Plum Creek Timber Co Inc – ‘8-K’ for 4/9/99 – EX-99

As of:  Monday, 4/12/99   ·   For:  4/9/99   ·   Accession #:  950172-99-405   ·   File #:  1-10239

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                         2±     9K 
 2: EX-99       Exhibit 99.1 - Press Release                           1      8K 
 3: EX-99       Exhibit 99.2 - Stipulation of Settlement              13±    54K 
 4: EX-99       Exhibit 99.3 - Notice of Pendency of Class Action     15±    62K 

EX-99   —   Exhibit 99.3 – Notice of Pendency of Class Action
Exhibit Table of Contents

                                                        EXHIBIT 99.3

 IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

IN AND FOR NEW CASTLE COUNTY    

JERROLD M. SONET,                   )                                           
)       
Plaintiff,        )                         
)       
v.                            )     C.A. No. 16931                  
)       
PLUM CREEK TIMBER COMPANY,          )                                           
L.P., PLUM CREEK MANAGEMENT         )                                           
COMPANY, L.P., and P.C. ADVISORY    )                                           
CORP. I,                            )                                           
)       
Defendants.       )                         

NOTICE OF PENDENCY OF CLASS ACTION, PROPOSED
 SETTLEMENT OF CLASS ACTION AND SETTLEMENT HEARING
 -------------------------------------------------

TO:   ALL RECORD AND BENEFICIAL OWNERS OF UNITS OF PLUM CREEK TIMBER            
COMPANY, L.P. FROM AND INCLUDING JUNE 8, 1988 THROUGH AND           
INCLUDING THE DATE ON WHICH THE CONVERSION OF PLUM CREEK FROM A     
MASTER LIMITED PARTNERSHIP TO A REAL ESTATE INVESTMENT TRUST,       
PURSUANT TO THE TERMS OF THE CONVERSION PROPOSAL, IS                
CONSUMMATED INCLUDING THEIR SUCCESSORS IN INTEREST,                 
PREDECESSORS, REPRESENTATIVES, TRUSTEES, EXECUTORS,                 
ADMINISTRATORS, HEIRS, ASSIGNS OR TRANSFEREES, IMMEDIATE AND        
REMOTE, AND EXCLUDING DEFENDANTS AND THEIR AFFILIATES.              

PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS  
WILL BE AFFECTED BY THE LEGAL PROCEEDINGS IN THIS LITIGATION. IF YOU
WERE NOT THE BENEFICIAL HOLDER OF UNITS OF PLUM CREEK, BUT HELD PLUM
 CREEK UNITS FOR A BENEFICIAL HOLDER, PLEASE TRANSMIT THIS DOCUMENT TO
SUCH BENEFICIAL HOLDER.                                             

1. This notice to all record and beneficial owners of units of Plum 
Creek Timber Company, L.P. (the "Partnership") from and including the close     
of business on June 8, 1988, through and including the date on which the        
Conversion is consummated pursuant to the terms of the Conversion Proposal,     
including any and all of their successors in interest, predecessors,            
representatives, trustees, executors, administrators, heirs, assigns or         
transferees, immediate and remote, and any person or entity acting for or       
on behalf of, or claiming under any of them, and each of them, and              
excluding the defendants in the Action, and all persons or entities related     
to or affiliated with the defendants (collectively, the "Class"), is given      
pursuant to Rule 23 of the Rules of the Court of Chancery of the State of       
Delaware and pursuant to an Order of the Court of Chancery of the State of      
Delaware in and for New Castle County (the "Court") entered in the              
above-captioned action (the "Action").                                          

SETTLEMENT HEARING    
------------------    

 2. Members of the Class have an interest in these proceedings and are
hereby notified that a hearing will be held before the Court of Chancery,       
in the Daniel L. Herrmann Courthouse, 10th & King Streets, Wilmington,          
Delaware 19899 on June 21, 1999, at 11:00 a.m. (the "Settlement Hearing"),      
to (i) determine whether a Stipulation of Settlement dated April 9, 1999        
(the "Stipulation"), and the terms and conditions of the Settlement             
proposed in the Stipulation (the "Settlement"), are fair, reasonable and        
adequate and in the best interests of the Class; (ii) determine whether a       
class should be certified in the Action; (iii) determine whether the Class      
was adequately represented by plaintiff and his attorneys; (iv) determine       
whether final judgment should be entered dismissing the Action as to all        
defendants named herein and their affiliates and with prejudice as against      
the plaintiff and all members of the Class (the "Order and Final                
Judgment"); (v) hear and determine any objections to the Settlement; and        
(vi) if the Court approves the Stipulation and the Settlement and enters        
the Order and Final Judgment, to determine whether it should award              
attorneys' fees and expenses to plaintiff's attorneys pursuant to the           
application described herein.                                                   

3. The Court has reserved the right to adjourn the Settlement       
Hearing, including consideration of the application for attorneys' fees and     
expenses, by oral announcement at such hearing or any adjournment thereof,      
and without further notice of any kind. The Court also has reserved the         
right to approve the Settlement at or after the Settlement Hearing with         
such modifications as may be consented to by the parties to the Stipulation     
and without further notice to the Class.                                        

