RECORDING REQUESTED BY:
Fidelity National Title Insurance Company
WHEN RECORDED, RETURN TO:
Sheppard, Mullin, Richter & Hampton LLP
4 Embarcadero Center, 17th Floor
San Francisco, CA 94111
Attn: Joan H. Story, Esq.
NEW RECIPROCAL RIGHTS AGREEMENT
THIS NEW RECIPROCAL RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of July 20, 1998 by and among THE PACIFIC LUMBER COMPANY, a
Delaware corporation ("Pacific Lumber"), SCOTIA PACIFIC COMPANY LLC, a
Delaware limited liability company ("Scotia Pacific"), and SALMON CREEK
CORPORATION, a Delaware corporation ("Salmon Creek").
RECITALS
A. Scotia Pacific Holding Company, a Delaware corporation ("SPH"),
previously acquired from Pacific Lumber approximately 179,200 acres of
commercial timberlands located in Humboldt County, California, which land
is more particularly described in Exhibit A attached hereto and
incorporated herein by this reference (the "SPH Property"). At that time,
Pacific Lumber retained ownership of and the right in perpetuity to harvest
all trees and timber now or in the future growing on approximately 7,900
acres of the SPH Property (the "Original Pacific Lumber Timber Rights").
B. Scotia Pacific is the successor by merger to SPH, and accordingly
has succeeded in title to the SPH Property.
C. Scotia Pacific has acquired from Pacific Lumber approximately
13,500 acres of additional commercial timberlands located in Humboldt
County, California, which land is more particularly described in Exhibit B
attached hereto and incorporated herein by this reference (the "New Scotia
Pacific Property"), and the Original Pacific Lumber Timber Rights with
respect to approximately 7,500 acres of the SPH Property. The SPH Property
and the New Scotia Pacific Property are hereinafter referred to
collectively as the "Scotia Pacific Property."
D. Pacific Lumber retains title to certain additional real property
in Humboldt County, California, near to or adjoining the Scotia Pacific
Property and the Salmon Creek Property (as defined below), which land
includes developed parcels, log decks, grasslands and timberlands and is
more particularly described in Exhibit C attached hereto and incorporated
herein by this reference (the "Pacific Lumber Property").
E. Pacific Lumber has transferred to Scotia Pacific title to and the
right in perpetuity to harvest all trees and timber now or in the future
growing on approximately 11,100 acres of the Pacific Lumber Property (the
"Scotia Pacific/PL Timber Rights").
F. Scotia Pacific has transferred to Pacific Lumber title to and the
right in perpetuity to harvest all trees and timber now or in the future
growing on approximately 1,300 acres of the SPH Property (together with the
Original Pacific Lumber Timber Rights to approximately 350 acres retained
by Pacific Lumber, the "Pacific Lumber Timber Rights").
G. Salmon Creek previously acquired from Pacific Lumber
approximately 6,000 acres of land located in Humboldt County, California,
which land is more particularly described in Exhibit D attached hereto and
incorporated herein by this reference (the "Salmon Creek Property").
H. Salmon Creek has transferred to Pacific Lumber, which has in turn
transferred to Scotia Pacific, title to and the right in perpetuity to
harvest all trees and timber now or in the future growing on approximately
1,100 acres of the Salmon Creek Property (the "Scotia Pacific/SC Timber
Rights").
I. The location of the lands subject to the Scotia Pacific/SC Timber
Rights, and the Pacific Lumber Timber Rights, are shown with particularity
on certain maps held in trust by U.S. Bank of California ("Escrow Holder")
pursuant to the terms of that certain New Escrow Agreement dated as of
July 20, 1998 (the "Escrow Agreement") among Scotia Pacific, Pacific
Lumber, Salmon Creek, and the Escrow Holder. The Scotia Pacific/PL Timber
Rights and the Scotia Pacific/SC Timber Rights are hereinafter referred to
collectively as the "Scotia Pacific Timber Rights." The land subject to
the Scotia Pacific Timber Rights is hereinafter referred to as the "Scotia
Pacific Timber Rights Property," and the land subject to the Pacific Lumber
Timber Rights is hereinafter referred to as the "Pacific Lumber Timber
Rights Property."
