Credit Agreement









EXHIBIT

10.38




 






















 




Credit

Agreement




 




between




 




Pope

Resources, A Delaware Limited Partnership,




As

Borrower




 




and




 




Bank of America, N.A.,




as Lender,




 




Dated as

of March 27, 2001




 






















 




Banc of

America Securities LLC,




as




Sole

Arranger




 




                                                




 













 




TABLE OF CONTENTS




 




	

  SECTION 1. DEFINITIONS AND

  ACCOUNTING TERMS


  
	

   


  	

  1.1.


  	

  Defined Terms


  
	

   


  	

  1.2.


  	

  Use of

  Certain Terms


  
	

   


  	

  1.3.


  	

  Accounting

  Terms


  
	

   


  	

  1.4.


  	

  Rounding


  
	

   


  	

  1.5.


  	

  Exhibits

  and Schedules


  
	

   


  	

  1.6.


  	

  References to

  Agreements and Laws


  
	

   


  	

   


  	

   


  
	

  SECTION 2.  THE COMMITMENT

  AND EXTENSIONS OF CREDIT


  
	

   


  
	

   


  	

  2.1.


  	

  The Commitment


  
	

   


  	

  2.2.


  	

  Borrowings,

  Conversions and Continuations of Loans


  
	

   


  	

  2.3.


  	

  Prepayments


  
	

   


  	

  2.4.


  	

  Reduction or

  Termination of Commitment


  
	

   


  	

  2.5.


  	

  Principal

  and Interest


  
	

   


  	

  2.6.


  	

  Fees


  
	

   


  	

  2.7.


  	

  Computation of

  Interest and Fees


  
	

   


  	

  2.8.


  	

  Making

  Payments


  
	

   


  	

  2.9.


  	

  Funding

  Sources


  
	

   


  	

  2.10.


  	

  General Partners’

  Liability


  
	

   


  	

   


  	

   


  
	

  SECTION 3.  TAXES, YIELD

  PROTECTION AND ILLEGALITY


  
	

   


  
	

   


  	

  3.1.


  	

  Taxes


  
	

   


  	

  3.2.


  	

  Illegality


  
	

   


  	

  3.3.


  	

  Inability to

  Determine Offshore Rate


  
	

   


  	

  3.4.


  	

  Increased

  Cost and Reduced Return; Capital Adequacy


  
	

   


  	

  3.5.


  	

  Breakfunding

  Costs


  
	

   


  	

  3.6.


  	

  Matters

  Applicable to all Requests for Compensation


  
	

   


  	

  3.7.


  	

  Survival


  
	

   


  	

   


  	

   


  
	

  SECTION 4.  CONDITIONS

  PRECEDENT TO extensions of credit


  
	

   


  
	

   


  	

  4.1.


  	

  Conditions of

  Initial Extension of Credit


  
	

   


  	

  4.2.


  	

  Conditions to

  all Extensions of Credit


  
	

   


  	

   


  	

   


  
	

  SECTION 5. REPRESENTATIONS AND

  WARRANTIES


  
	

   


  
	

   


  	

  5.1.


  	

  Existence

  and Qualification; Power; Compliance with Laws


  
	

   


  	

  5.2.


  	

  Power;

  Authorization; Enforceable Obligations


  
	

   


  	

  5.3.


  	

  No Legal Bar


  
	

   


  	

  5.4.


  	

  Financial

  Statements; No Material Adverse Effect


  
	

   


  	

  5.5.


  	

  Litigation


  
	

   


  	

  5.6.


  	

  No Default


  
	

   


  	

  5.7.


  	

  Ownership of Property;

  Liens


  
	

   


  	

  5.8.


  	

  Taxes


  
	

   


  	

  5.9.


  	

  Margin

  Regulations; Investment Company Act; Public Utility Holding Company Act


  
	

   


  	

  5.10.


  	

  ERISA

  Compliance


  
	

   


  	

  5.11.


  	

  Intangible

  Assets


  
	

   


  	

  5.12.


  	

  Compliance

  With Laws


  
	

   


  	

  5.13.


  	

  Environmental Compliance


  





 




i





























 




	

   


  	

  5.14.


  	

  Insurance


  
	

   


  	

  5.15.


  	

  Disclosure


  
	

   


  	

   


  	

   


  
	

  SECTION 6. AFFIRMATIVE

  COVENANTS


  
	

   


  
	

   


  	

  6.1.


  	

  Financial

  Statements


  
	

   


  	

  6.2.


  	

  Certificates,

  Notices and Other Information


  
	

   


  	

  6.3.


  	

  Payment of

  Taxes


  
	

   


  	

  6.4.


  	

  Preservation of Existence


  
	

   


  	

  6.5.


  	

  Maintenance of Properties


  
	

   


  	

  6.6.


  	

  Maintenance of Insurance


  
	

   


  	

  6.7.


  	

  Compliance

  With Laws


  
	

   


  	

  6.8.


  	

  Inspection

  Rights


  
	

   


  	

  6.9.


  	

  Keeping of

  Records and Books of Account


  
	

   


  	

  6.10.


  	

  Compliance

  with ERISA


  
	

   


  	

  6.11.


  	

  Compliance With Agreements


  
	

   


  	

  6.12.


  	

  Use of Proceeds


  
	

   


  	

   


  	

   


  
	

  SECTION 7. NEGATIVE COVENANTS


  
	

   


  
	

   


  	

  7.1.


  	

  Indebtedness


  
	

   


  	

  7.2.


  	

  Liens and Negative Pledges


  
	

   


  	

  7.3.


  	

  Fundamental

  Changes


  
	

   


  	

  7.4.


  	

  Dispositions


  
	

   


  	

  7.5.


  	

  Investments


  
	

   


  	

  7.6.


  	

  Lease

  Obligations


  
	

   


  	

  7.7.


  	

  Restricted

  Payments


  
	

   


  	

  7.8.


  	

  ERISA


  
	

   


  	

  7.9.


  	

  Change in Nature of

  Business


  
	

   


  	

  7.10.


  	

  Transactions with

  Affiliates


  
	

   


  	

  7.11.


  	

  Hostile

  Acquisitions


  
	

   


  	

  7.12.


  	

  Limitations on Upstreaming


  
	

   


  	

  7.13.


  	

  Margin

  Regulations


  
	

   


  	

  7.14.


  	

  Financial

  Covenants


  
	

   


  	

  7.15.


  	

  Timberland

  Acquisitions


  
	

   


  	

  7.16.


  	

  Change in

  Auditors


  
	

   


  	

   


  	

   


  
	

  SECTION 8. EVENTS OF DEFAULT AND

  REMEDIES


  
	

   


  
	

   


  	

  8.1.


  	

  Events of

  Default


  
	

   


  	

  8.2.


  	

  Remedies Upon Event of

  Default


  
	

   


  	

   


  	

   


  
	

  SECTION 9. MISCELLANEOUS


  
	

   


  
	

   


  	

  9.1.


  	

  Amendments;

  Consents


  
	

   


  	

  9.2.


  	

  Requisite

  Notice; Effectiveness of Signatures and Electronic Mail


  
	

   


  	

  9.3.


  	

  Attorney

  Costs, Expenses and Taxes


  
	

   


  	

  9.4.


  	

  Successors and

  Assigns; Participations


  
	

   


  	

  9.5.


  	

  Set-Off


  
	

   


  	

  9.6.


  	

  No Waiver; Cumulative

  Remedies


  
	

   


  	

  9.7.


  	

  Usury


  
	

   


  	

  9.8.


  	

  Counterparts


  
	

   


  	

  9.9.


  	

  Integration


  
	

   


  	

  9.10.


  	

  Nature of Lender’s

  Obligations


  
	

   


  	

  9.11.


  	

  Survival of

  Representations and Warranties


  
	

   


  	

  9.12.


  	

  Indemnity

  by Borrower


  
	

   


  	

  9.13.


  	

  Nonliability

  of Lender


  





 




ii





























 




	

   


  	

  9.14.


  	

  No Third Parties Benefited


  
	

   


  	

  9.15.


  	

  Severability


  
	

   


  	

  9.16.


  	

  Confidentiality


  
	

   


  	

  9.17.


  	

  Further

  Assurances


  
	

   


  	

  9.18.


  	

  Headings


  
	

   


  	

  9.19.


  	

  Time of

  the Essence


  
	

   


  	

  9.20.


  	

  Governing Law


  
	

   


  	

  9.21.


  	

  Waiver of Right to

  Trial by Jury


  





 




	

  EXHIBITS


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Form of


  
	

   


  	

   


  	

   


  
	

  A


  	

   


  	

  Request for Extension

  of Credit


  
	

  B


  	

   


  	

  Compliance Certificate


  
	

  C


  	

   


  	

  Promissory

  Note


  
	

  D


  	

   


  	

  Opinion

  of Counsel


  
	

  E


  	

   


  	

  Plum Creek Property


  
	

   


  	

   


  	

   


  
	

  SCHEDULES


  
	

   


  	

   


  	

   


  
	

   


  	

  7.01


  	

  Existing

  Indebtedness, Liens and Negative Pledges


  
	

   


  	

  9.02


  	

  Notice Addresses

  and Lending Office


  





 




iii





























 




CREDIT AGREEMENT




 




This CREDIT AGREEMENT (“Agreement”) is entered

into as of March 27, 2001 by and between POPE RESOURCES, A DELAWARE LIMITED

PARTNERSHIP (“Borrower”) and BANK OF AMERICA, N.A. (“Lender”).




 




RECITAL




 




Borrower has requested that Lender provide a revolving

line of credit, and Lender is willing to do so on the terms and conditions set

forth herein.




 




In consideration of the mutual covenants and

agreements herein contained, the parties hereto covenant and agree as follows:




 




SECTION 1.




DEFINITIONS AND ACCOUNTING TERMS




 




1.1.         Defined Terms.  As used in this Agreement, the

following terms shall have the meanings set forth below:




 




“Affiliate” means any Person directly or

indirectly controlling, controlled by, or under direct or indirect common

control with, another Person.  A Person

shall be deemed to be “controlled by” any other Person if such other Person

possesses, directly or indirectly, power (a) to vote 20% or more of the

securities (on a fully diluted basis) having ordinary voting power for the

election of directors or managing general partners; or (b) to direct or cause the

direction of the management and policies of such Person whether by contract or

otherwise.




 




“Agreement” means this Credit Agreement, as

amended, restated, extended, supplemented or otherwise modified in writing from

time to time.




 




“Applicable Amount” means a per annum rate

equal to:




 




(a)           with

respect to Base Rate Loans, zero percent;




 




(b)           with respect to

Offshore Rate Loans, two percent; and




 




(c)           with respect to the

Commitment Fee, 0.25 percent.




 




“Applicable Payment Date” means, (a) as to any

Offshore Rate Loan, the last day of the relevant Interest Period, any date that

such Loan is prepaid or converted in whole or in part, and the Maturity Date; provided,

however, that if any Interest Period for an Offshore Rate Loan exceeds

three months, interest shall also be paid on the Business Day which falls every

three months after the beginning of such Interest Period; and (b) as to any

other Obligations, the last Business Day of each calendar quarter and the

Maturity Date; provided, further, that interest accruing at the

Default Rate shall be payable from time to time upon demand of Lender.




 




“Applicable Time” means Seattle time.




 




“Attorney Costs” means and includes all

reasonable fees and disbursements of any law firm or other external counsel and

the reasonable allocated cost of internal legal services and all disbursements

of internal counsel.




 




1





























 




“Audited Financial Statements” means the

audited consolidated balance sheet of Borrower and its Subsidiaries for the

fiscal year ended December 31, 2000, and the related consolidated statements of

income and cash flows for such fiscal year of Borrower.




 




“BAS” has the meaning assigned to such term in Section

2.6(b).




 




“Base Rate” means for any day a fluctuating

rate per annum equal to the higher of (a) the Federal Funds Rate plus 1/2 of 1%

and (b) the rate of interest in effect for such day as publicly announced from

time to time by Lender as its “prime rate.” 

Such rate is a rate set by Lender based upon various factors including

Lender’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.  Any change in such rate announced by Lender shall take effect at

the opening of business on the day specified in the public announcement of such

change.




 




“Base Rate Loan” means a Loan which bears

interest based on the Base Rate.






“Borrower” has the meaning set forth in the

introductory paragraph hereto.




 




“Borrower Account” has the meaning assigned to

such term in Section 2.8(b).




 




“Borrower Party” means Borrower or any Person

other than Lender and any Affiliate of Lender from time to time party to a Loan

Document.




 




“Borrowing Base Limit” means, as of any date of

determination, a Dollar amount equal to the product of 0.35 times

(a) the market value of the Plum Creek Property, as set forth in the appraisal

dated March 2001 prepared by Atterbury Consultants, Inc., plus (b) the purchase

price or, if an appraisal acceptable to Lender has been obtained, the appraised

value of any unencumbered timberland acquired by Borrower following the Closing

Date, minus

(c) the Dollar amount of proceeds received by Borrower in connection with the

sale of any Plum Creek Property following the Closing Date.




 




“Business Day” means any day other than a

Saturday, Sunday, or other day on which commercial banks are authorized to

close under the Laws of, or are in fact closed in, the state where Lender’s

Lending Office is located and, if such day relates to any Offshore Rate Loan,

means any such day on which dealings in Dollar deposits are conducted by and

between banks in the offshore Dollar interbank market.




 




“Cash Flow Coverage Ratio” means, for any

period, the ratio of (a)  Consolidated EBITDA for such period minus internally

financed capital expenditures made by Borrower and its Subsidiaries during such

period, to

(b) the sum of (i) Consolidated Interest Charges during such period plus

(ii) all scheduled payments of principal with respect to Consolidated Funded

Indebtedness required to be made by Borrower and its Subsidiaries during such

period.




 




“Change of Control” means, with respect to any

Person, an event or series of events by which:




 




(a)           any “person” or

“group” (as such terms are used in Sections 13(d) and 14(d) of the Securities

Exchange Act of 1934, but excluding any employee benefit plan of such Person or

its subsidiaries, or any Person acting in its capacity as trustee, agent or

other fiduciary or administrator of any such plan), becomes the “beneficial

owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act

of 1934, except that a person shall be deemed to have “beneficial ownership” of

all securities that such person has the right to acquire, whether such right is

exercisable immediately or only after the passage of time), directly or

indirectly, of 50% or more of the membership interests of such Person; or




 




2





























 




(b)           during any period of

12 consecutive months, a majority of the members of the board of directors or

other equivalent governing body of such Person cease to be composed of

individuals (i) who were members of that board or equivalent governing body on

the first day of such period, (ii) whose election or nomination to that board

or equivalent governing body was approved by individuals referred to in clause

(i) above constituting at the time of such election or nomination at least a

majority of that board or equivalent governing body or (iii) whose election or

nomination to that board or other equivalent governing body was approved by

individuals referred to in clauses (i) and (ii) above constituting at the time

of such election or nomination at least a majority of that board or equivalent

governing body.




 




“Closing Date” means the date on which all the

conditions precedent in Section 4.1 are satisfied or waived by Lender.




 




“Code” means the Internal Revenue Code of 1986,

as amended from time to time.




 




“Commitment” means $27,000,000, as such amount

may be reduced or adjusted from time to time in accordance with the terms of

this Agreement.




 




“Commitment Fee” has the meaning assigned to

such term in Section 2.6(a).




 




“Compliance Certificate” means a certificate

substantially in the form of Exhibit B, properly completed and signed by

a Responsible Officer of Borrower.




 




“Consolidated EBITDA” means, for any period,

for Borrower and its Subsidiaries on a consolidated basis, an amount equal to

the sum of (a) Consolidated Net Income, (b) Consolidated Interest Charges,

(c) the amount of taxes, based on or measured by income, used or included in

the determination of such Consolidated Net Income, (d) the amount of

depreciation, amortization, and depletion expense deducted in determining such

Consolidated Net Income, and (e) the cost basis of land sold.




 




“Consolidated Funded Indebtedness” means, as of

any date of determination, for Borrower and its Subsidiaries on a consolidated

basis, the sum of (a) the outstanding principal amount of all obligations and

liabilities, whether current or long-term, for borrowed money (including

Obligations hereunder), (b) that portion of obligations with respect to capital

leases that are capitalized in the consolidated balance sheet of Borrower and

its Subsidiaries, and (c) without duplication, all Guaranty Obligations with

respect to Indebtedness of the type specified in subsections (a) and (b) above

of Persons other than Borrower or any Subsidiary.




 




“Consolidated Interest Charges” means, for any

period, for Borrower and its Subsidiaries on a consolidated basis, the sum of

(a) all interest, premium payments, fees, charges and related expenses of

Borrower and its Subsidiaries in connection with Consolidated Funded

Indebtedness (including capitalized interest) or in connection with the deferred

purchase price of assets, in each case to the extent treated as interest in

accordance with GAAP, and (b) the portion of rent expense of Borrower and its

Subsidiaries with respect to such period under capital leases that is treated

as interest in accordance with GAAP.




 




“Consolidated Net Income” means, for any

period, for Borrower and its Subsidiaries on a consolidated basis, the net

income of Borrower and its Subsidiaries from continuing operations after

extraordinary items (excluding gains or losses from Dispositions of assets) for

that period.




 




“Continuation” and “Continue” mean, with

respect to any Offshore Rate Loan, the continuation of such Offshore Rate Loan

as an Offshore Rate Loan on the last day of the Interest Period for such Loan.




 




3





























 




“Contractual Obligation” means, as to any

Person, any provision of any security issued by such Person or of any

agreement, instrument or undertaking to which such Person is a party or by

which it or any of its property is bound.




 




“Conversion” and “Convert” mean, with

respect to any Loan, the conversion of such Loan from or into another type of

Loan.




 




“Debt to Capitalization Ratio” means, as of any

date of determination, the ratio of Consolidated Funded Indebtedness as of such

date to the sum of Total Capitalization as of such date plus Consolidated Funded

Indebtedness as of such date.




 




“Debtor Relief Laws” means the Bankruptcy Code

of the United States of America, and all other liquidation, conservatorship,

bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,

receivership, insolvency, reorganization, or similar debtor relief Laws of the

United States of America or other applicable jurisdictions from time to time in

effect affecting the rights of creditors generally.




 




“Default” means any event that, with the giving

of any notice, the passage of time, or both, would be an Event of Default.




 




“Default Rate” means an interest rate equal to

the Base Rate plus the Applicable Amount, if any, applicable to Base

Rate Loans plus 2% per annum; provided, however, that with

respect to an Offshore Rate Loan, the Default Rate shall be an interest rate

equal to the interest rate (including any Applicable Amount) otherwise

applicable to such Loan plus 2% per annum, in each case to the fullest extent

permitted by applicable Laws.




 




“Determination Period” means, as of any date of

determination, the period consisting of the twenty consecutive trading days

prior to such determination date on which at least 500 shares of Borrower’s

partnership units were traded on the NASDAQ National Market System.




 




“Disposition” or “Dispose” means the

sale, transfer, license or other disposition (including any sale and leaseback

transaction) of any property by any Person, including any sale, assignment,

transfer or other disposal with or without recourse of any notes or accounts

receivable or any rights and claims associated therewith.




 




“Dollar” and “$” means lawful money of

the United States of America.




 




“Environmental Laws” means all Laws relating to

environmental, health, safety and land use matters applicable to any property.




 




“ERISA” means the Employee Retirement Income

Security Act of 1974 and any regulations issued pursuant thereto, as amended

from time to time.




 




“ERISA Affiliate” means any trade or business

(whether or not incorporated) under common control with Borrower within the

meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of

the Code for purposes of provisions relating to Section 412 of the Code).




 




“ERISA Event” means (a) a Reportable Event with

respect to a Pension Plan; (b) a withdrawal by Borrower or any ERISA Affiliate

from a Pension 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) or a cessation of operations that is treated as such a withdrawal under

Section 4062(e) of ERISA; (c) a complete or partial withdrawal by Borrower or

any ERISA Affiliate from a Multiemployer Plan or notification that a Multiemployer

Plan is in reorganization; (d) the filing of a notice of intent to terminate,

the treatment of a Plan amendment as a termination under Sections 4041 or 4041A

of ERISA, or the commencement of proceedings by the PBGC to 




 




4





























 




terminate a Pension Plan or Multiemployer Plan; (e) 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 Pension Plan or Multiemployer Plan; or (f) the imposition of

any liability under Title IV of ERISA, other than PBGC premiums due but not

delinquent under Section 4007 of ERISA, upon Borrower or any ERISA Affiliate.




 




“Eurodollar Reserve Percentage” means, for any

day during any Interest Period, the reserve percentage (expressed as a decimal,

rounded upward to the next 1/100th of 1%) in effect on such day applicable to

Lender under regulations issued from time to time by the Board of Governors of

the Federal Reserve System for determining the maximum reserve requirement

(including any emergency, supplemental or other marginal reserve requirement)

with respect to Eurocurrency funding (currently referred to as “Eurocurrency

liabilities”).  The Offshore Rate for each

outstanding Offshore Rate Loan shall be adjusted automatically as of the

effective date of any change in the Eurodollar Reserve Percentage.  The determination of the Eurodollar Reserve

Percentage and the Offs­hore Base Rate by Lender shall be conclusive in the

absence of manifest error.