SUMMARY OF SETTLEMENT     
---------------------     

The Action and the Settlement address claims arising out of the     
Conversion of Plum Creek from a master limited partnership to a REIT. As a      
result of the prosecution of the Actions by plaintiff and the Settlement,       
(i) the Partnership has issued supplemental disclosures to Unitholders and      
(ii) defendants have agreed to pay up to $30 million to a fund, depending       
upon Plum Creek's financial performance over the next five years, for the       
benefit of those persons who were beneficial owners of Plum Creek units at      
the time of the Conversion. In consideration for these substantial              
benefits, plaintiff has agreed, subject to consummation of the Conversion       
and the approval of the Settlement by the Court, to dismiss all claims made     
by and that could have been made by plaintiff and any Unitholders relating      
to the Conversion -- including all claims in this Action, in a prior action     
that plaintiff had filed but that was dismissed by the Court, and is now on     
appeal, and in a federal court action that plaintiff was preparing to file      
at the time the Settlement was negotiated.                                      

A.    Plaintiff's Separate Statement.                               

Plaintiff brought two lawsuits attacking the Conversion. In the     
first, he challenged the substantive terms of the Conversion, and the           
process by which such terms were determined. In the second, he challenged       
the adequacy of disclosure to Unitholders about the Conversion. As the          
result of plaintiff's second lawsuit, that disclosure was revised and           
supplemented.                                                                   

Although the claims he asserted are broader, plaintiff's main focus 
has been on the fairness of allotting 27% of the equity of the REIT to the      
General Partner, in light of the fact that its share of current                 
distributions is only 25.5%. The General Partner contends that since the        
terms of the Partnership Agreement entitle it to receive 37% of any             
increases in distributions over the current distribution levels and a           
step-up on the issuance of additional equity by the Partnership, based upon     
Plum Creek's projected future performance, the General Partner would            
receive more than 27% of Plum Creek's future distributions if Plum Creek        
remained a limited partnership. Because the General Partner is giving up        
its right to that projected increased share of distributions in the             
conversion of Plum Creek into a REIT, and is also giving up other rights it     
has under the Partnership Agreement, the General Partner argued that the        
27% equity interest it agreed to accept in the REIT is below the value of       
the rights in the Partnership it is giving up.                                  

Plaintiff contended that whether Plum Creek would be able, over the 
next five years, to increase distributions was speculative. In plaintiff's      
view, the General Partner ought not to be compensated now for future            
events, such as assumed acquisitions which have not been identified, and        
might not occur. Accordingly, plaintiff would not agree to a settlement of      
any of the claims he has asserted that allowed the General Partner to           
receive a 27% equity interest at this time, unless the settlement provided      
that the value of the increase in the General Partner's interest from 25.5%     
to 27% would be returned to the Unitholders if Plum Creek fails to perform      
as projected over the next five years. If Plum Creek's five year projected      
earnings are met, plaintiff's position is that the Conversion will be shown     
to have been fair, and thus, he and his fellow Unitholders will not be          
entitled to additional consideration. The cash equivalent of the difference     
in the value of REIT shares, based on the present market value of the           
units, between a 27% and 25.5% General Partner interest, inclusive of           
distributions at the current rate and after adjustment for taxes and            
transactional costs, is approximately $30 million.                              

Under the terms of the settlement, the General Partner will be      
required to turn over $30 million to a fund, the net proceeds of which will     
be distributed to persons who were Unitholders at the time of the               
Conversion, if the five year average of Plum Creek's net cash flow before       
taxes on a per share basis does not increase, i.e., is less than $2.26 on a     
per share basis, the average of Plum Creek's net cash flow before taxes         
over the last three years, 1996-1998. If the five year average on a per         
share basis of net cash flow before taxes is $2.84 or more, the plaintiff       
and all other Unitholders will receive no additional consideration. If the      
net cash flow before taxes falls within the range of $2.84 and $2.26, the       
General Partner will pay a ratable portion of $30 million. Thus, if the         
average net cash flow before taxes is $2.55, the plaintiff and all other        
persons who were Unitholders at the time of the Conversion will receive a       
share in $15 million less the percentage of the fund awarded as fees to         
plaintiff's counsel.                                                            

 The formula is modified in the event of a sale of Plum Creek. If Plum
Creek is sold, at any time over the next three years, for $34 or more per       
share, or if Plum Creek's performance during such period is on target, no       
payment will be made. If Plum Creek is sold for less than $34 per share,        
but Plum Creek is on target, no payment will be made. If Plum Creek is sold     
for less than $34 per share, then the formula will apply to the abbreviated     
period and payment will be made to the extent Plum Creek's performance is       
below target. In the fourth and fifth years, the formula alone will             
control and payment will be made regardless of the per share sale's price.      
Plaintiff has no reason to believe and does not believe that there is any       
present intention to sell Plum Creek. The adjustment to the formula was         
devised by attorneys to cover every eventuality.                                