J. Pacific Lumber and Scotia Pacific have executed, or intend to
execute, a New Services Agreement pursuant to which Pacific Lumber will
provide certain land and timber operational and management services with
respect to the Scotia Pacific Property and the Scotia Pacific Timber Rights
Property (the "New Services Agreement"), a New Master Purchase Agreement
governing the sale of logs by Scotia Pacific to Pacific Lumber and the
harvesting and removal by Pacific Lumber of the logs so purchased (the "New
Master Purchase Agreement"), a New Additional Services Agreement pursuant
to which Scotia Pacific will provide certain services to Pacific Lumber
(the "New Additional Services Agreement").
K. Pacific Lumber, SPH and Salmon Creek previously entered into that
certain Reciprocal Rights Agreement dated March 18, 1993 and recorded March
22, 1993 as Document No. 1993-1890-136 in the Official Records of Humboldt
County, California (the "Old Reciprocal Rights Agreement").
L. Pacific Lumber, Scotia Pacific and Salmon Creek now desire to
provide for reciprocal rights of access over, entry onto and use of the
lands of the other parties hereto in connection with the exercise of the
Scotia Pacific Timber Rights and the Pacific Lumber Timber Rights, the
performance of the New Services Agreement, the New Master Purchase
Agreement and related log purchase agreements, and the New Additional
Services Agreement and for various other purposes related to the operation,
management and utilization of the lands and the timber owned by each, and
on terms differing from the Old Reciprocal Rights Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby expressly acknowledged, the parties hereto
agree as follows:
1. Termination of Old Reciprocal Rights Agreement. Pacific Lumber,
Scotia Pacific, as successor in interest to SPH, and Salmon Creek, the
parties to the Old Reciprocal Rights Agreement and the holders of all the
real property subject to the Old Reciprocal Rights Agreement, hereby
terminate the Old Reciprocal Rights Agreement (except to the extent
otherwise provided in Section 9(a) of this Agreement).
2. Access Rights. Pacific Lumber, Scotia Pacific and Salmon Creek
hereby each grant to each of the other parties hereto, for the benefit of
each party, its officers, directors, employees, agents, representatives,
servants, invitees, successors and assigns (collectively, the "Related
Persons"), the right to enter upon the Pacific Lumber Property, the Scotia
Pacific Property and the Salmon Creek Property, respectively, for the
following purposes (the "Purposes"):
(i) to conduct wildlife and other studies and to gather any
other data reasonably necessary, advisable or desirable to prepare
timber harvesting plans and/or any other studies, reports, plans or
documents in connection with the business and activities of Pacific
Lumber, Scotia Pacific and/or Salmon Creek, whether or not required to
be filed with any governmental departments, agencies or other entities
having jurisdiction thereof;
(ii) to survey or examine any portions of the Scotia Pacific
Property, the Pacific Lumber Property, the Salmon Creek Property or
the timber or other resources located thereon;
(iii) to carry out conservation, management, operation and
utilization activities with respect to timber, land and other
resources, whether or not pursuant to the New Services Agreement, the
New Master Purchase Agreement and related log purchase agreements
and/or the New Additional Services Agreement;
(iv) to implement and maintain fisheries and/or wildlife
management or conservation programs, whether or not required by
applicable law;
(v) to conduct timber harvesting operations, including, without
limitation, the removal of logs, with respect to timber owned by such
party or subject to an agreement to cut or similar agreement in favor
of such party;
(vi) to carry out timber replanting and regeneration activities;
(vii) to explore, test for and extract minerals, gas, oil and
hydrocarbon substances owned by such party;
(viii) to extract gravel and rock for any purpose permitted by
paragraph 3 hereof;
(ix) to extract water for any purpose permitted by paragraph 4
hereof;
(x) to exercise hunting rights granted pursuant to paragraph 5
hereof;
(xi) to conduct fire protection, fire suppression and fire
control activities pursuant to paragraph 6 hereof;
(xii) to provide ingress and egress from public roadways over the
lands of the other parties to the Scotia Pacific Property, the Scotia
Pacific Timber Rights Property, the Pacific Lumber Property, the
Pacific Lumber Timber Rights Property and the Salmon Creek Property,
utilizing existing and future roadways and rights-of-way on such
lands;
(xiii) to exercise any other rights granted by or reasonably
necessary, advisable or desirable to perform such party's obligations
under this Agreement, the New Services Agreement, the New Master
Purchase Agreement, the New Additional Services Agreement or any of
the other Operative Documents, as such term is defined in that certain
Indenture dated as of even date herewith between Scotia Pacific and
State Street Bank and Trust Company, as trustee, governing the Timber
Notes issued by Scotia Pacific as of such date and any Additional
Timber Notes subsequently issued by Scotia Pacific (the "Indenture"),
or the Indenture or any other documents contemplated by the Indenture;
and
(xiv) to otherwise manage, operate and utilize such party's
interest in the Scotia Pacific Property, the Scotia Pacific Timber
Rights Property, the Pacific Lumber Property, the Pacific Lumber
Timber Rights Property and the Salmon Creek Property and the assets
located on or relating to any of the foregoing lands.
