC Obligations
outstanding with respect to, Euro Letters of Credit. Without limiting the
forgoing, the Dollar Equivalent amount of drawings under, the LOC Obligations
outstanding with respect to, Euro Letters of Credit shall be used for purposes
of determining (i) the availability of additional Revolving Loans under Section
2.1(a); (ii) the availability of additional Letters of Credit under Section
2.2(a); (iii) the outstanding LOC Obligations under Section 3.3(b)(i); (iv) the
Unused Fee under Section 3.5(a); (v) the Letter of Credit Fee under Section
3.5(b); (vi) the Issuing Lender fees under Section 3.5(c); and (vii) the amount
of unreimbursed drawings and outstanding LOC Obligations under Sections 2.2(c),
(d) and (e), 3.14, 3.15 and 9.2.

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Except to the extent specifically provided to the contrary in this letter, all
terms and conditions of the Credit Agreement shall remain in full force and
effect, without modification or limitation. This consent and modification shall
not operate as a consent to any other action or inaction by the Borrower or any
of the Guarantors, or as a waiver of any right, power, or remedy of any Lender
or the Agent under, or any provision contained in, the Credit Agreement except
as specifically provided herein. This consent and may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which taken
together shall be deemed to constitute one and the same instrument. This letter
shall constitute a Credit Document.
 
 

       
Very truly yours,
 
LENDERS:
     
BANK OF AMERICA, N.A.,
in its capacity as Administrative Agent
       
By:
 
/s/    KEVIN F. SULLIVAN        

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Kevin F. Sullivan
Managing Director

 

       
BANK OF AMERICA, N.A.,
individually in its capacity as Issuing Lender and a Lender
       
By:
 
/s/    KEVIN F. SULLIVAN        

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Kevin F. Sullivan
Managing Director

 

       
BANK OF NOVA SCOTIA
       
By:
 
/s/    PATRICK G. NORRIS         

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Patrick G. Norris
Director

 

       
COBANK, ACB
       
By:
 
/s/    S. RICHARD DILL         

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S. Richard Dill
Vice President
rdill@cobank.com

 

       
WELLS FARGO BANK, N.A.
       
By:
 
/s/    STEVEN J. ANDERSON         

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Steven J. Anderson
Senior Vice President

 
[Lender Signatures Continue]
 

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WACHIVIA BANK, NATIONAL ASSOCIATION (F/K/A WACHOVIA BANK, N.A.)
By:
 
/s/    SHAWN JANKO        

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Shawn Janko
Vice President

 
NORTHWEST FARM CREDIT SERVICES, PCA
By:
 
  /S/    JIM D. ALLEN        

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Jim D. Allen
Vice President

 
TRANSAMERICA BUSINESS CAPITAL CORPORATION
By:
 
 

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Name:             
   
Title:         

 
CAPITAL FARM CREDIT
By:
 
/S/    ROBERT P. ABBOTT        

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Robert P. Abbott
VP Commercial Loans  

 
U.S. BANK NATIONAL ASSOCIATION
By:
 
 

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Name:             
   
Title:

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The terms of the foregoing Consent and Modification dated as of September 11,
2002 and hereby acknowledged and agreed to:
 
BORROWER:
     
POTLATCH CORPORATION
 
       
By:
 
/s/    GERALD L. ZUEHLKE        

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Gerald L. Zuehlke
VP Finance, CFO
             

 
SUBSIDIARY GUARANTORS:
     
THE PRESCOTT AND NORTHWESTERN
RAILROAD COMPANY
 
       
By:
 
/s/    MALCOLM A. RYERSE        

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Malcolm A. Ryerse        
Secretary and Asst. Treasurer
             

 
ST. MARIES RIVER
RAILROAD COMPANY
 
By:
 
/s/    MALCOLM A. RYERSE        

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Malcolm A. Ryerse        
Secretary and Asst. Treasurer

 
WARREN AND SALINE RIVER
RAILROAD COMPANY
 
By:
 
/s/    MALCOLM A. RYERSE        

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Malcolm A. Ryerse        
Secretary and Asst. Treasurer

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