Plaintiff's attorneys will apply for a fee equal to 25% of the cash 
actually paid by the General Partner into the fund for distribution to          
former Unitholders. If Plum Creek reaches or exceeds the target figure of       
$2.84 per share, plaintiff's attorneys will receive no fee on this aspect       
of the settlement. Thus, plaintiff's attorneys are placed in the same           
position as class members: if the class does not receive cash, the              
attorneys receive no fee. The defendants will not oppose the plaintiff's        
attorneys' fee request. The Court, however, may grant or deny in whole or       
in part, the plaintiff's attorneys' fee request in its sole discretion. Any     
class member may contest the plaintiff's attorneys' entitlement to any fee      
or to a fee in a lesser amount than 25% by following the procedure set          
forth in this notice under the heading RIGHT TO APPEAR AT SETTLEMENT            
HEARING.                                                                        

At this time, plaintiff's attorneys are applying, inter alia, for a 
fee for their work in connection with the supplemental disclosure they          
caused to be made by Plum Creek to Unitholders. Plaintiff obtained a            
preliminary injunction from the Chancery Court based upon his challenge to      
the disclosure contained in the combined Proxy Statement and Prospectus,        
dated January 28, 1999. As a result of that injunction, a supplemental          
Proxy Statement and Prospectus dated March 29, 1999, along with the             
decision of the Honorable Jack Jacobs, Vice Chancellor of the Court of          
Chancery in New Castle County, Delaware, were sent to all class members.        
Plaintiff believes that the quality of the additional disclosure obtained       
through the efforts of his attorneys set a high water mark for disclosure       
and that, based upon established Delaware and United States Supreme Court       
authorities, his attorneys are entitled to a fee for those efforts.             

Plaintiff's attorneys are seeking fees of $1.5 million and          
reimbursement of actual expenses of $125,000. If and to the extent awarded      
by the Court, those fees and expenses will be paid by Plum Creek. The           
defendants will not oppose such a request. However, the Court may, in its       
discretion, grant or deny, in whole or in part, the fee and expense             
request. Any class member may oppose plaintiff's attorneys' application for     
fees and expenses by following the procedure in this notice under the           
heading RIGHT TO APPEAR AT SETTLEMENT.                                          

B.    Defendants' Separate Statement.                               

Defendants believe that the Conversion presents compelling benefits 
for Plum Creek and all of its Unitholders. Since September 1998, the            
defendants have been responding to litigation initiated by plaintiff, which     
has involved two lawsuits in Delaware Chancery Court and a possible third       
lawsuit in the United States District Court. Plaintiff's substantive            
challenge to the Conversion was dismissed by the Chancery Court, and is now     
on appeal. Plaintiff's ability to continue to prosecute his other claims,       
as well as his continued ability to appeal the dismissal of his substantive     
challenge, threatens to interfere with the timely consummation of the           
Conversion.                                                                     

 Defendants believe that the continued uncertainty and potential delay
occasioned by plaintiff's continuing litigation is contrary to the              
interests of Plum Creek and all of its partners, including the Unitholders      
and the General Partner. Accordingly, although defendants firmly believe        
that none of plaintiff's pending, threatened or previously asserted and         
dismissed claims has any merit, they have negotiated this settlement in         
order to put all of this litigation behind them and to enable the               
Conversion to proceed at the earliest possible date.                            

 * * *
A more complete summary of the Settlement is set forth on pages ____
of this Notice.                                                                 

THE FACTUAL BACKGROUND    
----------------------    

THE DESCRIPTION OF THE ACTION AND THE SETTLEMENT WHICH FOLLOW HAVE BEEN         
PREPARED BY COUNSEL FOR THE PARTIES. THE COURT HAS MADE NO FINDINGS WITH        
RESPECT TO SUCH MATTERS, AND THIS NOTICE IS NOT AN EXPRESSION BY THE COURT      
OF FINDINGS OF FACT.                                                            

 A. Defendant Plum Creek Timber Company, L.P. (the "Partnership") is a
publicly traded Delaware limited partnership. The Partnership and its           
subsidiaries own, manage and operate 3.3 millions of acres of timberland        
and various wood products conversion facilities in various parts of the         
United States.                                                                  

 B. Defendant Plum Creek Management Company, L.P. ("PCMC"), a Delaware
limited partnership, is the general partner of the Partnership. Defendant       
PC Advisory Corp. I ("Corp. I"), a Delaware corporation, is the indirect        
general partner of PCMC. PCMC Intermediate Holdings, L.P. is the sole           
limited partner of PCMC. PCMC Intermediate Holdings, L.P. and its               
successors are referred to as "Holdings." Defendants PCMC and Corp. I are       
referred to collectively as the "General Partner."                              

C. On June 8, 1998, the Partnership announced that it had entered   
into an agreement with the General Partner (the "Conversion Proposal")          
pursuant to which the Partnership would convert from a master limited           
partnership into a real estate investment trust (the "Conversion"). The         
newly formed real estate investment trust will be Plum Creek Timber             
Company, Inc. (the "REIT"). The term "Plum Creek" shall be used to refer as     
applicable to the Partnership (prior to the Conversion) and/or the REIT         
(after the Conversion). The Conversion was expressly conditioned upon the       
affirmative vote of 66-2/3% of the outstanding units of the Partnership. If     
the Conversion Proposal were approved by the unitholders of the Partnership     
(the "Unitholders"), the General Partner would exchange its current             
interest in the Partnership for a 27% equity interest in the REIT.              
Following the Conversion, 99% of the General Partner's economic interest in     
the REIT will be held through Holdings.                                         

D. On September 11, 1998, plaintiff filed a class action complaint, 
purportedly on behalf of all Unitholders, in the Court styled Sonet v. Plum     
Creek Timber Co., L.P. et al., Del. Ch., C.A. No. 16639, against Plum           
Creek, PCMC and Corp. I alleging that the General Partner violated certain      
of its fiduciary duties to the Unitholders by virtue of the terms of the        
Conversion and the process by which it was determined, including the duty       
of due care (the "First Action"). On November 17, 1998, plaintiff filed an      
amended complaint in the First Action which also challenged the General         
Partner's alleged breach of fiduciary duties in connection with the             
Conversion Proposal. Defendants moved to dismiss the First Action.              