 




“Event of Default” means any of the events

specified in Section 8.




 




“Extension of Credit” means the borrowing,

Conversion or Continuation of any Loan (collectively, the “Extensions of

Credit”).




 




“Federal Funds Rate” means, for any day, the

rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to the

weighted average of the rates on overnight Federal funds transactions with

members of the Federal Reserve System arranged by Federal funds brokers on such

day, as published by the Federal Reserve Bank on the Business Day next

succeeding such day; provided that (a) if such day is not a Business

Day, the Federal Funds Rate for such day shall be such rate on such

transactions on the next preceding Business Day as so published on the next

succeeding Business Day, and (b) if no such rate is so published on such next

succeeding Business Day, the Federal Funds Rate for such day shall be the

average rate charged to Lender on such day on such transactions as determined

by Lender.




 




“GAAP” means generally accepted accounting

principles set forth 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

such other principles as may be approved by a significant segment of the

accounting profession, that are applicable to the circumstances as of the date

of determination, consistently applied. 

If at any time any change in GAAP would affect the computation of any

financial ratio or requirement set forth in any Loan Document, and either

Borrower or Lender shall so request, Lender and Borrower shall negotiate in

good faith to amend such ratio or requirement to preserve the original intent

thereof in light of such change in GAAP (subject to the approval of Lender),

provided that, until so amended, (a) such ratio or requirement shall continue

to be computed in accordance with GAAP prior to such change therein and (b)

Borrower shall provide to Lender financial statements and other documents

required under this Agreement or as reasonably requested hereunder setting

forth a reconciliation between calculations of such ratio or requirement made

before and after giving effect to such change in GAAP.




 




“Governmental Authority” means (a) any

international, foreign, federal, state, county or municipal government, or

political subdivision thereof, (b) any governmental or quasi-governmental

agency, authority, board, bureau, commission, department, instrumentality,

central bank or public body, or (c) any court, administrative tribunal or

public utility.




 




“Guaranty Obligation” means, as to any Person,

any (a) guaranty by such Person of Indebtedness of, or other obligation payable

or performable by, any other Person or (b) assurance, agreement, letter of

responsibility, letter of awareness, undertaking or arrangement given by such

Person to an obligee of any other Person with respect to the payment or

performance of an obligation by, or the financial condition of, such other




 




5





























 




 Person, whether direct,

indirect or contingent, including any purchase or repurchase agreement covering

such obligation or any collateral security therefor, any agreement to provide

funds (by means of loans, capital contributions or otherwise) to such other

Person, any agreement to support the solvency or level of any balance sheet

item of such other Person or any “keep-well” or other arrangement of whatever

nature given for the purpose of assuring or holding harmless such obligee

against loss with respect to any obligation of such other Person; provided,

however, that the term Guaranty Obligation shall not include

endorsements of instruments for deposit or collection in the ordinary course of

business.  The amount of any Guaranty

Obligation shall be deemed to be an amount equal to the stated or determinable

amount of the related primary obligation, or portion thereof, covered by such

Guaranty Obligation or, if not stated or determinable, the maximum reasonably

anticipated liability in respect thereof as determined by the Person in good

faith.




 




“Hood Canal Property” means the real property

legally described in (1) Exhibit A to Schedule A to the Commitment for Title

Insurance issued by Transnation Title Insurance Company as of 8:30 a.m. on

February 14, 2001 (File No. 50-1004829), (2) Schedule A to the commitment for

title insurance issued by Jefferson Title Company as of 8:00 a.m. on February

12, 2001 (Order No. 56684R), (3) Exhibit A to Schedule A to the Commitment for

Title Insurance issued by Mason County Title Company as of 8:00 a.m. on March

9, 2001 (Order Number 83332), and (4) Schedule A to the commitment for title

insurance issued by Clallam Title Company as of 8:00 a.m. on March 9, 2001

(Order No. 79790-R).




 




“Indebtedness” means, as to any Person at a

particular time, all of the following:




 




(a)           all obligations of

such Person for borrowed money and all obligations of such Person evidenced by

bonds, debentures, notes or other similar instruments;




 




(b)           any direct or

contingent obligations of such Person arising under letters of credit

(including standby and commercial), banker’s acceptances, bank guaranties,

surety bonds and similar instruments;




 




(c)           net obligations

under any Swap Contract in an amount equal to (i) if such Swap Contract has

been closed out, the termination value thereof, or (ii) if such Swap Contract

has not been closed out, the mark-to-market value thereof determined on the

basis of readily available quotations provided by any recognized dealer in such

Swap Contract;




 




(d)           whether or not so

included as liabilities in accordance with GAAP, all obligations of such Person

to pay the deferred purchase price of property or services, and indebtedness

(excluding prepaid interest thereon) secured by a Lien on property owned or

being purchased by such Person (including indebtedness arising under

conditional sales or other title retention agreements), whether or not such

indebtedness shall have been assumed by such Person or is limited in recourse;




 




(e)           lease payment

obligations under capital leases or Synthetic Lease Obligations; and




 




(f)            all Guaranty

Obligations of such Person in respect of any of the foregoing.




 




For all purposes of this Agreement, the Indebtedness

of any Person shall include the Indebtedness of any partnership or joint

venture in which such Person is a general partner or a joint venturer, unless

such Indebtedness is expressly made non-recourse to such Person except for

customary exceptions acceptable to Requisite Lenders.




 




“Indemnified Liabilities” has the meaning set

forth in Section 9.12.




 




“Indemnitees” has the meaning set forth in Section

9.12.




 




6





























 




“Intangible Assets” means assets that are

considered to be intangible assets under GAAP, including customer lists,

goodwill, computer software, copyrights, trade names, trade marks, patents,

unamortized deferred charges, unamortized debt discount and capitalized

research and development costs.




 




“Interest Period” means for each Offshore Rate

Loan, (a) initially, the period commencing on the date such Offshore Rate Loan

is disbursed or Continued or Converted into such Offshore Rate Loan and (b)

thereafter, the period commencing on the last day of the preceding Interest

Period, and ending, in each case, on the earlier of (x) the scheduled Maturity

Date, or (y) one, two, three or six months thereafter; provided that:




 




(i)            any Interest Period

that would otherwise end on a day that is not a Business Day shall be extended

to the next succeeding Business Day unless such Business Day falls in another

calendar month, in which case such Interest Period shall end on the next

preceding Business Day;




 




(ii)           any Interest Period

which 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)          unless Lender

otherwise consents, there may not be more than six Interest Periods for

Offshore Rate Loans in effect at any time.




 




“Investment” means, as to any Person, any

acquisition or any investment by such Person, whether by means of the purchase

or other acquisition of stock or other securities of any other Person or by

means of a loan, creating a debt, capital contribution, guaranty or other debt

or equity participation or interest in any other Person, including any

partnership and joint venture interests in such other Person.  For purposes of covenant compliance, the

amount of any Investment shall be the amount actually invested, without

adjustment for subsequent increases or decreases in the value of such

Investment.




 




“IRS” means the United States Internal Revenue

Service.




 




“John Hancock Indebtedness” means (a) the

Indebtedness in an aggregate initial principal amount of up to $30,000,000

provided or to be provided to Borrower by John Hancock Life Insurance Co. in

March or April of 2001, and (b) the Indebtedness in an aggregate initial principal

amount of $16,000,000 provided to Borrower by John Hancock Life Insurance Co.

pursuant to a Promissory Note and related Timberland Deed of Trust and Security

Agreement with Assignment of Rents, both dated as of April 29, 1992, between

Borrower and John Hancock Life Insurance Co.




 




“Laws” or “Law” means all international,

foreign, federal, state and local statutes, treaties, rules, guidelines,

regulations, ordinances, codes and administrative or judicial precedents or

authorities, including the interpretation or administration thereof by any

Governmental Authority charged with the enforcement, interpretation or

administration thereof, and all applicable administrative orders, directed

duties, requests, licenses, authorizations and permits of, and agreements with,

any Governmental Authority, in each case whether or not having the force of

law.




 




“Lending Office” means the office or offices of

Lender described as such on Schedule 9.02, or such other office or

offices as Lender may from time to time notify Borrower.




 




“Lien” means any mortgage, pledge,

hypothecation, assignment, deposit arrangement (in the nature of compensating

balances, cash collateral accounts or security interests), encumbrance, lien

(statutory or other), charge, or preference, priority or other security

interest or preferential arrangement of any kind or nature whatsoever

(including any conditional sale or other title retention agreement, any

financing lease having substantially the same economic effect as any of the

foregoing, and the filing of any financing statement under




 




7





























 




 the Uniform Commercial Code or

comparable Laws of any jurisdiction), including the interest of a purchaser of

accounts receivable.




 




“Loan” means any advance made as provided in Section

2 (collectively, the “Loans”).




 




“Loan Documents” means this Agreement and each

Note, each Request for Extension of Credit, each Compliance Certificate, each

certificate, each fee letter, and each other instrument, document and agreement

from time to time delivered in connection with this Agreement.




 




“Market Capitalization” means, as of any date

of determination, a Dollar amount equal to the product of (a) the average

number of Borrower’s partnership units that are outstanding during the

Determination Period with respect to such date of determination multiplied

by (b) the average (rounded to the nearest penny) of the closing

bid and ask prices (per partnership unit) of Borrower’s partnership units on

the NASDAQ National Market System during such Determination Period, as reported

in The Wall Street Journal.




 




“Material Adverse Effect” means any set of

circumstances or events which (a) has or could reasonably be expected to have

any material adverse effect whatsoever upon the validity or enforceability of

any Loan Document, (b) is or could reasonably be expected to be material and

adverse to the condition (financial or otherwise), business, assets, operations

or prospects of any Borrower Party, or (c) materially impairs or could

reasonably be expected to materially impair the ability of any Borrower Party

to perform the Obligations.




 




“Maturity Date” means (a) September 27, 2002,

or (b) such earlier date upon which the Commitment may be terminated in

accordance with the terms of this Agreement.




 




“Minimum Amount” means, with respect to each of

the following actions, the minimum amount and any multiples in excess thereof

set forth opposite such action: 




 




	

  Type of Action


  	

   


  	

  Minimum


  Amount


  	

   


  	

  Multiples

  in


  excess thereof


  	

   


  
	

  Borrowing or prepayment

  of, or Conversion into, Base Rate Loans


  	

   


  	

  $


  	

  100,000


  	

   


  	

  $


  	

  100,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Borrowing,

  prepayment or Continuation of, or Conversion into, Offshore Rate Loans


  	

   


  	

  $


  	

  250,000


  	

   


  	

  $


  	

  100,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Reduction in

  Commitments


  	

   


  	

  $


  	

  1,000,000


  	

   


  	

  $


  	

  1,000,000


  	

   


  





 




“Multiemployer Plan” means any employee benefit

plan of the type described in Section 4001(a)(3) of ERISA.




 




“Negative Pledge” means a Contractual

Obligation that restricts Liens on property.




 




“Note” means a promissory note made by Borrower

in favor of Lender evidencing Loans made by Lender, substantially in the form

of Exhibit D.




 




“Obligations” means all advances to, and debts,

liabilities, obligations, covenants and duties of, any Borrower Party arising

under any Loan Document, whether direct or indirect (including those acquired

by assumption), absolute or contingent, due or to become due, now existing or

hereafter arising and including interest that accrues after the commencement of

any proceeding under any Debtor Relief Laws by or against any Borrower Party or

any Subsidiary or Affiliate of any Borrower Party.




 




8





























 




“Offshore Base Rate” means, for any Interest

Period:




 




(a)           the rate per annum

equal to the rate determined by Lender to be the offered rate that appears on

the page of the Telerate screen that displays an average British Bankers

Association Interest Settlement Rate for deposits in Dollars (for delivery on

the first day of such Interest Period) with a term equivalent to such Interest

Period, determined as of approximately 11:00 a.m. (London time) two Business

Days prior to the first day of such Interest Period, or




 




(b)           in the event the

rate referenced in the preceding subsection (a) does not appear on such page or

service or such page or service shall cease to be available, the rate per annum

equal to the rate determined by Lender to be the offered rate on such other

page or other service that displays an average British Bankers Association

Interest Settlement Rate for deposits in Dollars (for delivery on the first day

of such Interest Period) with a term equivalent to such Interest Period,

determined as of approximately 11:00 a.m. (London time) two Business Days prior

to the first day of such Interest Period, or




 




(c)           in the event the

rates referenced in the preceding subsections (a) and (b) are not available,

the rate per annum (rounded upward to the next 1/100th of 1%) determined by

Lender as the rate of interest at which Dollar deposits for delivery on the

first day of such Interest Period in same day funds in the approximate amount

of the Offshore Rate Loan being made, Converted or Continued and with a term

equivalent to such Interest Period would be offered by Lender’s London Branch

to major banks in the offshore Dollar market at their request at approximately

11:00 a.m. (London time) two Business Days prior to the first day of such

Interest Period.




 




“Offshore Rate” means for any Interest Period

with respect to any Offshore Rate Loan, a rate per annum determined by Lender

pursuant to the following formula:




 




	

  Offshore Rate 

  =


  	

   


  	

  Offshore Base Rate


  
	

   


  	

  1.00 – Eurodollar Reserve Percentage


  





 




“Offshore Rate Loan” means a Loan bearing

interest based on the Offshore Rate.




 




“Ordinary Course Dispositions” means:




 




(a)           Dispositions of

obsolete or worn out property, whether now owned or hereafter acquired, in the

ordinary course of business;




 




(b)           Dispositions of

cash, cash equivalents, inventory, timber and other property in the ordinary

course of business;




 




(c)           Dispositions of

property to the extent that such property is exchanged for credit against the

purchase price of similar replacement property, or the proceeds of such sale

are reasonably promptly applied to the purchase price of such replacement

property or where Borrower or any Subsidiary determine in good faith that the

failure to replace such equipment will not be detrimental to the business of

Borrower or such Subsidiary; and




 




(d)           Dispositions of

assets or property by any Subsidiary to Borrower or another wholly-owned

Subsidiary;




 




provided, however, that no such Disposition

shall be for less than the fair market value of the property being disposed of.




 




9





























 




“Ordinary Course Indebtedness” means:




 




(a)           intercompany

Guaranty Obligations of Borrower or any Subsidiaries guarantying Indebtedness

otherwise permitted hereunder of Borrower or any wholly-owned Subsidiary;




 




(b)           Indebtedness arising

from the honoring of a check, draft or similar instrument against insufficient

funds;




 




(c)           Ordinary Course Swap

Obligations;




 




(d)           trade and other accounts payable in

the ordinary course of business in accordance with customary trade terms and

which are not overdue for a period of more than 60 days;




 




(e)           Indebtedness incurred under capital

leases entered into for the acquisition of equipment, and other personal

property, in the ordinary course of business; and




 




(f)            deferred taxes.




 




“Ordinary Course

Investments” means Investments consisting of:




 




(a)           cash and cash

equivalents;




 




(b)           advances to

officers, directors and employees of Borrower and Subsidiaries for travel,

entertainment, relocation and analogous ordinary business purposes;




 




(c)           Investments of any

Subsidiary in Borrower or another Subsidiary;




 




(d)           extensions of credit

to customers or suppliers of Borrower and Subsidiaries in the ordinary course

of business and any Investments received in satisfaction or partial

satisfaction thereof;




 




(e)           loans and other

extensions of credit to, and other Investments in, Borrower’s Subsidiaries up

to an aggregate principal amount of $3,000,000; and




 




(f)            Guaranty

Obligations permitted by Section 7.1.




 




“Ordinary

Course Liens” means:




 




(a)           Liens

for taxes not yet due or which are being contested in good faith and by

appropriate proceedings, if adequate reserves with respect thereto are

maintained on the books of the applicable Person in accordance with GAAP;




 




(b)           carriers’,

warehousemen’s, mechanics’, loggers’, materialmen’s, repairmen’s or other like

Liens arising in the ordinary course of business which are not overdue for a

period of more than 30 days or which are being contested in good faith and by

appropriate proceedings, if adequate reserves with respect thereto are

maintained on the books of the applicable Person;




 




(c)           pledges or deposits

in connection with worker’s compensation, unemployment insurance and other

social security legislation;




 




(d)           deposits to secure

the performance of bids, trade contracts (other than for borrowed money),

leases, statutory obligations, surety and appeal bonds, performance bonds and

other obligations of a like nature incurred in the ordinary course of business;




 




10





























 




(e)           easements,

rights-of-way, restrictions and other similar encumbrances affecting real

property which, in the aggregate, are not substantial in amount, and which do

not in any case materially detract from the value of the property subject

thereto or materially interfere with the ordinary conduct of the business of

the applicable Person; and




 




(f)            attachment,

judgment or other similar Liens arising in connection with litigation or other

legal proceedings (and not otherwise a Default hereunder) in the ordinary

course of business that is currently being contested in good faith by

appropriate proceedings, and for which adequate reserves have been set aside

and no material property is subject to a material risk of loss or forfeiture.




 




“Ordinary Course Swap Obligations” means all

obligations (contingent or otherwise) of Borrower or any Subsidiary existing or

arising under any Swap Contract, provided that each of the following criteria

is satisfied:  (a) such obligations are

(or were) entered into by such Person in the ordinary course of business for

the purpose of directly mitigating risks associated with liabilities,

commitments, investments, assets, or property held or reasonably anticipated by

such Person, or changes in the value of securities issued by such Person and

not for purposes of speculation or taking a “market view;” and (b) such Swap

Contracts do not contain any provision (“walk-away” provision) exonerating the

non-defaulting party from its obligation to make payments on outstanding

transactions to the defaulting party.




 




“Organization Documents” means, (a) with

respect to any corporation, the certificate or articles of incorporation and

the bylaws; (b) with respect to any limited liability company, the articles or

certificate of formation and operating agreement; and (c) with respect to any

partnership, joint venture, trust or other form of business entity, the

partnership or joint venture agreement and any agreement, instrument, filing or

notice with respect thereto filed in connection with its formation with the

secretary of state or other department in the state of its formation, in each

case as amended from time to time.




 




“Outstanding Obligations”

means, as of any date, and giving effect to making any Extensions of Credit

requested on such date and all payments, repayments and prepayments made on

such date, the aggregate outstanding principal amount of all Loans.




 




“PBGC” means the Pension Benefit Guaranty

Corporation or any successor thereto established under ERISA.




 




“Pension Plan” means any “employee pension

benefit plan” (as such term is defined in Section 3(2) of ERISA), other than a

Multiemployer Plan, that is subject to Title IV of ERISA and is sponsored or

maintained by Borrower or any ERISA Affiliate or to which Borrower or any ERISA

Affiliate contributes or has an obligation to contribute, 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 five plan years.




 




“Person” means any individual, trustee,

corporation, general partnership, limited partnership, limited liability

company, joint stock company, trust, unincorporated organization, bank,

business association, firm, joint venture, Governmental Authority, or

otherwise.




 




“Plan” means any employee benefit plan

maintained or contributed to by a Borrower Party or by any trade or business

(whether or not incorporated) under common control with a Borrower Party as

defined in Section 4001(b) of ERISA and insured by the Pension Benefit Guaranty

Corporation under Title IV of ERISA.




 




“Plum Creek Property” means the real property

legally described in Exhibit E.




 




“Port Gamble Environmental Issue” means the

contamination of Borrower’s property at Port Gamble, Washington, which is the

subject of ongoing inquiry and oversight by the State of Washington Department

of Ecology and remediation activity of Borrower and Pope & Talbot, Inc.




 




11





























 




“Port Ludlow Agreement” means the Real Estate

Purchase and Sale Agreement entered into as of January 12, 2001 by and between

HCV Partners LLC, Borrower, and Olympic Property Group LLC, Olympic Real Estate

Development LLC, Olympic Real Estate Management, Inc. and Olympic Resorts LLC.




 




“Port Ludlow Property” means the real and

personal property defined as the “Property” in the Port Ludlow Agreement.




 




“Publicly Traded” means, as of any date of

determination, that Borrower’s partnership units are beneficially owned by at

least 500 Persons who are not affiliates of Borrower within the meaning of Rule

405 promulgated by the Securities and Exchange Commission pursuant to the

Securities Act of 1933, as amended.




 




“Reportable Event” means any of the events set forth

in Section 4043(b) of ERISA or the regulations thereunder, a withdrawal from a

Plan described in Section 4063 of ERISA, or a cessation of operations described

in Section 4062(e) of ERISA.




 




“Request for Extension of Credit” means, unless

otherwise specified herein, a written request substantially in the form of Exhibit

A, duly completed and signed by a Responsible Officer of Borrower and

delivered by Requisite Notice.




 




“Requisite Notice” means a notice delivered in

accordance with Section 9.2.




 




“Requisite Time” means, with respect to any of

the actions listed below, the time and date set forth below opposite such

action:




 




	

  Type of Action


  	

   


  	

  Applicable

  Time


  	

   


  	

  Date

  of Action


  
	

  Delivery of Request for

  Extension of Credit for, 


  or notice for:


  
	

   


  
	

  •      Borrowing or prepayment

  of a Base Rate Loan


  	

   


  	

  10:00 a.m.