(a) Existing Rights of Way. The foregoing grant of access shall
include, without limitation, rights of way over all existing and future
roads located on the Scotia Pacific Property, the Pacific Lumber Property
and the Salmon Creek Property for any of the Purposes. This reciprocal
grant of rights of way shall include the right of all lessees, licensees
and permittees of Pacific Lumber, Scotia Pacific and Salmon Creek to use
any roadways, now or hereafter existing, on the Scotia Pacific Property,
the Pacific Lumber Property or the Salmon Creek Property which are
reasonably necessary or advisable for ingress to and egress from that
portion of the Scotia Pacific Property, the Pacific Lumber Property or the
Salmon Creek Property subject to any lease, use agreement or similar
agreement or arrangement. Pacific Lumber, Scotia Pacific and Salmon Creek
each agree, from and after the date of this Agreement, not to enter into
any lease, use agreement or similar agreement or arrangement with a third
party which requires access over the lands owned by or subject to the
timber rights of either of the other parties without obtaining the prior
consent of such party, which consent shall not be unreasonably withheld.
(b) New Roads. Pacific Lumber, Scotia Pacific and Salmon Creek, and
their respective Related Persons, shall each have the right to construct
such new roads over the lands of the other parties as are reasonably
necessary, advisable or desirable to carry out any of the Purposes. All
new roads shall be constructed so as to minimize any adverse affects on the
land and otherwise in accordance with the provisions of Section 9(b)
hereof. Before constructing any new road on the property of another party
to this Agreement, Pacific Lumber, Scotia Pacific and Salmon Creek shall
each obtain the approval of such party, which approval shall not be
unreasonably withheld. If the burdened landowner objects to the proposed
location of the new road, such owner shall propose an alternative location
for construction of the proposed road, which alternative location shall
not, in any material respect, increase the cost of constructing the road or
decrease the usefulness of the road to the benefited party.
(c) Road Construction and Maintenance Costs. So long as the New
Services Agreement is in effect, Pacific Lumber shall be responsible for
and Scotia Pacific shall bear the cost, in accordance with the provisions
of the New Services Agreement, of maintaining all roads on or serving the
Scotia Pacific Property or the Scotia Pacific Timber Rights Property and
Pacific Lumber shall be responsible, at its own cost, for maintaining all
roads on or serving the Pacific Lumber Property or the Pacific Lumber
Timber Rights Property. Pacific Lumber and Scotia Pacific shall in the
event of termination of the New Services Agreement, and Salmon Creek shall
at all times, be responsible for maintaining all roads existing on or
serving its own lands in a manner consistent in all material respects with
prudent business practices, which, in the reasonable judgment of the
responsible party, are (i) consistent with the current applicable industry
standards, and (ii) in compliance in all material respects with applicable
laws. Subject to the terms of the New Services Agreement, each party shall
be responsible for construction of roads for its own benefit on its own
lands. Any party desiring to construct a new road over the lands of
another party shall be responsible for all costs of constructing such road,
which thereafter shall be subject to the maintenance provisions of this
paragraph.
(d) Access Fees. No party shall charge the other parties any fees
for access under the terms of this Agreement.