E. While defendants' motion to dismiss the First Action was pending,
plaintiff's counsel engaged in extensive discovery including the review of      
documents produced by defendants and their respective financial advisors.       
Plaintiff's counsel also deposed Rick Holley (President and CEO of PCMC),       
Ian B. Davidson and David D. Leland (members of the Special Committee of        
the Corp I board of directors), William J. Patterson (director of Corp. I       
and one of three principals who collectively own 100% of the capital stock      
of Corp. I), and representatives of Salomon Smith Barney, Inc. (a financial     
advisor to the Special Committee) and Merrill Lynch, Pierce, Fenner & Smith     
Incorporated (a financial advisor to Plum Creek).                               

F. On December 17, 1998, the Court granted defendants' motion to    
dismiss the First Action. On January 11, 1999, Plaintiff filed a notice of      
appeal in the Supreme Court of the State of Delaware with respect to the        
First Action. Plaintiff's appeal to the Supreme                                 
Court is pending.                                                               

G. On or about January 29, 1999, Plum Creek distributed its Proxy   
Statement/Prospectus (the "Proxy Statement") setting a March 22, 1999 date      
for a special meeting of Unitholders in connection with the Conversion          
Proposal. Shortly thereafter, plaintiff filed a new class action complaint,     
purportedly on behalf of all Unitholders, in the Court styled Sonet v. Plum     
Creek Timber Company, L.P. et al., Del. Ch., C.A. No. 16931 (the "Action"       
or the "Second Action"). The Second Action alleged that the Proxy Statement     
contained material omissions and misstatements and asserted claims based        
upon the General Partner's alleged breach of its duties of candor and due       
care. Along with his complaint, plaintiff also filed in the Second Action a     
motion seeking to preliminarily enjoin the Unitholder vote on the               
Conversion.                                                                     

H. Following expedited briefing by the parties, plaintiff's motion  
for preliminary injunction was argued to the Court on March 2, 1999. On         
March 18, 1999, the Court issued an opinion finding that certain of the         
disclosures about which plaintiff complained were deficient and granting        
plaintiff's motion to preliminarily enjoin the Unitholder vote on the           
Conversion until appropriate corrective disclosures were made and properly      
disseminated (the "Opinion"). Sonet v. Plum Creek Timber Company, L.P., et      
al., Del. Ch., C.A. No. 16931, Jacobs, V.C. (March 18, 1999) .                  

 I. On March 19, 1999, the Court entered an order in the Second Action
(the "Order") which provided, in pertinent part, that:                          

   1.    The Unitholder vote on the Conversion shall not occur
          until [supplemental disclosures (the "Supplement")] in
    substantially the form attached is mailed to the
           Unitholders, as of the record date of January 22, 1999,
of the Partnership.                         

       2.    The Partnership may count the proxies already received as
         long as it provides all of its Unitholders with a new
            proxy, and clearly informs them that the last previously
         submitted proxy will be counted unless a new proxy is
         submitted. The Partnership shall not hold its meeting
           sooner than 15 days from the mailing of the Supplement.
            Such a meeting shall be treated as an adjournment of the
         March 22, 1999 meeting and no new record date need be
set.                                        

    3.    The entry of this Order shall not foreclose any claims
          based on, or preclude any action by the Securities and
          Exchange Commission with respect to federal disclosure
and/or proxy rules and regulations.         

       4.    By entry of this Order, the Court is neither approving or
           disapproving the adequacy of the Supplement attached to
this Order.                                 

J. As a result of the Opinion and the Order, the scheduled March 22,
1999 special meeting of Unitholders was convened and then adjourned until       
March 24, 1999 and again until March 29, 1999. At the reconvened March 29,      
1999 special meeting of Unitholders, the meeting was adjourned again until      
April 19, 1999.                                                                 

K. Following the entry of the Order, the parties commenced          
discussions with respect to a possible settlement of the Second Action.         
Those discussions also contemplated that as part of any settlement,             
Plaintiff would withdraw his appeal of the dismissal of the First Action.       