  	

   


  	

  Same Business Day as

  such borrowing or prepayment


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

  •     Conversion into a Base

  Rate Loan


  	

   


  	

  10:00 a.m.


  	

   


  	

  3 Business Days prior

  such Conversion


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

  •     Borrowing, prepayment or

  Continuation of, or
        Conversion into, an Offshore Rate Loan


  	

   


  	

  11:00 a.m.


  	

   


  	

  3 Business Days prior

  to such borrowing, prepayment Continuation or Conversion


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

  •     Voluntary reduction in or

  termination of Commitment


  	

   


  	

  11:00 a.m.


  	

   


  	

  5 Business Days prior

  to such reduction or termination


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Payments to Borrower or

  Lender


  	

   


  	

  11:00 a.m.


  	

   


  	

  On date payment is due


  





 




“Responsible Officer” means the chief executive

officer, president, chief financial officer, treasurer or assistant treasurer

of a Borrower Party.  Any document or

certificate hereunder that is signed by a Responsible Officer of a Borrower

Party shall be conclusively presumed to have been authorized by all necessary

corporate, partnership and/or other action on the part of such Borrower Party

and such Responsible Officer shall be conclusively presumed to have acted on

behalf of such Borrower Party.




 




“Restricted Payment” means:




 




(a)           the declaration or

payment of any dividend or distribution by Borrower or any Subsidiary, either

in cash or property, on any shares of the capital stock of any class of

Borrower or any Subsidiary (except dividends or other distributions payable

solely in shares of capital stock of Borrower or any Subsidiary or payable by

any Subsidiary to Borrower or to a wholly-owned Subsidiary);




 




12





























 




(b)           the purchase,

redemption or retirement by Borrower or any Subsidiary of any shares of its

capital stock of any class or any warrants, rights or options to purchase or

acquire any shares of its capital stock, whether directly or indirectly;




 




(c)           any other payment or

distribution by Borrower or any Subsidiary in respect of its capital stock,

either directly or indirectly;




 




(d)           any Investment other

than an Investment otherwise permitted under any Loan Document; and




 




(e)           the prepayment,

repayment, redemption, defeasance or other acquisition or retirement for value

prior to any scheduled maturity, scheduled repayment or scheduled sinking fund

payment, of any Indebtedness not otherwise permitted under any Loan Document to

be so paid, other than with respect to the John Hancock Indebtedness.




 




“Revolving Loan Limit” means (a) at all times

prior to the sale of the Port Ludlow Property, the Commitment, and (b) at all

times after the sale of the Port Ludlow Property, the lesser of (i) the

Commitment or the (b) Borrowing Base Limit.




 




“Shareholders’ Equity” means, as of any date of

determination for Borrower and its Subsidiaries on a consolidated basis,

shareholders’ equity as of that date determined in accordance with GAAP.




 




“Subsidiary” of a Person means a corporation,

partnership, joint venture, limited liability company or other business entity

of which a majority of the shares of securities or other interests having

ordinary voting power for the election of directors or other governing body

(other than securities or interests having such power only by reason of the

happening of a contingency) are at the time beneficially owned, or the

management of which is otherwise controlled, directly, or indirectly through

one or more intermediaries, or both, by such Person.  Unless otherwise specified, all references to a “Subsidiary” or

to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries

of Borrower.




 




“Swap Contract” means (a) any and all rate swap

transactions, basis swaps, credit derivative transactions, forward rate

transactions, commodity swaps, commodity options, forward commodity contracts,

equity or equity index swaps or options, bond or bond price or bond index swaps

or options or forward bond or forward bond price or forward bond index

transactions, interest rate options, forward foreign exchange transactions, cap

transactions, floor transactions, collar transactions, currency swap

transactions, cross-currency rate swap transactions, currency options, spot

contracts, or any other similar transactions or any combination of any of the

foregoing (including any options to enter into any of the foregoing), whether

or not any such transaction is governed by or subject to any master agreement,

and (b) any and all transactions of any kind, and the related confirmations,

which are subject to the terms and conditions of, or governed by, any form of

master agreement published by the International Swaps and Derivatives

Association, Inc., any International Foreign Exchange Master Agreement, or any

other master agreement (any such master agreement, together with any related

schedules, as amended, restated, extended, supplemented or otherwise modified

in writing from time to time, a “Master Agreement”), including any such

obligations or liabilities under any Master Agreement.




 




“Swap Termination Value” means, in respect of

any one or more Swap Contracts, after taking into account the effect of any

legally enforceable netting agreement relating to such Swap Contracts, (a) for

any date on or after the date such Swap Contracts have been closed out and

termination value(s) determined in accordance therewith, such termination

value(s), and (b) for any date prior to the date referenced in clause (a) the

amount(s) determined as the mark-to-market value(s) for such Swap Contracts, as

determined based upon one or more mid-market or other readily available

quotations provided by any recognized dealer in such Swap Contracts (which may

include Lender).




 




13





























 




“Synthetic Lease Obligations” means all

monetary obligations of a Person under (a) a so-called synthetic, off-balance

sheet or tax retention lease, or (b) an agreement for the use or possession of

property creating obligations which do not appear on the balance sheet of such

Person but which, upon the insolvency or bankruptcy of such Person, would be

characterized as the Indebtedness of such Person (without regard to accounting

treatment).




 




“Threshold Amount” means $3,000,000.




 




“Total Capitalization” means, as of any date of

determination, (a) if Borrower’s partnership units are Publicly Traded, the

Market Capitalization of Borrower as of such date, and (b) if Borrower’s

partnership units are not Publicly Traded, Shareholders’ Equity as of such date

minus

the Intangible Assets of Borrower and its Subsidiaries as of such date.




 




“to the best knowledge of” means, when

modifying a representation, warranty or other statement of any Person, that the

fact or situation described therein is known by such Person (or, in the case of

a Person other than a natural Person, known by any officer of such Person)

making the representation, warranty or other statement, or with the exercise of

reasonable due diligence under the circumstances (in accordance with the

standard of what a reasonable Person in similar circumstances would have done)

would have been known by such Person (or, in the case of a Person other than a

natural Person, would have been known by an officer of such Person).




 




“type” of Loan means (a) a Base Rate Loan, and

(b) an Offshore Rate Loan.




 




“Unfunded Pension Liability” means the excess

of a Pension Plan’s benefit liabilities under Section 4001(a)(16) of ERISA,

over the current value of that Pension Plan’s assets, determined in accordance

with the assumptions used for funding the Pension Plan pursuant to Section 412

of the Code for the applicable plan year.




 




1.2.         Use of Certain Terms.




 




(a)           All terms defined in

this Agreement shall have the defined meanings when used in any certificate or

other document made or delivered pursuant hereto or thereto, unless otherwise

defined therein.




 




(b)           As used herein,

unless the context requires otherwise, the masculine, feminine and neuter

genders and the singular and plural include one another.




 




(c)           The words “herein”

and “hereunder” and words of similar import when used in any Loan

Document shall refer to the Loan Documents as a whole and not to any particular

provision thereof.  The term “including” is by way of example and

not limitation.  References herein to a

Section, subsection or clause shall, unless the context otherwise requires,

refer to the appropriate Section, subsection or clause in this Agreement.




 




(d)           The term “or”

is disjunctive; the term “and” is conjunctive.  The term “shall” is mandatory; the term “may” is

permissive.




 




1.3.         Accounting

Terms.  All accounting

terms not specifically or completely defined in this Agreement shall be

construed in conformity with, and all financial data required to be submitted

by this Agreement shall be prepared in conformity with, GAAP applied on a

consistent basis, as in effect from time to time, applied in a manner

consistent with that used in preparing the Audited Financial Statements, except

as otherwise specifically prescribed herein.




 




1.4.         Rounding.  Any financial ratios required to

be maintained by Borrower pursuant to this Agreement shall be calculated by

dividing the appropriate component by the other component, carrying the 




 




14





























 




result to one

place more than the number of places by which such ratio is expressed in this

Agreement and rounding the result up or down to the nearest number (with a

round-up if there is no nearest number) to the number of places by which such

ratio is expressed in this Agreement.




 




1.5.         Exhibits

and Schedules.  All

exhibits and schedules to this Agreement, either as originally existing or as

the same may from time to time be supplemented, modified or amended, are

incorporated herein by this reference. 

A matter disclosed on any Schedule shall be deemed disclosed on all

Schedules.




 




1.6.         References to Agreements and Laws.  Unless otherwise expressly

provided herein, (a) references to agreements (including the Loan Documents)

and other contractual instruments shall include all amendments, restatements,

extensions, supplements and other modifications thereto (unless prohibited by

any Loan Document), and (b) references to any Law shall include all statutory

and regulatory provisions consolidating, amending, replacing, supplementing or

interpreting such Law.




 




SECTION 2.




THE COMMITMENT AND EXTENSIONS OF

CREDIT




 




2.1.         The

Commitment.




 




(a)           Subject to the terms

and conditions set forth in this Agreement, Lender agrees to make, Convert and

Continue Loans until the Maturity Date in such amounts as Borrower may from

time to time request; provided, however, that the Outstanding

Obligations shall not exceed the Revolving Loan Limit at any time.  Subject to the foregoing and the other terms

and conditions hereof, Borrower may borrow, Convert, Continue, prepay and

reborrow Loans as set forth herein without premium or penalty.




 




(b)           Loans made by Lender

shall be evidenced by one or more loan accounts or records maintained by Lender

in the ordinary course of business. 

Upon the request of Lender, the Loans may be evidenced by one or more

Notes, instead of or in addition to loan accounts.  Lender may attach schedules to its Note(s) and endorse thereon

the date, amount and maturity of its Loans and payments with respect thereto.

Such Notes, loan accounts and records shall be conclusive absent manifest error

of the amount of such Loans and payments thereon.  Any failure so to record or any error in doing so shall not,

however, limit or otherwise affect the obligation of Borrower to pay any amount

owing with respect to the Loans.




 




2.2.         Borrowings, Conversions and Continuations of Loans.




 




(a)           Borrower may

irrevocably request a borrowing, Conversion or Continuation of Loans on any

Business Day in a Minimum Amount therefor by delivering a Request for Extension

of Credit therefor by Requisite Notice to Lender not later than the Requisite

Time therefor.  All borrowings,

Conversions and Continuations of Loans shall constitute Base Rate Loans unless

properly and timely otherwise designated as set forth in the prior sentence.




 




(b)           Lender shall

promptly notify Borrower of the interest rate applicable to any Offshore Rate

Loan upon determination of same.  Lender

shall from time to time notify Borrower of any change in its prime rate used in

determining the Base Rate promptly following the public announcement of such

change.  Upon satisfaction of the

applicable conditions set forth in Section 4, all funds shall be

credited in immediately available funds to Borrower by deposit of such funds

into the Borrower Account (and funding of Loans pursuant to this Agreement

shall be made solely in this manner).




 




(c)           Except as otherwise

provided herein, an Offshore Rate Loan may be Continued or Converted only on

the last day of the Interest Period for such Offshore Rate Loan.  During the existence of a Default or Event

of Default, no Loans may be requested as, Converted into or Continued as

Offshore Rate Loans, and Lender may demand that any or all of the then

outstanding Offshore Rate Loans be Converted immediately into Base Rate Loans.




 




15





























 




(d)           If a Loan is to be

made on the same date that another Loan is due and payable, Borrower or Lender,

as the case may be, shall, unless Lender otherwise requests, make available the

net amount of funds giving effect to both such Loans and the effect for

purposes of this Agreement shall be the same as if separate transfers of funds

had been made with respect to each such Loan.




 




2.3.         Prepayments.  Upon Requisite Notice to Lender

not later than the Requisite Time therefor, Borrower may at any time and from

time to time voluntarily prepay Loans in part in the Minimum Amount therefor or

in full without premium or penalty.  If

for any reason the Outstanding Obligations exceed the Revolving Loan Limit as

in effect or as reduced or because of any limitation set forth in this

Agreement or otherwise, Borrower shall immediately prepay Loans in an aggregate

amount equal to such excess.  Any

prepayment of an Offshore Rate Loan shall be accompanied by all accrued

interest thereon, together with the costs set forth in Section 3.5.




 




2.4.         Reduction or Termination of

Commitment.  Upon

Requisite Notice to Lender not later than the Requisite Time therefor, Borrower

may at any time and from time to time, without premium or penalty, permanently

and irrevocably reduce the Commitment in a Minimum Amount therefor to an amount

not less than the Outstanding Obligations at such time or terminate the

Commitment.  Upon the earlier of the

sale of the Port Ludlow Property or June 27, 2001, Borrower will permanently

and irrevocably reduce the Commitment to $17,000,000.  Any reduction or termination of the Commitment pursuant to this Section

2.4 shall be accompanied by payment of all accrued and unpaid fees with

respect to the portion of the Commitment being reduced or terminated.




 




2.5.         Principal and Interest.




 




(a)           Except as otherwise

provided hereunder, if not sooner paid, Borrower agrees to pay the outstanding

principal amount of each Loan on the Maturity Date.




 




(b)           Subject to

subsection (c) below, and unless otherwise specified herein, Borrower shall pay

interest on the unpaid principal amount of each Loan (before and after default,

before and after maturity, before and after judgment, and before and after the

commencement of any proceeding under any Debtor Relief Laws) from the date

borrowed until paid in full (whether by acceleration or otherwise) on each

Applicable Payment Date at a rate per annum equal to (i) in the case of Base

Rate Loans, the sum of the Base Rate plus the Applicable Amount, and (ii) in

the case of Offshore Rate Loans, the sum of the Offshore Rate plus the

Applicable Amount.




 




(c)           If any amount

payable by any Borrower Party under any Loan Document is not paid when due

(without regard to any applicable grace periods), it shall thereafter bear

interest (after as well as before entry of judgment thereon to the extent

permitted by law) at a fluctuating interest rate per annum at all times equal

to the Default Rate to the fullest extent permitted by applicable Law.  Accrued and unpaid interest on past due

amounts (including interest on past due interest) shall be payable upon demand.




 




2.6.         Fees.




 




(a)           Commitment Fee.  Borrower shall pay to Lender a commitment

fee (the “Commitment Fee”) equal to the Applicable Amount times the

actual daily amount by which the Revolving Loan Limit exceeds the Outstanding

Obligations.  The Commitment Fee shall

accrue at all times from the Closing Date until the Maturity Date, prorated for

portions of any calendar year in which the Commitment is in effect, and shall

be payable quarterly in arrears on each Applicable Payment Date.  The Commitment Fee shall be calculated

quarterly in arrears, and if there is any change in the Applicable Amount

during any quarter, the actual daily amount shall be computed and multiplied by

the Applicable Amount separately for each period during such quarter that such

Applicable Amount was in effect. The Commitment Fee shall accrue at all times,

including at any time during which one or more conditions in Section 4

are not met.




 




16





























 




(b)           Advisory Fee.  On the Closing Date, Borrower shall pay to

Banc of America Securities LLC (“BAS”) an upfront advisory fee  pursuant

to a separate letter agreement between Borrower and BAS.  Such upfront fee is for the advisory

services provided by BAS prior to the Closing Date and is fully earned on the

date paid.




 




2.7.         Computation

of Interest and Fees.  Computation

of interest on Base Rate Loans when the Base Rate is determined by Lender’s

“prime rate” shall be calculated on the basis of a year of 365 or 366 days, as

the case may be, and the actual number of days elapsed.  Computation of all other types of interest

and all fees shall be calculated on the basis of a year of 360 days and the

actual number of days elapsed, which results in a higher yield to Lender than a

method based on a year of 365 or 366 days. 

Interest shall accrue on each Loan for the day on which the Loan is

made, and shall not accrue on a Loan, or any portion thereof, for the day on

which the Loan or such portion is paid, provided that any Loan that is

repaid on the same day on which it is made shall bear interest for one day.




 




2.8.         Making Payments.




 




(a)           Except as otherwise

provided herein, all payments by Borrower shall be made to Lender at its

Lending Office, and all payments by Lender shall be made to Lender in the

deposit account from time to time designated by Borrower to Lender, in each

case not later than the Requisite Time for such type of payment.  All payments received after such Requisite

Time shall be deemed received on the next succeeding Business Day.  All payments shall be made in immediately

available funds in lawful money of the United States of America.  All payments by Borrower shall be made

without condition or deduction for any counterclaim, defense, recoupment or

setoff.




 




(b)           On each date when

the payment of any principal, interest or fees are due under this Agreement or

under any Note, Borrower agrees to maintain on deposit in an ordinary checking

account maintained by Borrower with Lender (as such account shall be designated

by Borrower in a written notice to Lender from time to time, the “Borrower

Account”) an amount sufficient to pay such principal, interest or fees in full

on such date.  Borrower hereby authorizes

Lender (i) to deduct automatically all principal, interest or fees when due

under this Agreement or under any Note from the Borrower Account, and (ii) if

and to the extent any payment of principal, interest or fees under this

Agreement or any Note is not made when due, to deduct automatically any such

amount from any or all of the accounts of Borrower maintained with Lender.  Lender agrees to provide timely written

notice to Borrower of any automatic deduction made pursuant to this Section

2.8(b), showing in reasonable detail the amounts of such deduction.  Lender agrees to reimburse Borrower for

amounts, if any, deducted from such accounts in excess of amounts due hereunder

or under any other Loan Document.




 




(c)           Subject to the

definition of “Interest Period,” if any payment to be made by any Borrower

Party shall come due on a day other than a Business Day, payment shall instead

be considered due on the next succeeding Business Day, and such extension of

time shall be reflected in computing interest and fees.




 




2.9.         Funding

Sources.  Nothing in this

Agreement shall be deemed to obligate Lender to obtain the funds for any Loan

in any particular place or manner or to constitute a representation by Lender

that it has obtained or will obtain the funds for any Loan in any particular

place or manner.




 




2.10.       General

Partners’ Liability.  The

obligations of Borrower hereunder shall be nonrecourse as to the general

partners of Borrower and their assets, and neither general partner shall have

any liability to Lender hereunder or under any other Loan Document.




 




17





























 




SECTION 3.




TAXES, YIELD PROTECTION AND

ILLEGALITY




3.1.         Taxes.




 




(a)           Any and all payments

by Borrower to or for the account of Lender under any Loan Document shall be

made free and clear of and without deduction for any and all present or future

taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or

similar charges, and all liabilities with respect thereto, excluding

taxes imposed on or measured by its net income, and franchise taxes imposed on

it (in lieu of net income taxes), by the jurisdiction (or any political

subdivision thereof) under the Laws of which Lender is organized or maintains a

lending office (all such non-excluded taxes, duties, levies, imposts,

deductions, assessments, fees, withholdings or similar charges, and liabilities

being hereinafter referred to as “Taxes”).  If Borrower shall be required by any Laws to deduct any Taxes

from or in respect of any sum payable under any Loan Document to Lender, (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), Lender receives an amount equal to the sum it would have

received had no such deductions been made, (ii) Borrower shall make such

deductions, (iii) Borrower shall pay the full amount deducted to the relevant

taxation authority or other authority in accordance with applicable Laws, and

(iv) within 30 days after the date of such payment, Borrower shall furnish to

Lender the original or a certified copy of a receipt evidencing payment

thereof.




 




(b)           In addition,

Borrower agrees to pay any and all present or future stamp, court or

documentary taxes and any other excise or property taxes or charges or similar

levies which arise from any payment made under any Loan Document or from the

execution, delivery, performance, enforcement or registration of, or otherwise

with respect to, any Loan Document (hereinafter referred to as “Other Taxes”).




 




(c)           If Borrower shall be

required to deduct or pay any Taxes or Other Taxes from or in respect of any

sum payable under any Loan Document to Lender, Borrower shall also pay to

Lender, at the time interest is paid, such additional amount that Lender

accurately computes to be necessary to preserve the after-tax yield (after

factoring in all taxes, including taxes imposed on or measured by net income)

Lender would have received if such Taxes or Other Taxes had not been imposed.




 




(d)           Borrower agrees to

indemnify Lender for the full amount of Taxes and Other Taxes (including any

Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable

under this Section) paid by Lender, amounts payable under Section 3.1(c) and any

liability (including penalties, interest and expenses) arising therefrom or

with respect thereto.




 




3.2.         Illegality.  If Lender determines that any

Laws have made it unlawful, or that any Governmental Authority has asserted

that it is unlawful, for Lender or its Lending Office to make, maintain or fund

Offshore Rate Loans, or materially restricts the authority of Lender to

purchase or sell, or to take deposits of, Dollars in the applicable offshore

Dollar market, or to determine or charge interest rates based upon the Offshore

Rate, then, on notice thereof by Lender to Borrower, any obligation of Lender

to make Offshore Rate Loans shall be suspended until the circumstances giving

rise to such determination no longer exist. 

Upon receipt of such notice, Borrower shall, upon demand from Lender,

prepay or Convert all Offshore Rate Loans, either on the last day of the

Interest Period thereof, if Lender may lawfully continue to maintain such

Offshore Rate Loans to such day, or immediately, if Lender may not lawfully

continue to maintain such Offshore Rate Loans. 