3. Extraction of Rock and Gravel. In addition to the rights granted
to Pacific Lumber by Scotia Pacific pursuant to the New Master Purchase
Agreement, Pacific Lumber, Scotia Pacific and Salmon Creek hereby each
grant to the other parties hereto, for the benefit of each party, and its
Related Persons, the right to extract from the Pacific Lumber Property, the
Scotia Pacific Property, and the Salmon Creek Property, respectively, rock
and gravel in such quantities as may be required for use in the
construction and maintenance of roads or as may be reasonably necessary,
advisable or desirable to carry out any of the other Purposes. All such
extractions of rock and gravel shall be performed in a manner reasonably
designed to minimize any adverse affects on the land and otherwise in
accordance with the provisions of Section 9(b) hereof.
4. Water Rights. Pacific Lumber, Scotia Pacific and Salmon Creek
hereby each grant to the other parties hereto, for the benefit of each
party, and its Related Persons, the right to draw water from the creeks,
streams and rivers on the Pacific Lumber Property, the Scotia Pacific
Property and the Salmon Creek Property, respectively, as reasonably
necessary, advisable or desirable to carry out any of the Purposes. Water
shall be extracted only in amounts consistent in all material respects with
the past practices of Pacific Lumber, with such modifications thereto from
time to time as are reasonably necessary or advisable in light of changed
circumstances or required by changes in the laws and/or governmental
regulations applicable to such waterways, in a manner which does not
impede, in any material respect, the legal or contractual rights of any
downstream water users and otherwise in accordance with the provisions of
Section 9(b) hereof.
5. Hunting and Fishing Rights. Pacific Lumber, Scotia Pacific and
Salmon Creek hereby each grant to each of the other parties hereto, for the
benefit of the officers, directors, employees, permittees and invitees of
each party, the right to come onto the lands of the other for the purpose
of hunting, at all times permitted by applicable law, all fish, game
animals and birds permitted by applicable law to be hunted. Pacific Lumber
shall have the sole authority and responsibility to supervise all hunting
and game management activities on the Pacific Lumber Property, the Scotia
Pacific Property and the Salmon Creek Property, including, without
limitation, the issuance of hunting access permits and keys to locked
access roads. Hunting access permits shall be issued only to persons
holding valid hunting or fishing licenses and shall be issued only for use
during legal hunting and/or fishing seasons established by the State of
California.
6. Soil Conservation Districts; Fire Fighting. Pacific Lumber,
Scotia Pacific and Salmon Creek hereby each covenant to cooperate with each
of the other parties hereto in (i) the establishment of soil conservation
districts, and (ii) the conduct of fire protection, fire suppression and
fire control activities, benefiting the Pacific Lumber Property, the Scotia
Pacific Property and/or the Salmon Creek Property. All decisions
concerning the establishment of soil conservation districts or the conduct
of fire protection, suppression or control activities shall be made jointly
by the parties whose land is benefited thereby, and the costs thereof shall
be borne as agreed by the parties.
7. Joint Plans and Permits. Pacific Lumber, Scotia Pacific and
Salmon Creek hereby each covenant to cooperate with each of the other
parties in preparing, filing and updating, as required by any governmental
department, agency or other entity having jurisdiction thereof or as
otherwise deemed necessary, advisable or desirable by the parties, joint
management, habitat conservation, sustained yield or similar plans or
permits, with respect to the Pacific Lumber Property, the Scotia Pacific
Property and the Salmon Creek Property and the timber and other resources
thereon.