L. While settlement discussions were ongoing, the Partnership       
finalized and prepared to mail the Supplement. In connection with that          
process, counsel for plaintiff expressed to the Partnership, to the             
Securities and Exchange Commission and to the Court his views about the         
inadequacy of various aspects of the proposed supplemental disclosure, as a     
result of which certain changes were made. In addition, plaintiff's counsel     
made known to the Partnership his intention to commence in the United           
States District Court for the District of Washington a third action against     
the General Partner and the Partnership (the "Third Action") and, for           
purposes of discussing settlement, provided portions of the draft complaint     
to counsel for the General Partner. The contemplated Third Action would         
have asserted claims under the Securities Act of 1933 challenging the           
adequacy of the contents of the disclosures made in connection with the         
Conversion. (The First, Second and Third Actions shall be referred to           
collectively as the "Actions").                                                 

M. On or about March 29, 1999, the Supplement was mailed to all     
Unitholders of record as of January 22, 1999. Over the course of several        
days, the parties engaged in intensive settlement discussions in an effort      
to reach a settlement on a mutually acceptable basis in time to avoid           
further litigation (the "March-April Settlement Discussions"). The parties      
had previously held settlement discussions in December 1998, but those          
discussions had been unsuccessful. Counsel for the Plaintiff conducted the      
March-April Settlement Discussions with the participation of his retained       
financial advisor directly with counsel for the General Partner. The            
resulting agreement was the product of multiple exchanges of proposals by       
both parties and embodies terms that reflect compromises by both sides on       
all issues.                                                                     

N. In light of the events, negotiations and agreements described    
above, the facts that had been developed in discovery, and analysis of          
applicable law, counsel for plaintiff in the Action has concluded that the      
terms and conditions of the settlement provided for in the Stipulation (the     
"Settlement") are fair, reasonable, adequate, and in the best interests of      
the plaintiff and the class of Unitholders represented in the Action.           

O. Plaintiff enters into this Stipulation after taking into account 
(i) the substantial benefits to the members of the Class (as defined            
below), (ii) the risk of continued litigation, (iii) the desirability of        
permitting the Settlement to be consummated as provided by the terms of         
this Stipulation, and (iv) the conclusion of counsel for plaintiff that the     
terms and conditions of the Settlement are fair, reasonable, adequate and       
in the best interests of the Unitholders. Plaintiff and plaintiff's counsel     
have agreed to the terms of the Settlement because, in their view, the          
Settlement achieves plaintiff's principal objectives in the Actions, which      
were to provide the Unitholders with full disclosure of all material            
information so that they could make an informed decision with respect to        
the Conversion, and to provide compensation to Unitholders in the event the     
actual economic performance of Plum Creek does not equal or exceed the          
amounts set forth in the financial information referenced in a letter from      
Sidney B. Silverman, Esquire to Srinivas M. Raju, Esquire dated April 7,        
1999 (the "Financial Information").                                             

P. Defendants in the Action have denied and continue to deny        
vigorously any liability with respect to all claims alleged in the Actions.     
While denying any fault or wrongdoing, and relying on the provision of the      
Stipulation that it shall in no event be construed as or deemed to be           
evidence of an admission or concession on the part of defendants or any         
Released Person (as defined below) of any fault or liability whatsoever,        
and without conceding any infirmity in their defenses against the claims        
alleged in the Actions, defendants consider it desirable that the Action be     
settled and dismissed, subject to the terms and conditions of the               
Stipulation, because the Settlement will (i) be beneficial to the               
Unitholders; (ii) halt the substantial expense, inconvenience and               
distraction of continued litigation of plaintiff's claims; (iii) finally        
put to rest those claims; and (iv) dispel any uncertainty that may exist as     
a result of the Actions.                                                        

THE SETTLEMENT TERMS    
--------------------    

 1. In consideration for the full settlement, satisfaction, compromise
and release of the Settled Claims, the parties agree as follows:                

       a. On April 15, 2004, or such earlier date in 2004 as the final
audited financial results for calendar year 2003 are available, Holdings        
shall make a payment to a settlement fund (the "Fund") to be established by     
plaintiff's counsel, subject to the jurisdiction of the Court, in the           
following amount:                                                               

           i. In the event Plum Creek's five-year average earnings
before taxes, depreciation and amortization on a consolidated basis             
including all its subsidiaries whether or not such subsidiaries are             
required to be consolidated pursuant to generally accepted accounting           
principles ("EBTDA") during the fiscal years ending December 31, 1999 -         
December 31, 2003 (the "Period") is less than $2.26 per share, Holdings         
shall pay $30 million into the Fund;                                            

         ii. In the event Plum Creek's five-year average EBTDA
during the period is $2.84 per share (the "Upper Target") or greater,           
Holdings shall make no payment into the Fund; and                               

          iii. In the event Plum Creek's five-year average EBTDA
during the Period is between $2.26 and $2.84 per share, Holdings shall pay      
into the Fund $517,241.38 for each $.01 by which Plum Creek's five-year         
average EBTDA is below $2.84 per share, up to a maximum of $30 million.         