Lender agrees to designate a different Lending Office if such

designation will avoid the need for such notice and will not, in the good faith

judgment of Lender, otherwise be materially disadvantageous to Lender.




 




3.3.         Inability to Determine Offshore Rate.  If, in connection with any

Request for Extension of Credit involving any Offshore Rate Loan, Lender

determines that (a) Dollar deposits are not being offered to banks in the

applicable offshore dollar market for the applicable amount and Interest Period

of the requested Offshore Rate Loan, (b) adequate and reasonable means do not

exist for determining the underlying interest rate for such Offshore Rate Loan,

or (c) such underlying interest rate does not adequately and fairly reflect the






 




18





























 




cost to Lender of

funding such Offshore Rate Loan, Lender shall promptly notify Borrower.  Thereafter, the obligation of Lender to make

or maintain such Offshore Rate Loan shall be suspended until Lender revokes

such notice.  Upon receipt of such

notice, Borrower may revoke any pending request for an Offshore Rate Loan or,

failing that, be deemed to have converted such request into a request for a

Base Rate Loan in the amount specified therein.




 




3.4.         Increased Cost and Reduced Return;

Capital Adequacy.




 




(a)           If Lender determines

that any Laws:




 




(i)            subject Lender to any Tax, duty, or

other charge with respect to any Offshore Rate Loans or its obligation to make

Offshore Rate Loans, or change the basis on which taxes are imposed on any

amounts payable to Lender under this Agreement in respect of any Offshore Rate

Loans;




 




(ii)           shall impose or modify any reserve,

special deposit, or similar requirement (other than the reserve requirement

utilized in the determination of the Offshore Rate) relating to any extensions

of credit or other assets of, or any deposits with or other liabilities or

commitments of, Lender (including the Commitment); or




 




(iii)          shall impose on Lender or on the

offshore interbank market any other condition affecting this Agreement or any

of such extensions of credit or liabilities or commitments;




 




and the result of any of the foregoing is to increase the cost to

Lender of making, Converting into, Continuing, or maintaining any Offshore Rate

Loans or to reduce any sum received or receivable by Lender under this

Agreement with respect to any Offshore Rate Loans, then from time to time upon

demand of Lender, Borrower shall pay to Lender such additional amounts as will

compensate Lender for such increased cost or reduction.




 




(b)           If Lender determines

that any change in or the interpretation of any Laws have the effect of

reducing the rate of return on the capital of Lender or compliance by Lender

(or its Lending Office) or any corporation controlling Lender as a consequence

of Lender’s obligations hereunder (taking into consideration its policies with

respect to capital adequacy and Lender’s desired return on capital), then from

time to time upon demand of Lender, Borrower shall pay to Lender such

additional amounts as will compensate Lender for such reduction.




 




3.5.         Breakfunding

Costs.  Upon demand of

Lender from time to time, Borrower shall promptly compensate Lender for and

hold Lender harmless from any loss, cost or expense incurred by it as a result

of:




 




(a)           any Continuation,

Conversion, payment or prepayment of any Loan other than a Base Rate Loan on a

day other than the last day of the Interest Period for such Loan (whether

voluntary, mandatory, automatic, by reason of acceleration, or otherwise); or




 




(b)           any failure by

Borrower (for a reason other than the failure of Lender to make a Loan) to

prepay, borrow, Continue or Convert any Loan other than a Base Rate Loan on the

date or in the amount notified by Borrower;




 




including any loss of anticipated profits and any

loss or expense arising from the liquidation or reemployment of funds obtained

by it to maintain such Loan or from fees payable to terminate the deposits from

which such funds were obtained.  Borrower shall also pay any customary

administrative fees charged by Lender in connection with the foregoing.




 




3.6.         Matters Applicable to all Requests for

Compensation.  A

certificate of Lender claiming

compensation under this Section 3 and setting forth the additional

amount or amounts to be paid to it hereunder shall be conclusive in the absence

of clearly demonstrable error.  In

determining such amount, Lender may

use 




 




19





























 




any reasonable

averaging and attribution methods.  For purposes of this Section 3,

Lender shall be deemed to have

funded each Offshore Rate Loan at the Offshore Base Rate used in determining

the Offshore Rate for such Loan by a matching deposit or other borrowing in the

applicable offshore interbank market, whether or not such Offshore Rate Loan

was in fact so funded.




 




3.7.         Survival.  All of Borrower’s obligations

under this Section 3 shall survive termination of the Commitment and

payment in full of all Obligations.




 




SECTION 4.




CONDITIONS PRECEDENT TO EXTENSIONS

OF CREDIT




 




4.1.         Conditions of Initial Extension of

Credit.  The obligation

of Lender to make the initial

Extension of Credit hereunder is subject to satisfaction of the following

conditions precedent:




 




(a)           Except as otherwise

specified by Lender, Lender’s receipt of the following, each of which shall be

originals or facsimiles (followed promptly by originals) unless otherwise

specified, each properly executed by a Responsible Officer of the signing

Borrower Party, each dated on, or in the case of third-party certificates,

recently before the Closing Date and each in form and substance satisfactory to

Lender and its legal counsel:




 




(i)            executed counterparts of this

Agreement, sufficient in number for distribution to Lender and Borrower;




 




(ii)           if requested by Lender, a Note

executed by Borrower in favor of Lender, in a principal amount equal to the

Commitment;




 




(iii)          such certificates of resolutions or

other action, incumbency certificates and/or other certificates of Responsible

Officers of each Borrower Party as Lender

may require to establish the identities of and verify the authority and

capacity of each Responsible Officer thereof authorized to act as a Responsible

Officer thereof;




 




(iv)          such evidence as Lender may reasonably require to verify

that each Borrower Party is duly organized or formed, validly existing, in good

standing and qualified to engage in business in each jurisdiction in which it

is required to be qualified to engage in business, including certified copies

of each Borrower Party’s Organization Documents, certificates of good standing

and/or qualification to engage in business, tax clearance certificates, and the

like;




 




(v)           a certificate signed by a Responsible

Officer of Borrower certifying (A) that the conditions specified in Sections

4.1(c) and (d) have been satisfied, and (B) that there has been no

event or circumstance since the date of the Audited Financial Statements which

has a Material Adverse Effect;




 




(vi)          an opinion of counsel to Borrower

substantially in the form of Exhibit D hereto; and




 




(vii)         such other assurances, certificates,

documents, consents or opinions as Lender reasonably may require.




 




(b)           Any fees required to

be paid on or before the Closing Date shall have been paid.




 




(c)           The representations

and warranties made by Borrower herein, or which are contained in any

certificate, document or financial or other statement furnished at any time

under or in connection herewith or therewith, shall be correct on and as of the

Closing Date.




 




20





























 




(d)           Each Borrower Party

shall be in compliance with all the terms and provisions of the Loan Documents

to which it is a party, and no Default or Event of Default shall have occurred

and be continuing.




 




(e)           Borrower shall have

paid all Attorney Costs of Lender to the extent invoiced prior to or on the

Closing Date, plus such additional amounts of Attorney Costs as shall

constitute its reasonable estimate of Attorney Costs incurred or to be incurred

by it through the closing proceedings (provided that such estimate shall not

thereafter preclude final settling of accounts between Borrower and Lender).




 




4.2.         Conditions to all Extensions of Credit.  In addition to the continuing

satisfaction of the conditions precedent set forth elsewhere in this Section

4 or in Section 2, the obligation of Lender to honor any Request for

Extension of Credit is subject to the following conditions precedent:




 




(a)           the representations

and warranties of Borrower contained in this Agreement, or which are contained

in any certificate, document or financial or other statement furnished at any

time under or in connection herewith or therewith, shall be correct on and as

of the date of such Extension of Credit, except to the extent that such

representations and warranties specifically refer to any earlier date.




 




(b)           no Default or Event

of Default exists, or would result from such proposed Extension of Credit.




 




(c)           Lender shall have

timely received a Request for Extension of Credit by Requisite Notice by the

Requisite Time therefor.




 




(d)           Lender shall have

received, in form and substance satisfactory to it, such other assurances,

certificates, documents or consents related to the foregoing as Lender

reasonably may require.




 




Each Request for Extension of Credit by Borrower shall be deemed to be

a representation and warranty that the conditions specified in Sections

4.2(a) and (b) have been satisfied on and as of the date of such

Extension of Credit.




 




SECTION 5.




REPRESENTATIONS AND WARRANTIES




 




Borrower represents and

warrants to Lender that:




 




5.1.         Existence and Qualification; Power;

Compliance with Laws.  Each

Borrower Party is a corporation, partnership or limited liability company duly

organized or formed, validly existing and in good standing under the Laws of

the state of its incorporation or organization, has the power and authority and

the legal right to own and operate its properties, to lease the properties it

operates and to conduct its business, is duly qualified and in good standing

under the Laws of each jurisdiction where its ownership, lease or operation of

properties or the conduct of its business requires such qualification, and is

in compliance with all Laws except to the extent that noncompliance does not,

individually or in the aggregate, have a Material Adverse Effect.




 




5.2.         Power; Authorization; Enforceable

Obligations.  Each

Borrower Party has the power and authority and the legal right to make, deliver

and perform each Loan Document to which it is a party and Borrower has power

and authority to borrow hereunder and has taken all necessary action to

authorize the borrowings on the terms and conditions of this Agreement and to

authorize the execution, delivery and performance of this Agreement and the

other Loan Documents to which it is a party. 

No consent or authorization of, filing with, or other act by or in

respect of any Governmental Authority, is required in connection with the

borrowings hereunder or with the execution, delivery, performance, validity or

enforceability of this Agreement or any of the other Loan Documents.  The Loan Documents have been duly 




 




21





























 




executed and

delivered by each Borrower Party, and constitute a legal, valid and binding

obligation of each Borrower Party, enforceable against each Borrower Party in

accordance with their respective terms.




 




5.3.         No Legal Bar.  The execution, delivery, and

performance by each Borrower Party of the Loan Documents to which it is a party

and compliance with the provisions thereof have been duly authorized by all

requisite action on the part of such Borrower Party and do not and will not (a)

violate or conflict with, or result in a breach of, or require any consent

under (i) any Organization Documents of such Borrower Party or any of its

Subsidiaries, (ii) any applicable Laws, rules, or regulations or any order,

writ, injunction, or decree of any Governmental Authority or arbitrator, or

(iii) any Contractual Obligation of such Borrower Party or any of its

Subsidiaries or by which any of them or any of their property is bound or

subject, (b) constitute a default under any such agreement or instrument, or

(c) result in, or require, the creation or imposition of any Lien on any of the

properties of such Borrower Party or any of its Subsidiaries.




 




5.4.         Financial Statements; No Material

Adverse Effect.




 




(a)           The Audited

Financial Statements (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 Borrower and its

Subsidiaries as of the date thereof and their results of operations for the

period covered thereby in accordance with GAAP consistently applied throughout

the period covered thereby, except as otherwise expressly noted therein; and

(iii) show all material indebtedness and other liabilities, direct or

contingent, of Borrower and its Subsidiaries as of the date thereof, including

liabilities for taxes, material commitments and Indebtedness in accordance with

GAAP consistently applied throughout the period covered thereby.




 




(b)           Since the date of

the Audited Financial Statements, there has been no event or circumstance that

has a Material Adverse Effect.




 




5.5.         Litigation.  Other than the Port Gamble

Environmental Issue, no litigation, investigation or proceeding of or before an

arbitrator or Governmental Authority is pending or, to the knowledge of

Borrower after due and diligent investigation, threatened by or against any

Borrower Party or any of its Subsidiaries or against any of their properties or

revenues which, if determined adversely, has a Material Adverse Effect.




 




5.6.         No Default.  Neither any Borrower Party nor any

its Subsidiaries are in default under or with respect to any Contractual

Obligation which has a Material Adverse Effect, and no Default or Event of

Default has occurred and is continuing or will result from the consummation of

this Agreement or any of the other Loan Documents, or the making of the

Extensions of Credit hereunder.




 




5.7.         Ownership

of Property; Liens.  Each

Borrower Party and its Subsidiaries have valid fee or leasehold interests in

all real property which they use in their respective businesses, and each

Borrower Party and its Subsidiaries have good and marketable title to all their

other property, and none of such property is subject to any Lien, except

(1) for exceptions, limitations, defects, and third-party claims that, taken

individually or in the aggregate, do not have a Material Adverse Effect and (2)

as permitted in Section 7.2.




 




5.8.         Taxes.  Each Borrower Party and its

Subsidiaries have filed all tax returns which are required to be filed, and

have paid, or made provision for the payment of, all taxes with respect to the

periods, property or transactions covered by said returns, or pursuant to any

assessment received by such Borrower Party or its respective Subsidiaries, except

(a) such taxes, if any, as are being contested in good faith by appropriate

proceedings and as to which adequate reserves have been established and

maintained, and (b) immaterial taxes; provided, however, that in

each case no material item or portion of property of any Borrower Party or any

of its Subsidiaries is in jeopardy of being seized, levied upon or forfeited.




 




22





























 




5.9.         Margin Regulations; Investment Company

Act; Public Utility Holding Company Act.




 




(a)           No Borrower Party is

engaged or will engage, principally or as one of its important activities, in

the business of extending credit for the purpose of “purchasing” or “carrying”

“margin stock” within the respective meanings of each of the quoted terms under

Regulation U of the Board of Governors of the Federal Reserve System as now and

from time to time hereafter in effect.  No part of the proceeds of any

Extensions of Credit hereunder will be used for “purchasing” or “carrying”

“margin stock” as so defined or for any purpose which violates, or which would

be inconsistent with, the provisions of Regulations T, U or X of such Board of

Governors.




 




(b)           No Borrower Party or

any of its Subsidiaries (i) is 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,” within the meaning of the Public

Utility Holding Company Act of 1935, or (ii) is or is required to be registered

as an “investment company” under the Investment Company Act of 1940.




 




5.10.       ERISA Compliance.




 




(a)           Each Plan is in

compliance in all material respects with the applicable provisions of ERISA, the

Code and other federal or state Laws. 

Each Plan that is intended to qualify under Section 401(a) of the Code

has received a favorable determination letter from the IRS or an application

for such a letter is currently being processed by the IRS with respect thereto

and, to the best knowledge of Borrower, nothing has occurred which would

prevent, or cause the loss of, such qualification.  Borrower and each ERISA Affiliate have made all required

contributions to each Plan subject to Section 412 of the Code, and no

application for a funding waiver or an extension of any amortization period

pursuant to Section 412 of the Code has been made with respect to any Plan.




 




(b)           There are no pending

or, to the best knowledge of Borrower, threatened claims, actions or lawsuits,

or action by any Governmental Authority, with respect to any Plan that has a

Material Adverse Effect.  There has been

no prohibited transaction or violation of the fiduciary responsibility rules

with respect to any Plan that has a Material Adverse Effect.




 




(c)           (i) No ERISA Event

has occurred or is reasonably expected to occur; (ii) no Pension Plan has any

Unfunded Pension Liability; (iii) neither Borrower nor any ERISA Affiliate has

incurred, or reasonably expects to incur, any liability under Title IV of ERISA

with respect to any Pension Plan (other than premiums due and not delinquent

under Section 4007 of ERISA); (iv) neither Borrower nor any ERISA Affiliate has

incurred, or reasonably expects to incur, 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; and (v) neither Borrower nor any ERISA Affiliate has

engaged in a transaction that could be subject to Section 4069 or 4212(c) of

ERISA.




 




5.11.       Intangible

Assets.  Each Borrower

Party and its Subsidiaries own, or possess the right to use, all trademarks,

trade names, copyrights, patents, patent rights, franchises, licenses and other

intangible assets that are used in the conduct of their respective businesses

as now operated, except to the extent that a failure to own or possess the

right to use such items does not, individually or in the aggregate, have a

Material Adverse Effect, and none of such items, to the best knowledge of

Borrower, conflicts with the valid trademark, trade name, copyright, patent,

patent right or intangible asset of any other Person to the extent that such

conflict has a Material Adverse Effect.




 




5.12.       Compliance

With Laws.  Each Borrower

Party and its Subsidiaries are in compliance in all material respects with all

Laws that are applicable to it.




 




5.13.       Environmental

Compliance.  Each

Borrower Party and its Subsidiaries conduct in the ordinary course of business

a review of the effect of existing Environmental Laws and claims alleging 




 




23





























 




potential

liability or responsibility for violation of any Environmental Law on their

respective businesses, operations and properties, and as a result thereof

Borrower has reasonably concluded that, except for the Port Gamble

Environmental Issue, such Environmental Laws and claims do not, individually or

in the aggregate, have a Material Adverse Effect.  Based on information obtained to date, the cost of remediation of

the Port Gamble site is estimated by outside consultants to be $10-12 million;

Borrower is continuing to negotiate liability issues with Pope & Talbot,

Inc., and Borrower’s current best estimate of net cost to Borrower of such

remediation is $2-3 million; and a total of $2 million has been reserved for

such remediation in the 2000 financial statements of Borrower.




 




5.14.       Insurance.  The properties of each Borrower

Party and its Subsidiaries are insured with financially sound and reputable

insurance companies not Affiliates of Borrower, 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

such Borrower Party or such Subsidiary operates.




 




5.15.       Disclosure.  No statement, information,

report, representation, or warranty made by any Borrower Party in any Loan

Document or furnished to Lender in connection with any Loan Document contains

any untrue statement of a material fact or omits to state any material fact

necessary to make the statements herein or therein not misleading, and each

Borrower Party has disclosed to Lender all facts and circumstances which can

reasonably be expected to have a Material Adverse Effect.




 




SECTION 6.




AFFIRMATIVE COVENANTS




 




So long as any Obligation remains unpaid or

unperformed, or any portion of the Commitment remains outstanding, Borrower

shall, and shall (except in the case of Borrower’s reporting covenants), cause

each Subsidiary to:




 




6.1.         Financial Statements.  Deliver to Lender in form and

detail satisfactory to Lender:




 




(a)           as soon as

available, but in any event within 90 days after the end of each fiscal year of

Borrower, a consolidated balance sheet of Borrower and its Subsidiaries as at

the end of such fiscal year, and the related consolidated statements of income

and cash flows for such fiscal year, setting forth in each case in comparative

form the figures for the previous fiscal year, all in reasonable detail, audited

and accompanied by a report and opinion of an independent certified public

accountant of nationally recognized standing reasonably acceptable to Lender,

which report and opinion shall be prepared in accordance with GAAP and shall

not be subject to any qualifications or exceptions as to the scope of the audit

nor to any qualifications and exceptions not reasonably acceptable to Lender;

and




 




(b)           as soon as

available, but in any event within 45 days after the end of each of the fiscal

quarters of each fiscal year of Borrower, a consolidated balance sheet of

Borrower and its Subsidiaries as at the end of such fiscal quarter, and the

related consolidated statements of income and cash flows for such fiscal

quarter and for the portion of Borrower’s fiscal year then ended, setting forth

in each case in comparative form the figures for the corresponding fiscal

quarter of the previous fiscal year and the corresponding portion of the

previous fiscal year, all in reasonable detail and certified by a Responsible

Officer of Borrower as fairly presenting the financial condition, results of

operations and cash flows of Borrower and its Subsidiaries in accordance with

GAAP, subject only to normal year-end audit adjustments and the absence of

footnotes.




 




6.2.         Certificates, Notices

and Other Information.  Deliver

to Lender in form and detail satisfactory to Lender:




 




(a)           concurrently with

the delivery of the financial statements referred to in Section 6.1(a),

a certificate of its independent certified public accountants certifying such

financial statements and stating that in making the examination necessary

therefor no knowledge was obtained of any Default or Event of Default 




 




24





























 




under the

financial covenants set forth herein or, if any such Default or Event of

Default shall exist, stating the nature and status of such event;




 




(b)           concurrently with

the delivery of the financial statements referred to in Sections 6.1(a)

and (b), a duly completed Compliance Certificate signed by a Responsible

Officer of Borrower;




 




(c)           promptly after

request by Lender, copies of any detailed audit reports, management letters or

recommendations submitted to the board of directors (or the audit committee of

the board of directors) of Borrower by independent accountants in connection

with the accounts or books of Borrower or any Subsidiary, or any audit of any

of them;




 




(d)           promptly after the

same are available, copies of each annual report, proxy or financial statement

or other report or communication sent to the stockholders of Borrower, and

copies of all annual, regular, periodic and special reports and registration

statements which Borrower may file or be required to file with the Securities

and Exchange Commission under Sections 13 or 15(d) of the Securities Exchange

Act of 1934, and not otherwise required to be delivered to Lender pursuant

hereto;




 




(e)           promptly after the

occurrence thereof, notice of any Default or Event of Default;




 




(f)            notice of any

material change in accounting policies or financial reporting practices by

Borrower or any Subsidiary;




 




(g)           promptly after the

commencement thereof, notice of any litigation, investigation or proceeding

affecting any Borrower Party where the amount claimed against the Borrower

Party or the amount of potential loss exceeds the Threshold Amount, or in which

injunctive relief or similar relief is sought, which relief, if granted, has a

Material Adverse Effect;




 




(h)           promptly after the

occurrence thereof, notice of any Reportable Event with respect to any Plan or

the intent to terminate any Plan, or the institution of proceedings or the

taking or expected taking of any other action to terminate any Plan or withdraw

from any Plan;




 




(i)            promptly after the

occurrence thereof, notice of any Material Adverse Effect;




 




(j)            on or before July

31 and January 31 of each year, Borrower-prepared reports as of June 30 and

December 31, respectively, detailing (i) the total net volume of timber

harvested, by species and product, from each tract of real property owned by

Borrower and its Subsidiaries, (ii) the number of acres and associated timber

volumes destroyed by fire, insects, disease, storms or other causes, (iii) all

improvements made to real property owned by Borrower, the number of acres

affected by such improvements, and the location of such improvements by

reference to plat or other legal description, and (iv) such other information

as Lender may reasonably request;




 




(k)           on a monthly basis,

reports as to monthly sales and purchases of timberland and timber, by

reference to acreage, timber volume, location and market value, in form and

substance sufficient to enable Lender to calculate the Borrowing Base Limit;

and




 




(l)            promptly, such

other data and information as from time to time may be reasonably requested by

Lender.