8. Establishment of Agreed Boundaries. Pacific Lumber, Scotia
Pacific and Salmon Creek hereby acknowledge that certain boundary lines
have not been established by survey and, in many cases, section corners
have not been physically located and marked to delineate the Pacific Lumber
Property, the Scotia Pacific Property, the Salmon Creek Property, the
Scotia Pacific Timber Rights Property, and the Pacific Lumber Timber Rights
Property. Pacific Lumber, Scotia Pacific, and Salmon Creek agree that
boundary determinations to delineate the land subject to the Scotia
Pacific/SC Timber Rights, and the Pacific Lumber Timber Rights Property,
shall be made pursuant to the New Escrow Agreement. Pacific Lumber, Scotia
Pacific, and Salmon Creek agree that boundary determinations with respect
to the remainder of the Scotia Pacific Timber Rights Property, and the
Pacific Lumber Property, the Scotia Pacific Property, and the Salmon Creek
Property reasonably made by any individual or firm selected jointly by all
parties shall be binding upon Pacific Lumber, Scotia Pacific, and Salmon
Creek. In the event Pacific Lumber, Scotia Pacific, and Salmon Creek are
not able to agree upon an individual or firm to make the boundary
determination, each party shall designate its own representative and the
representatives shall work together in good faith to establish the agreed
boundary. Nothing in the foregoing shall prevent any party from obtaining,
at such party's cost, a survey by a licensed surveyor of any disputed
boundary line. All agreed boundaries shall be blazed on trees and/or
otherwise marked in accordance with then-existing standard industry
practice for similar lands. In the event standing timber owned by Pacific
Lumber, Scotia Pacific or Salmon Creek (or any two of them as appropriate)
is harvested pursuant to a joint timber harvesting plan, the parties shall
account for the timber volume harvested by each party, based on the agreed
boundary established in accordance with this paragraph.
9. Indemnities and Covenants.
(a) Pacific Lumber, Scotia Pacific and Salmon Creek (each, an
"Indemnifying Party") hereby each agree to indemnify each of the other
parties hereto, any subsidiary or affiliate companies of the other parties
hereto, and their respective shareholders and members, and the Related
Persons of any of the foregoing (the "Indemnified Parties") from and
against any and all claims, demands, causes of action, expenses or
liabilities (including reasonable attorneys fees and disbursements) of
every kind and character (whether known or unknown, fixed or contingent,
liquidated or unliquidated, secured or unsecured, choate or inchoate,
accrued, absolute or otherwise), suffered or sustained, arising out of the
activities or omissions of the Indemnifying Party under the Old Reciprocal
Rights Agreement or this Agreement or the breach by the Indemnifying Party
of any of the provisions of the Old Reciprocal Rights Agreement or this
Agreement. Any Indemnified Party claiming a right of indemnity pursuant to
this Section 9(a) shall notify the Indemnifying Party promptly of such
claim after learning of the same. The Indemnifying Party shall have the
right to defend the claim, and the Indemnified Party shall cooperate in the
defense. If the Indemnifying Party does not defend the claim, the
Indemnified Party may engage separate counsel and the Indemnifying Party
shall pay the reasonable fees and expenses of such counsel. Neither
Indemnifying Party shall have any obligation to pay for any settlement of a
claim made without its consent. Notwithstanding the foregoing, the monetary
obligations of Scotia Pacific under this Section 9(a) or any other
provisions of this Agreement shall be payable solely from, and the parties
acknowledge that such obligations are expressly limited to, Excess Funds as
such term is defined in the Indenture) or other funds not subject to the
Lien of the Deed of Trust (as those terms are defined in the Indenture).
(b) Pacific Lumber, Scotia Pacific and Salmon Creek each agree
to carry out all activities permitted by the terms of this Agreement on the
lands of the other parties hereto in compliance with all local, state and
federal laws, ordinances, rules and regulations and regulatory permits or
plans, or agreements with regulatory authorities, applicable to such lands
and otherwise in a manner consistent in all material respects with the
prudent business practices which, in the reasonable judgment of the acting
party, are (i) consistent with then current applicable industry standards,
and (ii) in compliance in all material respects with applicable laws. Each
party shall supervise its employees, agents, representatives, servants and
invitees while on the lands of the other party in a reasonably prudent
manner.