b. In determining EBTDA for purposes of the foregoing   
sub-section, extraordinary items shall be excluded -- provided, however,        
that the acquisition by Plum Creek of additional timberlands or facilities      
shall not be considered an extraordinary item, nor shall the sale of higher     
and better use land, up to the aggregate limit contained in the Financial       
Information, be considered an extraordinary item. The $2.26 per share and       
$2.84 per share targets in the foregoing sub-section shall be subject to        
downward adjustment in the event of a sale, transfer or other disposition       
of a substantial portion of Plum Creek's timberlands or other significant       
assets if the consideration received in connection with such sale, transfer     
or other disposition is distributed to shareholders. In the event of any        
unresolved disagreement between the parties as to whether a particular item     
constitutes an extraordinary item or whether a sale requires an adjustment      
in the thresholds, the matter shall be submitted for resolution to an           
independent Big Five accounting firm to be identified by plaintiff's            
counsel at the time a dispute arises.                                           

  c. In the event the REIT is sold to or acquired by another
company or person prior to the end of the Period (a "Sales Transaction"),       
any obligation on the part of Holdings to make a payment to the Fund shall      
be determined as of the date of closing of the Sales Transaction as             
follows:                                                                        

         i. if the Sales Transaction occurs on or prior to the
close of business on December 31, 2001 and is at a price (or equivalent         
price in a non-cash transaction) equal to or greater than $34 per share,        
then Holdings shall have no obligation to make any payment to the Fund; or      

         ii. if the Sales Transaction is either at a price (or
equivalent price in a non-cash transaction) less than $34 per share or          
occurs after the close of business on December 31, 2001, then Holdings'         
payment obligation, if any, shall be determined based on Plum Creek's           
average EBTDA measured from January 1, 1999 through the last full quarter       
on a calendar year basis (prorating any partial year from the full year         
number) immediately preceding the Sales Transaction (the "Revised Period")      
and Holdings' payment obligation shall be:                                      

             (1)   in the event Plum Creek's average EBTDA
during the Revised Period is less than $2.26 per share, Holdings shall pay      
$30 million into the Fund;                                                      

             (2)   in the event Plum Creek's average EBTDA
during the Revised Period equals or exceeds the Revised Upper Target (as        
defined below), Holdings shall make no payment into the Fund; and               

             (3)   in the event Plum Creek's average EBTDA
during the Revised Period is between $2.28 and the Revised Upper Target (as     
defined below), Holdings shall make a payment into the Fund ratably             
apportioned between $0 and $30 million. The "Revised Upper Target" shall be     
determined pursuant to the same calculation that is used to determine the       
Upper Target, except that the calculation shall be performed for the            
Revised Period.                                                                 

     d. The Fund shall be established by plaintiff's counsel prior
to the date the payment, if any, by Holdings to the Fund shall be due. The      
Fund shall be for the benefit of beneficial owners of units of the              
Partnership as of the date of the Conversion (the "Entitled Unitholders"),      
and shall be subject to the jurisdiction of the Court. The proceeds of the      
Fund, after payment of fees as may be awarded by the Court and expenses of      
administration and distribution, shall be distributed to the Entitled           
Unitholders. Other than Holdings' obligation, as set forth in this              
paragraph, to make a payment to the Fund, none of the defendants shall have     
any responsibility for or involvement in the establishment or                   
administration of, or any other matter relating to, the Fund.                   

     e. During the Period or Revised Period, whichever is shorter,
Holdings shall maintain unencumbered stock of the REIT or other assets          
reasonably acceptable to plaintiff's counsel in an amount no less than $40      
million to secure compliance with its obligations under this paragraph. At      
least annually, Holdings shall provide to plaintiff's counsel a statement       
from an independent auditor or accounting firm certifying Holdings'             
compliance with this sub-section.                                               

   f. No later than April 15 of each calendar year, Plum Creek
shall provide to plaintiff's counsel a statement of Plum Creek's EBTDA per      
share for the immediately preceding calendar year and an average for the        
Period to date. Counsel for plaintiff shall have the right to request such      
additional information from Plum Creek as may reasonably be necessary to        
enable him, or an independent financial advisor retained by him, to verify      
the calculation.                                                                

     g. Although the parties do not believe that the provisions of
this paragraph 1 create a security, in the event anyone were to deem it to      
do so, such security would be exempt from registration pursuant to Section      
3(a)(10) of the Securities Act of 1933.                                         

2. If the Stipulation and the Settlement are approved by the Court, 
the Court will enter an Order and Final Judgment which, among other things,     
will provide that subject to consummation of the Conversion, the Action and     
any and all claims, demands, rights, actions or causes of action, whether       
known or unknown that have been, could have been, or in the future can or       
might be asserted in the Actions, or in any court, tribunal or proceeding       
(including, but not limited to, any claims arising under federal or state       
law relating to alleged fraud, breach of any duty, negligence, violations       
of the federal securities laws or otherwise) by or on behalf of any member      
of the Class, whether individual, class, derivative, representative, legal,     
equitable or any other type or in any other capacity (collectively, the         
"Releasing Parties") against defendants in the Actions or any of their          
families, parent entities, associates, affiliates or subsidiaries and each      
and all of their respective past, present or future officers, directors,        
stockholders, principals, representatives, employees, attorneys, financial      
or investment advisors, consultants, accountants, investment bankers,           
commercial bankers, engineers, insurers and reinsurers, advisors or agents,     
heirs, executors, trustees, general or limited partners or partnerships,        
personal representatives, estates, administrators, predecessors, successors     
and assigns (collectively, the "Released Persons") which have arisen, could     
have arisen, arise now or hereafter arise out of, or relate in any manner       
to, the allegations, facts, events, transactions, acts, occurrences,            
statements, representations, misrepresentations, omissions or any other         
matter, thing or cause whatsoever, or any series thereof, embraced,             
involved, set forth or otherwise related, directly or indirectly, to any of     
the complaints filed at any time in the Actions, the claims to be included      
in the Third Action, the Conversion Proposal, the Conversion, and the Proxy     
Statement, the Supplement and any proxy material, public filings or             
statements by any of the defendants in the Action or any other Released         
Persons in connection with the Conversion Proposal or the Conversion            
(collectively, the "Settled Claims") shall be fully, finally, and forever       
compromised, settled, discharged, dismissed with prejudice and released         
pursuant to the terms and conditions set forth herein; provided however,        
that the Settled Claims shall not include any claims or causes of action        
that members of the Class may have (i) based solely upon the failure under      
the Internal Revenue Code of Plum Creek to qualify as a real estate             
investment trust and (ii) to enforce compliance with the terms of the           
Settlement.                                                                     