 




Each notice pursuant to this Section shall be accompanied by a

statement of a Responsible Officer of Borrower setting forth details of the

occurrence referred to therein and stating what action Borrower has taken and

proposes to take with respect thereto.




 




25





























 




6.3.         Payment of Taxes.  Pay and discharge when due all

taxes, assessments, and governmental charges, Ordinary Course Liens or levies

imposed on any Borrower Party or its Subsidiaries or on its income or profits

or any of its property, except for any such tax, assessment, charge, or levy

which is an Ordinary Course Lien under subsection (b) of the definition of such

term.




 




6.4.         Preservation

of Existence.  Preserve

and maintain its existence, licenses, permits, rights, franchises and

privileges necessary or desirable in the normal conduct of its business, except

where failure to do so does not have a Material Adverse Effect.




 




6.5.         Maintenance of Properties.  Maintain, preserve and protect

all of its material properties and equipment necessary in the operation of its

business in good order and condition, subject to wear and tear in the ordinary

course of business, and not permit any waste of its properties.




 




6.6.         Maintenance

of Insurance.  Maintain

liability and casualty insurance with financially sound and reputable insurance

companies in such amounts with such deductibles and against such risks as is

customary for similarly situated businesses.




 




6.7.         Compliance With Laws.




 




(a)           Comply with the

requirements of all applicable Laws and orders of any Governmental Authority,

noncompliance with which has a Material Adverse Effect.




 




(b)           Conduct its

operations and keep and maintain its property in compliance with all

Environmental Laws, noncompliance with which has a Material Adverse Effect.




 




6.8.         Inspection

Rights.  At any time

during regular business hours, upon reasonable advance notice, and as often as

reasonably requested, permit Lender, or any employee, agent or representative

thereof, to examine, audit and make copies and abstracts from the Borrower

Parties’ records and books of account and to visit and inspect their properties

and to discuss their affairs, finances and accounts with any of their officers

and key employees, and, upon request, furnish promptly to Lender true copies of

all financial information and internal management reports made available to

their senior management.




 




6.9.         Keeping of Records and Books of

Account.  Keep adequate

records and books of account reflecting all financial transactions in conformity

with GAAP, consistently applied, and in material conformity with all applicable

requirements of any Governmental Authority having regulatory jurisdiction over

Borrower or the applicable Subsidiary.




 




6.10.       Compliance

with ERISA.  Cause, and

cause each of its ERISA Affiliates to: (a) maintain each Plan in compliance in

all material respects with the applicable provisions of ERISA, the Code and

other federal or state law; (b) cause each Plan which is qualified under

Section 401(a) of the Code to maintain such qualification; and (c) make all

required contributions to any Plan subject to Section 412 of the Code.




 




6.11.       Compliance

With Agreements.  Promptly

and fully comply with all Contractual Obligations to which any one or more of

them is a party, except for any such Contractual Obligations (a) the

performance of which would cause a Default or Event of Default, (b) then being

contested by any of them in good faith by appropriate proceedings, or (c) if

the failure to comply therewith does not have a Material Adverse Effect.




 




6.12.       Use of Proceeds.

 Use the proceeds of

Extensions of Credit for (a) the purchase of the Plum Creek Property, (b) the

purchase from time to time of other timberland, and (c) other lawful general

corporate purposes not otherwise in contravention of this Agreement.




 




26





























 




SECTION 7.




NEGATIVE COVENANTS




 




So long as any Obligations remain unpaid or

unperformed, or any portion of the Commitment remains outstanding, Borrower

shall not, nor shall it permit any Subsidiary to, directly or indirectly,

without the prior written consent of Lender:




 




7.1.         Indebtedness.  Create,

incur, assume or suffer to exist any Indebtedness, except:




 




(a)           Indebtedness under

the Loan Documents;




 




(b)           The John Hancock

Indebtedness and all other Indebtedness outstanding on the date hereof and

listed on Schedule 7.01 and any refinancings, refundings, renewals or

extensions thereof, provided that the amount of such Indebtedness is not

increased at the time of such refinancing, refunding, renewal or extension

except by an amount equal to the premium or other amount paid, and fees and

expenses incurred, in connection with such refinancing and by an amount equal

to any utilized commitments thereunder;




 




(c)           Ordinary Course Indebtedness;

and




 




(d)           Unsecured

Indebtedness in an aggregate principal amount not exceeding $500,000 at any

time.




 




7.2.         Liens

and Negative Pledges.  Incur,

assume or suffer to exist, any Lien or Negative Pledge upon any of its

property, assets or revenues, whether now owned or hereafter acquired, except:




 




(a)           Liens pursuant to

any Loan Document;




 




(b)           Liens on the Hood

Canal Property that secure the John Hancock Indebtedness.




 




(c)           Liens and Negative

Pledges existing on the date hereof and listed on Schedule 7.01 and

any renewals or extensions thereof, provided that the property covered

thereby is not increased and any renewal or extension of the obliga­tions

secured or benefited thereby is permitted by Section 7.1(b);




 




(d)           Ordinary Course

Liens; and




 




(e)           Other Liens securing

Indebtedness in an aggregate principal amount not exceeding $500,000 at any

time.




 




7.3.         Fundamental

Changes.  Merge or

consolidate with or into any Person or liquidate, wind-up or dissolve itself,

or permit or suffer any liquidation or dissolution or sell all or substantially

all of its assets, except, that so long as no Default or Event of Default

exists or would result therefrom:




 




(a)           any Subsidiary may

merge with (i) Borrower provided that Borrower shall be the continuing or

surviving corporation, (ii) any one or more Subsidiaries, and (iii) any joint

venture, partnership or other Person, so long as such joint venture,

partnership and other Person will, as a result of making such merger and all

other contemporaneous related transactions, become a Subsidiary; provided

that when any wholly-owned Subsidiary is merging into another Subsidiary, the

wholly-owned Subsidiary shall be the continuing or surviving Person or the

surviving Person shall become, by virtue of the transaction, a wholly-owned

Subsidiary; and




 




(b)           any Subsidiary may

sell all or substantially all of its assets (upon voluntary liquidation or

otherwise) to Borrower or to another Subsidiary; provided that when any

wholly-owned Subsidiary is selling 




 




27





























 




all or

substantially all of its assets to another Subsidiary, the Subsidiary acquiring

such assets shall be a wholly-owned Subsidiary.




 




7.4.         Dispositions.  Make any Dispositions, except:




 




(a)           Ordinary Course

Dispositions;




 




(b)           Dispositions

permitted by Section 7.3;




 




(c)           Dispositions of

timberland in the ordinary course of business, provided that no Dispositions of

the Plum Creek Property or other timberland acquired after the Closing Date

shall occur unless, at the time of such Disposition, and after giving effect to

the Disposition, (i) no Default or Event of Default has occurred and is

continuing, (ii) the representations and warranties in this Agreement are true

and correct as if made at such time, and (iii) no reduction of the Commitment

will be required pursuant to Section 2.4.




 




(d)           Disposition of

property pursuant to the Port Ludlow Agreement;




 




(e)           Disposition of the

timber consulting business currently conducted by and through the Canadian

Subsidiary of Borrower;




 




(f)            additional Dispositions

involving consideration not exceeding $1,000,000 in the aggregate in any fiscal

year of Borrower.




 




7.5.         Investments.  Make any Investments, except:




 




(a)           Investments existing

on the date hereof;




 




(b)           Ordinary Course

Investments;




 




(c)           Investments

permitted by Section 7.3; and




 




(d)           additional

Investments not exceeding $1,000,000 in the aggregate in any fiscal year of

Borrower.




 




7.6.         Lease

Obligations.  Create or

suffer to exist any obligations for the payment of rent for any property under

lease or agreement to lease, except:




 




(a)           leases in existence

on the date hereof and any renewal, extension or refinancing thereof; and




 




(b)           leases (other than

capital leases) entered into or assumed by Borrower or any Subsidiary after the

date hereof in the ordinary course of business.




 




7.7.         Restricted

Payments.  Make any

Restricted Payments, except that Borrower may declare and make distributions to

its partners, or purchase, redeem or otherwise acquire its partnership units or

options, warrants or similar rights with respect to such partnership units,

provided that the aggregate Dollar amount of all such distributions, purchases,

redemptions and acquisitions in any fiscal year does not exceed fifty percent

(50%) of Consolidated Net Income for such fiscal year, excluding distributions

to pay the reasonably estimated federal and state income tax payable by each

unitholder of Borrower on such unitholder’s share of the taxable income of

Borrower (as calculated for federal income tax purposes as if all unitholders

have the same basis in Borrower’s assets as does Borrower itself); provided,

however, that in no event shall Borrower declare or make distributions

in any fiscal year, regardless of the type of or reason for such distributions,

in excess of seventy-five percent (75%) of Consolidated Net Income for such

year; and provided  further, that Borrower may not




 




28





























 




 purchase, redeem, or retire any outstanding

partnership units if after giving effect to any such purchase, redemption, or

retirement, Borrower would be in violation of any of the terms or covenants of

this Agreement.




 




7.8.         ERISA.  At any time engage in a

transaction which could be subject to Section 4069 or 4212(c) of ERISA, or

permit any Pension Plan to (a) engage in any non-exempt “prohibited

transaction” (as defined in Section 4975 of the Code); (b) fail to comply with

ERISA or any other applicable Laws; or (c) incur any material “accumulated

funding deficiency” (as defined in Section 302 of ERISA), which, with respect

to each event listed above, has a Material Adverse Effect.




 




7.9.         Change

in Nature of Business.  Make

any change in the nature of the business of any Borrower Party as conducted and

as proposed to be conducted as of the date hereof, other than as a result of

Dispositions in accordance with the provisions of Section 7.4 of this

Agreement.




 




7.10.       Transactions

with Affiliates.  Enter

into any transaction of any kind with any Affiliate of Borrower other than

arm’s-length transactions with Affiliates that are otherwise permitted

hereunder.




 




7.11.       Hostile

Acquisitions.  Use the proceeds of any Loan in connection

with the acquisition of a voting interest of five percent or more in any Person

if such acquisition is opposed by the board of directors or management of such

Person unless (a) Borrower has given Lender five Business Days’ prior

notice thereof and (b) Lender does not object to the use of the proceeds of

such Loan for that purpose.




 




7.12.       Limitations

on Upstreaming.  Agree to

any restriction or limitation on the making of Restricted Payments or

transferring of assets from any Subsidiary of Borrower to Borrower.




 




7.13.       Margin

Regulations.  Use the

proceeds of any Extensions of Credit hereunder for “purchasing” or “carrying”

“margin stock” as so defined or for any purpose which violates, or which would

be inconsistent with, the provisions of Regulations U or X of such Board of

Governors.




 




7.14.       Financial Covenants.




 




(a)           Cash Flow Coverage Ratio.  Permit Borrower’s Cash Flow Coverage Ratio

to be less than 1.10 to 1.00 as of the end of: 

(i) the six months ending June 30, 2001, (ii) the three

calendar quarter periods ending September 30, 2001, or (iii) any period of

four consecutive calendar quarters ending on or after December 31, 2001.




 




(b)           Debt to Capitalization Ratio.  Permit the Debt to Capitalization Ratio as

of the end of any fiscal quarter to be greater than 0.50:1.




 




7.15.       Timberland

Acquisitions.  Purchase or otherwise acquire timberland, in

one or a series of related transactions, for a purchase price of $5,000,000 or

more (whether paid in cash or otherwise), unless Borrower has obtained from an

appraiser acceptable to Lender an appraisal of such timberland confirming that

the fair market value of the timberland equals or exceeds the purchase price; provided,

however, that if the aggregate purchase price of all unappraised

purchases and other acquisitions of timberland following the Closing Date

exceeds $20,000,000, then Borrower shall obtain from an appraiser acceptable to

Lender an appraisal of such timberland.




 




7.16.       Change in

Auditors.  Change the

certified public accountants auditing the books of Borrower except to

certified public accountant of nationally recognized standing reasonably

acceptable to Lender.




 




29





























 




SECTION 8.




EVENTS OF DEFAULT AND REMEDIES




 




8.1.         Events of

Default.  Any one or more

of the following events shall constitute an Event of Default:




 




(a)           Borrower fails to

pay any principal on any Outstanding Obligation (other than fees) as and on the

date when due; or




 




(b)           Borrower fails to

pay any interest on any Outstanding Obligations, or any fees due hereunder

within three days after the date when due; or fails to pay any other fees or

amount payable to Lender under any other Loan Document within five days after

the date due; or




 




(c)           Any default occurs

in the observance or performance of any agreement contained in Section 6.1,

6.2, 6.4, 6.8 or 7; or




 




(d)           The occurrence of an

Event of Default (as such term is or may hereafter be specifically defined in

any other Loan Document) under any other Loan Document; or any Borrower Party

fails to perform or observe any other covenant or agreement (not specified in

subsection (a), (b) or (c) above) contained in any Loan Document on its part to

be performed or observed and such failure continues for 30 days; or




 




(e)           Any representation

or warranty in any Loan Document or in any certificate, agreement, instrument

or other document made or delivered by any Borrower Party pursuant to or in

connection with any Loan Document proves to have been materially incorrect when

made or deemed made; or




 




(f)            (i) Any Borrower

Party (x) defaults in any payment when due of principal of or interest on any

Indebtedness (other than Indebtedness hereunder) having an aggregate principal

amount in excess of the Threshold Amount or (y) defaults in the observance or

performance of any other agreement or condition relating to any Indebtedness

(other than Indebtedness hereunder) or contained in any instrument or agreement

evidencing, securing or relating thereto, or any other event shall occur, the

effect of which default or other event is to cause, or to permit the holder or

holders of such Indebtedness (or a trustee or agent on behalf of such holder or

holders or beneficiary or beneficiaries) to cause, with the giving of notice if

required, such Indebtedness to be demanded or become due (automatically or

otherwise) prior to its stated maturity, or any Guaranty Obligation in such

amount to become payable or cash collateral in respect thereof to be demanded,

or any Borrower Party is unable or admits in writing its inability to pay its

debts as they mature; or (ii) the occurrence under any Swap Contract of an

Early Termination Date (as defined in such Swap Contract) resulting from (x) any

event of default under such Swap Contract as to which Borrower or any

Subsidiary is the Defaulting Party (as defined in such Swap Contract) or (y)

the occurrence of any Termination Event under such Swap Contract (as defined

therein) as to which Borrower or any Subsidiary is an Affected Party (as so

defined) as a result of which, in either event, the Swap Termination Value owed

by Borrower or such Subsidiary is greater than the Threshold Amount; or




 




(g)           Any Loan Document,

at any time after its execution and delivery and for any reason other than the

agreement of Lender or satisfaction in full of all the Obligations, ceases to

be in full force and effect or is declared by a court of competent jurisdiction

to be null and void, invalid or unenforceable in any respect; or any Borrower

Party denies that it has any or further liability or obligation under any Loan

Document, or purports to revoke, terminate or rescind any Loan Document; or




 




(h)           (i)  A final judgment against any Borrower Party

is entered for the payment of money in excess of the Threshold Amount after

giving effect to the proceeds of any insurance available to the Borrower Party,

or any non–monetary final judgment is entered against any Borrower Party

which has a Material Adverse Effect and, in each case, if such judgment remains

unsatisfied without procurement of a stay of execution within (A) 30 calendar

days after the date of entry of judgment or, (B) if earlier, five days prior to




 




30





























 




 the date of any proposed sale, or (ii) any

writ or warrant of attachment or execution or similar process is issued or

levied against all or any material part of the property of any such Person and

is not released, vacated or fully bonded within 30 calendar days after its

issue or levy; or




 




(i)            Any Borrower Party

or any of its Subsidiaries institutes or consents to the institution of any

proceeding under Debtor Relief Laws, or makes an assignment for the benefit of

creditors; or applies for or consents to the appointment of any receiver,

trustee, custodian, conservator, liquidator, rehabilitator or similar officer

for it or for all or any material part of its property; or any receiver,

trustee, custodian, conservator, liquidator, rehabilitator or similar officer

is appointed without the application or consent of that Person and the

appointment continues undischarged or unstayed for 60 calendar days; or any

proceeding under Debtor Relief Laws relating to any such Person or to all or

any part of its property is instituted without the consent of that Person and

continues undismissed or unstayed for 60 calendar days, or an order for relief

is entered in any such proceeding; or




 




(j)            (i) An ERISA Event

occurs with respect to a Pension Plan or Multiemployer Plan which has resulted

or could reasonably be expected to result in liability of Borrower under

Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in

an aggregate amount in excess of the Threshold Amount; (ii) the aggregate

amount of Unfunded Pension Liability among all Pension Plans at any time

exceeds the Threshold Amount; or (iii) Borrower or any ERISA Affiliate fails to

pay when due, after the expiration of any applicable grace period, any

installment payment with respect to its withdrawal liability under Section 4201

of ERISA under a Multiemployer Plan in an aggregate amount in excess of the

Threshold Amount; or




 




(k)           There occurs any

Change of Control;




 




(l)            Borrower

Parties and their respective Subsidiaries, taken together, incur aggregate

obligations or other liability in excess of $10 million in connection with the

Port Gamble Environmental Issue (net of amounts paid or to be paid directly by

Pope & Talbot, Inc., and any other third parties, and amounts reimbursed to

Borrower by such parties); or




 




(m)          Any set of

circumstances or events occur that (a) has or could reasonably be expected to

have any material adverse effect whatsoever upon the validity or enforceability

of any Loan Document, or (b) materially impairs or could reasonably be expected

to materially impair the ability of any Borrower Party to perform the

Obligations.




 




8.2.         Remedies

Upon Event of Default.  Without

limiting any other rights or remedies of Lender provided for elsewhere in this

Agreement, the Loan Documents, or by applicable Law, or in equity, or

otherwise:




 




(a)           Upon the occurrence

of any Event of Default other  than an Event of Default described

in Section 8.1(i), Lender may terminate the Commitment and/or declare

all or any part of the unpaid principal of all Loans, all interest accrued and

unpaid thereon and all other amounts payable under the Loan Documents to be

immediately due and payable, whereupon the same shall become and be immediately

due and payable, without protest, presentment, notice of dishonor, demand or

notice of any kind, all of which are expressly waived by Borrower.




 




(b)           Upon the occurrence

of any Event of Default described in Section 8.1(i), the Commitment and

all other obligations of Lender under the Loan Documents shall automatically

terminate without notice to or demand upon Borrower, which are expressly waived

by Borrower, and the unpaid principal of all Loans, all interest accrued and

unpaid thereon and all other amounts payable under the Loan Documents shall be

immediately due and payable, without protest, presentment, notice of dishonor,

demand or notice of any kind, all of which are expressly waived by Borrower.




 




31





























 




(c)           Upon the occurrence

of any Event of Default, Lender, without notice to (except as expressly

provided for in any Loan Document) or demand upon Borrower, which are expressly

waived by Borrower (except as to notices expressly provided for in any Loan

Document), may proceed to protect, exercise and enforce its rights and remedies

under the Loan Documents against any Borrower Party and such other rights and

remedies as are provided by Law or equity.




 




(d)           The order and manner

in which Lender’s rights and remedies are to be exercised shall be determined

by Lender in its sole and absolute discretion. 

Regardless of how Lender may treat payments for the purpose of its own

accounting, for the purpose of computing the Obligations hereunder, payments

shall be applied first, to costs and expenses (including Attorney Costs)

incurred by Lender, second, to the payment of accrued and

unpaid interest on the Loans to and including the date of such application, third,

to the payment of the unpaid principal of the Loans, and fourth, to the payment of

all other amounts (including fees) then owing to Lender under the Loan

Documents.  No application of payments

will cure any Event of Default, or prevent acceleration, or continued

acceleration, of amounts payable under the Loan Documents, or prevent the

exercise, or continued exercise, of rights or remedies of Lender hereunder or

thereunder or at Law or in equity.




 




SECTION 9.