10. Covenants Running With the Land. The provisions of this
Agreement shall be binding upon and shall inure to the benefit of the
successors of Pacific Lumber, Scotia Pacific and Salmon Creek, and the
covenants contained in this Agreement shall, except as expressly provided
to the contrary herein, be appurtenant to and run with the land and shall
be binding upon all successor owners of the Pacific Lumber Property, the
Scotia Pacific Property and the Salmon Creek Property. In the event (i)
Pacific Lumber desires to sell or otherwise transfer: (x) all or a
material portion of its interest in any portion of the Pacific Lumber
Property or the Pacific Lumber Timber Rights Property; or (y) a majority of
the then outstanding capital stock of Salmon Creek (whether in one or in a
series of transactions), or (ii) Scotia Pacific desires to sell or
otherwise transfer all or a material portion of its interest in any portion
of the Scotia Pacific Property or the Scotia Pacific Timber Rights
Property, or (iii) Salmon Creek desires to sell or otherwise transfer all
or a material portion of its interest in any portion of the Salmon Creek
Property, to an unrelated third party, it shall, prior to such sale or
transfer, notify the other two parties. In the event that either or both
of such other two parties determine, in its (their) reasonable business
judgment, that a legitimate business purpose exists to terminate all or a
portion of the reciprocal rights that would be received by the prospective
transferee, then, upon written request from such other party or parties,
the prospective transferor shall relinquish all of the reciprocal rights
granted herein requested to be relinquished, provided that and only to the
extent such termination and relinquishment shall not have a material
adverse effect on any portion of the operations or business to be conducted
by the prospective transferee on the property to be transferred as
determined by the parties hereto in their reasonable business judgment.
Such relinquishment shall be binding upon successor owners of the property
to be transferred, and relinquishment of rights shall not terminate the
burdens imposed by this Agreement upon the property to be transferred,
which burdens shall not be terminated in connection with a transfer of
property except as otherwise provided below. Furthermore, if the
prospective transferor determines, in its reasonable business judgment,
that the transferability or marketability of the property sought to be
transferred will be impaired if burdened by one or more of the rights
granted to the other party by this Agreement, then, upon receipt of a
written request from the transferor prior to such transfer, the other
parties to this Agreement shall relinquish all of the reciprocal rights
granted herein requested to be relinquished with respect to the property to
be transferred, provided that and only to the extent such termination and
relinquishment shall not have a Material Adverse Effect (as defined in the
Indenture) on Scotia Pacific, or a material adverse effect on any portion
of the operations or business of any other relinquishing party as
determined by the parties hereto in their reasonable business judgment.
Such relinquishment shall be binding upon successor owners of the property
to be transferred, and such relinquishment of rights shall not terminate
the rights granted pursuant to this Agreement benefiting property to be
transferred, which rights shall not be terminated in connection with a
transfer of the property, except as otherwise provided above. Pacific
Lumber, Scotia Pacific and Salmon Creek each agree to cooperate with each
of the other parties hereto in granting to successor owners of any portion
of the Pacific Lumber Property, the Scotia Pacific Property and the Salmon
Creek Property such rights of way and/or other rights as may be reasonably
required to make the parcel being transferred transferrable or marketable
and to execute and deliver to the other such documents as may be necessary
or appropriate to evidence any such grant or any termination of any rights
granted herein, provided that no such document or agreement shall have a
Material Adverse Effect (as defined in the Indenture) on Scotia Pacific, or
a material adverse effect on the operation or business of any other party
to this Agreement or its successors as determined by the parties hereto in
their reasonable business judgment.
11. Amendments. This Agreement may be amended only by an agreement
in writing executed by all the parties in accordance with Section 4.12 of
the Indenture. Promptly following the execution of any amendment to this
Agreement, Scotia Pacific shall furnish to the Trustee and each Rating
Agency (as those terms are defined in the Indenture) a true, correct and
complete copy of such amendment.
12. No Bankruptcy Petition. Pacific Lumber and Salmon Creek each
hereby covenant and agree that prior to the date which is one year and one
day after payment in full of all outstanding Notes (as defined in the
Indenture), it will not institute against or join any other Persons (as
that term is defined in the Indenture) in instituting against Scotia
Pacific, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceeding or other similar proceeding under any Bankruptcy Law
(as that term is defined in the Indenture).
13. Entire Agreement. This Agreement (together with the Escrow
Agreement with respect to the establishment of boundaries) contains the
entire understanding between the parties with respect to the subject matter
hereof and supersedes any other representations or understandings of the
parties.
14. Severability. If any provision of the Agreement shall be
determined to be illegal or unenforceable, such determination shall not
affect any other provision of this Agreement and all other such provisions
shall remain in full force and effect.
15. Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person or by mail or when dispatched by
telegram or electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) to the addressee at the address specified below:
If to Pacific Lumber: The Pacific Lumber Company
125 Main Street
P.O. Box 37
Scotia, California 95565
Attn: Vice President, Finance and
Administration
Fax: (707) 764-4269
If to Scotia Pacific: Scotia Pacific Company LLC
Second Floor
125 Main Street
P.O. Box 712
Scotia, California 95565
Attn: Vice President, Finance and
Administration
Fax: (707) 764-5001
If to Salmon Creek: Salmon Creek Corporation
125 Main Street
P. O. Box 37
Scotia, California 95565
Attn: Vice President, Finance and
Administration
Fax: (707) 764-4269
If to any Rating Standard & Poor's, a division of the McGraw Hill
Agency: Companies
26 Broadway - 10th Floor
New York, New York 10004
Fax: (212) 208-8208
Attention: Asset-Backed Surveillance Group
Moody's Investors Service, Inc.
99 Church Street - 4th Floor
New York, New York 10007
Fax: (212) 553-4948
Attention: ABS Monitoring Department
or such other address as either party may from time to time designate by
like notice.
16. Limitation on Rights. Notwithstanding any other provision of
this Agreement to the contrary, neither Pacific Lumber nor Salmon Creek
shall exercise any of the rights granted to such party hereunder
(including, without limitation, all rights granted pursuant to paragraph 3
and 4 hereof) in such a manner so as to have a Material Adverse Effect, as
that term is defined in the Indenture, on Scotia Pacific.
17. Headings. The section headings in this Agreement are for the
purpose of reference only and shall not affect the meaning of any of the
provisions of this Agreement.
18. Governing Law. This Agreement shall be governed by the internal
laws of the State of California, without regard to principles of conflicts
of law.
19. Termination Upon Transfer to Governmental Entities.
Notwithstanding the provisions of Section 10, in the event (i) Pacific
Lumber sells or otherwise transfers any portion of the Pacific Lumber
Property or the Pacific Lumber Timber Rights Property; or (ii) Scotia
Pacific sells or otherwise transfers any portion of the Scotia Pacific
Property or the Scotia Pacific Timber Rights Property, or (iii) Salmon
Creek sells or otherwise transfers any portion of the Salmon Creek
Property, to any federal, state or local governmental entity, this
Agreement, including without limitation the reciprocal rights provided
hereby and the burdens imposed hereby, shall automatically terminate with
respect to the property being transferred. Pacific Lumber, Scotia Pacific
and Salmon Creek each agree to execute and deliver to the other such
documents as may be necessary or appropriate to evidence any such
termination.
[Rest of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have executed this
Reciprocal Rights Agreement as of the date first written above.
THE PACIFIC LUMBER COMPANY, a
Delaware corporation
By: /S/ John A. Campbell
Print: John A. Campbell
As Its: President and CEO
SCOTIA PACIFIC COMPANY LLC,
a Delaware limited liability
company
By: /s/ Gary L. Clark
Print: Gary L. Clark
As Its: Vice President
SALMON CREEK CORPORATION, a
Delaware corporation
By: /s/ William S. Riegel
Print: William S. Riegel
As Its: Vice President
STATE OF CALIFORNIA )
)
COUNTY OF HUMBOLDT )
On July 16, 1998, before me, Susan Pryor-Colby,
a Notary Public for the State of California, personally appeared
John A. Campbell, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or
the entity on behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature: /s/ Susan Pryor-Colby (Seal)
STATE OF CALIFORNIA )
)
COUNTY OF HUMBOLDT )
On July 16, 1998, before me, Susan Pryor-Colby,
a Notary Public for the State of California, personally appeared
Gary L. Clark, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or
the entity on behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature: /s/ Susan Pryor-Colby (Seal)
STATE OF CALIFORNIA )
)
COUNTY OF HUMBOLDT )
On July 16, 1998, before me, Susan Pryor-Colby,
a Notary Public for the State of California, personally appeared
William S. Riegel, personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person(s) whose name(s)
is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s), or
the entity on behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature: /s/ Susan Pryor-Colby (Seal)