It is the intention of the parties to extinguish all Settled Claims 
and consistent with such intention the Releasing Parties waive their            
rights, to the extent permitted by law, from the provisions                     
of Section 1542 of the California Civil Code or any other similar state         
law, federal law or principle of common law, which may have the effect of       
limiting the release set forth above.                                           

 3. THE COURT HAS NOT FINALLY DETERMINED THE MERITS OF THE CLAIMS MADE
BY PLAINTIFF AGAINST, OR THE DEFENSES OF, THE DEFENDANTS. THIS NOTICE DOES      
NOT IMPLY THAT THERE HAS BEEN OR WOULD BE ANY FINDING OF VIOLATION OF THE       
LAW OR THAT RELIEF IN ANY FORM OR RECOVERY IN ANY AMOUNT COULD BE HAD IF        
THE ACTIONS WERE NOT SETTLED.                                                   

DISMISSAL AND RELEASE     
---------------------     

4. It is the intent of the parties to the Action that the proposed  
Settlement, if approved by the Court, shall extinguish for all time all         
rights, claims and causes of action that are or relate to the Settled           
Claims against any of the Released Persons.                                     

 5. The Settlement will become effective at such time as (i) the Order
and Final Judgment entered by the Court approving the Settlement shall          
become final and not subject to further appeal or review, and (ii) the          
Conversion, pursuant to the terms of the Conversion Proposal, is                
consummated. In the event that the Settlement is not approved by the Court      
or does not become effective, then the Settlement shall be of no further        
force and effect and each party shall be restored to his, her or its            
respective position prior to entering into the Stipulation, except that all     
costs incurred in connection with notifying the Class of the proposed           
Settlement shall be the obligation of Plum Creek.                               

6. If the Settlement is approved by the Court and the Conversion is 
consummated, the Action will be dismissed on the merits with respect to all     
defendants and with prejudice against plaintiff and all members of the          
Class. In addition, upon the execution of this Settlement Agreement by all      
parties, the parties shall file in the Supreme Court a stipulation staying      
plaintiff's appeal of the dismissal of his complaint in the First Action.       
Upon the date when this Settlement shall be Finally Approved (as defined in     
the Stipulation), the parties shall file a stipulation in the Supreme Court     
dismissing the appeal of the dismissal of the First Action with prejudice       
and without costs. The Stipulation provides that the Settlement is a full       
compromise, settlement and release of all claims, known or unknown, which       
have been or which might have been asserted by plaintiff or any other           
member of the Class against any of the Released Persons arising now or          
hereafter from or relating to matters alleged in the Actions. Under the         
terms of the Stipulation, such release and dismissal will bar the               
institution or prosecution by plaintiff or any member of the Class of any       
other action asserting any Settled Claim against any of the Released            
Persons.                                                                        

ATTORNEYS' FEES     
---------------     

7. At or before the hearing, plaintiff's counsel may apply for an   
award of attorneys' fees and expenses, as follows: (i) an amount not to         
exceed $1,500,000.00, with the amount awarded by the Court to be paid by        
Plum Creek; (ii) actual expenses up to $125,000, the amount approved by the     
Court to be paid by Plum Creek; and (iii) a fixed percentage, not to exceed     
25%, of the Fund, to be paid solely from the Fund. Defendants agree they        
will not object to such an application by plaintiff's counsel, and              
plaintiff's counsel agrees not to make any other application for fees or        
disbursements, but defendants retain the right to oppose any other              
application for fees or disbursements by any other person. The fairness,        
reasonableness and adequacy of the Settlement may be considered and ruled       
upon by the Court independently of any award of attorneys' fees and             
reimbursement of expenses.                                                      

CLASS CERTIFICATION     
-------------------     

8. On April 9, 1999, the Court entered an order (the "Scheduling    
Order") determining preliminarily and solely for purposes of the                
Settlement, that the Action may be maintained as a class action, with no        
opt out rights, by plaintiff as representative of the Class, and naming the     
law firm of Rosenthal, Monhait, Gross & Goddess, P.A. as Delaware Liaison       
Counsel and naming the law firm of Silverman, Harnes, Harnes, Prussin &         
Keller as Lead Counsel for the Class ("Class Counsel"), pursuant to Court       
of Chancery Rules 23(a), (b)(1) and (b)(2), on behalf of the Class. The         
Court will consider these issues further at the Settlement Hearing to           
determine whether (1) the Class contemplated in the Action is so numerous       
that joinder of all members is impracticable, (2) there are questions of        
law or fact common to the Class, (3) the claims of the representative           
plaintiff are typical of the claims of the Class, and (4) the                   
representative plaintiff has fairly and adequately protected the interests      
of the Class and whether the Action otherwise complies with Court of            
Chancery Rules 23(a), (b)(1) and (b)(2).                                        