MISCELLANEOUS




 




9.1.         Amendments;

Consents.  No amendment,

modification, supplement, extension, termination or waiver of any provision of

this Agreement or any other Loan Document, no approval or consent thereunder,

and no consent to any departure by any Borrower Party therefrom shall be

effective unless in writing signed by Lender and any Borrower Parties party

thereto, and each such waiver or consent shall be effective only in the

specific instance and for the specific purpose for which given.




 




9.2.         Requisite Notice; Effectiveness of

Signatures and Electronic Mail.




 




(a)           Requisite Notice.  Notices given in connection with any Loan

Document shall be delivered to the intended recipient at the number and/or address

set forth on Schedule 9.02 (or as otherwise specified from time to time

by such recipient in writing to Lender) and shall be given by (i) irrevocable

written notice or (ii) except as otherwise provided, irrevocable telephonic

(not voicemail) notice.  Such notices

may be delivered, must be confirmed and shall be effective as follows: 




 




	

  Mode of Delivery


  	

   


  	

  Effective

  on earlier of actual receipt, and:


  
	

  Mail


  	

   


  	

  Fourth Business Day

  after deposit in U.S. mail, first class postage pre-paid


  
	

   


  	

   


  	

   


  
	

  Courier or hand delivery


  	

   


  	

  When signed for by

  recipient


  
	

   


  	

   


  	

   


  
	

  Telephone (not

  voicemail)


  	

   


  	

  When conversation

  completed (must be confirmed in writing)


  
	

   


  	

   


  	

   


  
	

  Facsimile


  	

   


  	

  When confirmed by

  telephone (not voicemail)


  
	

   


  	

   


  	

   


  
	

  Electronic Mail


  	

   


  	

  When delivered (usage

  subject  to subsection (c) below)


  





 




provided,

however, that notices delivered to Lender pursuant to Section 2

shall not be effective until actually received by Lender; provided, further,

that Lender may require that any notice be confirmed or followed by a

manually-signed hardcopy thereof. 

Notices shall be in any form prescribed herein and, if sent by a

Borrower Party, shall be made by a Responsible Officer of such Borrower

Party.  Notices delivered and, if

required, confirmed in accordance with this subsection shall be deemed to have

been delivered by Requisite Notice.




 




32





























 




(b)           Effectiveness of Facsimile Documents

and Signatures.  Loan

Documents may be transmitted and/or signed by facsimile.  The effectiveness of any such documents and

signatures shall, subject to applicable Law, have the same force and effect as

manually-signed hardcopies and shall be binding on all Borrower Parties and

Lender. Lender may also require that any such documents and signatures be

confirmed by a manually-signed hardcopy thereof; provided, however,

that the failure to request or deliver the same shall not limit the

effectiveness of any facsimile document or signature.




 




(c)           Limited Usage of Electronic

Mail.  Electronic mail

and internet and intranet websites may be used to distribute routine

communications, such as financial statements and other information, and to

distribute agreements and other documents to be signed by Lender and Borrower

Parties.  No other legally-binding

and/or time-sensitive communication or Request for Extension of Credit may be

sent by electronic mail without the consent of, or confirmation to, the

intended recipient in each instance.




 




(d)           Reliance by Lender.  So long as Lender is

acting in good faith, Lender shall be entitled to rely and act upon any notices

purportedly given by any Responsible Officer of Borrower and represented by

such Responsible Officer to be on behalf of any Borrower Party even if (i) such

notices were not made in a manner specified herein, were incomplete or were not

preceded or followed by any other notice specified herein, or (ii) the terms

thereof, as understood by the recipient, varied from any confirmation

thereof.  Borrower shall indemnify

Lender- from any loss, cost, expense or liability as a result of relying on any

notices purportedly given by given by any Responsible Officer of Borrower and

represented by such Responsible Officer to be on behalf of any Borrower Party.




 




9.3.         Attorney Costs,

Expenses and Taxes.  Borrower

agrees (a) to pay or reimburse Lender for all costs and expenses incurred in

connection with the development, preparation, negotiation and execution of the

Loan Documents, and the development, preparation, negotiation and execution of

any amendment, waiver, consent, supplement or modification to, any Loan

Documents, and any other documents prepared in connection herewith or

therewith, and the consummation and administration of the transactions

contemplated hereby and thereby, including all Attorney Costs, and (b) to pay

or reimburse Lender for all costs and expenses incurred in connection with any

refinancing, restructuring, reorganization (including a bankruptcy

reorganization) and enforcement or attempted enforcement, or preservation of

any rights under any Loan Documents, and any other documents prepared in

connection herewith or therewith, or in connection with any refinancing, or

restructuring of any such documents in the nature of a “workout” or of any

insolvency or bankruptcy proceeding, including Attorney Costs.  The foregoing costs and expenses shall

include all search, filing, recording, title insurance and appraisal charges

and fees and taxes related thereto, and other out-of-pocket expenses incurred

by Lender and the cost of independent public accountants and other outside

experts retained by Lender.  Any amount

payable to Lender under this Section shall bear interest from the second

Business Day following the date of demand for payment at the Default Rate.  The agreements in this Section shall survive

repayment of all Obligations.




 




9.4.         Successors and Assigns;

Participations.  This

Agreement and the other Loan Documents to which Borrower is a party will be

binding upon and inure to the benefit of Borrower and Lender and their

respective successors and assigns, except that Borrower may not assign or

transfer any of its rights under this Agreement without the prior written

consent of Lender and any such attempted assignment shall be void.  Lender in its sole and absolute discretion

may at any time, and from time to time, sell, assign (with the consent of

Borrower other than during the existence of a Default or an Event of Default,

which consent shall not be unreasonably withheld) or grant participations in

all or a portion of the Commitment and/or the Obligations outstanding under this

Agreement or any Loan Document. 

Borrower hereby acknowledges and agrees that any such assignment or

participation will give rise to a direct obligation of Borrower to the assignee

or participant upon written notice from Lender to Borrower.  Borrower agrees to execute, and cause each

other Borrower Party to execute, any documents reasonably requested by Lender

in connection with any such assignment.  All information provided by or on

behalf of Borrower to Lender or its Affiliates may be furnished by Lender to

its Affiliates and to any actual or proposed assignee or participant.




 




33





























 




9.5.         Set-Off.  In addition to any rights and remedies of Lender or any

assignee or participant of Lender or any Affiliates thereof (each, a “Proceeding

Party”) provided by law, upon the occurrence and during the continuance of

any Event of Default, each Proceeding Party is authorized at any time and from

time to time, without prior notice to Borrower, any such notice being waived by

Borrower to the fullest extent permitted by law, to proceed directly, by right

of set-off, banker’s lien, or otherwise, against any assets of the Borrower

Parties which may be in the hands of such Proceeding Party (including all

general or special, time or demand, provisional or other deposits and other

indebtedness owing by such Proceeding Party to or for the credit or the account

of Borrower) and apply such assets against the Obligations, irrespective of

whether such Proceeding Party shall have made any demand therefor and although

such Obligations may be unmatured.




 




9.6.         No

Waiver; Cumulative Remedies.  No

failure by Lender to exercise, and no delay by Lender in exercising, 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

under any Loan Document preclude any other or further exercise thereof or the

exercise of any other right, remedy, power or privilege.  The rights,

remedies, powers and privileges herein or therein provided are cumulative and

not exclusive of any rights, remedies, powers and privileges provided by

Law.  Any decision by Lender not to

require payment of any interest (including Default Interest), fee, cost or

other amount payable under any Loan Document or to calculate any amount payable

by a particular method on any occasion shall in no way limit or be deemed a

waiver of Lender’s right to require full payment thereof, or to calculate an

amount payable by another method that is not inconsistent with this Agreement,

on any other or subsequent occasion.




 




9.7.         Usury.  Notwithstanding anything

to the contrary contained in any Loan Document, the interest and fees paid or

agreed to be paid under the Loan Documents shall not exceed the maximum rate of

non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If Lender shall receive interest or a fee in

an amount that exceeds the Maximum Rate, the excessive interest or fee shall be

applied to the principal of the Outstanding Obligations or, if it exceeds the

unpaid principal, refunded to Borrower. 

In determining whether the interest or a fee contracted for, charged, or

received by Lender exceeds the Maximum Rate, Lender may, to the extent

permitted by applicable Law, (a) characterize any payment that is not principal

as an expense, fee, or premium rather than interest, (b) exclude voluntary

prepayments and the effects thereof, and (c) amortize, prorate, allocate, and

spread in equal or unequal parts the total amount of interest throughout the

contemplated term of the Obligations.




 




9.8.         Counterparts.  This Agreement may be executed in

one or more counterparts, each of which shall be deemed an original, but all of

which together shall constitute one and the same instrument.




 




9.9.         Integration.  This Agreement, together with the

other Loan Documents and any letter agreements referred to herein, comprises

the complete and integrated agreement of the parties on the subject matter

hereof and supersedes all prior agreements, written or oral, on the subject

matter hereof.  In the event of any

conflict between the provisions of this Agreement and those of any other Loan

Document, the provisions of this Agreement shall control and govern; provided

that the inclusion of supplemental rights or remedies in favor of Lender in any

other Loan Document shall not be deemed a conflict with this Agreement.  Each Loan Document was drafted with the

joint participation of the respective parties thereto and shall be construed

neither against nor in favor of any party, but rather in accordance with the

fair meaning thereof.  ORAL

AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT, OR TO FORBEAR

FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.




 




9.10.       Nature

of Lender’s Obligations.  Nothing

contained in this Agreement or any other Loan Document and no action taken by

Lender pursuant hereto or thereto may, or may be deemed to, make Lender a

partnership, an association, a joint venture or other entity with Borrower or

any Affiliate of Borrower.




 




9.11.       Survival of Representations and

Warranties.  All

representations and warranties made hereunder and in any other Loan Document,

certificate or statement delivered pursuant hereto or thereto or in 




 




34





























 




connection

herewith or therewith shall survive the execution and delivery thereof.  Such representations and warranties have

been or will be relied upon by Lender, notwithstanding any investigation made

by Lender or on its behalf.




 




9.12.       Indemnity

by Borrower.  Whether or

not the transactions contemplated hereby are consummated, Borrower agrees to

indemnify, save and hold harmless Lender, its Affiliates and their respective

officers, directors, employees, agents and attorneys-in-fact (collectively the

“Indemnitees”) from and against: 

(a) any and all claims, demands, actions or causes of action that are

asserted against any Indemnitee by any Person relating directly or indirectly

to a claim, demand, action or cause of action that such Person asserts or may

assert against any Borrower Party, any of their Affiliates or any of their

officers or directors; (b) any and all claims, demands, actions or causes of

action arising out of or relating to, the Loan Documents, any predecessor loan

documents, the Commitment, the use or contemplated use of the proceeds of any

Loan, or the relationship of any Borrower Party and Lender under this

Agreement; (c) any administrative or investigative proceeding by any

Governmental Authority arising out of or related to a claim, demand, action or

cause of action described in subsection (a) or (b) above; and (d) any and all

liabilities (including liabilities under indemnities), losses, costs or

expenses (including Attorney Costs) that any Indemnitee suffers or incurs as a

result of the assertion of any foregoing claim, demand, action, cause of action

or proceeding, or as a result of the preparation of any defense in connection

with any foregoing claim, demand, action, cause of action or proceeding, in all

cases, whether or not arising out of the negligence of an Indemnitee,  whether

or not an Indemnitee is a party to such claim, demand, action, cause of action

or proceeding (all the foregoing, collectively, the “Indemnified

Liabilities”); provided that no Indemnitee shall be entitled to

indemnification for any loss caused by its own gross negligence or willful

misconduct or for any loss asserted against it by another Indemnitee.  The agreements in this Section shall survive

repayment of all Obligations.




 




9.13.       Nonliability

of Lender.  Borrower

acknowledges and agrees that:




 




(a)           Any inspections of

any property of Borrower made by or through Lender are for purposes of

administration of the Loan Documents only, and Borrower is not entitled to rely

upon the same (whether or not such inspections are at the expense of Borrower);




 




(b)           By accepting or

approving anything required to be observed, performed, fulfilled or given to

Lender pursuant to the Loan Documents, Lender shall not be deemed to have

warranted or represented the sufficiency, legality, effectiveness or legal

effect of the same, or of any term, provision or condition thereof, and such

acceptance or approval thereof shall not constitute a warranty or

representation to anyone with respect thereto by Lender;




 




(c)           The relationship

between Borrower and Lender is, and shall at all times remain, solely that of

borrower and lender; Lender shall not under any circumstance be deemed to be in

a relationship of confidence or trust or a fiduciary relationship with Borrower

or its Affiliates, or to owe any fiduciary duty to Borrower or its Affiliates;

Lender does not undertake or assume any responsibility or duty to Borrower or

its Affiliates to select, review, inspect, supervise, pass judgment upon or

inform Borrower or its Affiliates of any matter in connection with their

property or the operations of Borrower or its Affiliates; Borrower and its

Affiliates shall rely entirely upon their own judgment with respect to such

matters; and any review, inspection, supervision, exercise of judgment or

supply of information undertaken or assumed by Lender in connection with such

matters is solely for the protection of Lender and neither Borrower nor any

other Person is entitled to rely thereon; and




 




(d)           Lender shall not be

responsible or liable to any Person for any loss, damage, liability or claim of

any kind relating to injury or death to Persons or damage to property caused by

the actions, inaction or negligence of Borrower and/or its Affiliates and

Borrower hereby indemnifies and holds Lender harmless from any such loss,

damage, liability or claim.




 




35





























 




9.14.       No Third

Parties Benefited.  This

Agreement is made for the purpose of defining and setting forth certain

obligations, rights and duties of Borrower and Lender in connection with the

Extensions of Credit, and is made for the sole benefit of Borrower and Lender,

and Lender’s successors and assigns. 

Except as provided in Sections 9.4 and 9.12, no other

Person shall have any rights of any nature hereunder or by reason hereof.




 




9.15.       Severability.  Any provision of the Loan

Documents that is prohibited or unenforceable in any jurisdiction shall, as to

such jurisdiction, be ineffective to the extent of such prohibition or

unenforceability without invalidating the remaining provisions hereof, and any

such prohibition or unenforceability in any jurisdiction shall not invalidate

or render unenforceable such provision in any other jurisdiction.




 




9.16.       Confidentiality.  Lender and each participant shall

use any confidential non-public information concerning the Borrower Parties and

their Subsidiaries that is furnished to it by or on behalf of the Borrower

Parties and their Subsidiaries in connection with the Loan Documents

(collectively, “Confidential Information”) solely for the purpose of

evaluating and providing products and services to them and administering and

enforcing the Loan Documents, and it will hold the Confidential Information in

confidence.  Notwithstanding the

foregoing, Lender may disclose Confidential Information (a) to its affiliates

or any of its or its affiliates’ directors, officers, employees, auditors,

counsel, advisors, or representatives (collectively, the “Representatives”)

whom it determines need to know such information for the purposes set forth in

this Section; (b) to any bank or financial institution or other entity to which

Lender has assigned or desires to assign an interest or participation in the

Loan Documents or the Obligations, provided that any such foregoing

recipient of such Confidential Information agrees to keep such Confidential

Information confidential as specified herein; (c) to any governmental agency or

regulatory body having or claiming to have authority to regulate or oversee any

aspect of Lender’s business or that of its Representatives in connection with

the exercise of such authority or claimed authority; (d) to the extent

necessary or appropriate to effect or preserve Lender’s or any of its

Affiliates’ security (if any) for any Obligation or to enforce any right or

remedy or in connection with any claims asserted by or against Lender or any of

its Representatives; and (e) pursuant to any subpoena or any similar legal

process.  For purposes hereof, the term

“Confidential Information” shall not include information that (x) is in

Lender’s possession prior to its being provided by or on behalf of the Borrower

Parties, provided that such information is not known by Lender to be

subject to another confidentiality agreement with, or other legal or contractual

obligation of confidentiality to, a Borrower Party, (y) is or becomes publicly

available (other than through a breach hereof by Lender), or (z) becomes

available to Lender on a nonconfidential basis, provided that the source

of such information was not known by Lender to be bound by a confidentiality

agreement or other legal or contractual obligation of confidentiality with

respect to such information.




 




9.17.       Further

Assurances.  Borrower and

its Subsidiaries shall, at their expense and without expense to Lender, do,

execute and deliver such further acts and documents as Lender from time to time

reasonably requires for the assuring and confirming unto Lender of the rights

hereby created or intended now or hereafter so to be, or for carrying out the intention

or facilitating the performance of the terms of any Loan Document.




 




9.18.       Headings.  Section headings in this

Agreement and the other Loan Documents are included for convenience of

reference only and are not part of this Agreement or the other Loan Documents

for any other purpose.




 




9.19.       Time of the

Essence.  Time is of the

essence of the Loan Documents.




 




9.20.       Governing Law.




 




(a)           THIS AGREEMENT SHALL

BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF

WASHINGTON APPLICABLE TO




 




36





























 




 AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY

WITHIN SUCH STATE; PROVIDED THAT LENDER SHALL RETAIN ALL RIGHTS ARISING UNDER

FEDERAL LAW.




 




(b)           ANY LEGAL ACTION OR

PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE

BROUGHT IN THE COURTS OF THE STATE OF WASHINGTON SITTING IN KING COUNTY OR OF

THE UNITED STATES FOR THE WESTERN 

DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT,

EACH BORROWER PARTY AND LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS

PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.  EACH BORROWER PARTY AND LENDER IRREVOCABLY

WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED

ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO

THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY

LOAN DOCUMENT OR OTHER DOCUMENT RELATED HERETO.  EACH BORROWER PARTY AND LENDER WAIVES PERSONAL SERVICE OF ANY

SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS

PERMITTED BY THE LAW OF SUCH STATE.




 




9.21.       Waiver

of Right to Trial by Jury.  EACH

PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF

ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER ANY LOAN DOCUMENT OR

IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE

PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY LOAN DOCUMENT, OR THE

TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER

ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY

HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF

ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO

THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH

ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE

WAIVER OF THEIR RIGHT TO TRIAL BY JURY.




 




IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as

of the date first above written.




 




	

   


  	

  POPE

  RESOURCES, A DELAWARE LIMITED 


  PARTNERSHIP


  
	

   


  	

   


  
	

   


  	

  By: 


  	

  POPE MGP, INC.,

  a Delaware corporation, as


       Managing General Partner


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:


  	

   /s/ Thomas M. Ringo


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Its:


  	

  Vice President

  and CFO


  





 




 




	

   


  	

  BANK OF AMERICA, N.A.


  
	

   


  	

   


  
	

   


  	

  By:


  	

              /s/ John N. Austenson


  
	

   


  	

   


  	

   


  
	

   


  	

  Name:


  	

         John N. Austenson


  
	

   


  	

   


  	

   


  
	

   


  	

  Title: 


  	

           Senior Vice President


  
					





 




37





























 




EXHIBIT A




FORM OF  REQUEST FOR

EXTENSION OF CREDIT




	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Date:


  
	

   


  	

   


  	

   


  
	

  To:


  	

  Bank of America, N.A. (“Lender”)


  	

   


  
	

   


  	

   


  	

   


  





Ladies and Gentlemen:




 




Reference is made to that certain Credit Agreement

dated as of March 27, 2001 between Pope Resources, A Delaware Limited

Partnership (“Borrower”), and Lender (as amended, restated, extended,

supplemented or otherwise modified in writing from time to time, the “Agreement;”

the terms defined therein being used herein as therein defined).




 




The undersigned hereby requests (select one):




 




o  A Loan                                             o  A Conversion or Continuation of A Loan




 




1.             On                                   (a Business

Day).




 




2.             In

the amount of $                                    .




 




3.             Comprised of                                               

..




                                                [type

of Loan requested]




 




4.             For

Offshore Rate Loans:  with an Interest

Period of                months.




 




The foregoing request complies with the requirements

of Section 2.1 of the Agreement. 

The undersigned hereby certifies that the following statements are true

on the date hereof, and will be true on the above date, before and after giving

effect and to the application of the proceeds therefrom:




 




(a)           The representations

and warranties made by Borrower in the Agreement, or which are contained in any

certificate, document or financial or other statement furnished at any time

under or in connection therewith, are and will be correct on and as of the date

of this Extension of Credit, except to the extent that such representations and

warranties specifically refer to any earlier date; and




 




(b)           no Default or Event

of Default has occurred and is continuing on the date hereof or after giving

effect to this Extension of Credit.




 




	

   


  	

  POPE

  RESOURCES, A DELAWARE LIMITED


  PARTNERSHIP


  
	

   


  	

   


  
	

   


  	

  By: 


  	

  POPE MGP, INC.,

  a Delaware corporation, as 


       Managing General Partner


  
	

   


  	

   


  
	

   


  	

   


  	

  By:


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Its:


  	

   


  





 




A - 1





























 




EXHIBIT B




FORM OF COMPLIANCE CERTIFICATE




 




Financial Statement Date:                   ,               




 




To:          Bank of America, N.A.

(“Lender”)




 




Ladies and Gentlemen:




 




Reference is made to that certain Credit Agreement dated

as of March 27, 2001 between Pope Resources, A Delaware Limited Partnership (“Borrower”)

and Lender (as amended, restated, extended, supplemented or otherwise

modified in writing from time to time, the “Agreement;” the terms

defined therein being used herein as therein defined).