RIGHT TO APPEAR AT SETTLEMENT HEARING     
-------------------------------------     

9. Any Class member who objects to the Stipulation, the Settlement, 
the class action determination, the Order and Final Judgment to be entered      
herein, and/or the application for attorneys' fees and expenses, or who         
otherwise wishes to be heard, may appear in person or by his attorney at        
the Settlement Hearing and present any evidence or argument that may be         
proper and relevant; provided, however, that no person other than the named     
plaintiff, defendants and counsel for defendants in the Action shall be         
heard, and no papers, briefs, pleadings or other documents submitted by any     
such person shall be received or considered by the Court (unless the Court      
in its discretion shall thereafter otherwise direct, upon application of        
such person and for good cause shown), unless no later than ten (10) days       
prior to the Settlement Hearing, (i) a written notice of the intention to       
appear; (ii) a detailed statement of such person's objections to any matter     
before the Court; and (iii) the grounds therefor or the reasons why such        
person desires to appear and to be heard, as well as all documents and          
writings which such person desires the Court to consider, shall be filed by     
such person with the Register in Chancery and, on or before such filing,        
shall be served by hand or overnight mail on the following counsel of           
record:                                                                         

Joseph A. Rosenthal, Esquire                                        
Rosenthal, Monhait, Gross & Goddess, P.A.                           
Mellon Bank Center, Suite 1401                                      
P.O. Box 1070                                                       
Wilmington, Delaware 19899                                          
Attorneys for Plaintiff                                         

Jesse A. Finkelstein, Esquire                                       
Richards, Layton & Finger                                           
One Rodney Square                                                   
P.O. Box 551                                                        
Wilmington, Delaware  19899                                         
Attorneys for certain Defendants                                

Edward P. Welch, Esquire                                            
Skadden, Arps, Slate, Meagher & Flom LLP                            
One Rodney Square                                                   
P.O. Box 636                                                        
Wilmington, Delaware 19899                                          
Attorneys for certain Defendants                                  

Any person who fails to object in the manner prescribed above shall be          
deemed to have waived such objection and shall be forever barred from           
raising such objection in this or any other action or proceeding.               

INTERIM INJUNCTION    
------------------    

10. Pending final determination of whether the Stipulation should be
approved, the plaintiff and all members of the Class, and each of them, and     
any of their respective representatives, trustees, successors, heirs and        
assigns are barred and enjoined from commencing or prosecuting any action       
either directly or in any other capacity which asserts Settled Claims           
against any of the Released Persons.                                            

SCOPE OF THIS NOTICE AND FURTHER INFORMATION
--------------------------------------------

 11. This Notice does not purport to be a comprehensive description of
the Action, the allegations or transactions related thereto, the terms of       
the Settlement or the Settlement Hearing. For a more detailed statement of      
the matters involved in this litigation, you may inspect the pleadings, the     
Stipulation, the Orders entered by the Court of Chancery and other papers       
filed in these litigations, unless sealed, at the Office of the Register in     
Chancery of the Court of Chancery of the State of Delaware, Daniel L.           
Herrmann Courthouse, 10th & King Streets, New Castle County, Wilmington,        
Delaware, during regular business hours of each business day. DO NOT WRITE      
OR TELEPHONE THE COURT.                                                         

NOTICE TO PERSONS OR ENTITIES HOLDING     
RECORD OWNERSHIP ON BEHALF OF OTHERS    
-------------------------------------     

12. Brokerage firms, banks and other persons or entities who are    
members of the Class in their capacities as record owners, but not as           
beneficial owners, are requested to send this Notice promptly to beneficial     
owners. Additional copies of this notice for transmittal to beneficial          
owners are available on request directed to                                     

Georgeson & Company Inc.    
Wall Street Plaza     
88 Pine Street 30th Floor     
New York, New York 10005    
(212) 440-9800 (call collect)     
or    
(800) 223-2064 (call toll free)     

                          BY ORDER OF THE COURT:

                                  ------------------------------
                        Register in Chancery

Dated: April 9, 1999                                                            

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘8-K’ Filing		Date		Other Filings
		4/15/04
		12/31/03		10-K
		12/31/01		10-K
		12/31/99		10-K405
		6/21/99		8-K
		4/19/99		8-K
Filed on:		4/12/99
For Period End:		4/9/99
		4/7/99
		3/29/99		8-K
		3/24/99		8-K
		3/22/99		8-K,  DEFA14A
		3/19/99
		3/18/99		10-K,  8-K
		3/2/99
		1/29/99
		1/28/99		S-4
		1/22/99
		1/11/99
		1/1/99
		12/17/98
		11/17/98
		9/11/98
		6/8/98		8-K
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