 




The undersigned Responsible Officer hereby certifies

as of the date hereof that he is the                                      of Borrower, and that, as

such, he is authorized to execute and deliver this Certificate to Lender on the

behalf of Borrower, and that:




 




[Use

following for fiscal year-end financial statements]




 




1.             Attached

hereto as Schedule 1 are the year-end audited financial statements

required by Section 6.1(a) of the Agreement for the fiscal year of

Borrower ended as of the above date, together with the report and opinion of an

independent certified public accountant required by such section.




 




[Use

following for fiscal quarter-end financial statements]




 




1.             Attached

hereto as Schedule 1 are the unaudited financial statements required by Section

6.1(b) of the Agreement for the fiscal quarter of Borrower ended as of the

above date.  Such financial statements

fairly present the financial condition, results of operations and changes in

financial position of Borrower and its Subsidiaries in accordance with GAAP as

at such date and for such periods, subject only to normal year-end audit

adjustments and the absence of footnotes.




 




2.             The

undersigned has reviewed and is familiar with the terms of the Agreement and

has made, or has caused to be made under his supervision, a detailed review of

the transactions and conditions (financial or otherwise) of Borrower during the

accounting period covered by the attached financial statements.




 




3.             A

review of the activities of the Borrower Parties during such fiscal period has

been made under my supervision with a view to determining whether during such

fiscal period the Borrower Parties performed and observed all their respective

Obligations under the Loan Documents, and




 




[select one:]




 




[to

the best knowledge of the undersigned during such fiscal period, Borrower

performed and observed each covenant and condition of the Loan Documents

applicable to it.]




 




—or—




 




[the following covenants or

conditions have not been performed or observed and the following is a list of

each such Default or Event of Default and its nature and status:]




 




4.             The

following 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.




 




B - 1





























 




IN

WITNESS WHEREOF, the undersigned has executed this

Certificate as of                      

,                          .




 




	

   


  	

  POPE

  RESOURCES, A DELAWARE LIMITED PARTNERSHIP


  
	

   


  	

   


  
	

   


  	

  By: 


  	

  POPE MGP, INC.,

  a Delaware corporation, as 


       Managing General Partner


  	 

	

   


  	

   


  
	

   


  	

   


  	

  By:


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Its:


  	

   


  
					





 




B - 2





























 




For the Quarter/Year ended                                    (“Statement Date”)




 




SCHEDULE

2




to the Compliance Certificate




($ in 000’s)




 




	

  I.                               Section 7.14(a) — Cash Flow Coverage Ratio.


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

  A


  	

  Consolidated EBITDA for four consecutive fiscal

  quarters ending on above date (“Subject Period”):


  
	

   


  	

   


  	

  1.


  	

  Consolidated Net income for Subject Period:


  	

  $


  
	

   


  	

   


  	

  2.


  	

  Consolidated Interest Charges for Subject Period:


  	

  $


  
	

   


  	

   


  	

  3.


  	

  Provision for income taxes for Subject Period:


  	

  $


  
	

   


  	

   


  	

  4.


  	

  Depreciation expenses for Subject Period:


  	

  $


  
	

   


  	

   


  	

  5.


  	

  Depletion expenses for Subject Period:


  	

  $


  
	

   


  	

   


  	

  6.


  	

  Amortization expenses for intangibles for Subject

  Period:


  	

  $


  
	

   


  	

   


  	

  7.


  	

  Cost of Land Sold:


  	

  $


  
	

   


  	

   


  	

  8.


  	

  Consolidated EBITDA (Lines I.A.1 + 2 + 3 + 4 + 5 + 6

  + 7):


  	

  $


  
	

   


  	

  B.


  	

  Internally financed capital expenditures:


  	

  $


  
	

   


  	

  C.


  	

  Consolidated Interest Charges for Subject Period:


  	

  $


  
	

   


  	

  D.


  	

  Required principal payments for Subject Period


  	

  $


  
	

   


  	

  E.


  	

  Cash Flow Coverage Ratio ((Line I.A.6 - Line I.B)  ̧ (Line I.C + I.D)):


  	

                to 1


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Minimum

  required:


  	

  1.1 to 1


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

  II.                         Section 7.14(b) — Debt to

  Capitalization Ratio.


  
	

   


  
	

   


  	

  A.


  	

  Consolidated Funded Indebtedness at Statement Date:


  	

  $


  
	

   


  	

  B.


  	

  Market Capitalization at Statement Date:


  	

  $


  
	

   


  	

  C.


  	

  Sum of Consolidated Funded Indebtedness Plus Market

  Capitalization at Statement Date (Line II.A + II.B)


  	

  $


  
	

   


  	

  D.


  	

  Debt to Capitalization Ratio (Line II.A  ̧ Line II.C):


  	

                to 1


  
	

   


  	

   


  	

  Maximum

  permitted:


  	

  0.50:1


  
							





 




B

- 1





























 




	

  III.


  	

  Calculation

  of Revolving Loan Limit.


  
	

   


  	

   


  
	

   


  	

  A.


  	

  Prior to Sale of Port Ludlow Property


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Commitment at Statement Date


  	

  $


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  B


  	

  After Sale of Port Ludlow Property


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  1.


  	

  Commitment at Statement Date


  	

  $


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  2.


  	

  Borrowing Base Limit


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  a.


  	

  Market Value of Plum Creek Property


  	

  $54,241,000


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  b.


  	

  Value of unencumbered timberland Acquired after

  Closing Date


  	

  $


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  c.


  	

  Proceeds from sale of Plum Creek since Closing Date


  	

  $


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  d.


  	

  Sum (III.B.2.a + III.B.2.b + III.B.2.c)


  	

  $


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  e.


  	

  Borrowing Base Limit (III.B.2.d x 0.35)


  	

  $


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  3.


  	

  Revolving Loan Limit 


  (lesser of III.B.1 or III.B.2.e)


  	

  $


  





 




B - 2





























 




EXHIBIT C




PROMISSORY

NOTE




 




	

  $27,000,000


  	

   


  	

  March 27, 2001


  





 




FOR VALUE RECEIVED, the undersigned (the “Borrower”),

hereby promises to pay to the order of BANK OF AMERICA, N.A. (“Lender”),

on the Maturity Date (as defined in the Credit Agreement referred to below) the

principal amount of Twenty Seven Million Dollars ($27,000,000), or such lesser

principal amount of Loans (as defined in the Credit Agreement referred to

below) payable by Borrower to Lender on such Maturity Date under that certain

Credit Agreement dated as of March 27, 2001 between Borrower and Lender (as

amended, restated, extended, supplemented or otherwise modified in writing from

time to time, the “Agreement;” the terms defined therein being used

herein as therein defined).




 




Borrower promises to pay interest on the unpaid

principal amount of each Loan from the date of such Loan until such principal

amount is paid in full, at such interest rates, and payable at such times as

are specified in the Agreement.  All

payments of principal and interest shall be made to Lender in United States

Dollars in immediately available funds at Lender’s Office.  If any amount is not paid in full when due

hereunder, such unpaid amount shall bear interest, to be paid upon demand, from

the due date thereof until the date of actual payment (and before as well as

after judgment) computed at the per annum rate set forth in the Agreement.




 




This Note is the “Note” referred to in the

Agreement.  Reference is hereby made to

the Agreement for rights and obligations of payment and prepayment, events of

default and the right of Lender to accelerate the maturity hereof upon the

occurrence of such events.  Loans made

by Lender shall be evidenced by one or more loan accounts or records maintained

by Lender in the ordinary course of business. Lender may also attach schedules

to this Note and endorse thereon the date, amount and maturity of its Loans and

payments with respect thereto.




 




Borrower, for itself, its successors and assigns,

hereby waives diligence, presentment, protest and demand and notice of protest,

demand, dishonor and non-payment of this Note.




 




Borrower agrees to pay all collection expenses, court

costs and Attorney Costs (whether or not litigation is commenced) which may be

incurred by Lender in connection with the collection or enforcement of this

Note.




 




THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN

ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON.  ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, TO EXTEND CREDIT, OR

TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER

WASHINGTON LAW.




 




	

   


  	

  POPE

  RESOURCES, A DELAWARE LIMITED PARTNERSHIP


  
	

   


  	

   


  
	

   


  	

  By:


  	

   POPE MGP, INC., a Delaware

  corporation, as 
       Managing General Partner


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:


  	

   


  
	

   


  	

   


  	

  Its:


  	

   


  





 




C - 1





























 




LOANS AND PAYMENTS WITH RESPECT

THERETO




 




	

  Date


  	

   


  	

  Type

  of Loan


  Made


  	

   


  	

  Amount

  of


  Loan Made


  	

   


  	

  End

  of


  Interest


  Period


  	

   


  	

  Amount

  of


  Principal or 


  Interest Paid 


  This Date


  	

   


  	

  Outstanding


  Principal


  Balance This


  Date


  	

   


  	

  Notation


  Made By


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  





 




C - 2





























 




EXHIBIT D




FORM OF

OPINION OF COUNSEL




 




D - 1





























 




EXHIBIT E




PLUM CREEK PROPERTY




 




	

  Clark

  County


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 5 North, Range 4 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 15:


  	

  W1/2SW1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 6 North, Range 2 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 25:


  	

  N1/2SW1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Cowlitz

  County


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 6 North, Range 1 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 5:


  	

  SE1/4SW1/4, SW1/4SE1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 6 North, Range 2 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 1:


  	

  SW1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 3:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 5:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 9:


  	

  NW1/4NE1/4, NE1/4NW1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 6 North, Range 3 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 23:


  	

  N1/2SE1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 25:


  	

  Lots 1, NW1/4NE1/4, N1/2NW1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 7 North, Range 3 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 21:


  	

  SW1/4NE1/4, SE1/4NW1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 31:


  	

  S1/2SE1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 8 North, Range 3 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 13:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 21:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 23:


  	

  All


  	

   


  	

   


  
					





 




E - 1





























 




	

   


  	

   


  	

   


  	

   


  
	

  Skamania

  County


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 6 North, Range 5 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 1:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 2:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 3:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 11:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 12:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 13:


  	

  N1/2


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 6 North, Range 6 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 1:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 2:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 3:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 4:


  	

  Lots 1, 2, 3, S1/2NE1/4, SE1/4NW1/4, E1/2SW1/4, S1/2SW1/4SW1/4, SE1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 5:


  	

  S1/2SE1/4SE1/4, Lot 3, 4, S1/2NW1/4, W1/2SW1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 6:


  	

  Lots 1, 2, 3, 6, 7, 8, 10, 12, S1/2NE1/4, SE1/4NW1/4, E1/2SW1/4,

  SE1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 7:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 8:


  	

  NE1/4NE1/4, S1/2NE1/4, NW1/4NW1/4, S1/2NW1/4, S1/2


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 9:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 10:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 11:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 12:


  	

  N1/2, N1/2S1/2


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 7 North, Range 5 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 24:


  	

  N1/2, SW1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 7 North, Range 6 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 3:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 4:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 5:


  	

  All Fractional


  	

   


  	

   


  





 




E - 2





























 




	

   


  	

   


  	

   


  	

   


  
	

  Section 6:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 7:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 8:


  	

  NE1/4, W1/2E1/2NW1/4NW1/4, W1/2W1/2NW1/4,


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  NW1/4NE1/4SW1/4NW1/4, SE1/4NE1/4SW1/4NW1/4, SE1/4SW1/4NW1/4,


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  S1/2N1/2SE1/4NW1/4, S1/2SE1/4NW1/4 and S1/2


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 9:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 10:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 11:


  	

  W1/2


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 14:


  	

  N1/2NE1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 15:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 16:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 17:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 18:


  	

  Lots 1-4, E1/2W1/2, N1/2NE1/4, SW1/4SE1/4, SW1/4NE1/4 EXCEPT that

  portion conveyed to Marshall and Melba Moore by deed recorded in Book 194,

  Page 10


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 19:


  	

  All Fractional


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 20:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 21:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 22:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 23:


  	

  Lots 1, 2, W1/2, W1/2SE1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 27:


  	

  All, EXCEPTING from said Section 27 the following described tracts:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  That portion conveyed to Swift Creek Estates by deed

  recorded under Auditor’s File No. 99965, Book 85, Page 66, described as

  follows:  Beginning at the Southeast

  corner of said Section 27; thence North 0004’20” East 60.96 feet,

  more or less, along the Easterly line of said Section 27 to the Southerly

  right of way boundary of the Lewis River road, commonly called the N-90 Road;

  thence South 86017’00” West 569.87 feet, more or less, along said

  Southerly right of way boundary; thence South 3043’00” East 25

  feet, more or less, to a point on the Southerly line of said Section 27;

  thence South 89048’15” East 566 feet, more or less, along said

  Southerly line to the Point of Beginning. 

  ALSO EXCEPTING that portion of the E1/2SE1/4 of said Section 27, being

  that certain Short Plat as recorded in Skamania County on November 3, 1987,

  in Book 3 of Short Plats, page 125, recorded under Auditor’s File No. 104203


  
	

   


  	

   


  
	

  Section 28:


  	

  All, EXCEPTING from said Section 28 the following

  described tracts: Beginning at a point on the West line of said Section 28

  which is South 0016’55” East a distance of 1,674.98 feet


  





 




E - 3





























 




	

   


  	

  from the West quarter section corner thereof and running thence South

  25037’ East 498.22 feet; thence South 47034’30” East

  595.58 feet; thence North 59033’30” East 240.47 feet; thence South

  40026’ East 296.84 feet; thence South 89049’45”West

  1,050.02 feet to the Southwest corner of said Section 28;  and thence North 0016’55” West

  958.19 feet to the Point of Beginning. 

  ALSO EXCEPTING, Beginning at a point on the South line of said Section

  28 which is North  89049’45”

  East 2,006.72 feet from the Southwest corner thereof; and running thence

  North 78019’30” East 237.50 feet; thence North 33028’

  East 235.01 feet; thence North 63023’ East 464.47 feet; thence

  North 21005’30” East 360.93 feet; thence North 17030’30”

  East 212.97 feet; thence North 57042’ East 110.31 feet; thence

  South 16009’30” East 375.99 feet; thence South 10031’30”

  East 336.26 feet; thence South 31011’ West 416.74 feet to a point

  on the South line of said Section 28, which is South 89052’30”

  West 2,259.98 feet from the Southeast corner thereof; thence South 89052’30”

  West 380.01 feet to the South quarter corner of said Section 28; and thence

  South 89049’45” West 634.99 feet to the Point of Beginning.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 29:


  	

  All, EXCEPT that portion conveyed to Pacific Power and Light Co. by

  deed recorded under Auditor’s File No. 55342, Book 46, Page 115, described as

  lying South and West and below the 1,000 foot


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 33:


  	

  All, EXCEPT that portion conveyed to Pacific Power and Light Co. by

  deed recorded under Auditor’s File No. 55342, Book 48, Page 115, described as

  those portions lying below the 1,000 foot.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 35:


  	

  That part of fractional section lying Southeasterly of the Swift

  Creek Reservoir and being above the 1,000 contour


  
	

   


  	

   


  	

   


  	

   


  
	

  Lewis County


  	

   


  
	

   


  	

   


  
	

  Township 12 North, Range 4 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 1:


  	

  Government Lots 1, 2, 3, 4, S1/2NE1/4,

  NE1/4SE1/4;  ALSO that portion of the

  SW1/4NW1/4 lying within a 100 foot strip of land, being 50 feet on either

  side of the centerline of the main track of the former Chicago, Milwaukee and

  St. Paul Railway Company


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 2:


  	

  The South 85 feet of the SE1/4SE1/4, lying West of

  U.S. Highway 12 and described in Deed recorded under Auditor’s File No.

  8905420


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 3:


  	

  SE1/4SW1/4, S1/2SE1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 9:


  	

  NE1/4NE1/4, that portion of the NW1/4NE1/4 lying Southeasterly of

  Highland Valley Road, S1/2NE1/4, SE1/4NW1/4, S1/2 EXCEPT the North 189 feet

  of the NW1/4NE1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 11:


  	

  All of said section lying Southwesterly of U.S. Highway 12


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 17:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 19:


  	

  Government Lot 7 EXCEPT approximately 44.48 acres

  conveyed to the City of Tacoma by deed recorded under Auditor’s File No.

  707066, lying Southwesterly of the following described line:


  
	

   


  	

   


  
	

   


  	

  Beginning at the

  mid-point of the North line of said subdivision; thence South 44000’43”

  East 927.54 feet, more or less, to a point on the East line of said 


  





 




E - 4





























 




	

   


  	

   


  	

   


  	

   


  
	

   


  	

  subdivision

  which is South 0046’39” West a distance of 659.48 feet from the Northeast

  corner thereof and the terminus of said line


  
	

  Section 21:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 27:


  	

  N1/2, N1/2SW1/4, SW1/4SE1/4, and that portion of the SE1/4SW1/4

  EXCEPT approximately 13.80 acres in the SE1/4SW1/4 conveyed to the City of

  Tacoma by deed recorded under Auditor’s File No. 707066, Southwesterly of the

  following described line:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Beginning at a point on the West line of said subdivision South 1031’07”

  West 550 feet from the Northwest corner of said subdivision; thence South 74032’05”

  East 412.11 feet; thence South 53007’46” East 1,107.12 feet, more

  or less, to the Southeast corner of said subdivision and the terminus of said

  line.


  
	

   


  	

   


  	

   


  
	

  Section 28:


  	

  That portion of the NE1/4 of said section lying Northeasterly of the

  following described line:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Beginning at the Northwest corner of the SW1/4NE1/4; thence

  Southeasterly to the Southeast corner of said subdivision and the terminus of

  said line.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 35:


  	

  E1/2NW1/4, NE1/4 and Government Lot 4 EXCEPT approximately 13.34

  acres in the 


  
	

   


  	

   


  	

  E1/2NW1/4 conveyed to the City of Tacoma by deed recorded under

  Auditor’s File No. 707066, lying Westerly of the following described line:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  Beginning at a point on the West line of said Subdivision, North 1015’10”

  East 350.00 feet from the Southwest corner of said Subdivision; thence South

  53036’43” East 611.40 feet, more or less, to a point on the South

  line of the NE1/4NW1/4, South 88031’54”East 500 feet from the

  Southwest corner thereof; thence South 25047’11”West 722.49 feet;

  thence South 33027’52” East 802.76 feet, more or less, to the

  mid-point of the South line of the SE1/4NW1/4, said point lying South 88033’50”

  East 657.21 feet, more or less, from the Southwest corner thereof, and the

  terminus of said line.


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  EXCEPT ALSO approximately 1.51 acres in the SW1/4NE1/4 conveyed to

  the City of Tacoma by deed recorded under Auditor’s File No. 707066,

  described as that portion of the SW1/4NE1/4 of said section lying Southerly of

  a line drawn 50 feet Northerly of and parallel to the South line of said

  subdivision;


  
	

   


  	

   


  	

   


  	

   


  
	

  :


  	

   


  	

  EXCEPT ALSO approximately 29.75 acres in Government Lot 4 conveyed to

  the City of Tacoma by deed recorded under Auditor’s File No. 707066,

  described as lying Southwesterly of the following described line


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  BEGINNING at the Northwest corner of said Lot 4, said corner lying

  North 88033’50” West 1,318.76 feet, more or less, from the East

  quarter corner of said Section; thence South 62003’43” East

  1,473.23 feet, more or less, to the mid-point of the East line of said Lot 4,

  said mid-point lying South 1028’00” West 657.40 feet, more or

  less, from the East quarter corner of said Section, and the terminus of said

  line.


  





 




E - 5





























 




	

   


  	

   


  	

   


  	

   


  
	

  Township 12 North, Range 5 East, W.M.


  
	

   


  
	

  Section 1:


  	

  W1/2, NE1/4, N1/2SE1/4 and the SE1/4SE1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 3:


  	

  All, TOGETHER WITH an easement for ingress and egress as described in

  instruments recorded under Auditor’s File Nos. 680424 and 697932


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 5:


  	

  All, TOGETHER WITH an easement for ingress and egress over a 60 foot

  wide strip as described in instrument recorded July 11, 1989 under Auditor’s

  File No. 8905781


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 7:


  	

  NE1/4, NE1/4SE1/4, E1/2E1/2NW1/4SE1/4, and the North 7 acres of the


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  W1/2E1/2NW1/4SE1/4;


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  TOGETHER WITH an easement for ingress and egress over a 60 foot wide

  strip as described in instrument recorded January 16, 1976, under Auditor’s

  File No. 810668.


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  ALSO, that portion of the SE1/4SE1/4 lying within a 100 wide strip of

  land being


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  50 feet on either side of the centerline of the main tract of the

  Northern Pacific


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  Railway Company.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 9:


  	

  All, TOGETHER WITH an easement for ingress and egress over an

  existing 50 foot wide road as described in instrument recorded June 4, 1995

  under Auditor’s File No. 680424


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 11:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 17:


  	

  E1/2, NE1/4NW1/4, S1/2SW1/4, EXCEPT approximately  7.36 acres conveyed to State of Washington

  for highway right-of-way by deed recorded October 2, 1951 under Auditor’s

  number 495492


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 21:


  	

  W1/2NW1/4, NE1/4NW1/4, NW1/4NE1/4


  
	

   


  	

   


  
	

  Section 23:


  	

  E1/2NE1/4, SE1/4


  
	

   


  	

   


  
	

  Section 27:


  	

  S1/2 EXCEPT approximately 17.39 acres in Government

  Lot 6 conveyed to the City of Tacoma by deed recorded under Auditor’s File

  No. 707066, described as lying Northwesterly of a line running from the

  Southwest corner of said subdivision to the Northeast corner thereof.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 29:


  	

  Part of the W1/2 and the SW1/4NE1/4 lying Westerly of the following

  described line:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  BEGINNING at the Southwest corner of said section; thence North 0040’48”

  East along the West line of said Section 29, 657.57 feet, more or less, to

  the mid-point of the West line of the SW1/4SW1/4; thence North 46040’01”

  East, 924.79 feet, more or less, to the mid-point of the North line of said

  SW1/4SW1/4, said mid-point lying South 88001’41” East, 665.28

  feet, more or less, from the West line of said section; thence South 88001’41”

  East 665.27 feet, more or less, along the North line of said SW1/4SW1/4 to

  the Northeast corner of said SW1/4SW1/4; thence North 15041’30”

  East 1323.48 feet, more or less, to the mid-point of the North line of the

  NW1/4NE1/4SW1/4, said mid-point lying South 87001’58” East 1674.35

  feet, more


  





 




E - 6





























 




	

   


  	

   


  	

  or less, from the West quarter corner of said section; thence North

  47044’40” East 1388.55 feet, more or less, to the mid-point of the

  West line of the NW1/4SW1/4NE1/4, said mid-point lying South 1025’18”

  West 1643.35 feet, more or less, from the North quarter corner of said

  section; thence North 47043’14” East, 461.26 feet, more or less,

  to the mid-point of the North line of the NW1/4SW1/4NE1/4, said mid-point

  lying North 86051’49” West 2335.44 feet, more or less, from the

  East line of said Section.


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  ALSO that portion of the SE1/4NE1/4 and the SE1/4, lying Easterly of

  the following described line:


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  BEGINNING at the Northeast corner of the Southeast quarter of the

  Northeast quarter of said section; thence South 1025’32” West

  along the East line of said section 292.83 feet, more or less, to a point

  lying South 1025’32” West 1599.64 feet from the Northeast corner

  of said section; thence South 35033’14” West 361.95 feet; thence

  South 52000’02” West 291.51 feet; thence South 60039’32”

  West 804.00 feet; thence South 70031’07” West 229.95 feet, more or

  less, to the Southwest corner of the SE1/4NE1/4, said Southwest corner lying

  North 87001’58” West 1334.38 feet, more or less, from the East

  quarter corner of said Section; thence South 67041’02” West 283.37

  feet; thence South 25018’10” West 424.57 feet; thence South 3034’36”

  East 528.26 feet; thence South 21039’45” East 268.99 feet, more or

  less to a point on the South line of the N1/2SE1/4, North 86012’25”

  West 1614.99 feet from the East line of said section, said point lying North

  86012’25” West 280.00 feet, more or less, from the Southeast

  corner of the NW1/4SE1/4; thence South 10054’23” West 648.57 feet;

  thence South 32005’31” West 524.38 feet; thence South 2036’38”

  East 173.03 feet, more or less, to a point on the South line of said section,

  said point lying South 85022’57: East 692.99 feet from the South

  quarter corner of said section;


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  EXCEPT Government Lots 1 and 2;


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  EXCEPT ALSO that portion of the NE1/4SE1/4 of said section lying

  Southeasterly of the following described line:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  BEGINNING at the East quarter corner of said section, said corner

  lying South 1025’32” West 2613.63 feet, more or less, from the

  Northeast corner of said section; thence South 28057’37” West

  1442.66 feet, more or less, the mid-point of the South line of said

  subdivision, said mid-point lying North 86012’25” West 667.49

  feet, more or less, from the Southeast corner of said subdivision.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 31:


  	

  NW1/4NE1/4, E1/2NW1/4 EXCEPT approximately 38.73 acres  conveyed to the City of Tacoma by deed

  recorded under Auditor’s File No. 707066 described as follows:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  (1) 


  	

  that portion of the SE1/4NW1/4 of said section lying Southeasterly of

  the following described line:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  BEGINNING at the Southwest corner of said subdivision; thence North

  46017’26” East 927.92 feet; thence North 22040’37” East

  702.33 feet, more or less, to a point on the North line of said subdivision,

  said point lying North 88022’25” West 400.00 feet from the

  Northeast corner of said subdivision.


  
					





 




E - 7





























 




	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  (2)


  	

  that portion of the NE1/4NW1/4 of said section described as follows:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  BEGINNING at the Southeast corner of said subdivision; thence North

  88022’25” West 400.00 feet along the South line of said

  subdivision; thence North 0036’52: East 654.67 feet; thence South

  57008’03” East 472.87 feet, more or less, to a point on the East

  line of said subdivision, said point lying North 0036’43” East

  409.39 feet from the Southeast corner of said subdivision, thence South 0036’43”

  West 409.39 feet along the East line of said subdivision to the Southeast

  corner of said subdivision.


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  (3)


  	

  Those portions of the NW1/4NE1/4 of said section described as

  follows:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

  BEGINNING at the Southwest corner of said subdivision; thence North 0036’43”

  East along the West line of said subdivision 409.39 feet; thence South 57008’03”

  East 781.10 feet, more or less, to the mid-point of the South line of said

  subdivision; thence North 88044’26” West along the South line of

  said subdivision 660.61 feet, more or less, to the Southwest corner of said

  subdivision.


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

  (4)


  	

  That portion of said subdivision lying Easterly of a line projected

  from the Northeast corner of said subdivision South 27047’59” West

  729.92 feet; thence South 0053’39” West 653.02 feet, more or less,

  to the mid-point of the South line of the Southeast quarter of said

  NW1/4NE1/4, said mid-point lying North 88044’26” West 330.30 feet,

  more or less, from the Southeast corner of the NW1/4NE1/4.


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 12 North, Range 6 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 1:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 3:


  	

  All, TOGETHER WITH an easement for ingress and egress over a 50 foot

  wide strip as described in instrument recorded November 23, 1964 under

  Auditor’s File No. 672210


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 5:


  	

  Government Lots 1, 2, 3, 4, SE1/4NE1/4,

  N1/2SW1/4NE1/4, S1/2NW1/4, W1/2SW1/4, W1/2NE1/4SW1/4, NE1/4NE1/4SW1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 10:


  	

  NE1/4NE1/4 and that portion of the NW1/4NW1/4  described as follows:


  
	

   


  	

   


  
	

   


  	

   


  	

  BEGINNING at the Northeast corner of a tract conveyed to Lewis County

  by deed recorded March 26, 1938 under Auditor’s File No. 314452; thence North

  47032’30” West along the Northerly line of said tract 285 feet;

  thence North 337 feet; thence East 209 feet to the East line of said

  NW1/4NW1/4; thence North along said East line 104.5 feet to the True Point of

  Beginning; thence continuing North along said East line 360 feet, more or

  less, to the North line of said subdivision; thence West along said North

  line 209 feet; thence South parallel with the East line of said subdivision

  to a point West of the True Point of Beginning; thence East to the True Point

  of Beginning.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 11:


  	

  N1/2


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 12 North, Range 7 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 27:


  	

  SW1/4NE1/4NE1/4, SE1/4NE1/4


  





 




E - 8





























 




	

   


  	

   


  	

   


  	

   


  
	

  Township 13 North, Range 4 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 35:


  	

  That portion of the NE1/4NE1/4 lying Northerly of

  State Route No. 7, as recorded under Auditor’s File No. 789588; 


  
	

   


  	

  ALSO that portion of the N1/2SW1/4NE1/4, NE1/4NW1/4,

  S1/2NW1/4 and SW1/4 lying Westerly of State Route 7, as recorded under

  Auditor’s File No.789588;


  
	

   


  	

  ALSO the West 30 feet of NE1/4SE1/4, N1/2SE1/4SE1/4,

  SE1/4SE1/4SE1/4 and the West 30 feet of SW1/4SE1/4SE1/4 EXCEPT Klasey Road


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 13 North, Range 5 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 3:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 7:


  	

  W1/2, NE1/4, that portion of the SE1/4 lying

  Northerly of State Route 7


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 8:


  	

  That portion of the NW1/4SW1/4 lying Northwesterly of Highway No. 7


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 9:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 17:


  	

  S1/2, S1/2NW1/4, NE1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 29:


  	

  S1/2, NE1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 31:


  	

  All, TOGETHER WITH an easement for ingress and egress over those 60

  foot wide strips as described in instrument recorded July 11, 1989 under

  Auditor’s File No. 8905781


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 32:


  	

  NE1/4


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 33:


  	

  All


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 34:


  	

  S1/2NW1/4, N1/2SW1/4, NW1/4SE1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 35:


  	

  S1/2, S1/2N1/2, NE1/4NE1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 14 North, Range 6 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 1:


  	

  NE1/4SW1/4, SE1/4


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 14 North, Range 7 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section 6:


  	

  Government Lot 8


  





 




E - 9





























 




	

   


  	

   


  	

   


  	

   


  
	

  Township 15 North, Range 7 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

               

  Section 33:


  	

  Those portions of the SW1/4NW1/4, SW1/4, S1/2SE1/4

  lying Southerly of the Nisqually River


  
	

   


  	

   


  	

   


  	

   


  
	

  Pierce

  County


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 15 North, Range 6 East, W.M.


  
	

   


  
	

  Section 25:


  	

  N1/2N1/2 and that portion of the SW1/4NW1/4 lying

  Northerly of the North line of Mt. Tacoma Canyon Road; ALSO part of the

  E1/2W1/2SE1/4NE1/4 as conveyed by Bargain and Sale Deed recorded under

  Auditor’s File No. 2060187  described

  as follows:


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  BEGINNING at a point on the North line of the

  Mountain Road, 738 feet West of the East line of said Section 25; thence West

  252 feet; Thence North Parallel with the East line of said Section 25 to the

  North line of the SE1/4NE1/4; thence East 330 feet; Thence South to a point

  220 feet North and 78 feet East of the Point of Beginning; thence West 78

  feet; thence South 220 feet to the point of beginning;


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  EXCEPT that portion conveyed to the State of

  Washington by Quit Claim Deed recorded under Recording No. 9604120400.


  
	

   


  	

   


  	

   


  	

   


  
	

  Township 15 North, Range 7 East, W.M.


  
	

   


  	

   


  	

   


  	

   


  
	

  Section  35:


  	

  Parts of NE1/4SW1/4, S1/2SE1/4, lying Northerly of

  the Nisqually River


  





 




E - 10





























 




SCHEDULE 7.01




EXISTING INDEBTEDNESS, LIENS AND NEGATIVE PLEDGES




 








	

  INDEBTEDNESS


  
	

  DEBTHOLDER


  	

   


  	

  Principal Amt Owed


  @ March 27, 2001


  
	

  JOHN HANCOCK LIFE INSURANCE CO.


  	

   


  	

  $


  	

  12,864,764


  
	

   


  	

   


  	

   


  
	

  JOHN HANCOCK LIFE INSURANCE CO. (anticipated to fund by 3/30/01)


  	

   


  	

  $


  	

  30,000,000


  
	

   


  	

   


  	

   


  
	

  LOCAL IMPROVEMENT DISTRICT (LID) OBLIGATIONS:


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

  GIG HARBOR


  	

   


  	

  114,280


  
	

   


  	

   


  	

   


  
	

  EVERETT


  	

   


  	

  44,970


  
	

   


  	

   


  	

   


  
	

  SEABECK


  	

   


  	

  35,176


  










 








	 
	

  LETTERS OF CREDIT


  
	 
	

  ISSUED BY


  	

   


  	

  BENEFICIARY


  	

   


  	

  AMOUNT


  
	

  BANK OF AMERICA


  	

   


  	

  CANADIAN 

  INTERNATIONAL DEVELOPMENT AGENCY (CIDA )


  	

   


  	

  C$ 136,250


  	 

											










 








	

  LEASE AND SURFACE MINING BONDS


  	

   


  
	

  BOND#


  	

   


  	

  TYPE OF BOND


  	

   


  	

  PURPOSE


  	

   


  	

  NAME


  	

   


  	

  PERMIT #


  	

   


  	

  LEASE #


  	

   


  	

  Prem.Renewal


  Date


  	

   


  	

  BOND $


  	

   


  
	

  1675838


  	

   


  	

  SURFACE MINING


  	

   


  	

   


  	

   


  	

  CHAMBERS CONSTRUCTION


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  06/28/2001


  	

   


  	

  5,000


  	

   


  
	

  1566868


  	

   


  	

  SURFACE MINING


  	

   


  	

   


  	

   


  	

  BEAVER VALLEY


  	

   


  	

  70-012769


  	

   


  	

   


  	

   


  	

  01/11/2002


  	

   


  	

  8,000


  	

   


  
	

  1673713


  	

   


  	

  SURFACE MINING


  	

   


  	

   


  	

   


  	

  BEAVER VALLEY


  	

   


  	

  1106


  	

   


  	

   


  	

   


  	

  02/27/2002


  	

   


  	

  36,000


  	

   


  
	

  1673712


  	

   


  	

  LEASE BOND


  	

   


  	

  FOR TIDE


  LANDS


  	

   


  	

  LUDLOW MARINA


  	

   


  	

   


  	

   


  	

  320-012407


  	

   


  	

  02/01/2002


  	

   


  	

  16,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  SUB

  TOTAL


  	

   


  	

  65,000


  	

   


  










 




1





























 








	

  CONSTRUCTION BONDS


  
	

   


  BOND#


  	

   


  	

  TYPE OF BOND


  	

   


  	

  PURPOSE


  	

   


  	

  NAME


  	

   


  	

  PERMIT #


  	

   


  	

  LEASE #


  	

   


  	

  Prem. Renewal Date


  	

   


  	

  BOND $


  	

   


  
	

  1675832


  	

   


  	

  PERFORMANCE


  	

   


  	

  CONTRACTOR SURETY


  	

   


  	

  STATE OF WA


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  06/01/2001


  	

   


  	

  6,000


  	

   


  
	

  191573S


  	

   


  	

  PERFORMANCE


  	

   


  	

  SUBDIVISION IMPROVEMENTS


  	

   


  	

  SEABECK HEIGHTS


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  06/13/2001


  	

   


  	

  37,746


  	

   


  
	

  1564984


  	

   


  	

  LICENSE/PERMIT


  	

   


  	

  SEABECK HEIGHTS


  	

   


  	

  09/17/2001


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  2,500


  	

   


  	

   


  	

   


  
	

  1719235


  	

   


  	

  PERFORMANCE


  	

   


  	

  MURRELET 

  SURVEYS


  	

   


  	

  CITY OF MONTESANO


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  03/07/2001


  	

   


  	

  1,000


  	

   


  
	

  1836606


  	

   


  	

  PERFORMANCE


  	

   


  	

  DNR CONTRACT


  	

   


  	

  WA ST DNR


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  08/08/2001


  	

   


  	

  5,094


  	

   


  
	

  1837343


  	

   


  	

  Permit Bond — Aberdeen


  	

   


  	

  Road Construction


  	

   


  	

  WA St DOT


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  10/05/2000


  	

   


  	

  2,500


  	

   


  
	

  1721597


  	

   


  	

  Performance Bond


  	

   


  	

  Sewer Line Borgen Blvd.


  	

   


  	

  City of Gig Harbor


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  07/26/2000


  	

   


  	

  39,306


  	

   


  
	

  1838144


  	

   


  	

  Performance Bond


  	

   


  	

  Street, Storm, Swr, Wtr, & Signs


  	

   


  	

  Timberton Village Phase III


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  01/23/2002


  	

   


  	

  90,800


  	

   


  
	

  1839742


  	

   


  	

  Maintenance Bond


  	

   


  	

  Completed Work


  	

   


  	

  City of Gig Harbor


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  02/22/2002


  	

   


  	

  5,783


  	

   


  
	

  CK#0500130666


  	

   


  	

  Cashiers Ck in Leu of Performance Bond


  	

   


  	

  Sewer work performance


  	

   


  	

  City of Gig Harbor


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  N/A Issued 02/28


  	

   


  	

  750


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  SUB

  TOTAL


  	

   


  	

  191,479


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  TOTAL

  BONDS


  	

   


  	

  256,479


  	

   


  
																	










 




2





























 




	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  NOTARY BONDS


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

  As of 02/28/01


  	

   


  
	

  BOND#


  	

   


  	

  ASSIGNEE


  	

   


  	

  EXPIRATION DATE


  	

   


  	

   


  	

  BOND $


  	

   


  
	

  5851095


  	

   


  	

  Mary Corbett


  	

   


  	

  02/27/2004


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5863199


  	

   


  	

  Cynde Mayson


  	

   


  	

  04/01/2004


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5863209


  	

   


  	

  Michelle Wilcox


  	

   


  	

  04/04/2004


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5904342


  	

   


  	

  Pam Grove


  	

   


  	

  05/07/2001


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5930195


  	

   


  	

  Fay Schultz


  	

   


  	

  01/23/2002


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5930280


  	

   


  	

  Wendy Battaglino


  	

   


  	

  04/09/2002


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5930281


  	

   


  	

  Craig Jones


  	

   


  	

  04/10/2002


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5939523


  	

   


  	

  Michael Morgan


  	

   


  	

  06/04/2002


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5939542


  	

   


  	

  Dani Aldana


  	

   


  	

  06/23/2002


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5939590


  	

   


  	

  Miriam Villiard


  	

   


  	

  08/21/2002


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  593596


  	

   


  	

  Jacqueline


  McClurg


  	

   


  	

  09/14/2002


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  5812134


  	

   


  	

  Penny Henderson


  	

   


  	

  02/05/2003


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  6055822


  	

   


  	

  D. Susan Schroader


  	

   


  	

  08/01/2004


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  6103299


  	

   


  	

  Ember Krumwied


  	

   


  	

  01/24/2005


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

  SUB

  TOTAL  


  	

  140,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  NON EMPLOYEE


  
	

   


  
	

  *5897967


  	

   


  	

  Gwynne Bennett


  	

   


  	

  03/01/2001


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  *5904342


  	

   


  	

  Pam Grove


  	

   


  	

  05/07/2001


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  *5915444


  	

   


  	

  Noreen James


  	

   


  	

  10/01/2001


  	

   


  	

  10,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

  SUB

  TOTAL


  	

   


  	

  30,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

  TOTAL

  ORM


  	

   


  	

  140,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

  TOTAL

  ALL


  	

   


  	

  170,000


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
												





 




* Per PS&F

these people are no longer our employees, therefore there is no liability to

us.




 




3





























 




	

  Letters of Credit


  
	

   


  
	

  As of 02/28/01


  
	

   


  
	

  Letter #


  	

   


  	

  Issued By


  	

   


  	

  Expiration Date


  	

   


  	

  Amount


  	

   


  	

  Project


  	

   


  	

  Purpose


  	

   


  
	

  3020784


  	

   


  	

  Bank of America


  	

   


  	

  December 2, 2002


  	

   


  	

  $


  	

  113,760.00


  	

   


  	

  CIDA


  	

   


  	

  Canadian Government - Contract Canadian $


  	

   


  
													





 




4





























 




SCHEDULE 9.02




NOTICE ADDRESSES AND LENDING OFFICE




BORROWER




 




Pope Resources, A Delaware Limited Partnership




P.O. Box 1780




19245 10th Avenue N.E.




Poulsbo, Washington 98370




	

  Attn:


  	

  Chief Financial Officer


  
	

   


  	

  Telephone: 

  360-697-6626


  
	

   


  	

  Facsimile: 

  360-697-1156


  
	

   


  	

  Electronic Mail:

  tomringo@orminc.com


  





 




	

  With a copy to:


  	

  Greg F. Adams


  
	

   


  	

  Davis Wright Tremaine LLP


  
	

   


  	

  2600 Century Square


  
	

   


  	

  1501 Fourth Avenue


  
	

   


  	

  Seattle, Washington 98101-1688


  
	

   


  	

   


  





 




LENDER




 




Lending Office for Extensions of

Credit and Payments:




 




BANK OF

AMERICA, N.A.


CLSC—Seattle Admin #94680




P.O. Box 84448




Seattle, Washington 98124




Attn:                    Sharolynn K. Abbott


Telephone:  206-358-8549  


Facsimile:  206-358-5614 


Electronic Mail: sharolynn.k.abbott@bankofamerica.com


Account No. 7036787029


Ref: Pope Resources


ABA# 125000024




 




Notices (other than Requests for

Extensions of Credit):




 




BANK OF AMERICA, N.A.


800 Fifth Avenue, Floor 35




Mail Code: 

WA1-501-35-01




Seattle, Washington 98104




Attn:                    John N.

Austenson


Telephone:  206-358-3986


Facsimile:  206-358-3971 


Electronic mail: 

john.n.austenson@bankofamerica.com




 




1